Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Q3 2011 Earnings Presentation
27 slides from Fortum Oyj's earnings presentation, Oct 20, 2011
Slide 1: Fortum Corporation Interim Report January-September 2011
Fortum Corporation Interim Report January-September 2011 20 October 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 Q3
Highlights in Q3 • Result on last year’s level • Increased hydro and nuclear volumes • Russian investment programme progressed as planned • Fortum was included as a sector leader in the Carbon Disclosure Leadership Index in September 3
Slide 4: Q3: Market conditions
Q3: Market conditions • Nordic water reservoirs increased and were above average levels at the end of the quarter • CO2 allowance prices decreased at the end of the quarter • Nordic spot prices clearly lower than last year • Russia power price (spot) at last year’s level 4
Slide 5: Nordic water reservoirs levels higher than long-term average
Nordic water reservoirs levels higher than long-term average 120 100 reservoir content (TWh) 80 60 40 20 2000 2003 2009 2010 2011 reference level 0 Q1 Q2 Q3 Q4 Source: Nord Pool Spot 5
Slide 6: Prices decreased in the Nordic region and Russia
Prices decreased 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 -22% 1 200 +0% 62,1 66,2 935 950 954 939 60 1 000 52,3 817 45,9 48 800 36,0 36 600 24 400 12 200 0 0 Q3/2010 Q4/2010 Q1/2011 Q2/2011
Slide 7: Results at last year's levels
Results at last year’s levels Q3 • Comparable operating profit, EUR 297 (302) million • Earnings per share EUR 0.23 (0.27) • Net cash from operating activities 277 (273) million January- September • Comparable operating profit, EUR 1,294 (1,292) million • Earnings per share EUR 1.52 (1.20) • Net cas
Slide 8: Q3: Comparable profit at last year's level
Q3: Comparable profit at last year’s level Comparable operating profit, EUR million 302 1 -2 0 1 -7 2 297 Q3/2010 Power Heat Russia Distribution Electricity Other Q3/2011 Sales 8
Slide 9: January-September: Stable comparable profit development
January-September: Stable comparable profit development Comparable operating profit, EUR million 1292 -112 30 17 -10 1294 48 29 Distribution Electricity I-III/2010 Power Heat Russia Other I-III/2011 Sales 9
Slide 10: Financials
Financials 10
Slide 11: Comparable and reported operating profit
Comparable and reported operating profit Comparable operating Reported operating Comparable operating Reported operating MEUR profit profit profit profit III/2011 III/2010 III/2011 III/2010 I-III/2011 I-III/2010 I-III/2011 I-III/2010 Power 268 267 273 256 850 962 1 033 1 003 Heat -14 -12 -10 -15 182
Slide 12: Q3: Power
Q3: Power Power • Comparable operating profit on last year’s level – Higher hydro and nuclear volumes – Lower achieved price MEUR III/2011 III/2010 I-III/2011 I-III/2010 LTM Sales 560 584 1 827 1 950 2 579 Comparable operating profit 268 267 850 962 1 186 Net Assets 5 956 5 818 Comparable RONA, % 19
Slide 13: Q3: Heat
Q3: Heat Heat • Comparable operating profit at last year’s level – Higher costs in Poland – Lower electricity price and sales volumes MEUR III/2011 III/2010 I-III/2011 I-III/2010 LTM Sales 212 220 1 259 1 172 1 857 Comparable operating profit -14 -12 182 153 304 Net Assets 3 934 4 021 Comparable RON
Slide 14: Q3: Russia
Q3: Russia Russia • Comparable operating profit on last year’s level – Positive effect from commissioning new capacity – Energy spot market prices at last year’s level – Higher fuel costs MEUR III/2011 III/2010 I-III/2011 I-III/2010 LTM Sales 156 137 646 550 900 Comparable operating profit -16 -16 3
