Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Investor Day (November 2018)
19 slides from Fortum Oyj's investor day presentation, Nov 13, 2018
Slide 1: Positioning Fortum for the decade of electricity
Positioning Fortum for the decade of electricity Pekka Lundmark, President and CEO 13 November 2018
Slide 2: Positioning Fortum for the decade of electricity – For a cleaner world
Positioning Fortum for the decade of electricity – For a cleaner world Illustrative Profitability 4. Build options for significant new businesses 3. Drive focused growth in the power value chain Increasing uncertainty 2. Ensure value creation from investments and portfolio optimisation Competitive 1
Slide 3: This is what Fortum launched in 2016…
This is what Fortum launched in 2016… 3
Slide 4: … and has successfully delivered
… and has successfully delivered • Largest shareholder in Uniper • >140 MW of operational wind and 220 MW of • Top benchmark performance in hydro, nuclear, operational solar trading and Russia • >1 GW solar and wind pipeline • Active fleet development and capacity upgrades • Russia’s first industria
Slide 5: Fortum has transformed the company in line with its strategy and capital redeployment goals
Fortum has transformed the company in line with its strategy and capital redeployment goals ~ EUR 10 billion ~ EUR 7 billion from largest divestments (in 2013-2015) … … to acquisitions and investments (2016-2018) Comparable operating profit, 1,070 1,085 MEUR* 949 811 808 Russia; 265 644 Consumer Sol
Slide 6: Fortum's assets are well positioned in prevailing market conditions
Fortum’s assets are well positioned in prevailing market conditions Year 18 Year 19 Year 20 EUR/MWh Nordic power price forwards 50 50 40 40 30 30 20 20 10 10 00 1 November 2018 2.1.2013 2013 2.1.2014 2014 2.1.2015 2015 2.1.2016 2016 2.1.2017 2017 2.1.2018 2018 Year 2018 Year 2019 Year 2020 Source: N
Slide 7: Fortum has a long green track record
Fortum has a long green track record – ranking among the top utilities in Europe for low CO2 emissions Increasing CO2-free power Among the lowest specific Growing in solar and wind generation emissions Annual CO2-free power generation has Fortum: 96% of the power generation in Fortum is targeting a
Slide 8: Fortum's vision is even more valid today – For a cleaner world
Fortum’s vision is even more valid today – For a cleaner world Illustrative Profitability 4. Build options for significant new businesses 3. Drive focused growth in the power value chain Increasing uncertainty 2. Ensure value creation from investments and portfolio optimisation Competitive 1. Pursue
Slide 9: Fortum's long-term financial targets and dividend policy remain unchanged
Fortum’s long-term financial targets and dividend policy remain unchanged Fortum’s dividend policy is Return on capital employed Comparable (ROCE) of at least Net debt/EBITDA ratio to pay a stable, at around sustainable, and over 10% 2.5x time increasing dividend of 50-80% of earnings per share, exc
Slide 10: Three main drivers are shaping the future electricity markets
Three main drivers are shaping the future electricity markets Climate and Politics and Technology Environment Regulation Development • Decarbonisation to • National and • Solar and wind reach Paris agreement international interests targets • Digitalisation and • Market models artificial intelligence
Slide 11: Europe needs to eliminate CO2 emissions to reach climate goals
Europe needs to eliminate CO2 emissions to reach climate goals 77,000 000 66,000 000 Greenhouse gas emissions European emissions (MtCO2 eq.) 55,000 000 Coal Power 44,000 000 - 40% (minimum targets from 1990 level) 33,000 000 Transport1 Oil - 60% Energy-related Buildings2 emissions 22,000 000 Gas Ind
Slide 12: Decarbonisation will increase electricity demand
Decarbonisation will increase electricity demand Means to decarbonise Carbon neutrality could double via electrification electricity demand by 2050 Electricity demand (TWh) Power Electric vehicles, +100% hydrogen 6,000 Transport Heat pumps, Buildings hydrogen 3,000 Industry Electrified processes, In
Slide 13: Demand for flexibility is increasing because stable and flexible capacity is being replaced by intermittent generation
Demand for flexibility is increasing because stable and flexible capacity is being replaced by intermittent generation European power generation (TWh) • Higher share of intermittent solar and wind 100% capacity Intermittent 90% • Reduced share of flexible coal and oil - partly 80% compensated by inc
Slide 14: Volatility and uncertainty in the European power market increases the value of flexible assets
Volatility and uncertainty in the European power market increases the value of flexible assets Intermittent renewables Nuclear and coal closures Increasing role of gas Volatility and Supply-demand balance uncertainty Increased interconnection between Nordics and Continent Commodity and CO2 prices We
Slide 15: Fortum's strategic priorities in a changing energy market
Fortum’s strategic priorities in a changing energy market 1. Pursue operational excellence and 2. Ensure value creation from investments increased flexibility and portfolio optimisation • Ensure benchmark performance • Increase shareholder value from Uniper • Focus on cash flow and efficient use of
Slide 16: Fortum's investment in Uniper supports Europe's energy transition
Fortum’s investment in Uniper supports Europe’s energy transition and secures a valuable cash flow contribution Fortum is the single largest shareholder in Uniper Generation volume, 121 TWh in 2017 Accounting view • CFO Markus Rauramo appointed Vice Chairman of Gas Uniper’s Supervisory Board Coal Hy
Slide 17: Fortum's strategic priorities in a changing energy market
Fortum’s strategic priorities in a changing energy market 1. Pursue operational excellence and 2. Ensure value creation from investments increased flexibility and portfolio optimisation • Ensure benchmark performance • Increase shareholder value from Uniper • Focus on cash flow and efficient use of
Slide 18: Cross-organisational development initiatives to ensure successful strategy execution
Cross-organisational development initiatives to ensure successful strategy execution Strengthen Become a Shape the Develop Open Leadership Digital Winner Regulatory Agenda Sales and culture to boost through data and analytics through empowerment, Commercialisation leadership proactive dialogue excel
Slide 19: Positioning Fortum for the decade of electricity – For a cleaner world
Positioning Fortum for the decade of electricity – For a cleaner world Illustrative Profitability 4. Build options for significant new businesses 3. Drive focused growth in the power value chain Increasing uncertainty 2. Ensure value creation from investments and portfolio optimisation Competitive 1