Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Investor Presentation (May 2004)
40 slides from Fortum Oyj's investor presentation, May 2004
Slide 1: A leading energy company in the Nordic area – Investor Meetings May 2004
– a leading energy company in the Nordic area Investor Meetings May 2004
Slide 2: Overview of Fortum
Overview of Fortum Second largest Nordic generator and supplier of power The leading Nordic provider of district heating The leading Nordic refiner of clean traffic fuels Operating profit EUR 1,420 million, EPS EUR 0.91 (2003) Total assets EUR 16.2 billion (31 December 2003) Privatised i
Slide 3: Fortum's strategy
Fortum’s strategy Fortum focuses on the Nordic energy market as a platform for long-term profitable growth Create the Become the Strengthen leading energy supplier position as the power and heat of choice leading clean company fuels refining company Excel in business performance 3
Slide 4: Fortum is en route to become the leading Nordic energy company
Fortum is en route to become the leading Nordic energy company No. 1 No. 2 Power Heat production Sales of Clean fuels electricity refining and heating oil Distribution 4
Slide 5: Strong presence as a leading Pan-Nordic power and heat company
Strong presence as a leading Pan-Nordic power and heat company Population in key geographic markets Million 3 1 2 7 5
Slide 6: Majority of earnings from Power and Heat
Majority of earnings from Power and Heat EBIT Net assets Power Oil & Heat Oil Power & Heat Net sales Oil Power & Heat Based on figures for 2003 Power, Heat and Gas; Electricity Distribution; Oil Refining and Marketing 6
Slide 7: Changing markets
Changing markets 7
Slide 8: Aim for an open European power market
Aim for an open European power market - Nordic market at the forefront Stage 1: Develop regional markets Stage 2: Integrate the regional markets into a European market Nordic market Nordic market GB/IRL market (2005?) Baltic market GB/IRL market (2008?) (2005?) Baltic market (2008?) E. European mark
Slide 9: The Nordic home market is large on the European level
The Nordic home market is large on the European level Others 5 largest players 370 TWh Others 5 largest players Others Others 545 TWh The 383 TWh largest player 5 largest players 536 TWh Production in 2002 9 Sources: Fortum analyses, Company information; Eurelectric
Slide 10: Highly fragmented Nordic market – even big actors have modest shares
Highly fragmented Nordic market – even big actors have modest shares* Generation 14 million 14 million 383 TWh retail customers distribution customers Fortum Fortum Fortum others others others Vattenfall Vattenfall Vattenfall E.ON E.ON 43% Hafslund 64% 65% Nesa Statkraft Hafslund E.ON PVO Statkraft
Slide 11: Nordic power market is integrated
Nordic power market is integrated Power Flows to and from Nordic Market (2002, GWh) – Total electricity demand in the 200 Nordic countries approximately 386 TWh in 2002 – Nordic electricity prices lowest in SWEDEN Europe FINLAND – Only 4%-6% of total current electricity demand can be NORWAY 7,900 im
Slide 12: New capacity will be needed
New capacity will be needed Nordic generation and demand TWh/a 500 Demand In order to ensure long term supply 400 security 300 highest efficiency 200 100 Price signals are necessary 0 1990 2000 2010E 2020E Other Peat Renewables Oil Coal Hydro Natural gas Nuclear Wind Source: Europrog / Finergy 1
Slide 13: Price signals guide new capacity investments
Price signals guide new capacity investments €/MWh 60 Investments are made on rational 50 financial basis 40 New base load capacity requires a 30 long term price of 30-35 €/MWh 20 10 Price signals are necessary for generators decisions 0 -94 -96 -98 -00 -02 -04 -06 on new capacity Source: Nord
