Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Q1 2011 Earnings Presentation
29 slides from Fortum Oyj's earnings presentation, Apr 28, 2011
Slide 1: Fortum Corporation Interim Report January-March 2011
Fortum Corporation Interim Report January-March 2011 Conference Call 28 April 2011 1
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: Highlights in Q1
Highlights in Q1 • Result on solid basis • Nuclear availability improved – hydro volumes very low • Difference between Nordic system price and area prices • In Russia, the first new unit started commercial operations • Fortum's CO2 emissions in Europe at 74 g/kWh (five-year average) – within the EU
Slide 4: CO2-free and energy-efficient solutions remain important to satisfy demand
CO2-free and energy-efficient solutions remain important in order to satisfy the demand for electricity and heat Global megatrends impact • Power and heat demand and supply • Degree of market liberalisation and integration • Climate change response • Energy system structure • Business models and com
Slide 5: Q1: Market conditions
Q1: Market conditions – Power consumption in the Nordic countries 114 (118) TWh – Nordic water reservoir levels at record low during Q1 – Nordic spot prices continued to increase, forward prices more stable – Difference between the Nordic system price and area prices was opposite compared to 2010 –
Slide 6: Q1: Overall a good start of the year
Q1: Overall a good start of the year • Comparable operating profit, EUR 649 (651) million – Clear improvement in Heat, Russia, Distribution and Electricity Sales – Power fell short, extremely low hydro volumes • Earnings per share EUR 0.76 (0.63) – IAS 39 accounting effect corresponding to EUR 0.14
Slide 7: Q1: Comparable profit at last years level
Q1: Comparable profit at last years level Comparable operating profit, EUR million 651 -99 24 -6 649 22 39 18 Q1/2010 Power Heat Russia Distribution Electricity Other Q1/2011 Sales 7
Slide 8: Nordic water reservoirs at record low during Q1
Nordic water reservoirs at record low during Q1 120 100 reservoir content (TWh) 80 60 40 20 2003 2008 2009 2010 2011 reference level 0 Q1 Q2 Q3 Q4 Source: Nord Pool Spot 8
Slide 9: Price development in the Nordic region and Russia
Price development in the Nordic region and Russia Spot price for pow er in NordPool pow er exchange Spot price for pow er (m arket price), Urals hub eur/MWh RUB/MWh 72 +11% 66,2 1 200 +16% 62,1 59,5 935 950 60 1 000 817 817 770 44,8 45,9 800 48 36 600 24 400 12 200 0 0 Q1/2010 Q2/2010 Q3/2010 Q4/201
Slide 10: Differences between the Nordic system price and area prices
Differences between the Nordic system price and area prices in Stockholm and Helsinki Nordic system price, Helsinki and Stockholm area prices Helsinki Stockholm System 600 500 Daily average price EUR / MWh 400 300 200 100 0 Q1/2010 Q2/2010 Q3/2010 Q4/2010 Q1/2011 10
Slide 11: Financials
Financlals=— —
Slide 12: Comparable and reported operating profit
Comparable and reported operating profit Comparable operating Reported operating Comparable operating Reported operating MEUR profit profit profit profit I/2011 I/2010 I/2011 I/2010 2010 2010 Power 325 424 489 467 1 298 1 132 Heat 171 132 265 159 275 303 Russia 34 16 34 32 8 53 Distribution 124 102
Slide 13: Q1: Power
Q1: Power Power • Comparable operating profit decreased – Nuclear availability improved – Lowest Q1 hydro generation since 2003 – Lower power price – Expired Russian power import contract MEUR I/2011 I/2010 LTM Sales 693 769 2 626 Comparable operating profit 325 424 1 199 Net Assets 5 996 5 591 Comp
Slide 14: Q1: Power result declined due to a number of reasons
Q1: Power result declined due to a number of reasons Comparable operating profit, change EUR million 424 -50 -20 -15 -5 -9 325 Hydro/nuclear Russian Q1/2010 Strong Taxes Other Q1/2011 volume and price import SEK 14
Slide 15: Q1: Heat
Q1: Heat Heat • Comparable operating profit increased clearly – Better availability, lower peak-load impact on production costs and stronger SEK • New CHP* capacity in Poland and Estonia increased power volumes MEUR I/2011 I/2010 LTM Sales 725 651 1 844 Comparable operating profit 171 132 314 Net As
