Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — H1 2009 Earnings Presentation
29 slides from Fortum Oyj's earnings presentation, Jul 17, 2009
Slide 1: Interim Report January - June 2009
Interim Report January - June 2009 17 July 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: Solid half year 2009
Solid half year 2009 • Good results – Higher achieved Nordic sales price at Power Generation, while Nord Pool average system price was similar to last year • Very strong cash flow • 94% (92%) of the generated power CO2-free in the EU • 80% of Fortum’s Nordic power sales volume for the rest of 2009 h
Slide 4: Good results
Good results • Comparable operating profit EUR 1,002 (984) million, +2% – SEK translation effect EUR -78 million • Earnings per share EUR 0.78 (0.78) – Higher reported operating profit, lower interest and income tax expenses – Lower contribution from associates • Net cash from operating activities i
Slide 5: Key events and highlights
Key events and highlights • Russian power reform proceeded – The share of wholesale power sold at a competitive price from 30% to 50% • Market’s turnaround programme led to a strong improvement in results • Preparations for the sale of Fingrid shares initiated • EUR 888 million dividend paid, (1.00
Slide 6: Improvement in Markets and Russia
Improvement in Markets and Russia Comparable operating profit EUR million Lower hydro and nuclear 22 -8 1002 984 -14 -10 29 production in Power -1 Generation Heat – weaker SEK Distribution – weaker SEK Markets – Strong improvement from turnaround programme Operational improvement in Russia I-II 2008
Slide 7: Electricity demand development
Electricity demand development Chelyabinsk Urals area Russia Tyumen Denmark Russia Sweden Norway Finland Nordic 5% 5% 0% 0% -5 % -5 % -1% -10 % -10 % -7% -9% -15 % -11% -15 % -20 % -20 % -25 % Q1 2009 vs Q1 2008 -25 % Q1 2009 vs Q1 2008 Q2 2009 vs Q2 2008 -25% Q2 2009 vs Q2 2008 -30 % -30 % Change i
Slide 8: 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 8
Slide 9: Commodity prices
Commodity prices Crude oil price (ICE Brent) CO2 price (NP EUA) 160 35 140 H1 average: 30 H1 average: 120 53 (110) 25 13 (24) EUR / tCO 2 USD / bbl 100 80 20 60 15 40 10 20 5 0 2006 2007 2008 2009 0 2006 2007 2008 2009 Coal price (ICE Rotterdam) Gas price (ICE NBP) 240 100 H1 average: H1 average: 20
Slide 10: Price development in Nordic and Russia
Price development in Nordic and Russia • Nord Pool wholesale price in: – Q2: decreased 2% to 34.0 (34.6) EUR/MWh – H1: decreased 1% to 36.1 (36.3) EUR/MWh • Power Generation's achieved Nordic power price in: – Q2: increased to 48.0 (47.9) EUR/MWh – H1: increased 6% to 48.8 (46.2) EUR/MWh • Russian p
Slide 11: Financials
FINANCIALS 11
Slide 12: Power Generation
Power Generation • Higher achieved Nordic power price • Lower volumes; hydro and nuclear • Weaker SEK MEUR I-II/2009 I-II/2008 LTM Sales 1 330 1 438 2 784 Comparable operating profit 765 779 1 514 Net Assets 5 384 5 524 Comparable RONA, % 28.3 Gross Investments 100 50 184 12
Slide 13: Heat
Heat • Weaker SEK • Lower volumes – divested CHP assets • Ongoing CHP investments: Suomenoja, Finland (2009); Częstochowa, Poland (2010); Pärnu, Estonia (2010) MEUR I-II/2009 I-II/2008 LTM Sales 761 777 1 450 Comparable operating profit 138 148 240 Net Assets 3 503 3 599 Comparable RONA, % 7.3 Gross
Slide 14: Distribution
Distribution • Weaker SEK • Main Automatic Meter Management rollout in Sweden completed MEUR I-II/2009 I-II/2008 LTM Sales 405 412 782 Comparable operating profit 135 136 247 Net Assets 3 106 3 330 Comparable RONA, % 8.2 Gross Investments 79 133 242 14
Slide 15: Markets
Markets • Improved results – the turnaround programme; new product pricing model in Finland, renegotiated agreements, cost savings MEUR I-II/2009 I-II/2008 LTM Sales 767 930 1 759 Comparable operating profit 4 -25 -4 Net Assets 106 236 Comparable RONA, % 0.7 Gross Investments 1 3 1 15
