Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — H1 2010 Earnings Presentation
30 slides from Fortum Oyj's earnings presentation, Jul 16, 2010
Slide 1: Fortum Corporation Interim report January-June 2010
Fortum Corporation Interim report January-June 2010 16 July 2010
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: Business environment improving
Business environment improving • Nordic power consumption up by 6% in the second quarter – Power consumption in the Nordic countries 386 TWh in last twelve months, 397 TWh in 2008 • Russian power consumption increased by about 4% in the second quarter – Electricity spot price in Russia up by 28% fro
Slide 4: Nordic spot prices increased, forward prices more stable
Nordic spot prices increased, forward prices more stable EUR/MWh Nord Pool System Price Year 2011 Year 2012 100 90 80 70 60 50 40 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 2009 2010 4
Slide 5: A good first half year
A good first half year • Comparable operating profit, EUR 990 (1,002) million – Lower hydro and nuclear volumes in Power – Improvement in Russia, Distribution and Heat – SEK translation effect EUR +53 million • Earnings per share EUR 0.93 (0.78) – Non-recurring items EUR 50 (14) million in the first
Slide 6: Good performance, but room to improve
Good performance, but room to improve Comparable operating profit, EUR million 1002 -60 -7 15 -5 990 25 20 I-II/2009 Power Heat Distribution Electricity Russia Other I-II/2010 Sales 6
Slide 7: Key events and highlights
Key events and highlights • Development in Russia on track – Russian wholesale power reform proceeded as planned – Rules and price parameters for capacity market approved – The share of competitive market increased to 80% in July 2010 • 86% (94%) of the power generated by Fortum in the EU CO2-free –
Slide 8: Increased power consumption
Increased power consumption Chelyabinsk Urals area Denmark Russia Tyumen Sweden Norway Finland Russia Nordic 15 % 15 % 10 % 10 % 5% 5% 0% 0% -5 % -5 % -10 % -10 % Q3 2009 vs Q3 2008 Q3 2009 vs Q3 2008 Q4 2009 vs Q4 2008 Q4 2009 vs Q4 2008 -15 % -15 % Q1 2010 vs Q1 2009 Q1 2010 vs Q1 2009 Q2 2010 vs
Slide 9: Nordic water reservoirs below normal
Nordic water reservoirs below normal 120 100 reservoir content (TWh) 80 60 40 20 2003 2008 2009 2010 reference level 0 Q1 Q2 Q3 Q4 Combined water and snow reservoirs appr. 18 TWh below average Source: Nord Pool 9
Slide 10: Commodity prices
Commodity prices Crude oil price (ICE Brent) CO2 price (NP EUA) 160 35 140 H1 average: 30 H1 average: 120 78 (53) 14 (13) 25 EUR / tCO2 USD / bbl 100 20 80 15 60 40 10 20 5 0 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Coal price (ICE Rotterdam) Gas price (ICE NBP) 240 100 H1 average: H1 ave
Slide 11: Price development in the Nordic region and Russia
Price development in the Nordic region and Russia Spot price for power in Nord Pool, Spot price for power (market price), Urals hub, eur/MWh 59,5 RUB/MWh 60 900 817 +28% 770 +32% 800 50 45,0 700 693 700 603 40 36,6 34,0 600 31,3 500 30 400 20 300 200 10 100 0 0 Q2/2009 Q3/2009 Q4/2009 Q1/2010 Q2/201
Slide 12: Financials
Financials
Slide 13: Power
Power • Lower hydro and nuclear volumes, higher thermal generation • Higher costs of associated nuclear companies • Power's achieved Nordic power price 3.2 €/MWh lower than last year in the second quarter MEUR I-II/2010 I-II/2009 LTM Sales 1 366 1 296 2 601 Comparable operating profit 695 755 1 394
Slide 14: Heat
Heat • Higher heat and power volumes • Suomenoja and Tarto plants in operation • Czestochowa and Pärnu to be commissioned in 2010 MEUR I-II/2010 I-II/2009 LTM Sales 952 764 1 587 Comparable operating profit 165 140 256 Net Assets 3 884 3 503 Comparable RONA, % 7.8 Gross Investments 121 167 313 14
Slide 15: Distribution
Distribution • Higher volumes • Stronger SEK MEUR I-II/2010 I-II/2009 LTM Sales 480 405 875 Comparable operating profit 155 135 282 Net Assets 3 482 3 106 Comparable RONA, % 8.9 Gross Investments 76 79 190 15
Slide 16: Electricity Sales
