FORTUM Power and heat company in the Nordic area, Russia, Poland and the Baltics. Investor / Analyst material (excluding Fortum Värme) May 2014

Transcription

1 FORTUM Power and heat company in the Nordic area, Russia, Poland and the Baltics Investor / Analyst material (excluding Fortum Värme) May 2014

2 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

3 Content Fortum today, pages 4 18 European and Nordic power markets, pages Data on Fortum s nuclear fleet, pages Russia, pages Data on capacity payments, pages Fortum s investment programme, page 42 Financials and outlook, pages Hedges, pages Efficiency programme, page 51 Facts of Distribution, page 52 3

4 Appr. 130,000 shareholders Power and heat company in the Nordic countries, Russia, Poland and the Baltics Listed at the Helsinki Stock Exchange since 1998 Among the most traded shares on the NASDAQ OMX Helsinki stock exchange Market cap ~15 billion euros Households 10.3% Financial and insurance institutions 2.3% Other Finnish investors 8.6% Finnish State 50.8% Foreign investors 28.0%

5 Capital returns : 2013 EUR 1.10 per share ~ EUR 1.0 billion Fortum s dividend policy is based on the following preconditions: The dividend policy ensures that shareholders receive a fair remuneration for their entrusted capital, supported by the company s long-term strategy that aims at increasing earnings per share and thereby the dividend. When proposing the dividend, the Board of Directors looks at a range of factors, including the macro environment, balance sheet strength as well as future investment plans. Fortum Corporation's target is to pay a stable, sustainable and over time increasing dividend of 50-80% of earnings per share excluding one-off items Fortum has since 1998 annually paid dividends in total ~10,493 MEUR 5 year dividend per share (EUR) history

6 Fortum Executive Management as of 1st March 2014 President and CEO Tapio Kuula Business Divisions Corporate Staff Functions Finance Chief Financial Officer Timo Karttinen Strategy and M&A Senior Vice President Kari Kautinen Legal N.N. Human Resources and IT Senior Vice President Mikael Frisk Communications Senior Vice President Helena Aatinen Corporate Relations Senior Vice President Esa Hyvärinen Chief Operating Officer Matti Ruotsala Hydro Power and Technology Executive Vice President Per Langer Nuclear and Thermal Power Executive Vice President Tiina Tuomela Heat, Electricity Sales and Solutions Executive Vice President Markus Rauramo Russia Executive Vice President Alexander Chuvaev Distribution Executive Vice President Timo Karttinen 6 Country responsibles: Timo Karttinen/Finland, Norway; Per Langer/Sweden; Alexander Chuvaev/Russia; Markus Rauramo/Poland, Baltics, India

7 Fortum s Mission and Strategy Mission Fortum s purpose is to create energy that improves life for present and future generations. We provide sustainable solutions for society and deliver excellent value to our shareholders. Strategy Build on the strong Nordic core Create solid earnings growth in Russia Build a platform for future growth Strong competence in CO 2 -free hydro and nuclear, efficient CHP production and energy markets 7

8 Our geographical presence today Nr 3 Nr 1 Nr 2 Nr 2 Power generation Heat Distribution Electricity sales Nordic countries* Power generation Heat sales In addition, 50% share in Fortum Värme in Stockholm Great Britain Power generation 1.0 TWh Heat sales 1.8 TWh 45.3 TWh 5.8 TWh Distribution customers 1.6 million Electricity customers 1.2 million Russia Key figures 2013* Sales EUR 5.3 bn Operating profit EUR 1.5 bn Balance sheet EUR 23 bn Personnel 9,200 OAO Fortum Power generation 20.0 TWh Heat sales 24.2 TWh In addition, ~25% share in TGC-1 Poland Power generation 0.6 TWh Heat sales 4.0 TWh Baltic countries Power generation Heat sales 0.5 TWh 1.1 TWh India (as of 2013)** Power generation ~9 GWh 8 All countries reported production in 2013; *) Fortum Värme excluded. **) Production figure for India estimate of full-year production, operations acquired June 2013.