Slide 15: Q3: Distribution
Q3: Distribution Distribution • Stable comparable operating profit – Somewhat lower volumes, efficiency improvements – Smart metering rollout to network customers in Finland proceeded MEUR III/2011 III/2010 I-III/2011 I-III/2010 LTM Sales 203 196 729 676 1 016 Comparable operating profit 62 61 246 2
Slide 16: Q3: Electricity Sales
Q3: Electricity Sales Markets • Comparable operating profit decreased – Lower margins MEUR III/2011 III/2010 I-III/2011 I-III/2010 LTM Sales 139 305 695 1 269 1 224 Comparable operating profit 4 11 25 8 28 Net Assets 43 55 Comparable RONA, % 30.5 Gross Investments 0 0 4 0 4 16
Slide 17: Q3: Income statement
Q3: Income statement MEUR III/2011 III/2010 I-III/2011 I-III/2010 2010 LTM Sales 1 144 1 152 4 494 4 394 6 296 6 396 Expenses -847 -850 -3 200 -3 102 -4 463 -4 561 Comparable operating profit 297 302 1 294 1 292 1 833 1 835 Items affecting comparability 17 10 529 95 -125 309 Operating profit 314 312
Slide 18: Q3: Cash flow statement
Q3: Cash flow statement MEUR III/2011 III/2010 I-II/2011 I-III/2010 2010 LTM Operating profit before depreciations 461 452 2 274 1 803 2 271 2 742 Non-cash flow items and divesting activities -31 -25 -600 -98 124 -378 Financial items and fx gains/losses 0 -126 -290 -449 -641 -482 Taxes -104 -93 -362
Slide 19: Key ratios
Key ratios MEUR LTM 2010 2009 Q3 ‘11 EBITDA 2 742 2 271 2 292 Comparable EBITDA 2 433 2 396 2 398 Interest-bearing net debt 6 929 6 826 5 969 Net debt/EBITDA 2.5 3.0 2.6 Comparable Net debt/EBITDA 2.8 2.8 2.5 Return on capital employed (%) 13.5 11.6 12.1 Return on shareholders' equity (%) 18.5 15.7
Slide 20: Debt Maturity Profile
Debt Maturity Profile MEUR 1750 2011 166 1500 2012 656 2013 633 1250 2014 1,266 1000 2015 1,041 750 2016 877 2017 267 500 2018 187 250 2019 882 2020 73 0 2021+ 1,566 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ Bonds Financial institutions Other long-term debt CPs Other short-term debt pe
Slide 21: Outlook
Outlook 21
Slide 22: Outlook
Outlook • Key drivers and risks – Wholesale price of electricity • Demand • Fuels • CO2 emissions prices • Water reservoirs • Nuclear availability • Nordic markets – Annual electricity demand growth estimated to be approximately 0.5% – Electricity continues to gain share of total energy consumption
Slide 23: Outlook
Outlook • Annual capex (excluding potential acquisitions) – 2011 around EUR 1.5 billion - disclosed divestments in 2011 totalled approximately EUR 0.5 billion – 2012 around EUR 1.6 to 1.8 billion – 2013 and 2014 around EUR 1.1 to 1.4 billion annually • Hedging – 2011 approximately 65% hedge ratio at
Slide 24: Strong financial position
Strong financial position Fortum’s financial targets LTM* in Q3/2011 Return on capital employed 12% 13.5% Return on shareholder's equity 14% 18.5% Net debt/EBITDA around 3.0 2.8** ** Last twelve months * Comparable net debt/EBITDA Good liquidity – committed credit lines total EUR 2.7 billion 24
Slide 25: Fortum's production structure creates a firm basis for the future
Fortum’s production structure creates a firm basis for the future • Strong financial position • Electricity will continue to gain a higher share of the total energy consumption • Good production portfolio going forward – Growth in Russia 25
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Slide 27: Wholesale prices for electricity
Wholesale prices for electricity EUR/MWh Spot prices Forward prices 110 100 90 80 70 Germany 60 50 Nordic 40 30 20 10 17 October 2011 0 2007 2008 2009 2010 2011 2012 2013 Source: 27