Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Investor Day (November 2014)
13 slides from Fortum Oyj's investor day presentation, Nov 5, 2014
Slide 1: Operational efficiency in focus
Operational efficiency in focus Capital Markets Day 5 November 2014 Matti Ruotsala, COO 1
Slide 2: Agenda
Agenda • Some market aspects • Fortum is prepared also for demanding markets • Industrial excellence – Example hydro • Fleet value enhancement • Summary 2
Slide 3: Market outlook remains flat
Market outlook remains flat The power market opportunity shifts from volume to price volatility Nord Pool electricity price €/MWh 60 Market forwards for • Electricity price scenario in the 55 SYS (mid-Oct) SYS spot price Nordics is flattish 50 Area spot price* – Moderate demand growth on average 45
Slide 4: Wholesale electricity prices are too low to attract investments
Wholesale electricity prices are too low to attract investments: Nearly all new investments in Europe are based on subsidies Annual wholesale electricity prices in €/MWh the Nordics and Germany €/MWh Average levelized cost of new electricity 70 90 generation 80 60 70 50 60 50 40 40 30 30 20 20 10 10
Slide 5: Profitability of market-based generation deteriorated by weak demand, generous subsidies and low CO2 price
Profitability of market-based generation deteriorated by weak demand, generous subsidies and low CO2 price Case Germany: Current market conditions favor coal above gas Breakdown of German clean dark spread Breakdown of German clean spark spread €/MWh – margin on generation low €/MWh – margin on gene
Slide 6: Fortum is well prepared for a demanding operational environment
Fortum is well prepared for a demanding operational environment Nordic electricity price 1. Capture value of price movements 2. Operational excellence 3. Investment portfolio management Market forwards for SYS (mid-Oct) SYS spot price 6
Slide 7: Role of Chief Operating Officer - COO
Role of Chief Operating Officer - COO Industrial excellence – ability to add value – competitiveness CEO Tapio Kuula Chief Operating Officer Matti Ruotsala Hydro Power and Nuclear and Thermal Heat, Electricity Sales Power Russia Technology and Solutions Executive Vice President Executive Vice Presid
Slide 8: Value of flexible generation to increase
Value of flexible generation to increase Nordic spot price vs. Fortum’s achieved power price • Price volatility is increasing - especially 75 Achieved power in the physical markets 70 price Spot price, SE&FI 65 avg. • Intraday markets becoming increasingly 60 important value drivers 55 Euro/MWh • To
Slide 9: We are determined to keep the profits
We are determined to keep the profits Identified four key areas for where we focus our actions 1. Price volatility (both dips and peaks) – Physical and financial trading have increasingly become significant capacity optimization elements – Open district heating and smartly optimized heat systems – T
Slide 10: Increased flexibility, enhanced performance and improved safety
Increased flexibility, enhanced performance and improved safety Example - Hydro and trading business transformation Timeline of main actions 2010 2011 2012 2013 2014 Re-organisation in Restructuring real estate maintenance renewable energy and wind development Merging physical and financial trading
Slide 11: Investment targets - maximize profitability and enhance fleet flexibility
Investment targets - maximize profitability and enhance fleet flexibility PROJECT KPI’s • Investment projects are valuated based on various criteria, key issues for the decision: IRR% – Strategic fit NPV (M€) – Country / market growth potential – Technology Return IRR-WACC% Index – Flexibility – Pro
Slide 12: Summary
Summary • Performance, agile operations and flexible cost structure • Fast execution • Synergies throughout the divisions • Capture value in market volatility • Investments to support flexibility and optionality • Attractive and innovative customer solutions We are determined to keep the profits and
Slide 13: For more information, please visit
For more information, please visit www.fortum.com/investors