9 Fortum s reporting segments and divisions Power and Technology Heat, Electricity Sales and Solutions Russia Distribution Hydro, nuclear and thermal power generation Power Solutions with expert services Portfolio management and trading Technology and R&D functions The segment incorporates two divisions: Hydro Power and Technology Nuclear and Thermal Power Combined heat and power (CHP) production District heating activities and business to business heating solutions Solar business Electricity sales and related customer offering Corporate Sustainability Power and heat generation and sales in Russia Includes OAO Fortum and Fortum s slightly over 25% holding in TGC-1 Electricity distribution activities 9

10 Fortum mid-sized European power generation player; major producer in global heat Power generation Largest producers in Europe and Russia, 2012 TWh Heat production Largest global producers, 2012 TWh Customers Electricity customers in EU, 2012 Millions EDF E.ON Enel RWE Rosenergoatom *) Gazprom Vattenfall GDF SUEZ **) Inter RAO UES RusHydro NNEGC Energoat. Iberdrola EuroSibEnergo Fortum CEZ EnBW ***) IES Statkraft PGE DTEK DEI *) Gazprom ***) IES Dalkia **) Inter RAO UES RusHydro Fortum Vattenfall ****) Sibgenco EuroSibEnergo Quadra DTEK, Ukraine TGC-2 Lukoil Minskenergo KDHC, Korea Tatenergo Dong Energy PGNiG *****) ELCEN. TGC Enel EDF E.ON RWE Iberdrola DEI Centrica CEZ EDP Vattenfall SSE EnBW GDF SUEZ Tauron PGE Gas Natural Fenosa Fortum Dong Energy Hafslund * incl. MOEK, ** incl. Bashkirenergo, *** incl. TGC-5, TGC-6, TGC-7, TGC-9, **** incl. TGC-12, TGC-13; ***** figure 2011, Fortum Värme excluded Source: Company information, Fortum analyses, 2012 figures pro forma, heat production of Beijing DH not available. 10

11 Biggest nuclear an hydro generators in Europe and Russia TWh Total generation Other 400 Nuclear Hydro EDF Rosenergoatom NNEGC Energoatom RusHydro Vattenfall E.ON Enel EuroSibEnergo GDF SUEZ Statkraft Fortum Iberdrola RWE EnBW CEZ Axpo Verbund *) Gazprom Hidroelectrica Centrica Alpiq E-CO Energi Ukrhydroenergo Norsk Hydro EPS, Serbia BKK Agder Energi EDP Gas Natural Fenosa DEI SSE **) Inter RAO UES PGE DTEK *) IES 11 Figures 2012 pro forma * incl. MOEK, ** incl. Bashkirenergo, *** incl. TGC-5, TGC-6, TGC-7, TGC-9

12 Fortum a forerunner in sustainability Carbon Disclosure Nordic Leadership Index Fortum no. 1, scores 100/100 SAM Sustainability Yearbook STOXX Global ESG Leaders indices oekom OMX GES Sustainability Finland Index ECPI Indices 12

13 Fortum's carbon exposure among the lowest in Europe g CO 2 /kwh electricity, % of Fortum's total power generation CO 2 -free 93% of Fortum s power generation in the EU CO 2 -free Close to 100% of the ongoing investment programme in the EU CO 2 -free Average 350 g/kwh DEI Drax RWE SSE EDP E.ON Vattenfall Enel Edipower Union Fenosa CEZ EnBW GDF SUEZ Dong Energy Iberdrola Fortum total EDF Verbund Fortum EU PVO Statkraft Note: Only European generation except Fortum total which includes Russia. Source: PWC & Enerpresse, November 2013 Climate Change and Electricity, Fortum 13

14 Fortum s strategic route Länsivoima 45% 65% Länsivoima 100% Elnova 50% 100% Separation of oil businesses E.ON Finland Divestment of Fingrid shares, 2011 Divestment of non-strategic heat business Divestment of electricity distribution business Neste IVO Gullspång Skandinaviska Elverk Birka Energi 50% Fortum 50% Stockholm Gullspång Stockholm Energi Lenenergo shares 1998 Stora Kraft Birka Energi 50% 100% Østfold Shares in Hafslund Shares in Lenenergo Divetment of Lenenergo shares Starting TGC-1 District heat in Poland 2003 Divestment of heat operations outside of Stockholm TGC-10 Divestment of small scale hydro 14

