Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Investor Presentation (December 2024)
52 slides from Fortum Oyj's investor presentation, December 2024
Slide 1: Equity story of Fortum: Powering a thriving world
Equity story of FORTUM Powering a thriving world Investor / Analyst material December 2024
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. Any references to the fut
Slide 3: Content
Content Fortum and power market 4 – 20 Interim Report January-September 2024 21 – 31 Appendices 33 – 47 Nuclear spent fuel and services 48 – 49 Fortum’s evolution and strategic route 50 Historical achieved prices 51 IR contacts 52 3
Slide 4: Fortum is well positioned as a Nordic clean energy provider
Fortum is well positioned as a Nordic clean energy provider Earnings dominated Clean power generation Sustainability is part of our DNA by clean generation gCO2/kWh, electricity* 1,000 ⚫ Consumer solutions 5% Specific emissions of 16 gCO2/kWh 800 ⚫ Nuclear 53% ⚫ Hydro 45% (Absolute emissions 1.6 m t
Slide 5: Fortum's strategy
Fortum’s strategy Our purpose is TOPOWERA WORLDWHERE PEOPLE, BUSINESSESAND NATURETHRIVETOGETHER STRATEGIC PRIORITIES Drive Deliver reliable decarbonisation clean energy in industries Transform and develop We help societies to reach carbon neutrality and our customers to grow and decarbonise 5 their
Slide 6: Opportunity amid sector disruption
Fortum in brief The ongoing sector disruption has increased uncertainty in the short term but provides opportunities going forward Near term Longer term Opportunity Structural Buildout of Continued high customer intermittent volatility in demand growth capacity global energy in the Nordics increasin
Slide 7: Nordic power market with clean power and competitive prices to accelerate demand
Nordic power market with clean power and competitive prices to accelerate demand The Nordic region is a source for extremely Nordic power demand driven by competitive and clean energy decarbonisation and electrification TWh/a Market price for power Lower Higher 7
Slide 8: Power demand growth - data centres and other sectors
Power demand growth - data centres and other sectors Nordic large-scale data centres Nordic power demand (TSOs estimate) 1 1 Facebook, Luleå, Facebook, Odense According to TSO information, power demand • Power demand from data centres is 2 Amazon, Västerås growth from data centre’s is expected to be
Slide 9: Fortum has a large portfolio of available industrial sites for new businesses
Fortum has a large portfolio of available industrial sites for new businesses - shortens time by several years for market entry • Sites suitable for industrial purposes • Plot areas up to 750 acres Kaskinen Jyväskylä • Sites with strong connection to power Tahkoluoto • 60 MW to 1.3 GW Ahlainen Meri-
Slide 10: Market prices are too low to attract new investments
Market prices are too low to attract new investments EUR/MWh 143 LCOE Achieved price 104 59 Average forward 38 price for 2027-31: 45 ~45 EUR/MWh 39 38 33 Onshore wind Utility solar Offshore wind Nuclear Source: NVE, Kostnader for kraftproduksjon, accessed 26.9.2024. FX nok/eur 11.2. Onshore wind and
Slide 11: Navigate the uncertainty with phased strategy execution
Navigate the uncertainty with phased strategy execution Near term Longer term ‘Sharpen focus and optimise core’ ‘Electrify and grow’ Optimise the operation of the Focus on value creation from flexibility, generation portfolio and manage efficiency and cash flows business risk Decrease share of merch
Slide 12: Our business portfolio
Our business portfolio FORTUM CORE DEMAND-DRIVEN EXPLORE Strengthen and selectively grow areas of RENEWABLES Future-shaping by studying, core competence, while capitalising volatile Prepare ready-to-build validating, and developing markets. pipeline to serve customer future opportunities. demand gro
Slide 13: How our strategy translates into shareholder value creation
How our strategy translates into shareholder value creation VALUE CREATION STRATEGIC PRIORITIES Hydro Customer business Best-in-class operations Nuclear Heating and cooling Deliver reliable Flexibility and optimisation clean energy Solar Demand-driven renewables Onshore wind Drive decarbonisation in
