Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Q1 2009 Earnings Presentation
34 slides from Fortum Oyj's earnings presentation, Apr 28, 2009
Slide 1: Interim Report January - March 2009
Interim Report January - March 2009 28 April 2009
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: A strong start for the year
A strong start for the year • Good results – Challenging market conditions – Nordic year-on-year demand decline at the same level as in Q4/2008 • TGC-10 integration is proceeding in line with plans • 90% (90%) of the generated power in the EU CO2-free • Net debt decreased by EUR 545 million to EUR ~
Slide 4: Good results
Good results • Comparable operating profit EUR 602 (581) million, +4% – SEK translation effect EUR -50 million • Earnings per share EUR 0.46 (0.51) – Lower contribution from associates EUR -0.08 • Net cash from operating activities increased to EUR 822 (542) million Comparison: Q1/2008 financial res
Slide 5: Improvement in operational performance
Improvement in operational performance Comparable operating profit EUR million Higher achieved price, lower hydro and nuclear production in Power 24 -9 -6 8 5 -1 602 Generation 581 Heat – weaker SEK and PLN, and unavailability in Sweden Distribution – weaker SEK Markets – Improvement in sales margin
Slide 6: Nordic water reservoirs
Nordic water reservoirs 120 100 reservoir content (TWh) 80 60 40 20 2003 2007 2008 2009 reference level 0 1 5 9 13 17 21 25 29 33 37 41 45 49 week Source: Nord Pool 6
Slide 7: Price development in Nordic power and CO2
Price development in Nordic Nord Pool power price • Nord Pool wholesale price in: EUR/MWh 80 – Q1 remained stable at 38.2 EUR/MWh 70 60 (38.0 EUR/MWh) 50 40 30 20 10 • Power Generation's achieved Nordic power price in: 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2003
Slide 8: Segments
SEGMENTS 8
Slide 9: Power Generation
Power Generation Segment's power generation in the Nordic countries (TWh) 14 13.2 12.1 12 • Lower hydro volume, -0.6 TWh 10 • Lower nuclear volume, -0.5 TWh 8 6 • CO2-free production of the segment 98% 4 2 0 I/2009 I/2008 Hydro Nuclear Condensing 9
Slide 10: Power Generation
Power Generation • Higher achieved Nordic power price • Lower volumes • Weaker SEK MEUR I/2009 I/2008 LTM Sales 705 717 2 880 Comparable operating profit 419 395 1 552 Net Assets 5 392 5 633 Comparable RONA, % 28.7 Gross Investments 52 18 168 10
Slide 11: Heat
Heat Heat sales by area (TWh) 10 9.4 9.2 9 • New plant in Tartu, Estonia into 8 commercial use 7 6 • 5 Investments in CHP plants ongoing: 4 - Suomenoja, Finland (2009) 3 - Częstochowa, Poland (2010) 2 - Pärnu, Estonia (2010) 1 0 I/2009 I/2008 Finland Sweden Poland Other countries 11
Slide 12: Heat
Heat • Weaker currencies and unavailability in Sweden MEUR I/2009 I/2008 LTM Sales 513 493 1 486 Comparable operating profit 112 121 241 Net Assets 3 484 3 617 Comparable RONA, % 7.0 Gross Investments 70 112 389 12
Slide 13: Distribution
Distribution Fortum's distributed electricity by area (TWh) 9 8.2 7.9 8 7 • Stable business 6 • The installation of automatic 5 meters in Sweden continues, 4 ~820,000 meters already installed 3 2 1 0 I/2009 I/2008 Sweden Finland Norway Estonia 13
Slide 14: Distribution
Distribution • Weaker SEK MEUR I/2009 I/2008 LTM Sales 229 232 786 Comparable operating profit 81 87 242 Net Assets 3 090 3 332 Comparable RONA, % 7.9 Gross Investments 36 61 271 14
Slide 15: Markets
Markets • Improved sales margin through restructuring MEUR I/2009 I/2008 LTM Sales 469 519 1 872 Comparable operating profit -2 -10 -25 Net Assets 128 169 Comparable RONA, % -12.4 Gross Investments 1 1 3 15
Slide 16: Russia
Russia Segment's power and heat generation* • Power sector reform proceeds: Competitive market (TWh) 30% from 1 January 2009, 16 50% from 1 July 2009 14 12 • Integration proceeds as planned 10 8 • 2/3 of the volumes sold in Tyumen and 6 4 other oil and gas producing areas 2 • Demand increase in Tyum
Slide 17: Price development in Russia
Price development in Russia Key electricity, capacity and gas prices for TGC-10 I/2009 I/2008 Change, % Electricity spot price (market price), Urals hub, RUB/MWh 535 705 -24 Average regulated electricity price for TGC-10, RUB/MWh 541 479 +13 Average regulated capacity price, RUB/MW/month 189,500 157
Slide 18: Russia
