Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Non-Deal Roadshow (March 2003)
39 slides from Fortum Oyj's roadshow presentation, March 2003
Slide 1: A leading energy company in the Nordic area – Investor Meetings March 2003
– a leading energy company in the Nordic area Investor Meetings March 2003
Slide 2: Overview of Fortum
Overview of Fortum n Second largest Nordic generator and supplier of power n The leading provider of district heating in Finland and Sweden n The leading Nordic refiner of clean traffic fuels n Total assets EUR 18 billion n Privatised in 1998 • Market capitalisation EUR 5 billion • Share price incre
Slide 3: Strategy and Markets
906 914 Strategy and Markets 705 586 March 2003 3
Slide 4: Fortum's strategy
Fortum’s strategy Fortum focuses on the Nordic energy market creating a platform for long-term profitable growth Create the Become the Strengthen leading most attractive position as the power and heat energy supplier leading clean company fuels refining company Excel in business performance March 20
Slide 5: Consolidation proceeds in the European electricity markets
Consolidation proceeds in the European electricity markets Liberalization of the European markets is driving industry consolidation which is led by the major electricity groups. Significant activity March 2003 5
Slide 6: The European majors have huge potential for further industry consolidation
The European majors have huge potential for further industry consolidation Potential headroom, €bn ~60 Free cash flow 5 Balance sheet headroom 20 ~36 (1) ~23 26 1 Disposals 35 ~13 ~12 16 1 7 8 10 6 (1) 5 5 E.ON RWE Enel Suez Endesa Source: Morgan Stanley March 2003 6
Slide 7: The majors have strong presence
The majors have strong presence Production EU/Nordic Electricity customers, Europe TWh/a Millions EdF EdF E.ON* ENEL E.ON* Enel RWE** RWE Endesa Vattenfall** Iberdrola Electrabel Vattenfall Endesa Centrica British Southern Energy Electrabel Fortum Scottish Power Iberdrola Fortum EnBW Hafslund Statkr
Slide 8: The Nordic market is very fragmented
The Nordic market is very fragmented Production in 2001, TWh 523 356 387 23 145*) 85 499 80 68*) 29*) 66*) 60 213 68*) 262 42 Share of largest players in 2000 (*1999): 1st 1-3 1-5 all Source: EU report 3 Dec 2001, Yritystieto, Eurprog 2001 March 2003 8
Slide 9: Integrated Nordic Power Market
Integrated Nordic Power Market Power Flows to and from Nordic Market (2002, GWh) – Total electricity demand in the 200 Nordic countries approximately 386 TWh in 2002 – Nordic electricity prices lowest in SWEDEN Europe FINLAND – Only 4%-6% of total current electricity demand can be NORWAY 7,900 impor
Slide 10: Development in supply and demand
Development in supply and demand Nordic supply/demand trends TWh/a 500 n New capacity will be required 400 n Efficient use of resources should be prioritized 300 n Incentives for investments both in supply and demand 200 100 Prices should be market- 0 based 1990 2000 2010E 2020E Other/undefined Peat
Slide 11: Supply – investments in production capacity
Supply – investments in production capacity EUR/MWh 60 n Investments are based on rational reasons 50 n This is why price signals are required 40 n New base-load capacity Investments to new base-load capacity require requires a price level of 30-35 30 a price level of 30-35 EUR/MWh for the longterm
Slide 12: Demand – increased commitment
Demand – increased commitment EUR/MWh 500 n Price signals drive demand side behaviour also 400 n Price peaks encourage Cost of new peak power capacity –100 EUR/MWh ++ customers to adjust their consumption 300 200 100 0 2001 2002 March 2003 12
