Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Q3 2001 Earnings Presentation
33 slides from Fortum Oyj's earnings presentation, Nov 1, 2001
Slide 1: Interim Report January-September 2001
Interim Report January-September 2001 1 November 2001
Slide 2: Result improved, net debt down, performance improvement actions successful
January-September 2001 Result improved, net debt down, performance improvement actions successful • Operating profit up by 19%, profit before extraordinary items up by 41% • Earnings per share up by 26% • Strong cash flow before financing, € 806 million • Strengthened balance sheet − Net debt down b
Slide 3: Strategic actions
Strong Nordic energy company Strategic actions • Focusing of power generation – sales of power assets in the U.K., Hungary and Thailand • Focusing of oil and gas production – developing an oil field in northwestern Russia, decision to sell our interest in oil fields in Oman • Sale of Transmission En
Slide 4: Operational actions
Operational actions • Maintenance shutdowns (Porvoo and Loviisa) as planned • Increased production capacity of Citydiesel and base oils • Optimization of power generation • Rearrangements and outsourcing actions in the power and heat technology unit • Restructuring programme of Power Plant Engineeri
Slide 5: Focus on those areas where most value is added to the Business Units
Focus on those areas where most value is added to the Business Units (BU) Drive performance Corporate center value added Shape Develop strategy and leaders portfolio Fortum Corporation/RNR/hyk 1 November 2001 5
Slide 6: Fortum corporate structure
Fortum corporate structure FORTUM Oil Power and Heat Sectors Fortum Fortum Business Oil Oil Shipping Gene- Distri - Birka E&P PMT Heat Gas Energy Markets Units Refining Retail ration bution Energi Solutions 50% Fortum Corporation/RNR/hyk 1 November 2001 6
Slide 7: Crude Oil Price Performance
Crude Oil Price Performance Brent, weekly averages 2000 - 2001 USD/bbl 40 35 30 25 Price 2001 20 Price 2000 15 10 5 0 1.1 1.4 1.7 1.10 Fortum Corporation/RNR/hyk 1 November 2001 7
Slide 8: Refining margin, Brent complex
Refining margin, Brent complex weekly averages 2000 - 2001 USD/bbl 7 6 5 4 Margin 2001 3 2 Margin 2000 1 0 -1 1.1. 1.4. 1.7. 1.10. Fortum Corporation/RNR/hyk 1 November 2001 8
Slide 9: Electricity Price Performance
Electricity Price Performance Nord Pool system price, weekly average 2000 - 2001 €/MWh 40 35 30 25 Price 2001 20 Price 2000 15 10 5 0 1.1 1.4 1.7 1.10 Fortum Corporation/RNR/hyk 1 November 2001 9
Slide 10: Key indicators
Key indicators III/01 III/00 I-III/01 I-III/00 2000 Net sales, M€ 2,482 2,561 7,874 7,532 10,614 Operating profit, M€ 184 201 743 623 906 Profit before extraordinary items, M€ 134 144 583 414 633 Earnings per share, € 0.11 0.13 0.49 0.39 0.55 Interest-bearing net debt, M€ 3,755 5,067 4,626 Return on
Slide 11: Net sales
Net sales M€ M€ I-III / 01 I-III / 00 2000 12 000 Disc Oil and Gas Upstream 556 331 533 Other Refining and Marketing 5 544 5 550 7 759 Eng 10 000 Serv Power Generation 1 401 1 246 1 760 Elect Electricity Distribution 335 338 467 8 000 P&H Service 253 234 356 R&M 6 000 O&G Engineering 299 408 585 Oth
Slide 12: Operating Profit
Operating Profit M€ M€ I-III / 01 I-III / 00 2000 1 000 Disc Oil and Gas Upstream 180 131 218 Other Eng Refining and Marketing 222 274 382 800 Serv Power Generation 228 148 211 Elect Electricity Distribution 105 93 127 P&H 600 Service 29 4 12 R&M O&G Engineering -9 -5 -21 400 Other Operations -16 -1
Slide 13: Oil and Gas Upstream
Oil and Gas Upstream Production profile (Including SeverTEK) • The year-end value of 60000 oil and gas reserves was 50000 € 1.4 billion 40000 BOEPD 30000 • Production cost at USD 10 20000 a barrel, depreciation included 10000 0 • The share of natural gas 1994 1996 1998 2000 2002 2004 2006 2008 2010
Slide 14: Brent crude oil spot price
Brent crude oil spot price USD/barrel 40 35 30 25 20 15 10 5 0 1.1.1995 1.1.1996 1.1.1997 1.1.1998 1.1.1999 1.1.2000 1.1.2001 Fortum Corporation/RNR/hyk 1 November 2001 14
Slide 15: Oil and Gas Upstream, January-September 2001
Oil and Gas Upstream January-September 2001 • Oil and gas production was at an average of 40,900 oil-equivalent barrels a day (32,400), increase of 25%. • The average price of oil sold by Fortum was 25.6 USD/bbl (27.5). • Decision to invest in the first phase of the developing of the South- Shapinsk
Slide 16: Oil Refining and Marketing
Oil Refining and Marketing Production of Citydiesel 1997- 2001 • Market leader in the refining and actual/estimate marketing of high-quality, pro- 4,000,000 environmental petroleum products in the Baltic Rim 3,000,000 • Gasolines and diesel fuels fulfil the 2,000,000 tightest EU requirements. 1,000,
Slide 17: Refining margin in North West Europe
Refining margin in North West Eurpoe USD/bbl 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 -1,0 -2,0 1995 1996 1997 1998 1999 2000 2001 Fortum Corporation/RNR/hyk 1 November 2001 17
Slide 18: Oil refining and marketing, January-September 2001
