Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Q3 2013 Earnings Presentation
29 slides from Fortum Oyj's earnings presentation, Oct 23, 2013
Slide 1: Fortum Corporation Interim report January-September 2013
Fortum Corporation Interim report January-September 2013 23 October 2013
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Fortum shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser. 2
Slide 3: Q3 2013 Result
Q3 2013 Result Key figures (EUR) III/2013 III/2012 I-III/2013 I-III/2012 2012 LTM Sales, million 1,148 1,140 4,466 4,325 6,159 6,300 Comparable EBITDA, million 364 391 1,650 1,650 2,416 2,416 Operating profit, million 97 226 1,138 1,251 1,874 1,761 Comparable operating profit, million 166 223 1,114
Slide 4: Key points of the third quarter in 2013
Key points of the third quarter in 2013 • Very strong cash flow • Nearly all time low hydro volumes - Slightly higher nuclear and thermal production • Decision to discontinue electricity production at the Inkoo coal-fired power plant in Finland • Latvia’s first large-scale biomass CHP plant in Jelga
Slide 5: Market conditions in the third quarter
Market conditions in the third quarter Nordic countries • Power consumption in the Nordic countries almost at last year’s third quarter level • Industrial demand decrease partly offset by increase in non-industrial consumption • Water reservoir levels at low levels – considerably below last years re
Slide 6: Nordic water reservoirs – from normal to low during Q3
Nordic water reservoirs – from normal to low during Q3 Source: Nord Pool Spot 6
Slide 7: Weekly reservoir deficits compared to normal
Weekly reservoir deficits compared to normal; High surplus in 2012 has changed to heavy deficit 2013 I 20 15 Fortum Q3/2012 Fortum Q3/2013 hydro 6.3 TWh hydro 3.9 TWh 10 TWh from normal 5 0 -5 -10 -15 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 1 3 5 7 9 11 13 15 17 19 2
Slide 8: Wholesale price for electricity
Wholesale price for electricity EUR/MWh Nord Pool System Price Forwards 100 90 80 70 60 50 40 30 20 10 21 October 2013 0 2005 2007 2009 2011 2013 2015 2017 Source: Nord Pool Spot, NASDAQ OMX Commodities Europe 8
Slide 9: Price development in the Nordic region and Russia
Price development in the Nordic region and Russia Spot price for power in NordPool power exchange Spot price for power (market price), Urals hub EUR/MWh RUB/MWh 1 400 +2% 48 42,0 1 136 +72% 37,3 38,7 1 200 1 114 40 35,8 973 931 970 1 000 32 800 24 20,8 600 16 400 8 200 0 0 Q3/2012 Q4/2012 Q1/2013 Q2
Slide 10: Q3: Result burdened mainly by Power's low hydro production
Q3: Result burdened mainly by Power’s low hydro production and impairement loss Comparable operating profit, EUR million 10
Slide 11: Jan-Sep: Efficiency programme gives support in the challenging business environment
Jan-Sep: Efficiency programme gives support in the challenging business environment Comparable operating profit, EUR million 11
Slide 12: Fuel and CO2 allowance prices
Fuel and CO2 allowance prices Crude oil price (ICE Brent) CO2 price (ICE ECX EUA) 160 35 140 30 120 25 EUR / tCO2 100 USD / bbl 20 80 60 15 40 10 20 5 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 Coal price (ICE Rotterdam) Gas price (ICE NBP) 240 100
Slide 13: Financials
Financials Jarvenpaa CHP 13 sxenee | @Fortum
Slide 14: Comparable and reported operating profit
Comparable and reported operating profit Comparable Reported Comparable Reported MEUR operating profit operating profit operating profit operating profit III/2013 III/2012 III/2013 III/2012 I-III/2013 I-III/2012 I-III/2013 I-III/2012 Power 138 201 43 205 651 765 643 787 Heat -14 -9 -3 -10 167 177 18
Slide 15: Power
Power Q3 2013 Jan-Sep 2013 • Nearly all-time low hydro production • Lower water reservoir levels and inflow decreased hydro volume significantly • Impairment loss from discontinued electricity production in Inkoo • Good nuclear availability (except Oskarshamn 1) • Good achieved power price • Higher
Slide 16: Heat
