Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Investor Day (November 2014)
20 slides from Fortum Oyj's investor day presentation, Nov 5, 2014
Slide 1: Balance sheet strength enables growth and value creation
Balance sheet strenght enables growth and value creation Capital Markets Day 5 November 2014 Timo Karttinen, CFO 1
Slide 2: Agenda
Agenda • January-September results • Efficiency programme – Fixed costs • Market outlook • Financial targets • Cash flow - Net debt • Summary 2
Slide 3: Summary of January-September 2014
Summary of January-September 2014 • Good results in continuously demanding market environment • Flexible hydro production partly offset weak electricity price • Strong cash flow from operations • Finnish and Norwegian electricity distribution business sales completed. The evaluating and planning of
Slide 4: January-September 2014 Results
January-September 2014 Results Key figures (EUR) III/14 III/13 I-III/14 I-III/13 2013 LTM Sales, million 976 1,060 3,466 3,918 5,309 4,857 Comparable EBITDA, million 309 336 1,317 1,429 1,975 1,863 Operating profit, million 149 96 2,778 1,002 1,508 3,284 Comparable operating profit, 183 167 915 979
Slide 5: Fortum's efficiency programme 2013-2014
Fortum's efficiency programme 2013-2014 • The efficiency programme will be finalised during Q4 – focus will stay • Total annual cost savings visible in all divisions • Improved working capital efficiency • Divestments of non-core assets totalling more than EUR 500 million WHEN WHY WHAT 2013-2014 SPE
Slide 6: Efficiency programme reductions starting from Q3 2012
Efficiency programme reductions starting from Q3 2012 SPEED - Cash flow improved by EUR 1 billion – FLEXIBILITY CAPEX DIVESTMENTS 2000 EUR 250-350 million 300 EUR 500 million 250 1500 200 CAPEX 200 Savings 1000 100 150 100 500 0 50 0 -100 0 2012 2013 E2014 2012 2013 E2014 CAPEX Savings Divestments W
Slide 7: Tax environment; predictability – how to meet future challenges
Tax environment; predictability – how to meet future challenges High attention • Take total taxes into consideration early – When making investment analysis, orders, agreements – When restructuring operations V a • Synchronise legal decision making with operative decision making l u – Tax authoritie
Slide 8: Market outlook remains flat
Market outlook remains flat The power market opportunity shifts from volume to price volatility Nord Pool electricity price €/MWh 60 Market forwards for • Electricity price scenario in the 55 SYS (mid-Oct) SYS spot price Nordics is flattish 50 Area spot price* – Moderate demand growth on average 45
Slide 9: Financial targets
Financial targets LTM 2013 Target Return on capital employed, ROCE (%) 18.9 9.0 12 Return on shareholders’ equity, ROE (%) 29.0 12.0 14 Comparable net debt/EBITDA 2.6 3.9 ~3 - excluding Värme 2.2 3.4 Over the cycle ROCE% 20 15 ROCE target 10 5 10 Y FIN Bond 0 2003 2004 2005 2006 2007 2008 2009 2010
Slide 10: Fortum has invested heavily, keeping capital structure and dividends at a good level
Fortum has invested heavily, keeping capital structure and dividends at a good level Capital expenditure and gross MEUR investments in shares 3000 • By investing we maintain the current 2500 assets and create growth for future 2000 • Strong balance sheet and capital structure 1500 stronger than targ
Slide 11: Fortum's maintenance investments (excluding Distribution)
Fortum’s maintenance investments (excluding Distribution) clearly below depreciation with current portfolio MEUR 450 400 350 300 250 200 150 100 50 0 2013 E2014 E2015 E2016 Fortum Group Depreciation excl. Distribution Note: Excluding Distribution 11
Slide 12: Cash flow increasing post the efficiency programme
Cash flow increasing post the efficiency programme MEUR Cash flow from operating activities 2500 2000 1500 1000 500 0 2008 2009 2010 2011 2012 2013 LTM 12
Slide 13: Diversified funding base – net debt EUR 4.8 billion
Diversified funding base – net debt EUR 4.8 billion at the end of September 2014 1500 MEUR 2014 32 1250 2015 1,035 2016 863 1000 2017 548 2018 629 750 2019 821 500 2020 76 2021 547 250 2022 1,057 2023 112 0 2024+ 1,249 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+ TOTAL 6,969 Bonds Financi
Slide 14: Change in net debt during Q1-Q3 2014
Change in net debt during Q1- Q3 2014 -3,003 (-39%) In Q1-Q3 2014 7,793 3,185 • Generated cash from operations EUR 1.3 billion (bn) 584 2,836 • Invested with EUR 0.6 bn 113 140 1,903 • Divested with EUR 2.8 bn • Received from Värme EUR 467 million from interest-bearing receivables • Paid dividends a
Slide 15: Access to liquidity
Access to liquidity • Fortum has a strong financial position • Good liquidity – committed credit lines total EUR 2.2 billion • Good interest in Fortum among investors LIQUID FUNDS AND COMMITTED CREDIT LINES Available Outstanding Total amount Committed Credit Lines Short Term 1) 217 0 217 Long Term 2
Slide 16: Fortum achieved price premium driven by right type of capacity and actions
Fortum achieved price premium driven by right type of capacity and actions We utilise our competences and flexibility in all markets – from intra-day to financial markets 20 90 Achieved price premium vs. market (EUR/MWh) 15 80 Spot and achieved price (EUR/MWh) 10 70 5 60 0 50 -5 40 -10 30 -15 20 -20
Slide 17: Annual average electricity prices and hedging levels
Annual average electricity prices and hedging levels at the end of September 2014 Hedging policy targets • Decrease volatility in company comparable operating profit • Secure EBITDA to meet company’s financial obligations • Hedging should in average contribute positively 17
Slide 18: Efficiency, cash flow and investments in focus
Efficiency, cash flow and investments in focus • Focus on current portfolio – Flexibility - Profitability - Scrutinize investments in current portfolio – Cost control – Continuous efficiency improvements – Working capital optimisation – Further divestments of non-core assets or ones with limited pot
Slide 19: Summary
Summary • Efficiency programme has been finalised and the work continues… – Cost control – Efficiency - Working capital optimisation – Cash flow – Investments – both current and growth – Hedging to capture the increasing volatility • Stong balance sheet and operational cash flow – Strenght in demand
Slide 20: For more information, please visit
For more information, please visit www.fortum.com/investors