15 Fortum in the Nordic electricity value chain Competitive businesses Large customers Power generation Nordic wholesale market Power exchange and bilateral agreements Retail customers Private customers, small businesses Regulated businesses Independent transmission system operator Transmission and system services Distribution Independent distribution companies 15

16 Fortum's power and heat production by source Fortum's power generation in 2013 Fortum's heat production in 2013 Nuclear power 35% Natural gas 29% Natural gas 76% Other 1% Biomass 2% Coal 6% Heat pumps, electricity 1% Peat 1% Waste 1% Biomass 8% Hydro power 27% Coal 13% Total generation 67.4 TWh (Generation capacity 14,518 MW) Total production 34.6 TWh (Production capacity 18,033 MW) Note: Fortum Värme excluded. 16

17 Fortum's European power and heat production Fortum's European power generation in 2013 Fortum's European heat production in 2013 Nuclear power 50% Natural gas 34% Coal 28% Other 1% Biomass 2% Natural gas 3% Coal 6% Oil 1% Heat pumps, electricity 3% Peat 3% Waste 4% Hydro power 38% Biomass 27% European generation 47.4 TWh (Generation capacity 10,263 MW) European production 10.4 TWh (Production capacity 4,567 MW) Note: Fortum Värme excluded. 17

18 Fortum s Nordic generation capacity Sweden Price areas MW SE2 Hydro Wind 30 SE3 Hydro Nuclear Other 12 Generation capacity in Sweden SE3 SE1 SE2 Nordic Hydro Nuclear CHP 438 Other thermal Wind 30 Nordic capacity Finland MW MW Hydro Nuclear CHP 438 Other thermal Wind 0.4 SE4 Generation capacity in Finland March 2014 Note: Fortum Värme excluded. 18

19 Market coupling milestones - cross-border power flows optimised by power exchanges Market coupling between NL, BE and FR since 2006 Germany Nord Pool Spot coupling started 11/2009 Market coupling for Central Western Europe (DE, FR, NL, BE) since 11/2010 with a continued coupling with Nord Pool Spot NorNed cable (NO-NL) included in January Poland coupled with Nord Pool Spot since December /2014 UK coupling started through BritNed cable in April 2011 Estonian price area in Nord Pool Spot since 2010 and Lithuanian area since 6/2012. Latvia joined in June Czech, Slovakia and Hungary coupled together since September Romania to join in November 2014 A common day-ahead market coupling for the whole northwestern Europe was started 4 February Iberia (Spain & Portugal) joining 13 May 2014, and Italy later in / CEE market coupling region to join in 2015, with flow-based cross-border capacity allocation for further trade optimisation In addition to day-ahead coupling, intraday market coupling and balancing market integration targeted as well 19

20 Current transmission capacity from Nordic area is over 5000 MW Countries Transmission capacity MW From Nordics To Nordics Denmark - Germany 2,365 2,100 Sweden - Germany Sweden - Poland Norway - Netherlands Finland - Estonia 860 1,016 Finland - Russia 0 (6/2014: 350) 1,300 Total 5,140 6, Theoretical maximum in transmission capacity ~40 TWh per annum Net export from Nordic area to Continental Europe and Estonia during the Nordic dry year 2013 was 3 TWh During 2012 net export was 18 TWh Approximately 25 TWh of net export is now reachable 700 2,

21 Nordic, Baltic and Continental markets are integrating interconnection capacity will double by 2020 The Northern Seas Offshore Grid and the Baltic Energy Market Integration Plan are included as priority electricity corridors in EU s Infrastructure Guidelines, approved in April 2013 NO-UK link of 1,400 MW agreed to be built by 2020; North Seas Countries Offshore Grid Initiative launched for supergrid development First direct 1,400 MW NO-DE link agreed to be built by 2018 EU financial support for a 700 MW DK-NL link, due to be built by 2019 Jutland DE capacity planned to grow by 1,000-1,500 MW by 2018 EU support to connect Kriegers Flak offshore wind area to DK&DE by 2018 New interconnections will double the export capacity to over 10,000 MW by 2020 New internal Nordic and Baltic grid investments provide for increased available capacity for export to the Continent and Baltics 350 MW of export capacity from Finland to Russia due to become available from June 2014 EU s European Energy Programme for Recovery co-financing Estlink 2 (2/2014) and NordBalt (12/2015) LitPol Link ( MW) to connect the Baltic market to Poland in 2015/20. It will open a new transmission route from the Nordic market to the Continent Svenska Kraftnät agreed 3/2014 with 50Hertz to study a new Hansa PowerBridge DC link between Sweden and Germany 21

