Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Non-Deal Roadshow (November 2001)
28 slides from Fortum Oyj's roadshow presentation, November 2001
Slide 1: Fortum: Focused Nordic Energy Strategy
Fortum Focused Nordic Energy Strategy 1
Slide 2: Overview of Fortum
Overview of Fortum l Leading Nordic energy company - utility and oil businesses l Sales of €11.6 Bn and operating profit of €1.2 Bn (1)(2) l Founded in 1998 from merger of IVO Group and Neste Group l Privatised with IPO in 1998 – Now largest quoted Nordic utility - market capitalisation of €4.2 Bn l
Slide 3: Key Strengths
Key Strengths l One of the largest Nordic utilities – Balance of power and heat generation, distribution and supply services – Also strong niche player in Refining & Marketing with high quality asset base l Strong growth potential – Generation portfolio positioned to benefit from rising Nordic elect
Slide 4: Leading Nordic Player in Core Businesses
Leading Nordic Player in Core Businesses Fortum’s Nordic Market l Fortum is a leading Positions(1) Nordic player in all key Nordic energy businesses Generation #2 l Birka acquisition Distribution #2 strengthens all Fortum’s core Power Markets #2 and Heat businesses District Heat #1 Refining & Market
Slide 5: Leading Nordic Energy Company
Leading Nordic Energy Company l Increased profitability and growth of Power & Heat activities 2000 Operating Profit Last Twelve Months Operating Profit (1)(2) (50% Birka Energi) (1) (pro-forma for 100% Birka Energi) Power & Heat Power 36% & Heat 50% Oil Oil 50% 64% 1) Operating profit including capi
Slide 6: Nordic Region: Attractive Investment Proposition
Nordic Region: Attractive Investment Proposition NordPool Spot Prices Nordic Supply/Demand Trends €/MWh MW 1996 1997 1998 1999 2000 2001 Production Capacity 90,000 45 Peak Power + Reserve Demand 40 80,000 35 30 70,000 25 60,000 20 15 50,000 10 5 40,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 7: Power & Heat
Power & Heat l 12,100 MW electricity l 1.4 million distribution generation capacity customers l 59 TWh output l 8,400 MW heat capacity l Industrial and commercial supply l 1.4 million retail customers Operating statistics as of Q3 2001, pro-forma for 100% of Birka Energi 7
Slide 8: Oil
Oil Retail l 1,000 outlets Refining and Marketing (60% unmanned) l 14 million tonnes/year l State-of-the-art refineries Exploration & Production l 40,000 boe/day Operating statistics as of Q3 2001, 2001 pro-forma for 100% of Birka Energi 8
Slide 9: Oil Refining & Marketing
Oil Refining & Marketing Superior Margins l Market leader in refining and marketing of high-quality, pro- $/bbl environmental petroleum 6 products in the Baltic Rim 5 l Gasolines and diesel fuels fulfill the tightest EU 4 requirements 3 l Own technology for production of gasoline components 2 l Tank
Slide 10: Fortum Performance & Ownership
Fortum Performance & Ownership Outperforming the Sector Ownership Structure € per share 6.00 Domestic Households Domestic 5.6% Domestic Others Financial and 3.3% Insurance 5.00 Institutions 8.9% International 5.5% 4.00 Treasury Stock 6.0% Finnish State 3.00 70.7% 10-Nov-2000 09-Mar-2001 06-Jul-2001
Slide 11: Strategy
11 Strategy Fortum
Slide 12: Fortum's Nordic Energy Strategy
Fortum’s Nordic Energy Strategy Fortum focuses on the Nordic energy market creating a platform for long-term sustainable growth Create the Develop a Leverage our leading power leading refining customer base company company with through focus on clean innovative fuels and branding and premium focused
Slide 13: Fortum's Nordic Energy Strategy
Fortum’s Nordic Energy Strategy l Focus on developing balanced utility businesses across Nordic region, building on current activities in Finland and Sweden l Focus on creating value from a niche position in Refining and Marketing – Participation in industry consolidation l Divest non-core utility a
Slide 14: Implementing Our Strategy
Implementing Our Strategy l Over €2 Bn of proceeds realized from assets sale l Important steps for ongoing repositioning of Fortum July 1999 September 2000 May 2001 November 2001 Sale of Merger with Sale of Full Acquisition of Enermet Länsivoima Humber Birka Energi May 1999 October 1999 June 2001 Ju
