Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Q3 2010 Earnings Presentation
30 slides from Fortum Oyj's earnings presentation, Oct 21, 2010
Slide 1: Fortum Corporation Interim report January-September 2010
Fortum Corporation Interim report January-September 2010 21 October 2010
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: Key events and highlights
Key events and highlights • Strategy development and financial targets • Improved business environment • Solid performance continued • 87% (92%) of the power generated by Fortum in the EU CO2-free 3
Slide 4: Fortum's Mission and Strategy
Fortum’s Mission and Strategy Mission Fortum’s purpose is to create energy that improves life for present and future generations. We provide sustainable solutions that fulfill the needs for low emissions, resource efficiency and energy supply security, and deliver excellent value to our shareholders
Slide 5: Strategy builds on our competences and industry beliefs
Strategy builds on our competences and industry beliefs Two strong Competitiveness Integrating European More attractive platforms for key for long term energy markets and growth prospects growth value creation a gradual decrease in power and heat in the weight of the generation Nordic power price •
Slide 6: Improved business environment
Improved business environment • Nordic power consumption up by 3% in the third quarter – Power consumption in the Nordic countries 388 TWh in last twelve months, 397 TWh in 2008 (pre-recession) • Russian power consumption increased by about 5% in the third quarter – Electricity spot price in Russia
Slide 7: Solid performance continued
Solid performance continued • Comparable operating profit, EUR 1,292 (1,318) million – Lower hydro volumes in Power – Improvement in Russia, Distribution and Heat – SEK translation effect EUR +70 million • Earnings per share EUR 1.20 (1.02) – Non-recurring items EUR 86 (21) million • Net cash from o
Slide 8: Solid performance, room to improve
Solid performance, room to improve Comparable operating profit, EUR million 1318 -101 -1 1292 34 -3 19 26 Power Electricity I-III/2009 Heat Distribution Russia Other I-III/2010 Sales 8
Slide 9: Increased power consumption
Increased power consumption Chelyabinsk Urals area Russia Tyumen Denmark Sweden Russia Norway Finland Nordic 15% 15% 10% 10% 5% 5% 0% 0% -5% -5% -10% -10% Q4 2009 vs Q4 2008 Q4 2009 vs Q4 2008 Q1 2010 vs Q1 2009 Q1 2010 vs Q1 2009 -15% -15% Q2 2010 vs Q2 2009 Q2 2010 vs Q2 2009 Q3 2010 vs Q3 2009 Q3
Slide 10: Nordic water reservoirs below normal
Nordic water reservoirs below normal 120 100 reservoir content (TWh) 80 60 40 20 2003 2008 2009 2010 reference level 0 Q1 Q2 Q3 Q4 Source: Nord Pool 10
Slide 11: Commodity prices
Commodity prices Crude oil price (ICE Brent) CO2 price (NP EUA) 160 35 140 Q1-Q3 average: 30 Q1-Q3 average: 120 78 (58) 14 (14) 25 EUR / tCO2 USD / bbl 100 20 80 60 15 40 10 20 5 0 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Coal price (ICE Rotterdam) Gas price (ICE NBP) 240 100 Q1-Q3 averag
Slide 12: Price development in the Nordic region and Russia
Price development in the Nordic region and Russia Spot price for power in Nord Pool power exchange Spot price for power (market price), Urals hub EUR/MWh RUB/MWh 59.5 1 200 60 +47% +47% +34% +34% 45.0 46.0 1 000 936 50 817 700 693 770 36.6 800 40 31.3 30 600 20 400 10 200 0 0 Q3/2009 Q4/2009 Q1/2010
Slide 13: Financials
Financials
Slide 14: Power
Power • Continued work in Swedish associated nuclear companies • Lower achieved Nordic power price MEUR I-III/2010 I-III/2009 LTM Sales 1 950 1 868 2 613 Comparable operating profit 962 1 063 1 353 Net Assets 5 818 5 516 Comparable RONA, % 23.3 Gross Investments 87 120 120 14
Slide 15: Heat
Heat • Higher heat and power volumes • CHP plants in Częstochowa, Poland and Pärnu, Estonia inaugurated; commercial operation will begin during Q4/2010 MEUR I-III/2010 I-III/2009 LTM Sales 1 172 941 1 630 Comparable operating profit 153 127 257 Net Assets 4 021 3 655 Comparable RONA, % 7.6 Gross Inv
Slide 16: Distribution