Slide 16: Q1: Russia
Q1: Russia Russia • Comparable operating profit improved – Higher electricity market prices and commissioning of the first new unit in Tyumen • Return for the new capacity is guaranteed – Capacity price is mainly impacted by the Russian Government long-term bond yields MEUR I/2011 I/2010 LTM Sales 2
Slide 17: Key factors behind the profitability improvement in Russia
Key factors behind the profitability improvement in Russia Efficiency improvement programme 2008-2011 – Increasing heat production profitability – Fuel efficiency improvement – Cost savings New capacity commissioning 2011-2014 – Additional capacity 2,360 MW; +85% – Capacity is sold at CSA* contracts
Slide 18: Q1: Distribution
Q1: Distribution Distribution • Comparable operating profit increased – Higher sales and strong SEK • Smart metering rollout to network customers in Finland started MEUR I/2011 I/2010 LTM Sales 311 280 994 Comparable operating profit 124 102 329 Net Assets 3 711 3 419 Comparable RONA, % 9.8 Gross In
Slide 19: Q1: Electricity Sales
Q1: Electricity Sales Markets • Comparable operating profit increased clearly – Stable market prices without extreme price peaks • Restructuring of the business market segment MEUR I/2011 I/2010 LTM Sales 373 637 1 534 Comparable operating profit 11 -13 35 Net Assets 130 163 Comparable RONA, % 29.1
Slide 20: Q1: Income statement
Q1: Income statement MEUR I/2011 I/2010 2010 LTM Sales 2 034 1 947 6 296 6 383 Expenses -1 385 -1 296 -4 463 -4 552 Comparable operating profit 649 651 1 833 1 831 Other items affecting comparability 251 73 -125 53 Operating profit 900 724 1 708 1 884 Share of profit of associates and jv's 59 16 62
Slide 21: Q1: Cash flow statement
Q1: Cash flow statement MEUR I/2011 I/2010 2010 LTM Operating profit before depreciations 1 049 861 2 271 2 459 Non-cash flow items and divesting activities -270 -67 124 -79 Financial items and fx gains/losses -302 -177 -641 -766 Taxes -114 -82 -355 -387 Funds from operations (FFO) 363 535 1 399 1 2
Slide 22: Key ratios
Key ratios MEUR LTM 2010 2009 Q1 ‘11 EBITDA 2 459 2 271 2 292 Comparable EBITDA 2 406 2 396 2 398 Interest-bearing net debt 6 367 6 826 5 969 Net debt/EBITDA 2.6 3.0 2.6 Comparable Net debt/EBITDA 2.6 2.8 2.5 Return on capital employed (%) 12.6 11.6 12.1 Return on shareholders' equity (%) 17.5 15.7
Slide 23: Debt maturity profile
Debt maturity profile MEUR 1250 2011 1 116 1000 2012 663 2013 640 750 2014 1 189 2015 1 045 500 2016 848 2017 243 250 2018 93 2019 796 0 2020 43 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ 2021+ 1 020 Bonds Financial institutions Other long-term debt CPs Other short-term debt per 31 Marc
Slide 24: Outlook
Outlook 24
Slide 25: Q1 Summary
Q1 Summary • Solid performance continued - seasonality • Power – Improved nuclear availability - low hydro volumes – Results year-end weighted compared to 2010 • Russia – Power reform proceeding, liberalised as of January 2011 – The return for the new capacity is guaranteed. Capacity price is mainly
Slide 26: Actions going forward
Actions going forward Focus on performance – Organisational efficiency – Nuclear availability – Value creation from Russian investments Prepare for growth – Prioritised value enhancing acquisitions while maintaining strong balance sheet – Investigating high-growth Asian markets Create strategic part
Slide 27: Outlook
Outlook • Key drivers and risks – Wholesale price of electricity • Fuels • CO2 emissions prices • Water reservoirs • Nuclear availability • Nordic Markets – Market continues to recover – 2008 level to be reached by 2012-2014 – Electricity continues to gain share of total energy consumption • Russia
Slide 28: Outlook
Outlook • Capex (excluding potential acquisitions) – 2011-2012 around EUR 1.6 to 1.8 billion (mainly due to Russian investment programme) – 2013-2014 around EUR 1.1 to 1.4 billion – Disclosed divestments totalled approximately EUR 0.5 billion in Q1 • Hedging – 2011 approximately 70% hedge ratio at a
Slide 29: Q&A Conference call
Q&A Conference call 28.4.2011 29