Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Fortum Oyj Corp Ord — Q1 2020 Earnings Presentation
26 slides from Fortum Oyj's earnings presentation, May 15, 2020
Slide 1: Interim Report January-March 2020
Interim Report January-March 2020 Fortum Corporation 15 May 2020
Slide 2: Q1 2020 – Solid result in a volatile market environment
Q1 2020 – Solid result in a volatile market environment • Power and heat consumption down due to mild winter – Nordic spot price down 67% – Water reservoirs clearly above long-term average levels in Q1 – Volatile commodity and CO2 prices • Covid-19 has had limited immediate impact on Fortum’s busine
Slide 3: Q1 2020 highlights
Q1 2020 highlights Majority owner in Uniper 73.4% Joensuu district - consolidating as a subsidiary heating divested Fortum partners Nordic wind with Infracapital Uniper Supervisory Board capital recycling on EV appointments closed infrastructure business
Slide 4: Power demand in Nordics and Europe
4 GWh/h GWh/h 60 65 30 35 40 45 50 55 60 65 30 35 40 45 50 55 01/01 01/01 01/16 01/16 01/31 01/31 02/15 02/15 -1% -3% 03/01 03/01 03/16 03/16 03/31 03/31 04/15 04/15 04/30 04/30 05/15 05/15 05/30 05/30 06/14 06/14 06/29 06/29 07/14 07/14 Nordics 07/29 07/29 08/13 Germany 08/13 08/28 08/28 09/12 09/1
Slide 5: Risk assessment of Covid-19 impact on Fortum
Risk assessment of Covid-19 impact on Fortum So far very limited effect from Covid-19, lot will depend on industrial activity on our core areas Not directly Covid-19 related Directly (also) Covid-19 related • Power price – hedging supports result • Power and heat price – CSA and CCS capacity • Power
Slide 6: Nordic hydro reservoir surplus increased during Q1
Nordic hydro reservoir surplus increased during Q1 Reservoir content (TWh) 120 • Rainy and mild weather led to a clear increase in the 100 surplus of the Nordic water reservoirs during January 80 and February 2020 • Weather conditions were 60 closer to long term average level in March and April 40 •
Slide 7: Fuel prices in Q1 on a downward trend
Fuel prices in Q1 on a downward trend USD / t Coal price (ICE API2 2021) • Generally coal prices have been less affected by Covid-19 compared to 120 many other energy commodities. 100 • During Q1, 2021 coal forward dropped ~13% from 62 USD/t to 55 80 USD/t. Mild winter combined with weakening gas an
Slide 8: Volatile CO2 and oil prices
Volatile CO2 and oil prices EUR / tCO2 CO2 price (EUA DEC 2020) 36 • EUA price saw a drastic decline during mid-March when in just five days the prices dropped from 24 €/t level to 14 €/t. Increased auction 30 supply in 2020 coupled with falling demand due to Covid-19 being the 24 main drivers. In a
Slide 9: Rainy and mild weather combined with weak commodities
Rainy and mild weather combined with weak commodities Nordic forward prices especially for 2020 declined • During Q1, the average Nord Pool system spot price was EUR/MWh Nordic spot and forward prices 15.4 EUR/MWh (46.8) 70 Realised system price • The average area prices were: Futures 3 Feb 2020 60
Slide 10: Nordic year forwards driven by Continental European power prices and hydrology
Nordic year forwards driven by Continental European power prices and hydrology • Along with the declining spot price, also the EUR/MWh forward prices have come down significantly since 45 year end. 40 • While hydrology is clearly the main driver for soft 35 Nordic spot prices, the forward curve is m
Slide 11: Fortum hedging supported achieved power price in the Nordics
Fortum hedging supported achieved power price in the Nordics as power prices declined, Russia power prices stable Spot price for power in Nord Pool power exchange Spot price for power (market price), Urals hub EUR/MWh RUB/MWh 54 1 500 46,9 45 1 250 1 128 1 151 1 107 38,6 1 081 1 068 35,6 34,7 36 1 0
Slide 12: Generation
Generation • Higher comparable operating profit in Q1, +5% – Higher hydro power generation, +33% – Achieved power price supported by hedges, 4.4 EUR/MWh lower at 34.0 EUR/MWh, -11% while spot price -67% • The segment’s overall operational performance and the load factor for nuclear generation were a
Slide 13: Russia