Distribution • Higher volumes • Stronger SEK • Smart metering pilot rollout to network customers in Finland started in Q4/2010 MEUR I-III/2010 I-III/2009 LTM Sales 676 573 903 Comparable operating profit 216 182 296 Net Assets 3 560 3 248 Comparable RONA, % 9.1 Gross Investments 127 130 190 16
Slide 17: Electricity Sales
Electricity Sales • Improvement in the third quarter comparable operating profit • Restructuring of the Business Market segment will affect the sales volume from Q4/2010 onwards MEUR I-III/2010 I-III/2009 LTM Sales 1 269 1 039 1 679 Comparable operating profit 8 11 19 Net Assets 55 46 Comparable RON
Slide 18: Russia
Russia • Higher spot prices • Lower capacity prices for “old” capacity • Accelerated investment programme MEUR I-III/2010 I-III/2009 LTM Sales 550 435 747 Comparable operating profit -9 -28 -1 Net Assets 2 522 2 112 Comparable RONA, % 1.0 Gross Investments 342 120 440 18
Slide 19: Comparable and reported operating profit
Comparable and reported operating profit Comparable operating Reported operating Comparable operating Reported operating MEUR profit profit profit profit III/2010 III/2009 III/2010 III/2009 I-III/2010 I-III/2009 I-III/2010 I-III/2009 Power 267 308 256 297 962 1 063 1 003 1 036 Heat -12 -13 -15 -11 1
Slide 20: Income statement
Income statement MEUR III/2010 III/2009 I-III/2010 I-III/2009 2009 LTM Sales 1 152 1 046 4 394 3 872 5 435 5 957 Expenses -840 -760 -3 007 -2 612 -3 653 -4 048 Operating profit 312 286 1 387 1 260 1 782 1 909 Share of profit of associates and jv's 10 3 41 -1 21 63 Financial expenses, net -37 -47 -98
Slide 21: Cash flow statement
Cash flow statement MEUR III/2010 III/2009 I-III/2010 I-III/2009 2009 LTM Operating profit before depreciations 452 414 1 803 1 634 2 292 2 461 Non-cash flow items and divesting activities -25 31 -98 50 46 -102 Financial items and fx gains/losses -126 -51 -449 248 146 -551 Taxes -93 -74 -248 -205 -2
Slide 22: Key ratios
Key ratios MEUR LTM LTM 2009 in Q3 ‘10 in Q2 ‘10 EBITDA 2 461 2 423 2 292 Net cash flow from operations 1 612 1 681 2 264 Interest-bearing net debt 6 608 6 506 5 969 Equity 8 736 8 662 8 491 Balance sheet total 21 202 20 606 19 841 Net debt/EBITDA 2.7 2.7 2.6 Return on capital employed (%) 12.9 12.8
Slide 23: Debt maturity profile
Debt maturity profile 1500 MEUR 2010 827 1250 2011 317 1000 2012 558 2013 591 750 2014 1.199 2015 1.073 500 2016 865 2017 228 250 2018 81 2019 845 0 2020+ 1.004 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020+ Bonds Financial institutions Other long-term debt CPs Other short-term debt per 30
Slide 24: Outlook
Outlook
Slide 25: Fuel and CO2 allowance prices
Fuel and CO2 allowance prices Crude oil price (ICE Brent) CO2 price (NP EUA) 160 35 140 30 120 25 EUR / tCO2 USD / bbl 100 20 80 60 15 40 10 20 5 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Coal price (ICE Rotterdam) Gas price (ICE NBP) 240 100 200 80 GBp / therm 160 60 USD / t 1
Slide 26: Nord Pool year forwards
Nord Pool year forwards €/MWh Year 07 Year 08 Year 09 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 18 October 2010 75 70 65 60 55 50 45 40 35 30 Forwards in mid-October 2010: 25 20 • rest of 2010 ~ 51 EUR/MWh 15 • 2011 ~ 45 EUR/MWh 10 • 2012 ~ 42 EUR/MWh 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 27: Hedging of Power Division's Nordic sales
Hedging of Power Division's Nordic sales Status at the end of September 2010 (Status at the end of June 2010) Hedge ratio Hedge price rest of 2010 ~ 80% ~ EUR 45 per MWh (~80%) (~ EUR 44 per MWh) 2011 ~ 70% ~ EUR 44 per MWh (~60%) (~ EUR 44 per MWh) 2012 ~ 35% ~ EUR 43 per MWh (n/a) (n/a) 27
Slide 28: Estimated start of supply for new power and heat plants
Estimated start of supply for new power and heat plants Capacity Capacity Supply Type electricity, MW heat, MW starts* Heat Częstochowa, Poland CHP bio, coal 64 120 Q4/2010 Pärnu, Estonia CHP bio, peat 24 50 Q4/2010 Power Hydro refurbishment Hydropower 20-30 2010 Russia Tyumen 1 CCGT, gas 231 Q1/201
Slide 29: Fortum in a strong position
Fortum in a strong position • Strategy developed • Solid performance continued • Flexible, cost-efficient and climate-benign generation portfolio • Russian power reform proceeding • Nordic power demand recovering further • Strong financial position and liquidity 29
Slide 30: @Fortum
@Fortum