Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Fortum Oyj Corp Ord — Q2 2020 Earnings Presentation
24 slides from Fortum Oyj's earnings presentation, Aug 19, 2020
Slide 1: Half-year Financial Report January-June 2020
Half-year Financial Report January-June 2020 Fortum Corporation 19 August 2020
Slide 2: Priorities for the new CEO
Priorities for the new CEO Create a joint Maintain the Foster a strong strategy for the Group’s leadership Fortum-Uniper financial culture based Group strength on openness 2
Slide 3: Q2 2020 – Exceptionally low Nordic spot prices largely offset by solid hedges
Q2 2020 – Exceptionally low Nordic spot prices largely offset by solid hedges • Power and heat consumption stable in the Nordics – Nordic spot price down 84% – Wet hydrology in Q2 – Volatile commodity and CO2 prices • Limited impact of Covid-19 on Fortum group – adverse effects on the Russian operat
Slide 4: Q2 2020 highlights
Q2 2020 highlights Disclosed divestments Limited impact from totalling EUR 1.2 Covid-19, Russian billion operations affected Ownership in Stockholm Exergi under strategic Focus on short term review actions to maintain financial flexibility Strategic review of district heating assets in Poland and Ba
Slide 5: Power demand development in different areas
5 GW GW 60 65 40 45 50 55 30 35 40 45 50 55 60 65 01/01 01/01 01/16 01/31 01/20 0% 02/15 02/08 -10% 03/01 02/27 03/16 03/17 03/31 04/15 04/05 04/30 04/24 05/15 05/13 05/30 06/01 06/14 06/29 06/20 07/14 07/09 Nordics 07/29 07/28 Germany 08/13 08/16 08/28 09/12 09/04 09/27 09/23 10/12 10/12 10/27 10/3
Slide 6: Risk assessment of Covid-19 impact on Fortum
Risk assessment of Covid-19 impact on Fortum So far very limited effect from Covid-19 on Group level, adverse effects in Russia Not directly Covid-19 related Directly (also) Covid-19 related • Power price – hedging supports • Power and heat price – CSA and CCS capacity result payments provides stabi
Slide 7: After delayed spring, the Nordic hydro reservoirs climbed high in Q2
After delayed spring, the Nordic hydro reservoirs climbed high in Q2 Reservoir content (TWh) 120 • Rainy and mild winter led to a rapid strengthening of the 100 Nordic water reservoirs in Q1. • In addition to high water 80 reservoir levels, the overall snow pack was estimated to be significantly abo
Slide 8: Weak coal and gas prices showed signs of recovery in late Q2
Weak coal and gas prices showed signs of recovery in late Q2 USD / t Coal price (ICE API2 2021) 120 • Coal prices have declined on cheap natural gas and more expensive 100 CO2, and Covid-19 exacerbated coal demand weakness. 80 • During Q2, API2 2021 continued losing its value through April (-4.2% Mo
Slide 9: CO2 trended upward as Q2 progressed
CO2 trended upward as Q2 progressed EUR / tCO2 CO2 price (EUA DEC 2020) 36 • After touching a two-year low at 15 EUR/t in March 2020, CO2 price 30 recovered quickly, averaging 21 EUR/t for Q2 and above 23 EUR/t in June. 24 • CO2 price is pushed down by high auction supply and low gas prices. At the
Slide 10: Rainy and mild weather combined with weak commodities
Rainy and mild weather combined with weak commodities • During Q2, the average Nord Pool system spot price EUR/MWh Nordic spot and forward prices declined exceptionally to 5.6 EUR/MWh (35.6) 70 Realised system price • The FI & SE3 area prices declined, but clearly less: Futures 12 May 2020 60 Future
Slide 11: Hedging supported Fortum's achieved power price as power prices fell
Hedging supported Fortum’s achieved power price as power prices fell in the Nordics, Russia power prices declined Spot price for power in Nord Pool power exchange Spot price for power (market price), Urals hub EUR/MWh RUB/MWh 42 38,6 1 500 35,6 34,7 35 1 250 1 151 1 107 1 081 1 068 1 021 28 1 000 21
Slide 12: Generation
Generation Q2 2020 H1 2020 • Lower power generation • Higher power generation – hydro -0.2 TWh, – hydro +1.3 TWh – nuclear -0.3 TWh – nuclear -0.3 TWh • Lower achieved power price, -4% – wind +0.1 TWh (1.4 EUR/MWh), supported by high • Lower achieved power price, -8% hedge levels, spot power price (