Electricity Sales • Improvement in the second quarter • Restructuring of the Business Market segment MEUR I-II/2010 I-II/2009 LTM Sales 964 767 1 646 Comparable operating profit -3 4 15 Net Assets 59 81 Comparable RONA, % 14.0 Gross Investments 0 1 0 16
Slide 17: Russia
Russia • Efficiency improvement programme on track • Capital expenditures increasing MEUR I-II/2010 I-II/2009 LTM Sales 413 324 721 Comparable operating profit 7 -8 -5 Net Assets 2 690 2 062 Comparable RONA, % 0.8 Gross Investments 258 62 414 17
Slide 18: Comparable and reported operating profit
Comparable and reported operating profit Comparable operating profit Reported operating profit Comparable operating profit Reported operating profit II/2010 II/2009 II/2010 II/2009 I-II/2010 I-II/2009 I-II/2010 I-II/2009 Power 271 340 280 307 695 755 747 739 Heat 33 26 35 39 165 140 194 154 Distribu
Slide 19: Income statement
Income statement MEUR II/2010 II/2009 I-II/2010 I-II/2009 2009 LTM Sales 1 295 1 194 3 242 2 826 5 435 5 851 Expenses -944 -819 -2 167 -1 852 -3 653 -3 968 Operating profit 351 375 1 075 974 1 782 1 883 Share of profit of associates and jv's 15 29 31 -4 21 56 Financial expenses, net -34 -49 -61 -81
Slide 20: Cash flow statement
Cash flow statement MEUR II/2010 II/2009 I-II/2010 I-II/2009 2009 LTM Operating profit before depreciations 490 499 1 351 1 220 2 292 2 423 Non-cash flow items and divesting activities -6 18 -73 19 46 -46 Financial items and fx gains/losses -146 160 -323 299 146 -476 Taxes -73 -117 -155 -131 -239 -2
Slide 21: Key ratios
Key ratios MEUR LTM LTM 2009 in Q2 ‘10 in Q1 ‘10 EBITDA 2 423 2 432 2 292 Net cash flow from operations 1 681 1 963 2 264 Interest-bearing net debt 6 506 5 679 5 969 Equity 8 662 8 465 8 491 Balance sheet total 20 606 21 318 19 841 Net debt/EBITDA 2.7 2.3 2.6 Return on capital employed (%) 12.8 12.3
Slide 22: Debt maturity profile
Debt maturity profile 1250 MEUR 2010 891 1000 2011 653 2012 537 750 2013 562 2014 1.185 2015 388 500 2016 858 2017 223 250 2018 79 2019 826 0 2020+ 998 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020+ Bonds Financial institutions Other long-term debt CPs Other short-term debt per 30 June, 201
Slide 23: Outlook
Outlook
Slide 24: Fuel and CO2 allowance prices
Fuel and CO2 allowance prices Crude oil price (ICE Brent) CO2 price (NP EUA) 160 35 140 30 120 25 EUR / tCO2 USD / bbl 100 20 80 15 60 40 10 20 5 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Coal price (ICE Rotterdam) Gas price (ICE NBP) 240 100 200 80 GBp / therm 160 60 USD / t 1
Slide 25: Nord Pool year forwards
Nord Pool year forwards €/MWh Year 07 Year 08 Year 09 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 13 July 2010 75 70 65 60 55 50 45 40 35 30 Forwards in mid-July 2010: 25 20 • rest of 2010 ~ 47 EUR/MWh 15 • 2011 ~ 44 EUR/MWh 10 • 2012 ~ 42 EUR/MWh 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 26: Hedging of Power Division's Nordic sales
Hedging of Power Division's Nordic sales Status at the end of June 2010 (Status at the end of March 2010) Hedge ratio Hedge price rest of 2010 ~ 80% ~ EUR 44 per MWh (~75%) (~ EUR 44 per MWh) 2011 ~ 60% ~ EUR 44 per MWh (~45%) (~ EUR 43 per MWh) 26
Slide 27: Hedging improves stability and predictability
Hedging improves stability and predictability EUR/MWh 80 70 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Power's Nordic power price Spot price, SE&FI avg. 27
Slide 28: New capacity to be commissioned in 2010
New capacity to be commissioned in 2010 Capacity Capacity Type electricity, MW heat, MW Available Heat Częstochowa, Poland CHP bio, coal 65 120 Q3/2010 Pärnu, Estonia CHP bio, peat 20 45 Q4/2010 Power Hydro refurbishment Hydropower 20-30 2010 Russia Tyumen 1 CCGT, gas 230 Q3/2010 Tobolsk CCGT, gas 2
Slide 29: Fortum in a strong position
Fortum in a strong position • A good first half of the year • Flexible, cost-efficient and climate-benign generation portfolio • Russian power reform proceeding and the results of OAO Fortum improving as planned • Nordic power demand recovering – back to 2008 level by 2012-2014 • Strong financial po
Slide 30: @Fortum
@Fortum