Slide 13: Consistency and determination
Consistency and determination 9 billion worth of restructuring 2000-2003 Rearrangement of Power Plant Engineering Focus on core Norwegian E&P assets Transmission businesses and the Stora Enso power assets Engineering Nordic area Hafslund ASA Østfold Merger of Shares in Espoon Sähkö Fredrikstads Läns
Slide 14: Strategic breakthrough, January 2003
Strategic breakthrough, January 2003 Neste Länsivoima • Fortum and E.ON AG agreed on a swap of power assets with Kraft IVO an aggregate value of EUR 770 million. • The values of assets Fortum to be acquired and sold are EUR 460 and 310 million respectively, leading to a balancing Birka consideration
Slide 15: Strengthened presence as a leading Pan-Nordic power and heat company
Strengthened presence as a leading Pan- Nordic power and heat company Population in key geographic markets Million 3 1 2 7 March 2003 15
Slide 16: North-west European refineries in 2001
North-west European refineries in 2001 Fortum Shell Esso Statoil 20 10 Preem 11 Millíon tonnes 10 89 5 3 99 23 1 4 5 12 4 5 1 96 110 14 0 11 4 5 5 9 4 March 2003 16
Slide 17: Opportunity for deeper cooperation with Russian oil industry
Opportunity for deeper cooperation with Russian oil industry • Crude oils & feedstocks from Russia • Refining at Porvoo and Naantali • Products for western/global markets March 2003 17
Slide 18: Leading market positions in the Nordic area
Leading market positions in the Nordic area Nro 1 Nro 2 Power Heat generation Retail sales of Oil electricity and refining heating oil Electricity distribution March 2003 18
Slide 19: A major Nordic energy player
A major Nordic energy player EBIT Net assets Power & Heat Oil Oil Power & Heat Net sales Oil Power & Heat Based on pro forma figures for 2002, after the sale of Norwegian E&P assets March 2003 19
Slide 20: 2002: Major strategic moves, significant increase in earnings
Year906 2002: 914 Major strategic moves, 705 significant increase in earnings 586 March 2003 20
Slide 21: Significant structural changes
Significant structural changes Major investments • Acquisition of remaining 50% of • Birka Energi, EUR 3.6 billion • Elnova, EUR 80 million 906 914 Major divestments 705 • 586 Interests in oil fields in Oman EUR 180 million • Agreement on Norwegian E&P assets EUR 1.1 billion • Stake in Espoon Sähkö
Slide 22: Substantially increased earnings
Substantially increased earnings Profit before taxes up by 44%: EUR 1,008 (702) million Earnings per share up by 39%: EUR 0.79 (0.57) Net cash from operating activities 906 EUR914 1,351 (1,145) million 705 ROCE 11.1% (8.7%), ROE 10.5% (8.3) 586 Net debt decreased during Q2 - Q4 EUR 1,265 million. è
Slide 23: Income statement
Income statement MEUR 2002 2001 Net sales 11 148 10 410 Expenses -9 859 -9 496 Operating profit 1 289 914 Financial expenses, net -281 -212 Profit before taxes 1 008 702 Income taxes total -269 -160 Minority interests -73 -83 Net profit for the period 666 459 EPS (EUR) 0.79 0.57 March 2003 23
Slide 24: Cash flow statement
Cash flow statement MEUR 2002 2001 Net cash from operating activities 1 351 1 145 Capital expenditures -2 420 -708 Proceeds from sales of fixed assets 1 009 438 Change in other investm ents 33 -31 Cash flow before financing activities -27 844 Net change in loans 209 -643 Dividends paid -220 -183 Oth
Slide 25: Key ratios