Russia • Comparable operating profit flat in Q1 – Lower electricity margin and CSA payments – Higher heat tariffs – FX impact EUR -2 million • In 2020, no new units will receive higher CSA payments MEUR I/2020 I/2019 2019 LTM Sales 317 298 1,071 1,090 Comparable EBITDA 138 135 469 472 Comparable ope
Slide 14: City Solutions
City Solutions • Lower comparable operating profit in Q1 – Heating and cooling business EUR 22 million negatively affected by • Lower heat sales volumes • Lower power prices especially lowering heat prices in Norway – The divestment of Joensuu district heating impact EUR -10 million – Recycling and
Slide 15: Consumer Solutions
Consumer Solutions • Sales -37% following significantly lower power prices in Q1 – Competition continued to be intense with high customer churn – Accelerated Covid-19 pandemic increased uncertainty in the small and medium size enterprise segment • Comparable operating profit +23% in Q1 – Higher sale
Slide 16: Uniper
Uniper Ownership and collaboration • Fortum’s ownership increased to 73.4% – Uniper has become a subsidiary and a valuable part of the Fortum group • New Supervisory Board members appointed – Fortum nominated 4/6 shareholder representatives • First collaboration areas established, strategic alignmen
Slide 17: Q1 2020 – Lower achieved power price and higher hydro volumes
Q1 2020 – Lower achieved power price and higher hydro volumes Comparable operating profit EUR million • 1.6 TWh higher • Lower power hydro volumes margin • Low power • Higher sales • 4.4 EUR/MWh • Higher heat prices margin lower achieved tariffs • Warm weather price • FX- effect EUR lowered heat 2 m
Slide 18: Income statement
Income statement MEUR I/2020 I/2019 2019 LTM • Lower power prices: Sales 1,357 1,690 5,447 5,114 • Sales declined due to lower power Other income 23 21 110 112 prices and divestment of district Materials and services -576 -917 -2,721 -2,380 heating business in Joensuu, Finland Employee benefits -123
Slide 19: Cash flow statement
Cash flow statement MEUR I/2020 I/2019 2019 LTM Comparable EBITDA 543 545 1,766 1,764 • Strong net cash from operating Paid net financial costs, income taxes and activities other -115 -64 -74 -125 Change in net margin liabilities 553 292 356 617 • Net cash from investing activities Change in working
Slide 20: Balance sheet
Balance sheet MEUR I/2020 2019 MEUR I/2020 2019 Intangible assets 2,185 1,143 Equity of the parent company 13,776 12,982 Property, plant and equipment 18,716 10,123 Non controlling interest 3,192 252 Participations in associates and JVs 2,869 6,435 Total equity 16,968 13,235 Derivative financial ins
Slide 21: New net debt definitions
New net debt definitions Financial net debt and adjusted net debt EUR million 31 Mar 2020 + Interest-bearing liabilities 10 464 “Net debt” of EUR 6,383 million - Liquid funds 4 081 according to Fortum’s previous - Non-current securities 76 definition - Collateral arrangement securities 243 - Securit
Slide 22: Ongoing actions to optimise cash flow and financial flexibility
Ongoing actions to optimise cash flow and financial flexibility Fortum targets to have a solid investment grade rating of at least BBB to maintain its financial strength, preserve financial flexibility and good access to capital markets for the enlarged group. Focus on cash flow - profitability, opt
Slide 23: Fortum's financial targets under review after Uniper consolidation
Fortum’s financial targets under review after Uniper consolidation Aim to set new targets by end of 2020 at the latest By the end of the year at the latest, Fortum aims to set new long-term financial targets for the enlarged group and ambitious decarbonisation targets covering the Fortum’s dividend
Slide 24: Outlook
Outlook Demand growth Hedging 2020 Estimated annual Taxation capital expenditure, Electricity demand in the Generation Nordic hedges: In 2020, the comparable including maintenance and Nordics is expected to effective corporate income For the remainder of 2020: ~85% excluding acquisitions grow by ~0.
Slide 25: Q&A
Q&A
Slide 26: Fortum Investor Relations and Financial Communications
For more information, please visit www.fortum.com/investors Fortum Investor Relations and Financial Communications Ingela Ulfves Rauno Tiihonen Måns Holmberg Pirjo Lifländer Meeting requests: Vice President, Manager Manager IR Specialist Anna-Elina Perttula Investor Relations and IR Coordinator Fina