Slide 14: Strategic targets to capture long-term opportunities, mitigate business and market risks
Strategic targets to capture long-term opportunities, mitigate business and market risks STRATEGIC Strengthen Nordic Ensure value Stabilise Demand-driven TARGET leadership creation from flexibility income streams renewables Rationale Focus on core competence Capitalising on volatile markets Lower co
Slide 15: Our generation fleet benefits from flexibility and environmental values
Our generation fleet benefits and is remunerated from flexibility and environmental values Components of the optimisation premium in Fortum’s achieved power price from outright generation: 1. Hydropower flexibility 2. Environmental values OPTIMISATION PREMIUM • Hourly/daily/weekly/seasonal • Guarant
Slide 16: Disciplined capital allocation and focus on cash flow
Disciplined capital allocation and focus on cash flow Disciplined capital expenditure Efficiency improvement and cash flow Total EUR 1.6 billion (excl. Fixed cost reduction acquisitions) for 2024-2026 • € 100 million, gradually by end of 2025 • Growth up to € 800 million • more than € 50 million by
Slide 17: Aiming to become leader in sustainability with ambitious sustainability targets
Aiming to become leader in sustainability with ambitious sustainability targets 2050 Ambitious climate targets Ambitious biodiversity Carbon neutrality targets and commitments 2020 2025 2030 2035 • Carbon neutrality by 2030 • No net loss of biodiversity from Group coal capacity on Sep 30, 2024: (Sco
Slide 18: Power generation capacity of Fortum
Power generation capacity of Fortum GENERATION CAPACITY MW SWEDEN, by price area MW FINLAND MW Hydro 4,669 SE2, Hydro 1,542 Hydro 1,569 Nuclear 3,234 SE3, Hydro 1,558 Nuclear 1,892 NO4 SE1 Wind 245* SE3, Nuclear 1,342 Wind 245* CHP 535 SE3, CHP 6 CHP 375 Other thermal 565 Generation capacity 4,448 O
Slide 19: Interconnection capacity: markets are integrating
Nordic, Baltic, Continental and UK markets are integrating – Interconnection capacity growing to over 13 GW during 2026 Several new interconnectors have started operation, and more are under construction or planned to be built Current Nordic/Baltic 1 EU’s Connecting Europe Facility co-financed 3rd E
Slide 20: Fortum has what it takes to drive the transition
Fortum in brief Fortum has what it takes to drive the transition Best-in-class operations A leader in ESG to enable Prudent capital allocation with sustainable earnings decarbonisation with selective growth We have a competitive We have a CO2 free We have regained our Nordic generation portfolio gen
Slide 21: Interim Report January–September 2024
Interim Report January–September 2024 Fortum Corporation 29 October 2024
Slide 22: Markus Rauramo, President and CEO
Markus Rauramo President and CEO
Slide 23: Quarterly highlights Q3 2024
Quarterly highlights Q3 2024 • Resilient performance despite lower prices and volumes Deliver reliable clean Drive decarbonisation – Successful hedging and physical optimisation energy of industries • Long-term PPAs Pjelax wind farm Development of industrial Coal exit sites – Pjelax started Nuclear
Slide 24: Resilient performance amid seasonally lower power prices in the Nordics
Resilient performance amid seasonally lower I-III/2024 power prices in the Nordics Comparable operating profit declined due to lower achieved power Key financial indicators for continuing operations price in the Generation segment Comp. OP Comp. EPS OCF Leverage 0.93 Cash flow 0.82 1,561 2-2.5x 1,18
Slide 25: Price pressure due to precipitation and wind generation
Price pressure due to precipitation Weather - the main driver and wind generation for Nordic Q3 power prices • In Q3 European gas prices increased, while coal EUR / MWh Nordic power prices EUR EUR // tCO tCO2 2 CO CO22 price price (ICE EUA) (ICE EUA) 500 500 125 125 and carbon remained almost unchan
Slide 26: Tiina Tuomela, CFO
Tiina Tuomela CFO @fortum Powering a thriving world
Slide 27: Comparable net profit almost halved in the third quarter
Comparable net profit almost halved in the third quarter Lower power prices reflected in the result (LTM) MEUR III/2024 III/2023 I-III/2024 I-III/2023 2023 LTM Sales 1,094 1,220 4,365 4,853 6,711 6,223 • Comparable operating profit at EUR 1,280 million Comparable EBITDA 254 318 1,202 1,443 1,903 1,6