22 Nordic water reservoirs reservoir content (TWh) reference level Q1 Q2 Q3 Q4 Source: Nord Pool Spot 22

23 Nordic year forwards Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 /MWh April Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Source: NASDAQ OMX Commodities Europe

24 Wholesale price for electricity EUR/MWh Nord Pool Spot System Price Forwards April Source: Nord Pool Spot, NASDAQ OMX Commodities Europe

25 Wholesale prices for electricity EUR/MWh Spot prices Forward prices Dutch German Nordic Russian* April * Including weighted average capacity price Source: Nord Pool Spot, NASDAQ OMX Commodities Europe, APX-ENDEX, Bloomberg Finance LP, ATS, NP Market Council, Fortum 25

26 Fuel and CO 2 allowance prices 150 Crude oil price (ICE Brent) 35 CO 2 price (ICE ECX EUA) USD / bbl EUR / tco Coal price (ICE Rotterdam) 100 Gas price (ICE NBP) USD / t GBp / therm Source: ICE Market prices 28 April 2014; future quotations

27 Nordic power generation dominated by hydro, but fossil needed 160 Total Nordic generation 406 TWh in TWh % 120 Fossil fuels TWh/a Nuclear Biomass Wind Hydro * Denmark Norway Sweden Finland Net import in 2012: -14 TWh Source: ENTSO-E Memo 2012 *) Normal annual Nordic hydro generation 200 TWh, variation +/- 40 TWh. 27

28 Still a highly fragmented Nordic power market Power generation 406 TWh >350 companies Electricity distribution 15 million customers ~500 companies Electricity retail 15 million customers ~350 companies Others 33% Vattenfall Statkraft Others 56% E.ON Fortum Dong Energy Vattenfall Caruna Others 52% Vattenfall Fortum Hafslund Dong Energy Agder Energi BKK Dong Energy Norsk Hydro E-CO Energi PVO E.ON Fortum Hafslund Elenia SEAS-NVE Helsinki Göteborg E.ON Statkraft Helsinki SEAS-NVE Bixia Göteborg, DinEl Source: Fortum, company data, shares of the largest actors, pro forma 2012 figures. Fortum Värme excluded 28

29 New power generation capacity needed for increasing demand and retiring capacity replacements Growing global energy demand will be increasingly fulfilled by electricity in the future 250% 200% 150% Growth, Primary energy demand Electricity generation 221% Substantial demand growth in the emerging markets Retirements and moderate demand growth in the EU Globally, ~6 000 GW of new capacity needed by % 50% 0% Capacity changes, (GW) Retiring capacity % % % US Europe Russia China India Other areas World total 1941 Capacity increase New capacity, total ( Source: IEA WEO 2013 (New polices scenario) 1) Total new capacity needed for increasing demand and replacements of retiring capacity 29

30 New capacity will require over 60 EUR/MWh power price EUR/MWh Source: Nord Pool spot, NASDAQ OMX Commodities Europe Futures 28 April 2014 EUR/MWh Coal CO 2 cost Other costs ( variation) Gas Nuclear Hydro Wind Clean coal Estimated lifetime average cost in nominal 2014 terms. Large variations in cost of new hydro and wind due to location and conditions. 30

31 Fortum s investment programme Nordic region and Baltic countries Project Electricity, MW Commissioned Olkiluoto 3, Finland 400 Swedish nuclear upgrades 290 Refurbishing of hydro power 10 Annually Total ~ 700 Additional electricity capacity around 700 MW, 100% CO 2 -free Already commissioned in 2013 Blaiken, Sweden, wind power 30 Q Klaipeda, Lithuania, waste CHP Q Järvenpää, Finland, biomass CHP Q Jelgava, Latvia, biomass CHP Q Brista, Sweden, waste CHP Q