Slide 13: Russia
Russia Q2 2020 H1 2020 • Lower power margin and generation • Lower power margin and generation • Lower CSA payments • Lower CSA payments • Higher heat tariffs • Higher heat tariffs • Q2 2019: Positive one-time effect • FX effect of EUR -4 million related to credit losses • FX effect of EUR -7 millio
Slide 14: City Solutions
City Solutions Q2 2020 H1 2020 • Lower result in Norwegian district • Lower heat sales volumes heating business • Lower power sales prices • Improved profit in the recycling and • Lower Norwegian heat sales prices waste business • Pavagada 2 solar plant contributed • Positive result contribution fro
Slide 15: Consumer Solutions
Consumer Solutions Q2 2020 H1 2020 • Competition continued to be intense • Higher sales margins as a result of with high customer churn active development of the service • 11th consecutive quarter of EBITDA offering following the Hafslund improvement integration and subsequent development of the bus
Slide 16: Uniper
Uniper Q2 2020 H1 2020 • Uniper income statement • In Q1, Fortum’s share of Uniper’s profits consolidated as of Q2 as a subsidiary as Uniper recorded as an associated • Sales figure inflated by commodity company in Other Operations trading business • Uniper contribution to Fortum’s EPS 0.65 (0.50) •
Slide 17: Q2 2020 – Lower power prices and volumes
Q2 2020 – Lower power prices and volumes Comparable operating profit EUR million • 0.5 TWh lower volumes • 1.4 EUR/MWh • Lower power lower achieved margin and • Uniper price volumes consolidated • Higher heat tariffs as a subsidiary • No increase in credit losses (Q2 2019: positive one-time effect)
Slide 18: H1 2020 – Lower power and heat prices, higher hydro volume
H1 2020 – Lower power and heat prices, higher hydro volume Comparable operating profit EUR million • 1.0 TWh higher • Lower power volumes margin and • 2.9 EUR/MWh volumes • Lower heat sales • Uniper volume • Higher sales consolidated lower achieved • Lower CSA • Lower power margins as a as a subsidi
Slide 19: Income statement
Income statement II/2020 II/2019 I-II/2020 I-II/2019 2019 LTM MEUR • Uniper’s income statement consolidated as of Q2 2020 Sales 12,330 1,144 13,687 2,834 5,447 16,300 • Uniper’s sales of EUR 11.4 bn mainly related to energy trading and optimisation business Other income 2,134 23 2,157 44 110 2,223 -
Slide 20: Cash flow and change in financial net debt in H1 2020
Cash flow and change in financial net debt in H1 2020 +1,090 7 772 147 6 790 977 6 682 1 770 1 020 1 849 4 833 Financial net Acquired Including CF from Investments Divestments Dividends paid Dividends paid FX and other Financial net debt Q4/19 financial debt acquired debt operating paid to minoritie
Slide 21: Focus remains on optimising of cash flow and maintaining of financial flexibility
Focus remains on optimising of cash flow and maintaining of financial flexibility Fortum targets to have a solid investment grade rating of at least BBB to maintain its financial strength, preserve financial flexibility and good access to capital markets for the enlarged group. Focus on cash flow -
Slide 22: Outlook
Outlook Hedging 2020 Estimated annual capital Income taxation expenditure, including maintenance Generation Nordic hedges: In 2020, the comparable effective and excluding acquisitions corporate income tax rate for For the remainder of 2020: Fortum is estimated to be in the 85% hedged at EUR 34 per M
Slide 23: Q&A
Q&A
Slide 24: Fortum Investor Relations and Financial Communications
For more information, please visit www.fortum.com/investors Fortum Investor Relations and Financial Communications Ingela Ulfves Rauno Tiihonen Måns Holmberg Pirjo Lifländer Meeting requests: Vice President, Manager Manager IR Specialist Anna-Elina Perttula Investor Relations and IR Coordinator Fina