Slide 28: Income statement
Income statement MEUR, continuing operations III/2024 III/2023 I-III/2024 I-III/2023 2023 LTM Last twelve months Sales 1,094 1,220 4,365 4,853 6,711 6,223 Other Income 5 8 38 22 32 48 Materials and services -611 -665 -2,474 -2,702 -3,808 -3,581 • Fixed costs of EUR ~1 billion Fixed costs -236 -246 -
Slide 29: Results impacted by lower power prices
Results impacted by lower power prices Q3/2024 Generation Lower result mainly due to lower spot and hedge prices, lower hydro volumes Comparable operating profit and somewhat higher costs for co-owned (EUR million) nuclear production. Marginally negative result from Pjelax wind farm. Improved result
Slide 30: Group results negatively affected by lower results in the Generation segment
I-III/2024 Group results negatively affected by Generation lower results in the Generation segment Lower result mainly due to the lower spot and hedge prices, partly offset by higher hydro volumes. EUR 16 million sales gain Comparable operating profit from the Indian renewables’ divestment. (EUR mil
Slide 31: Low leverage and strong liquidity position
Low leverage and strong liquidity Solid credit metrics position Financial net debt 'BBB+' long-term issuer credit rating, Stable outlook 349 4 16 'BBB' long-term issuer credit rating, 140 Stable outlook 851 655 Fortum’s objective: Maintain solid investment grade rating of at least BBB to maintain fi
Slide 32: Outlook
Outlook Generation’s Nordic outright (47 TWh/a): Capital expenditure guidance: Hedges 2024: Capital expenditure, including maintenance • For the rest of 2024: 80% hedged at 44 €/MWh capex of € 300 million, (excluding potential • For 2025: 65% hedged at 42 €/MWh acquisitions) expected to be € ~550 mi
Slide 33: Appendix
@fortum 33 Powering a thriving world
Slide 34: Nordic hydro reservoirs and wholesale power price
Nordic hydro reservoirs and wholesale power price Hydro reservoirs Power price Reservoir content (TWh) EUR/MWh 120 120 500 500 Realised daily system price 100 Futures 28 Nov 2024 100 400 400 80 80 300 300 60 60 200 200 40 40 Norway 100 100 20 20 Sweden 2003 2020 2022 2023 2024 Average 0 Finland 0 00
Slide 35: Generation: Achieved power price at 44.1 €/MWh
GENERATION: Power generation volumes, TWh III/2024 III/2023 Achieved power price at 44.1 €/MWh 4.7 5.4 5.8 5.6 0.2 0 Q3/2024 vs. Q3/2023 Hydro Nuclear Wind Comparable operating profit down by 33% to EUR 176 mn, I-III/2024 I-III/2023 mainly due to the lower spot and hedge prices. Lower hydro volumes
Slide 36: Consumer Solutions: Improved and more normalised results
CONSUMER SOLUTIONS: Improved and more normalised Number of customers (‘000) results 2,420 Q3/2024 vs. Q3/2023 2,320 Comparable operating profit decreased by EUR 4 mn to EUR 6 mn, mainly due to lower gas sales margin, the effect of which was partly offset by the reduced scope of the regulated price c
Slide 37: Other Operations: Results improved
OTHER OPERATIONS: Results improved Q3/2024 vs. Q3/2023 Comparable operating profit improved by EUR 22 mn to EUR -24 mn, MEUR III/2024 III/2023 I-III/2024 I-III/2023 2023 LTM mainly due to higher internal charges for services of enabling Sales 165 138 455 401 548 602 functions. The result of the Circ
Slide 38: Efficiency improvements and disciplined capital expenditure
Efficiency improvements and disciplined capital expenditure to enhance earnings, cash flow and competitiveness Fixed cost reduction Capital expenditure Capex 2024-2026 € 100 mn € 1,600 mn ⚫ €0.2 bn uncommitted ⚫ €1.4 bn committed gradually materialising, for 2024-2026 ⚫ Decarbonisation of full effec
Slide 39: Fortum's Nordic power generation and heat production by source
Fortum’s Nordic power generation and heat production by source Fortum’s Nordic power generation in 2023 Fortum’s Nordic heat production in 2023 Waste 29% Nuclear power 54% Coal 16% Nordic Nordic Coal 1% power generation heat production 46.4 TWh 3.2 TWh Bio 20% Natural gas 11% Oil 1% Hydropower 45% H
Slide 40: Fortum's power generation and heat production by source