Slide 16: Russia
Russia • Efficiency improvements • Clearly better Q2/09 compared to Q2/08 (+EUR 17 million) MEUR I-II/2009 I-II/2008* LTM Sales 320 152 657 Comparable operating profit -11 -33 -70 Net Assets 2 049 2 329 Comparable RONA, % -2.9 Gross Investments 62 1 074 736 * Income statement consolidated from 1.4.2
Slide 17: Comparable and reported operating profit
Comparable and reported operating profit Operating profit II/2009 Operating profit II/2008 Operating profit I-II/2009 Operating profit I-II/2008 Comparable Reported Comparable Reported Comparable Reported Comparable Reported Power Generation 346 304 384 260 765 727 779 691 Heat 26 39 27 37 138 152 1
Slide 18: Currency translation effects
Currency translation effects Effects on comparable operating profit in I-II/2009 compared to I-II/2008 I-II/2009 SEK Other Total Power Generation -55 -3 -58 Heat -12 -3 -15 Distribution -11 -1 -12 Markets -1 0 -1 Russia 0 1 1 Other 1 0 1 Total -78 -6 -84 Average rates: I-II/2009 I-II/2008 SEK 10.863
Slide 19: Income statement
Income statement MEUR II/2009 II/2008 I-II/2009 I-II/2008 2008 LTM Sales 1 194 1 322 2 826 2 762 5 636 5 700 Expenses -819 -974 -1 852 -1 805 -3 673 -3 720 Operating profit 375 348 974 957 1 963 1 980 Share of profit of associates and jv's 29 36 -4 70 126 52 Financial expenses, net -49 -74 -81 -119
Slide 20: Cash flow statement
Cash flow statement MEUR II/2009 II/2008 I-II/2009 I-II/2008 2008 LTM Operating profit before depreciations 499 483 1 220 1 203 2 478 2 495 Non-cash flow items and divesting activities 18 55 19 18 -275 -274 Financial items and fx gains/losses 160 -35 299 -80 233 612 Taxes -117 -123 -131 -200 -332 -2
Slide 21: Key ratios
Key ratios MEUR LTM 2008 2007 in Q2 '09 EBITDA 2 495 2 478 2 298 Net cash flow from operations 2 489 2 002 1 670 Interest-bearing net debt 6 004 6 179 4 466 Equity 7 903 8 411 8 651 Balance sheet total 19 473 20 278 17 674 Net debt/EBITDA* 2.4 2.5 2.2 Return on capital employed (%)* 14.1 15.0 14.0 R
Slide 22: Liquidity
Liquidity MEUR Available Outstanding Total amount SHORT TERM FINANCING Commercial Paper Programmes Finnish CP Programme 373 127 500 SEK 5.000 M Swedish CP Programme 275 187 462 648 314 962 LIQUID FUNDS AND COMMITTED CREDIT LINES Committed Credit Lines Short Term 207 0 207 Long Term * 2 700 0 2 700 2
Slide 23: Debt maturity profile
Debt maturity profile MEUR MEUR 2000 2009: 332 2010: 576 1500 2011: 1,258 2012: 476 1000 2013: 556 500 2014: 1,119 2015: 297 0 2016: 835 Y2009 2011 2013 2015 2017 2019+ 2017: 200 Bonds Financial institutions Other long-term debt CPs Other short-term debt 2018: 73 2019+ 1,722 : 30 June, 2009 31 Dec,
Slide 24: Outlook
OUTLOOK 24
Slide 25: Commodity prices
Commodity prices Crude oil price (ICE Brent) CO2 price (NP EUA) 160 35 140 30 120 25 EUR / tCO2 USD / bbl 100 20 80 60 15 40 10 20 5 0 2006 2007 2008 2009 2010 0 2006 2007 2008 2009 2010 Coal price (ICE Rotterdam) Gas price (ICE NBP) 240 100 200 80 GBp / therm 160 60 USD / t 120 40 80 40 20 0 2006 2
Slide 26: 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 75 70 65 60 55 50 45 40 35 30 Forwards in mid-July 2009: 25 20 • rest of 2009 ~ 37 EUR/MWh 15 • 2010 ~ 37-38 EUR/MWh 10 • 2011 ~ 38-39 EUR/MWh 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 27: Hedging of Power Generation's Nordic sales
Hedging of Power Generation's Nordic sales Status at the end of June 2009 (Status at mid-April 2009) Hedge ratio Hedge price rest of 2009 ~ 80% ~ EUR 50 per MWh (~75%) (~ EUR 51 per MWh) 2010 ~ 65% ~ EUR 43 per MWh (~65%) (~ EUR 43 per MWh) 2011 ~ 30% ~ EUR 42 per MWh (~30%) (~ EUR 42 per MWh) 27
Slide 28: Fortum in a strong position
Fortum in a strong position • Flexible, low cost and climate-benign production portfolio • Russian power reform and the integration of OAO Fortum proceeding as planned • Good hedging positions • Strong balance sheet and liquidity 28
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