Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — EEI Conference, London, March 15, 2010
23 slides from Fortum Oyj's conference presentation, Mar 15, 2010
Slide 1: A leading power and heat company in the Nordic area
FORTUM A leading power and heat company in the Nordic area Tapio Kuula, President & CEO Fortum Corporation EEI Conference, London, March 15, 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: Our geographical presence today
Our geographical presence today Nr 1 Heat Nordic countries Distribution Generation 48.1 TWh Electricity sales 54.9 TWh Electricity Heat sales 18.0 TWh sales Distribution cust. 1.6 million Nr 2 Power Electricity cust. 1.2 million Russia generation TGC-1 (~25%) Power generation ~6 TWh Heat sales ~8 TW
Slide 4: Fortum is a mid-sized European power generation player, relatively larger in heat (#4)
Fortum is a mid-sized European power generation player, relatively larger in heat (#4) Power generation Heat production Largest producers in Europe and Russia, 2008 TWh Largest global producers, 2008 TWh EDF *) IES E.ON Gazprom Enel **) Dalkia RWE+Essent Fortum Gazprom Vattenfall Vattenfall+Nuon RAO
Slide 5: Fortum's share performance
Fortum's share performance Fortum's 2007-2009 share performance Fortum's share performance since listed 160 700 140 600 120 500 100 400 80 300 60 200 40 20 100 0 0 2007 2008 2009 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Fortum DJ utilities Fortum DJ utilities 5
Slide 6: Capital returns
Capital returns Dividend per share EUR 1.35 1.26 Total ~ 6,853 MEUR 1.12 • Dividend proposal 2009 EUR 0.58 1.00 1.00* 0.53 1.00 per share, in total ~EUR 0.58 0.54 0.9 billion 0.42 • Dividend policy of 50-60% 0.77 0.31 0.73 0.58 0.23 0.26 payout of previous year's 0.13 0.18 results on the average 199
Slide 7: Fortum's carbon exposure among the lowest in Europe
Fortum's carbon exposure among the lowest in Europe g CO2/kWh electricity, 2008 1200 1000 800 600 Average 350 g/kWh 400 200 41 0 GDF Suez Europe Dong Energy Enel Union Fenosa Nuon Scottish&Southern EDP CEZ Vattenfall E.ON Statkraft British Energy Verbund RWE Fortum Iberdrola Drax EDF DEI PVO Source:
Slide 8: Fortum's investment programme
Fortum’s investment programme Nordic region, Poland and Baltic countries • Olkiluoto 3, Finland, nuclear • Swedish nuclear • Refurbishing of existing hydro assets • Czestochowa, Poland (coal/biomass CHP), Q3/2010 • Pärnu, Estonia (biomass/peat CHP), end of 2010 • Wind power project development Elect
Slide 9: Decision-in-Principle application for Loviisa 3
Decision-in-Principle application for Loviisa 3 • A new 1000-1800 MW nuclear power plant unit in Loviisa • Designed service life of the unit at least 60 years • Fortum already has two nuclear power plant units in Loviisa • The power plant unit will be designed to allow for combined heat and power pr
Slide 10: New capacity, except nuclear, will require over 60 EUR/MWh power price
New capacity, except nuclear, will require over 60 EUR/MWh power price EUR/MWh EUR/MWh 110 110 CO2 cost 100 100 Other costs ( variation) 90 90 80 80 70 70 60 Futures 60 1 March 2010 50 50 40 40 30 30 20 20 10 10 0 0 1995 -97 -99 -01 -03 -05 -07 -09 -11 -13 -15 Coal Gas Nuclear Hydro Wind Clean coal
Slide 11: Nordic and Continental markets are integrating – interconnection capacity could double by 2020
Nordic and Continental markets are integrating – interconnection capacity could double by 2020 1400 MW link to the UK could connect offshore New interconnections could wind, too; North Seas Countries’ Offshore Grid double the capacity to over Initiative launched for supergrid development 8000 MW by
Slide 12: Signs of demand picking up towards the end of 2009