Heat Q3 2013 Jan-Sep 2013 • Seasonally weak quarter impacted • Lower CO2 allowance sales and lower negatively by lower CO2 allowance sales achieved power prices • Jelgava biomass CHP inaugurated • The co-ownership agreement of Fortum Värme renewed with the City of Stockholm MEUR III/2013 III/2012 I-
Slide 17: Russia
Russia Q3 2013 Jan-Sep 2013 • Bad debt losses for Energostream and • Positive effect from CSA capacity totalled EUR unplanned outages (lost capacity and 85 (61) million electricity income) • Nyagan 1 commissioned 1 April 2013 • Nyagan 2 currently under testing • Investment programme delayed with som
Slide 18: Distribution
Distribution Assessment of the Distribution business • The assessment was announced in Jan 2013 • Has no impact on Fortum’s electricity distribution customers – excludes the electricity retail business • Is progressing well according to plan - high interest towards the assets • Expected to be conclu
Slide 19: Electricity Sales
Electricity Sales • A leading seller of CO2-free electricity in the Nordic countries • Result improved because of favourable wholesale market conditions and increased customer base MEUR III/2013 III/2012 I-III/2013 I-III/2012 2012 LTM Sales 133 119 548 501 722 769 Comparable operating profit 13 9 41
Slide 20: Income statement
Income statement MEUR III/2013 III/2012 I-III/2013 I-III/2012 2012 LTM Sales 1,148 1,140 4,466 4,325 6,159 6,300 Expenses -982 -917 -3,352 -3,164 -4,407 -4,595 Comparable operating profit 166 223 1,114 1,161 1,752 1,705 Items affecting comparability -69 3 24 90 122 56 Operating profit 97 226 1,138 1
Slide 21: Cash flow statement
Cash flow statement MEUR III/2013 III/2012 I-III/2013 I-III/2012 2012 LTM Operating profit before depreciations 295 394 1,684 1,740 2,538 2,482 Non-cash flow items and divesting activities 57 -38 -104 -157 -192 -139 Financial items and fx gains/losses 64 -161 -283 -435 -522 -370 Taxes -76 -85 -158 -
Slide 22: Key ratios
Key ratios MEUR LTM 2012 2011 EBITDA 2,482 2,538 3,008 Comparable EBITDA 2,416 2,416 2,374 Interest-bearing net debt *7,897 7,814 7,023 Comparable net debt/EBITDA 3.3 3.2 3.0 *30.9.2013 Return on capital employed, ROCE (%) 9.5 10.2 14.8 Return on shareholders’ equity, ROE (%) 14.4 14.6 19.7 Good liq
Slide 23: Fortum's efficiency programme 2013-2014
Fortum's efficiency programme 2013-2014 • Efficiency programme proceeding well according to plan • Cost savings – Visible in all divisions • Divestments – EUR 200 million of non-core assets divested since the start WHEN WHY WHAT 2013-2014 SPEED - Cash flow improved by EUR 1 billion - FLEXIBILITY CAP
Slide 24: Debt Maturity Profile
Debt Maturity Profile 1500 MEUR 2013 669 1250 2014 1.280 2015 1.109 1000 2016 883 750 2017 589 2018 680 500 2019 830 2020 75 250 2021 562 2022 969 0 2023+ 1.346 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023+ TOTAL 8.992 Bonds Financial institutions Other long-term debt CPs Other short-term
Slide 25: Outlook
Outlook Nyagan GRES wernt | @Fortum
Slide 26: Outlook
Outlook • Nordic markets ‒ Annual electricity demand growth estimated to be on average 0.5% ‒ Electricity continues to gain share of total energy consumption • Russia ‒ Fortum’s goal is to achieve an operating profit level (EBIT) of about EUR 500 million run- rate in its Russia Division during 2015
Slide 27: Outlook
Outlook • Annual capex estimate excluding potential acquisitions – 2013 EUR 1.1 to 1.4 billion – 2014 EUR 0.9 to 1.1 billion • Hedging – Rest of 2013 approximately 85% hedge ratio at approximately EUR 44/MWh (Q2: 75% at EUR 45/MWh) – 2014 approximately 65% hedge ratio at approximately EUR 42/MWh (Q2
Slide 28: I have confidence that 2013 will be a good year for Fortum
I have confidence that 2013 will be a good year for Fortum • Distribution assessment to be concluded • Efficiency programme continues • Continued joint effort to mitigate external and internal challenges • Hedges create stability • Safety and sustainability in our daily work • Strong cash flow– focu
Slide 29: For more information www.fortum.com/investors
For more information www.fortum.com/investors