Slide 15: Birka Transaction Highlights
Birka Transaction Highlights l Fortum acquires all of Birka Energi l €1.5 Bn (SEK14.5 Bn) cash consideration Fortum l City retains 50% economic interest in Birka Värme (Heat Business) and continues successful partnership with Fortum City of Birka l Expected close Q1 2002 Stockholm l Acquisition fina
Slide 16: Birka: Third Largest Swedish Utility
Birka: Third Largest Swedish Utility Birka Energi Generation Heat Networks Other and Sales Net Turnover (%)(1) Share of 32% 31% 30% 7% 1) Based on Birka Energi net turnover for 12 months to 30 September, 2001 16
Slide 17: Strong Strategic Logic for Acquisition
Strong Strategic Logic for Acquisition l A key step in delivering Fortum’s Nordic energy strategy – Management focused on creating value in core businesses l Builds scale and critical mass in Nordic power business – Strong position in all key segments l Enables benefits from merging operations – Sig
Slide 18: Leading Nordic Power Generator
Leading Nordic Power Generator Nordic Generators Fortum Low Cost Portfolio Fortum Generation Fuel Split TWh Fortum Birka (Pro-forma for 100% Birka Energi) 200 Other 160 4% Hydro Thermal 38% 120 31% 80 40 Nuclear 27% 0 Vattenfall Fortum & Statkraft Sydkraft Other Birka Source: Company Reports Source:
Slide 19: Leading Nordic Electricity Retailer
Leading Nordic Electricity Retailer Nordic Electricity Customers l 0.8 million Swedish and 2,000 Fortum Birka 0.4 million Finnish 1,600 customers 1,230 1,200 l 10% Nordic market share 800 l Retail customers provide 400 additional hedge for 0 generation Vattenfall Fortum Sydkraft Hafslund BKK & Birka
Slide 20: Leader in Nordic Heat Sector
Leader in Nordic Heat Sector Nordic District Heating Market Share l Fortum is #1 Nordic 15 generator and supplier of 12% district heat 10 l Birka heating network in Sweden serves 6,800 customers mainly in 5 Stockholm area l Stable heat and distribution revenues improve earnings 0 Fortum Helsingin Kø
Slide 21: Significant Distribution Player in Finland and Sweden
Significant Distribution Player in Finland and Sweden l Acquisition adds Birka’s network operations, delivering 30 TWh of electricity l 900,000 distribution connections in Sweden and 280,000 in Finland l Fortum connects 9% of Nordic electricity customers 21
Slide 22: Financial Impact
Financial Impact l Expected cash flow and earnings enhancement post- goodwill amortisation in 2003 l Pro-forma Fortum LTM EBITDA: +18% (1) l Pro forma EBITDA interest cover: ~4.8x (1) l Pro forma gearing: ~107% (2) l ~€375 million of goodwill, amortised over 20 years 1) 12 months to 30 September, 20
Slide 23: Financials
Financials Fortum
Slide 24: Fortum Income Statement
Fortum Income Statement Revenues(1) EBITDA(1) (2) EBIT(1) (2) € MM € MM € MM 14,000 2,000 1,400 23 1,800 12,000 66 1,200 95 1,600 10,000 1,400 830 1,000 597 1,200 8,000 158 800 1,666 1,012 832 8,511 1,000 195 90 8,292 600 6,000 478 600 800 114 331 264 5,007 5,352 600 400 117 4,000 1,030 400 591 651
Slide 25: Fortum Balance Sheet
Fortum Balance Sheet Fortum (€ billion) Fortum Birka (50%) Adjustments (1) Pro Forma (2) As of 30 September 2001 l Net Financial Debt 3.8 1.5 1.8 7.1 l Shareholders’ Equity 5.2 1.3 (1.3) 5.2 l Total Assets 13.8 3.7 0.6 18.2 (3) l Gearing 58% 117% - 107% (4) l Adjusted Gearing 95% - - 155% 1) Birka T
Slide 26: Financing Strategy
Financing Strategy l Birka acquisition financed through bank credit lines l Objectives of putting in place long-term capital structure l €1 billion from sales of existing assets l Possible access to capital markets in due course 26
Slide 27: Next Steps
27 Next Steps Fortum
Slide 28: Next Steps
Next Steps l Commitment to value creation through further restructuring l Ongoing focus on improving business performance l Achieve full synergies and cost savings potential from Birka acquisition l Divestments in progress – UK power assets – Omani exploration and production assets l Announced inten