Signs of demand picking up towards the end of 2009 Chelyabinsk Urals area Denmark Tyumen Sweden Norway Finland Russia Russia Nordic 10 % 10 % 5% 5% 0% 0% -5 % -5 % -10 % -10 % -15 % -15 % Q1 2009 vs Q1 2008 Q1 2009 vs Q1 2008 Q2 2009 vs Q2 2008 Q2 2009 vs Q2 2008 -20 % -20 % Q3 2009 vs Q3 2008 Q3 20
Slide 13: Improving efficiency, accountability and simplicity
Improving efficiency, accountability and simplicity Number of employees, 31 Dec. 18000 • New organisation structure was 15000 implemented from 1 October 2009 onwards 12000 • A programme targeting improved efficiency, 9000 15579 accountability and simplicity initiated 6000 11613 3000 • The process wi
Slide 14: Russia is a large market – World's 4th in power generation
14 billion tons Sa ud billion tons i 10 20 30 40 100 150 200 250 Ar 50 0 0 ab U ia S R us Ira si n a C h Ira Au ina q st Ku ra Ve w lia ne ait In zu d el a *) incl. Montenegro, Kosovo U ia Ka ra k U za ine AE R So khs us si ut tan h a Af Ka Lib ric za ya Se a kh Coal reserves rb st Oil reserves ia a
Slide 15: Fortum has long experience of successful co-operation with Soviet Union and Russia
Fortum has long experience of successful co-operation with Soviet Union and Russia 1950 1960 1970 1980 1990 2000 Construction of hydro power Construction of Loviisa Construction of North-West CHP plants in Kola area nuclear power plant in St. Petersburg Electricity import to Finland Agreement on J
Slide 16: Further power market liberalisation
Further power market liberalisation Share of liberalised trade for existing capacity • Further liberalisation of energy 100 % 100 % 90 % 100 % market increased to 60% in 80 % 80 % January 2010 70 % 60 % • The rate of liberalised volume 60 % 50 % 50 % is based on 2007 balance. All 40 % new capacity i
Slide 17: Investment programme of OAO Fortum
Investment programme of OAO Fortum Power generation capacity (MW) Plant Fuel type Existing Planned Total MW Tyumen CHP-2 Gas 755 450 (Condensing) 1,205 6,000 Tyumen CHP-1, Q3/2010 Gas 472 190 (CHP/Condensing) 662 5,000 Tobolsk CHP, Q3/2010 Gas 452 210 (Condensing) 662 4,000 +73% Chelyabinsk CHP-3, Q
Slide 18: Main earnings drivers of OAO Fortum
Main earnings drivers of OAO Fortum Development of the Heat business Margin increase (power price vs. gas price) Increased income from new volume sold Increased income from new capacity (higher payments for new capacity) Efficiency improvement programme New capacity and volume through investment pro
Slide 19: Strong financial position – Key ratios
Strong financial position Key ratios MEUR 2009 2008 2007 EBITDA 2 292 2 478 2 298 Net cash flow from operations 2 264 2 002 1 670 Interest-bearing net debt 5 969 6 179 4 466 Equity 8 491 8 411 8 651 Balance sheet total 19 841 20 278 17 674 Net debt/EBITDA* 2.6 2.5 2.2 Return on capital employed (%)*
Slide 20: 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 1 March 2010 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 20
Slide 21: Hedging of Power division's Nordic sales
Hedging of Power division's Nordic sales Status at the end of December 2009 (Status at the end of Sep 2009) Hedge ratio Hedge price 2010 ~ 70% ~ EUR 44 per MWh (~65%) (~ EUR 44 per MWh) 2011 ~ 40% ~ EUR 42 per MWh (~35%) (~ EUR 42 per MWh) 21
Slide 22: Fortum in a strong position
Fortum in a strong position • Flexible, low-cost and climate-benign generation portfolio • Russian power reform proceeding and the results of OAO Fortum improving as planned • Nordic power demand recovering • New power plants to be commissioned this year • Good hedging positions • Strong financial p
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