32 Overview of Fortum s nuclear fleet Commercial operation started Generation Capacity Fortum s share Yearly production Fortum s share of production Share of Fortums Nordic production Majority owner Fortum s share Operated by Unit 1: 1977 Unit 2: 1981 LOVIISA OLKILUOTO OSKARSHAMN FORSMARK Unit 1: 496 MW Unit 2: 496 MW Total: 992 MW 8 TWh 8 TWh Unit 1: 1978 Unit 2: 1980 Unit 3: (Under construction) Unit 1: 880 MW Unit 2: 880 MW (Unit 3: 1,600 MW) Total: 1,760 MW (3,360) 27% 468 MW 14 TWh 4 TWh Unit 1: 1972 Unit 2: 1974 Unit 3: 1985 Unit 1: 473 MW Unit 2: 638 MW Unit 3: 1,400 MW Total: 2,511 MW 43% 1,089 MW 17 TWh 7 TWh Unit 1: 1980 Unit 2: 1981 Unit 3: 1985 Unit 1: 984 MW Unit 2: 1,120 MW Unit 3: 1,170 MW Total: 3,274 MW 22% 720 MW 25 TWh 5.5 TWh 18% 9% 16% 13% Fortum Fortum Pohjolan Voima 26.6% Teollisuuden Voima (TVO) E.ON 43.4% OKG Aktiebolag Vattenfall 22.2% Forsmarks Kraftgrupp Responsibilities Loviisa: Fortum is the owner, licensee and operator with all the responsibilities specified in the Nuclear Energy Act, Nuclear Liability Act, and other relevant nuclear legislation Other units: Fortum is solely an owner with none of the responsibilities assigned to the licensee in the nuclear legislation. Other responsibilities are specified in the Companies Act and the Articles of Association and are mostly financial. 32

33 Fortum's nuclear power in the Nordics Load factor (%) Osakarshamn Oskarshamn Oskarshamn Forsmarks Forsmark Forsmark Loviisa Loviisa Olkiluoto Olkiluoto Source: Fortum Forsmark Olkiluoto Loviisa Finnish units world class in availability Overview of production and consumption: - energy related links Oskarshamn 33

34 Variety of technologies and ages Unit Mwe (Net) Share (%) Share (Mwe) Commercial operation Age Type/ Generation * Supplier Loviisa 1 Loviisa ,0 100, PWR / 1 PWR / 1 AEE (Atomenergoexport) AEE (Atomenergoexport) Olkiluoto 1 Olkiluoto 2 Olkiluoto (1,600) 26,6 26,6 25, (400) (?) BWR / 3 BWR / 3 PWR / 3 Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval Areva / Siemens Oskarshamn 1 Oskarshamn 2 Oskarshamn ,400 43,4 43,4 43, BWR / 1 BWR / 2 BWR / 4 Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval Forsmark 1 Forsmark 2 Forsmark ,120 1,170 23,4 23,4 20, BWR / 3 BWR / 3 BWR / 4 Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval *Generation refers to technical resemblence based on KSU classification and not to reactor design generations. All reactors are of Generation II except Olkiluoto-3 (EPR) which is of Generation III. PWR = Pressurized Water Reactor The most common reactor type in the world (e.g. all French units, most US units). Also the Loviisa units are PWRs, but based on Russian design. High pressure prevents water from boiling n the reactor. The steam rotating the turbine is generated in separate steam generators. BWR = Boiling Water Reactor Similar to the PWR in many ways, but the steam is generated directly in the reactor. Popular reactor type e.g. in Sweden, the US and Japan. 34

35 Third party nuclear liability in case of severe accident Has been approved by the Parliament. In force onwards. Law approved by Parliament in 2010, requires separate decision from Government to come into force. 300 M 300 M Unlimited company responsibility Convention parties 500 M 145 M 500 M State responsibility Responsibility of company (insurance or guarantee) 145 M 240 M Old, Finland 145 M 360 M Current, Sweden 700 M Sweden (new, not in force) 700 M 200 M Finland, temporary legislation 700 M New Paris convention Requires ratification by 2/3 of member states to come into force. In Finland approved by Parliament in