Slide 14: Fundamental Changes in the European Oil Sector
Fundamental Changes in the European Oil Sector Consolidation and privatisations Murmansk Planned New environmental requirements new export terminal Major demand shift away from gasoline and fuel oil to sulphur- St Petersburg Area free diesel Primorsk port Upgrades to meet existing and expa
Slide 15: Porvoo upgrade project is a necessary competitive move
Porvoo upgrade project is a necessary competitive move Transportation flows Historical Mt/a Now Increasing crude oil and feedstocks from Russia Changing demand/ supply balances of different oil products 10 10 50 Ambition to retain 5 leadership position in 5 regional competition Oil Refining/Jouko
Slide 16: Good start to the year 2004
Good start to the year 2004 | | : af | "a fe ar 5 | Aa +. ae r 2 | BS = = 1 Vi hk ——— “I el" | i j
Slide 17: Good Start for the Year
Good Start for the Year Weaker Market Drivers… …But Well Performing Businesses z Slight increase in Nordic electricity z Operating profit EUR 562 (475) consumption million – Norway up, Finland and Sweden z Earnings per share EUR 0.38 (0.32) down z Net cash from operating activities z Decrease of 46%
Slide 18: Focus on the Nordic area – progress in strategic steps
Focus on the Nordic area Progress in strategic steps 24 July 2003 • Strengthened market position in core business area • Agreement of the purchase of additional shares in Lenenergo • Separation and listing of oil businesses • Market fundamentals developing according to our assumptions. • Preparation
Slide 19: Income statement
Income statement MEUR Q1 / 04 Q1 / 03 2003 Net sales 2,823 3,593 11,392 Expenses -2,261 -3,118 -9,972 Operating profit 562 475 1,420 Financial expenses, net -75 -65 -236 Profit before taxes 487 410 1,184 Income taxes total -147 -107 -325 Minority interests -19 -33 -90 Net profit for the period 321 2
Slide 20: Operating profit
Operating profit MEUR Q1 / 04 Q1 / 03 2003 Power, Heat and Gas 335 291 776 Distribution 87 81 247 Markets 12 -5 47 Oil Refining & Marketing 140 125 396 Other Operations -12 -17 -46 Eliminations - - - Fortum Group 562 475 1 420 20
Slide 21: Balance sheet
Balance sheet MEUR Mar 31 Mar 31 Dec 31 2004 2003 2003 Fixed assets and other long-term investments 14,051 13,674 14,172 Current assets 2,259 2,813 2,390 ASSETS 16,310 16,487 16,562 Shareholders' equity 6,376 5,884 6,406 Minority interests 245 1,461 232 Interest-bearing liabilities 5,480 4,964 6,065
Slide 22: Cash flow statement
Cash flow statement MEUR Mar 31 Mar 31 Dec 31 2004 2003 2003 Net cash from operating activities 458 344 1,577 Capital expenditures -108 -83 -550 Acquisition of shares - -29 -570 Proceeds from sales of fixed assets 14 63 142 Proceeds from sales of shares 1 933 1,227 Change in other investments -51 1
Slide 23: Outlook for power and heat businesses
Outlook for power and heat businesses • Annual Nordic electricity consumption predicted to increase by about 1% over the next years. • Improved cost efficiency in the Group • In April, Nordic electricity forwards for the rest of 2004 EUR 29-31 per MWh. Fortum´s hedging for the next 12 months approxi
Slide 24: Outlook for oil businesses
Outlook for oil businesses • Oil refining reference margin in April has exceeded USD 5 /bbl. • Fortum´s premium margin in 2004 is expected to remain at the strong levels of previous years. • No major maintenance shutdowns planned at the refineries during 2004. • Hedging mitigates the negative impact
Slide 25: Potential to excel
Potential to excel • Strong first quarter • Structures in place • Well performing businesses • Strong cash flow • Fair market outlook • New opportunities by separating and listing the oil business Strengthened confidence in 2004 as another good year 25