Russia • Challenging market conditions • EBITDA EUR 24 million • TGC-10’s comparable stand-alone operating profit EUR 18 million, same level as last year MEUR I/2009 I/2008* LTM Sales 184 - 673 Comparable operating profit 5 - -87 Net Assets 2 000 2 264 Comparable RONA, % -3.0 Gross Investments 21 1
Slide 19: Financials
FINANCIALS 19
Slide 20: Income statement
Income statement MEUR I/2009 I/2008 2008 LTM Sales 1 632 1 440 5 636 5 828 Expenses -1 033 -831 -3 673 -3 875 Operating profit 599 609 1 963 1 953 Share of profit of associates and jv's -33 34 126 59 Financial expenses, net -32 -45 -239 -226 Profit before taxes 534 598 1 850 1 786 Income tax expense
Slide 21: Cash flow statement
Cash flow statement MEUR I/2009 I/2008 2008 LTM Operating profit before depreciations 721 720 2 478 2 479 Non-cash flow items and divesting activities 1 -37 -275 -237 Financial items and taxes 125 -122 -99 148 Funds from operations (FFO) 847 561 2 104 2 390 Change in working capital -25 -19 -102 -10
Slide 22: Comparable and reported operating profit
Comparable and reported operating profit Operating profit I/2009 Operating profit I/2008 Comparable Reported Comparable Reported Power Generation 419 423 395 431 Heat 112 113 121 130 Distribution 81 81 87 86 Markets -2 -11 -10 -20 Russia 5 5 - - Other -13 -12 -12 -18 Total 602 599 581 609 22
Slide 23: Currency translation effects
Currency translation effects Effects on comparable operating profit in Q1/2009 compared to Q1/2008 I/2009 SEK Other Total Power Generation -33 -2 -35 Heat -10 -2 -12 Distribution -7 -1 -8 Markets 0 0 0 Russia 0 -2 -2 Other 0 0 0 Total -50 -7 -57 Average rates: Q1/2009 Q1/2008 SEK 10.968 9.426 RUB 44
Slide 24: Key ratios
Key ratios MEUR LTM 2008 2007 in Q1 '09 EBITDA 2 479 2 478 2 298 Cash flow from operations 2 282 2 002 1 670 Interest-bearing net debt 5 634 6 179 4 466 Equity 8 729 8 411 8 651 Balance sheet total 21 709 20 278 17 674 Net debt/EBITDA* 2.3 2.5 2.2 Return on capital employed (%)* 12.6 15.0 14.0 Retur
Slide 25: IFRS technique for impairment testing
IFRS technique for impairment testing Book value incl. surplus Present value of value and goodwill compared with discounted cash-flows Valuation of TGC-10 • Valuation is based on present value of future cash flows • Valuation is in roubles Key assumptions: ¾Expected development of Russia power marke
Slide 26: Good liquidity
Good liquidity MEUR Available Outstanding Total amount SHORT TERM FINANCING Commercial Paper Programmes Finnish CP Programme 290 210 500 SEK 5.000 M Swedish CP Programme 182 275 457 472 485 957 LIQUID FUNDS AND COMMITTED CREDIT LINES Committed Credit Lines Short Term 207 0 207 Long Term 2 700 0 2 70
Slide 27: Debt maturity profile after repayments in April
Debt maturity profile after repayments in April MEUR MEUR 2009: 630 2000 2010: 574 2011: 1,741 1500 2012: 440 2013: 505 1000 2014: 992 2015: 224 500 2016: 768 2017: 73 0 2018: 1 Y2009 2011 2013 2015 2017 2019+ 2019+: 1,698 Bonds Financial institutions Other long-term debt CPs Other short-term debt 3
Slide 28: Outlook
OUTLOOK 28
Slide 29: Market fundamentals in late April 2009
Market fundamentals in late April 2009 • Nordic water reservoirs about 4 TWh below the long-term average • Forward power prices: – rest of 2009 ~ 36-37 EUR/MWh – 2010 ~ 37-39 EUR/MWh – 2011 ~ 38-40 EUR/MWh • CO2 prices: – for 2009 and 2010 ~ EUR 13-14 per tonne CO2 29
Slide 30: Fuel and CO2 allowance prices
Fuel and CO2 allowance prices Crude oil price (Brent) CO2 price (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 2006 2007 2008 2009 2010 Coal price (API2) Gas price (NBP) 240 120 200 100 GBp / therm 160 80 USD / t 120 60 80 40 40 20 0 0 2006 20
Slide 31: Nord Pool year forwards
Nord Pool year forwards €/MWh Year 06 Year 07 Year 08 Year 09 Year 10 Year 11 Year 12 Year 13 Year 14 23 April 2009 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 31
Slide 32: Hedging of Power Generation's Nordic sales
Hedging of Power Generation's Nordic sales Status in mid-April 2009 (Status at the end of January 2009) Hedge ratio Hedge price rest of 2009 ~ 75% ~ EUR 51 per MWh (~65%) (~ EUR 53 per MWh) 2010 ~ 65% ~ EUR 43 per MWh (~50%) (~ EUR 46 per MWh) 2011 ~ 30% ~ EUR 42 per MWh 32
Slide 33: Fortum in a strong position
Fortum in a strong position • Flexible and climate-benign production portfolio • Integration of Russian TGC-10 proceeding as planned • Growth through investment programmes in Nordic and Baltic Rim countries and in Russia – Capital expenditure for the next 4-5 years expected to be within EUR 0.8-1.2
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