Oil refining and marketing January-September 2001 • The average North-West European refining margin was 2.2 USD/bbl (3.5). Fortum´s refining margin was nearly USD 2 higher. • Fortum refined a total of 8.6 (9.3) million tonnes of crude oil and other feedstocks. 5.3 (5.5) million tonnes of petroleum p
Slide 19: Power and Heat Generation and Sales
Power and Heat Generation and Sales Electricity purchases in 2000 • The second largest company in the Nordic power generation and sales Other purchases Nuclear market, number one in heat generation Power Purchases from Russia • Mostly CO2-free hydro-electric and nuclear power and combined power Heat
Slide 20: Nordic Power market prices
Nordic Power market prices €/MWh Nord Pool System Weekly Price 45 40 35 30 25 20 15 10 5 0 1994 1995 1996 1997 1998 1999 2000 2001 Fortum Corporation/RNR/hyk 1 November 2001 20
Slide 21: Snow + hydro reservoir in Sweden and Norway
Snow + hydro reservoir in Sweden and Norway 1999 2000 2001 Normal snow and hydro reservoirs 120 110 100 TWh 90 80 70 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Week Fortum Corporation/RNR/hyk 1 November 2001 21
Slide 22: Power and Heat Generation and Sales, January-September 2001
Power and Heat Generation and Sales January-September 2001 • The average price of electricity in the Nordic electricity exchange was € 23.8 per MWh (11.5). • Fortum´s electricity sales were 40.5 TWh (36.0), heat sales 12.6 TWh (11.9). • The average price of electricity sold by Fortum in the Nordic c
Slide 23: Electricity Distribution
Electricity Distribution Electricity distribution in distribution networks by area, TWh Sweden Finland Other countries 16 • The operations include regional 14 transmission and electricity 12 distribution. 10 8 • In the distribution networks, the 6 market share of Fortum´s wholly- 4 owned subsidiarie
Slide 24: Electricity distribution, January-September 2001
Electricity distribution January-September 2001 • The distribution of electricity in distribution networks amounted to a total of 11.2 TWh (10.9). • Electricity transmissions via the regional distribution network totalled 4.9 TWh (5.3) in Finland and 5.8 TWh (4.7) in Sweden. • Fortum harmonized the
Slide 25: Service
Service January-September 2001 • The energy availability of power plants operated by Fortum Service was good 97.1% (96.0). • A number of orders for turbine maintenance and substation projects as well as for transformer maintenance assignments • The operation and maintenance contract for the Humber p
Slide 26: Engineering
Engineering January-September 2001 • The restructuring programme for the Power Plant Engineering continued. The measures included new service offerings, updating business processes and cutting costs. • Transmission Engineering was sold. • At the end of June, the volume of outstanding contracts total
Slide 27: Income statement
Income statement MEUR I-III /01 I-III / 00 2000 Net sales 7,874 7,532 10,614 Expenses -7,131 -6,909 -9,708 Operating profit 743 623 906 Financial expenses, net -160 -209 -273 Profit before extraordinary items 583 414 633 Extraordinary items - -8 -10 Profit before taxes 583 406 623 Income taxes total
Slide 28: Balance sheet
Balance sheet MEUR Sep 30, 2001 Sep 30, 2000 Dec 31, 2000 Fixed assets and other long-term investments 10,932 12,209 11,712 Current assets 2,887 3,067 3,116 Assets 13,819 15,276 14,828 Shareholders' equity 5,173 4,934 5,022 Minority interests 1,270 1,304 1,281 Interest-bearing liabilities 4,132 5,48
Slide 29: Cash flow statement
Cash flow statement MEUR I-III /01 I-III / 00 2000 Net cash from operating activities 889 422 424 Capital expenditures -483 -1 620 -1 742 Proceeds from sales of fixed assets 418 336 518 Change in other investments -18 0 115 Cash flow before financing activities 806 -862 -685 Net change in loans -703
Slide 30: Segments starting from Financial Statements 2001
Segments starting from Financial Statements 2001 Segments Business Units Oil and Gas Upstream Exploration and Production Oil Refining and Marketing Oil Refining Oil Retail Shipping Oil share of Fortum Markets Power, Heat and Gas Generation PMT Heat Gas Equivalent functions within Birka Energi Power
Slide 31: Short-term outlook
Short-term outlook • The Opec target price for crude oil is still USD 22 - 28 a barrel, in October Brent crude oil stood at USD 20.5 a barrel, Brent futures for the remainder of 2001 are USD 20.8 a barrel. A decrease in the price of crude oil would weaken the estimated result for oil and gas product
Slide 32: Crude oil price development
Crude oil price development Brent, weekly averages 2000 - 2001 USD/bbl 40 35 Price 2001 30 Price 2000 25 Futures 2001 20 15 10 5 0 1.1 1.4 1.7 1.10 Fortum Corporation/RNR/hyk 1 November 2001 32
Slide 33: Electricity price performance and futures
Electricity price performance and futures Nord Pool, system price, weekly average €/MWh 40 35 30 25 Price 2001 20 Futures 29.10.2001 Price 2000 15 10 5 0 1.1 1.4 1.7 1.10 Fortum Corporation/RNR/hyk 1 November 2001 33