Slide 26: Earnings per share, Dividend per share
Earnings per share Dividend per share EUR EUR 0.91 0.42 0.79 0.31 0.55 0.57 0.26 0.23 0.41 0.18 1999 2001 2003 1999 2001 2003 26
Slide 27: Key Financial Indicators
Key Financial Indicators EBIT Gearing 1 EUR mm % 1600 140 1 420 1400 CAGR: 19% 1 289 115 120 114 1200 100 93 88 85 1000 906 914 79 80 800 705 586 60 600 400 40 200 20 0 0 2 2 2 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 1. Gearing (%) defined as interest-bearing net debt / (sharehol
Slide 28: Supplementary material
Supplementary material | | : af | "a fe ar 5 | Aa +. we r = | BS = = 1G Vi hk “I el" | i j
Slide 29: Reporting Segments – Business Structure
Business Structure Group Group Sectors Power Powerand andHeat Heat Oil Oil Business Units Portfolio Portfolio Compo- Generation Heatand Värme Service Oil Distribution Generation Mgt Heat Vä rme Distribution Service Markets Oil Retail Shipping nents Mgt and Refining Trading Trading Reporting Segments
Slide 30: Key sensitivities during 2004
Key sensitivities during 2004 Approximate effect on the Group´s full-year EBIT based on hedge ratios at the end of 2003 Change in EUR million Price of electricity, EUR 1/MWh +/- 25 *) Oil refining margin, USD 0.1/bbl +/- 10 Crude oil price, USD 1/bbl +/- 10 **) US dollar, 10% +/- 15 *) the effect is
Slide 31: Water & snow reservoirs in Norway & Sweden
Water & snow reservoirs in Norway & Sweden 120 week 18/2004 110 reservoir content [TWh] 100 90 80 70 60 50 40 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1996 2001 2002 2003 2004 reference level 31
Slide 32: NordPool System Spot Price (EUR)
NordPool System Spot Price (EUR) 2003 2004 2002 = {LS Sp LS. tof rn ms => oOo LJ. S 2 eee rm IN T T ooo occa fa co & =— UMA 22nd aberay Apeg 120 (18 1d 16 ei OW 148 19 WO WAY TAN2 1 FOr! 32
Slide 33: Nordic Power Market Prices
(EUR) ices Nordic Power Market Pr 04 —Actual System Price ——Forward Prices 05.05.20) a Seepryees==s {007/15 Bere eee peers eee ben eee F 900s LS -----}-----4-----4-4--4-----; F SOOZ LS -----}-----J----- Vd t roozzs ----}-----]----- pf -4-----4 Ennzzs r cO0zcS r LOOzcS r OOOZcS 7 6661/2S 7 S66L/ES r
Slide 34: NordPool Year Forwards
EUR) ( NordPool Year Forwards Year 05 Year 06 Year O07 Year 04 22 FOYSOYZO FOFOYCO FOYEDYZO FOYcZOYZO FOF LOCO ED’ZLYZO EO*L LcO EOvOL/cO ED’60/20 EO’80/20 EO’ 40/20 eos0/c0 eorSO'cO ED/FOYCO EDYEDYZO eocOcO EO LOCO FOr! 34
Slide 35: Refining margins in North West Europe
Refining margins in North West Europe monthly averages USD/barre 10,0 l 8,0 6,0 4,0 2,0 0,0 -2,0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Average refinery in North West Europe Product prices: cargoes NWE FOB 35
Slide 36: Brent crude price and IPE Brent futures
Brent crude price ja IPE Brent futures USD/barrel 36 32 28 24 20 16 12 8 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Brent dated monthly IPE futures 30.4.2004 36
Slide 37: Fortum share price and Dow Jones STOXX utilities index
Fortum share price and Dow Jones STOXX 600 utilities index weekly averages of closing values, week 1/ 2001 = 100 30.4.04 250 200 150 100 50 0 01/01 07/01 01/02 07/02 01/03 07/03 01/04 Fortum euro Dow Jones index 37
Slide 38: Number of Fortum shares traded
Number of Fortum shares traded (millions shares/day, weekly average) 30.4.04 5 7.3 M 14 M 4 3 2 1 0 12/98 06/99 12/99 06/00 12/00 06/01 12/01 06/02 12/02 06/03 12/03 38
Slide 39: Shareholders as of 30 April 2004
Shareholders as of 30 April 2004 Households 5.6% Financial and insurance institutions 3.2% Other Finnish investors 10.6% International investors 20.1% Finnish State 60.5% Market capitalisation EUR 7.9 billion More than 50,000 shareholders Listed on the Helsinki Exchanges 39
Slide 40: 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. 40