Key ratios 2 002 2001 Capital employed (at the end of the period) EUR mill. 13 765 11 032 Interest-bearing net debt (at the end of the period), EUR mill. 5 846 3 674 Investments, EUR mill. 4 381 713 Cash flow before financing activities, EUR mill. -27 844 Return on capital employed, % 11.1 8.7 Retur
Slide 26: Earnings per share, Dividend per share
Earnings per share Dividend per share 0.31 *) 0.79 EUR 0.26 0.57 0.23 EUR 0.55 0.41 0.18 1999 2000 2001 2002 1999 2000 2001 2002 *) proposed by the Board March 2003 26
Slide 27: Price and margin development
906 914 Price 705 and margin development 586 March 2003 27
Slide 28: Water and snow reservoirs in Norway and Sweden
Water & s now r es er voir s in Nor w ay & Sw eden, w eek 9/2003 13 0 12 0 reservoir content [TWh] 110 10 0 90 80 70 60 50 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 19 9 6 2000 2001 2002 2003 reference level March 2003 28
Slide 29: Nord Pool System Spot Price
Nord Pool System Spot Price 120 100 Daily Average Price EUR/MWh 80 47,71 EUR/MWh March 6, 2003 60 40 20 0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 2001 2002 2003 March 2003 29
Slide 30: Nordic Power Market Prices
Weekly Average Price EUR/MWh 0 20 40 60 80 100 120 1/1994 1/1995 1/1996 1/1997 1/1998 53/1998 March 2003 52/1999 Futures Prices 05-03-2003 52/2000 30 52/2001 Nordic Power Market Prices 52/2002 Actual System Price 52/2003 52/2004 51/2005 51/2006
Slide 31: Nord Pool Year Forwards
Nord Pool Year Forwards Year 2003 Year 2004 Year 2005 Year 2006 250 240 Year 2003: Last quotation 230 at 380 NOK/MWh 220 210 NOK/MWh 200 190 180 170 160 150 1.10.2002 1.11.2002 1.12.2002 1.1.2002 1.2.2002 1.3.2002 1.4.2002 1.5.2002 1.6.2002 1.7.2002 1.8.2002 1.9.2002 1.1.2003 1.2.2003 1.3.2003 March
Slide 32: Refining margins in North West Europe
Refining margins in North West Europe monthly averages USD/barrel 6,0 4,0 2,0 0,0 -2,0 1995 1996 1997 1998 1999 2000 2001 2002 2003 Average refinery in North West Europe Product prices: cargoes NWE FOB March 2003 32
Slide 33: Brent Complex refining margin
Brent Complex refining margin yearly averages USD/bbl 6 5 4 3 2 1 0 1995 1996 1997 1998 1999 2000 2001 2002 Fortum margin International margin March 2003 33
Slide 34: Quotation of Fortum shares
Quotation of Fortum shares Daily closing values from 1999 7,00 28.02.2003 6,50 6,00 5,50 Euro 5,00 4,50 4,00 3,50 3,00 1/99 7/99 1/00 7/00 1/01 7/01 1/02 7/02 March 2003 34
Slide 35: Fortum share price and Dow Jones STOXX utilities index
Fortum share price and Dow Jones STOXX 600 utilities index weekly averages of closing values, week 1/ 2001 = 100 1,6 1,5 1,4 1,3 1,2 1,1 1 0,9 0,8 0,7 0,6 05.01.2001 05.07.2001 05.01.2002 05.07.2002 05.01.2003 Fortum euro Dow Jones index March 2003 35
Slide 36: Number of Fortum shares traded
Number of Fortum shares traded (millions shares/day, weekly average) 5 14 M 4 3 2 1 0 12/98 06/99 12/99 06/00 12/00 06/01 12/01 06/02 12/02 March 2003 36
Slide 37: Shareholders as of 31 December 2002
Shareholders as of 31. December 2002 Households 5.6 % Financial and insurance institutions 3.5 % Other Finnish investors 9.8 % International investors 20.3 % Finnish State 60.8 % n Market capitalisation EUR 5.3 billion n More than 50,000 shareholders n Listed on the Helsinki stock exchange March 200
Slide 38: IR Calendar for 2003
IR Calender for 2003 n Annual Report week 12 n Annual General Meeting 27 March n Capital Markets Day May (tbc) n Q1 results 24 April n Q2 results 24 July n Q3 results 23 October March 2003 38
Slide 39: 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. March 2003 39