Fortum's power generation and heat production by source Fortum’s power generation in 2023 Fortum’s heat production in 2023 Nuclear power 53% Waste 27% Coal 28% Total Total Waste, bio 1% power generation heat production Coal 1% 47.0 TWh* Natural gas 8% 4.3 TWh* Oil 1% Heat pumps, Bio 19% Hydropower 4
Slide 41: Largest CO2 free generators in Europe
Largest CO2 free generators in Europe Power generation Other, incl. bio Wind, solar, geoth. Nuclear Hydro Source: Company information, Fortum analyses, 2022 figures pro forma. *2021 figures for Ukrainian companies. 41 Fortum continuing operations. EPH incl. LEAG. Å Energi is formed from Agder and Gl
Slide 42: Fortum a leading player in a highly fragmented Nordic power market
Fortum a leading player in a highly fragmented Nordic power market Power generation Electricity retail Vattenfall Fortum Vattenfall Others Others 49% 42% 16 million 419 TWh Statkraft Andel customers >350 companies ~350 companies Elmera E.ON Fortum Norsk Hydro Norlys Uniper Eviny Helen Ørsted PVO Haf
Slide 43: Volatility and uncertainty increases the value of flexible assets
Volatility and uncertainty in the European power market increases the value of flexible assets Intermittent renewables Coal and other fossil closures Role of gas Volatility and Supply-demand balance uncertainty Increased interconnection between Nordics and Continent Commodity and CO2 prices Weather
Slide 44: Wholesale power price
Wholesale power price EUR/MWh Nord Pool Weekly System Price Futures 350 350 300 300 250 250 200 200 150 150 100 100 50 50 28 Nov 2024 00 1995 05 1997 05 1999 05 2001 05 2003 05 2005 05 2007 05 2009 05 2011 05 2013 05 2015 05 2017 05 2019 05 2021 05 2023 05 2025 05 2027 05 2029 05 2031 05 2033 05 05
Slide 45: Nordic year futures
Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 forward Year 19 forward Year 20 forward Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Nordic year futures Year10 Year11 Year12 Year13 Year14 Year15 Year16 Year17 Year18 Year19 Year20 Year21 Year22 Year23 Year24 Year25 Year26 E
Slide 46: German and Nordic spot and future prices
German and Nordic spot and future prices 150 120 90 60 Nordic and German daily spot prices in 2022 – 2024 30 Nordic and German year 2025 futures in 2022 – 2024 0 Sep 01/10/2024 Oct 01/11/2024Nov 01/09/2024 2024 2024 2024 EUR/MWh EUR/MWh 750 750 300 300 600 600 200 200 450 450 300 300 100 100 150 150
Slide 47: Growing role of the EU ETS in the European decarbonisation
Growing role of the EU ETS in the European decarbonisation EU ETS design has been reformed to keep up with Europe’s climate ambitions EU ETS reform complete: In April 2023, the EU ETS review files known as “Fit for 55” were adopted by the EU Parliament and approved by the EU Council, making the ardu
Slide 48: Fortum nuclear services - covering the entire nuclear power plant lifecycle
Fortum nuclear services - covering the entire nuclear power plant lifecycle Strong in-house Nuclear operator experience Projects delivered to a Proactive and strong nuclear engineering based on proven solutions global customer base co-operation in international nuclear forums Newbuild, licensing and
Slide 49: Posiva's final disposal of spent nuclear fuel in Onkalo
Posiva’s final disposal of spent nuclear fuel in Onkalo® www.posiva.fi 49
Slide 50: Fortum's evolution and strategic route
Fortum’s evolution and strategic route Skandinaviska Birka Energi Länsivoima Elnova Østfold Elverk 50% Fortum →100% 50% → 100% 50% Stockholm Gullspång merged Shares in Divestment of Divestment of with Hafslund Fingrid shares small scale hydro Gullspång Stora Kraft Birka Energi TGC-1 E.ON Divestment
Slide 51: Hedging improves stability and predictability
Hedging improves stability and predictability – principles based on risk mitigation, (Outright generation) 51 From 2009 onwards thermal and import from Russia excluded. Earlier than 2023 outright volume split (40/40/20), and from 2023 onwards (46/37/17).
Slide 52: Fortum Investor Relations and Financial Communications
Next events: For more information, January-December Financial Statements Bulletin 2024 on 11 Feb 2025 please visit www.fortum.com/investors Fortum's AGM 2025 is planned to be held on 1 April 2025 January-March Interim Report 2025 on 29 April 2025 January-June Half-year Financial Report 2025 on 15 Au