Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Fortum Oyj Corp Ord — Q4 2023 Earnings Presentation
23 slides from Fortum Oyj's earnings presentation, Feb 7, 2024
Slide 1: Financial Statements 2023
Financial Statements 2023 Fortum Corporation 7 February 2024
Slide 2: Markus Rauramo, President and CEO
Markus Rauramo President and CEO
Slide 3: Financial highlights 2023
Financial highlights 2023 • Volatile market environment • Strong financial position and solid financial performance • Return to bond market - balanced maturity profile • Lost control of Russia business - segment deconsolidated • 98% of power generation CO2-free - specific emissions for power at 16 g
Slide 4: Solid financial performance in 2023
Solid financial performance in 2023 2023 Operating profit Key financial indicators for continuing operations The Generation segment improved, but Group’s comparable operating Comp. OP Comp. EPS OCF Leverage profit was weighted down by the lower results in the Consumer 1.21 1.28 1,717 1,710 Solutions
Slide 5: Strategy execution in 2023
Strategy execution in 2023 Deliver reliable clean energy Drive decarbonisation in industries Transform and develop Ensuring long term productivity Partnering with strategic customers and Restructuring organisation to fit the and security of supply developing projects to enable growth current structu
Slide 6: Nordic power prices recovered in Q4 2023
Nordic power prices recovered in Q4 2023 Cold and dry weather was driving Nordic power in Q4 • After a brief rebound in October as a response to heightened geopolitical risks in the Middle East, European gas prices continued to decline until the end of the year on low demand, stable supply and recor
Slide 7: Our business portfolio
Our business portfolio FORTUM CORE DEMAND-DRIVEN EXPLORE Strengthen and selectively grow areas of RENEWABLES Future-shaping by studying, core competence, while capitalising volatile Prepare ready-to-build validating, and developing markets. pipeline to serve customer future opportunities. demand gro
Slide 8: Navigate the uncertainty with phased strategy execution
Navigate the uncertainty with phased strategy execution Near term Longer term ‘Sharpen focus and optimise core’ ‘Electrify and grow’ Optimise the operation of the Focus on value creation from flexibility, generation portfolio and manage efficiency and cash flows business risk Decrease share of merch
Slide 9: Disciplined capital allocation and focus on cash flow
Disciplined capital allocation and focus on cash flow Disciplined capital expenditure Efficiency improvement and Total EUR 1.7 billion (excl. cash flow acquisitions) for 2024-2026 Fixed cost reduction • Growth up to € 800 million • € 100 million • Annual maintenance of € 300 • Gradually by end of 20
Slide 10: Strategic targets to capture long-term opportunities, mitigate risks
Strategic targets to capture long-term opportunities, mitigate business and market risks STRATEGIC Strengthen Nordic Ensure value Stabilise Demand-driven TARGET leadership creation from flexibility income streams renewables Rationale Focus on core competence Capitalising on volatile markets Lower co
Slide 11: Tiina Tuomela, CFO
Tiina Tuomela CFO @fortum Powering thriving world
Slide 12: Slightly lower result but stable cash flow for the year 2023
Slightly lower result but stable cash flow for the year 2023 Higher hedge price – Key financials reflected in the cumulative result MEUR IV/2023 IV/2022 2023 2022 • Strong comparable operating Sales 1,858 2,407 6,711 7,774 profit at EUR 1,544 m Comparable EBITDA 459 774 1,903 2,025 • Comparable EPS
Slide 13: Result impacted mainly by lower achieved power price
Result impacted mainly by lower Q4/2023 achieved power price Generation Earnings down due to lower achieved Comparable operating profit power price, lower power production (EUR million) on condensing power and higher costs related to co-owned production companies Consumer Solutions Negatively impact
Slide 14: Generation segment the key earnings driver in 2023
Generation segment the key earnings 2023 driver in 2023 Generation Higher hedge price and good Comparable operating profit physical optimisation supported by (EUR million) high price volatility. All-time high earnings and achieved power price. Consumer Solutions Decreased mainly due to lower sales m
Slide 15: Efficiency improvements and disciplined capital expenditure
Efficiency improvements and disciplined capital expenditure to enhance earnings, cash flow and competitiveness Fixed cost reduction Capital expenditure Capex 2024-2026 € 100 m € 1,700 m ⚫ €0.3 bn uncommitted ⚫ €1.4 bn committed gradually materialising, for 2024-2026 ⚫ Decarbonisation of full effect
Slide 16: Balanced maturity profile and strong liquidity position
Balanced maturity profile and Solid credit metrics strong liquidity position 942 59 'BBB' long-term issuer credit rating, Financial net debt 14 Stable outlook 404 'BBB' long-term issuer credit rating, 474 Stable outlook 149 141 Fortum’s objective: Maintain solid investment grade rating of at least B
Slide 17: Outlook
Outlook Generation’s Nordic outright hedges: Capital expenditure guidance: • For 2024: 70% hedged at € 47/MWh 2024: Capital expenditure, including maintenance (Previously reported 65% at € 47/MWh) capex, (excluding potential acquisitions) is expected to be ~€ 550 million • For 2025: 40% hedged at €
Slide 18: Q&A
O&A 5 om @fortum Powering a thriving world
Slide 19: Appendix
@fortum 19 Powering a thriving world
Slide 20: Nordic hydro reservoirs and wholesale power price
Nordic hydro reservoirs and wholesale power price Hydro reservoirs Power price Reservoir content (TWh) EUR/MWh 120 120 500 500 Realised system price 100 100 Futures 1 February 2024 400 400 80 80 300 300 60 60 200 200 40 40 Norway 100 100 20 20 Sweden 2003 2020 2022 2023 2024 Average Finland 0 0 00 Q
Slide 21: All time high achieved power price at 63.1 per MWh
GENERATION: IV/2023 Volumes, TWh All time high achieved power IV/2023 IV/2022 price at 63.1 per MWh 6.0 Hydro 4.8 6.9 Nuclear 6.1 Q4/2023 vs. Q4/2022 • Comparable operating profit down by 43% 2023 Volumes, TWh 2023 2022 • Mainly due to the lower achieved power price, lower power production on conden
Slide 22: Consumer Solutions: Result more than halved
CONSUMER SOLUTIONS: Result more than halved Number of customers (‘000) 2,380 2,240 Q4/2023 vs. Q4/2022 • Earnings more than halved by EUR 13 million to EUR 12 million, mainly due to lower electricity sales margins and regulated electricity price cap for the year 2023 set for end users by the Polish
Slide 23: Other Operations: Result decreased significantly
OTHER OPERATIONS: Result decreased significantly Q4/2023 vs. Q4/2022 • Comparable operating profit decreased by EUR 5 million to EUR -43 million. • Mainly due to development costs for the new operating MEUR IV/2023 IV/2022 2023 2022 model and higher costs in enabling functions, the negative effect o