36 Nuclear upgrades in Sweden Reactor Completion Increase 100% (MW) Fortum's capacity increase (MW) Additional generation for Fortum (TWh/a) Fortum's capacity after increase (MW) Fortum's generation after increase (TWh/a) OKG ~2 OKG , ~3 OKG ~5 FKA 1 Decision ~ ~2 FKA ~2 FKA 3 Decision ~ ~2 Total ~290 ~2 ~1,950* ~15 Capacity increase and completion timetable based on recent estimate (Nord Pool). *At Fortum's share of Swedish nuclear capacity was 1,817 MW. 36

37 Russia is the World s 4th largest power market TWh 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Power generation in 2012 based on gross output. Source: BP Statistical Review of World Energy June

38 Fortum - a major player in Russia OAO Fortum (former TGC-10) Operates in the heart of Russia s oil and gas producing region, fleet mainly gas-fired CHP capacity 20 TWh power generation, 24 TWh heat production in 2013; more than Fortum s Nordic heat sales (14 TWh) TGC-1 Investment programme to add 85%, almost 2,400 MW to power generation capacity St. Petersburg Nyagan OAO Fortum TGC-1 Moscow Tobolsk Tyumen Slightly over 25% of territorial generating company TGC-1 operating in north-west Russia Chelyabinsk ~6,800 MW electricity production capacity (more than 40% hydro), ~28 TWh electricity, ~31 TWh heat in

39 Day ahead wholesale market prices increase driven by recovering demand and gas price Key electricity, capacity and gas prices in the OAO Fortum area IV14 IV/ LTM Electricity spot price (market price), Urals hub, RUB/MWh 1, ,021 1,031 Average regulated gas price, Urals region, RUB 1000 m 3 3,362 2,924 3,131 3,362 Average capacity price for CCS old capacity, trub/mw/month Average capacity price for CSA new capacity, trub/mw/month Average capacity price, trub/mw/month Achieved power price for OAO Fortum, EUR/MWh

40 Power market liberalisation two markets Capacity wholesale market Electricity wholesale market Capacity prices Competitive capacity selection (CCS) and free bilateral agreements (FBA) A higher, fixed capacity price for new capacity (CSA* agreements, built after 2007) Electricity prices Day ahead (spot) market, financial market, free bilateral agreements (FBA) and regulated bilateral agreements (RBA) Fully liberalised from 1 Jan 2011 except for volumes intended for households priced by RBA (~10% of volume) Lower capacity price for old capacity, price caps limits the price in some areas Old capacity intended for households are priced by regulated bilateral agreements (RBA) CSA is the intended mechanism for earning a (reasonable) return on invested capital in new capacity Capacity prices are a big part of a power generator s income a typical CHP plant ~35%, CCGT ~55%, of revenues In the day ahead (spot) market, the price mechanism is a day ahead hourly auction. Supply demand balance and variable cost (fuel) are the key drivers for the spot price Financial market for electricity started in June, * Capacity supply agreement

41 Capacity prices for new capacity considerably higher than prices for old capacity prices Long term rules and price parameters approved Both old and new capacity can participate in capacity auctions Old capacity (pre 2007) and new capacity priced differently Old capacity is priced by capacity auctions; price cap possibility New capacity under capacity supply agreements to receive guaranteed payments The payments for new capacity are based on approved pricing formulas Vary according to plant size, fuel, geographic location, capital costs Allow the recovery of capital costs and include return on invested capital; the targeted ROCE level 12-14% (with current government benchmark bond yields) After three years (2014), the regulator will review the earnings from the electricity-only market and can revise the payments, same goes after 6 years. Old capacity prices will depend on auction outcomes, but will likely remain relatively low; potentially price caps could limit the price 41

42 85% increase in power generation capacity in Russia by 2015 through the investment programme 42

43 Income statement MEUR I/2014 I/ LTM Sales 1,473 1,654 5,309 5,128 Other income and expenses 996 1,129 3,906 3,773 Comparable operating profit ,403 1,356 Items affecting comparability 1, ,009 Operating profit 2, ,508 3,364 Share of profit of associates and jv s Financial expenses, net Profit before taxes 2, ,398 3,249 Income tax expense Net profit for the period 2, ,212 3,063 Non-controlling interests EPS, basic (EUR) EPS, diluted (EUR)

44 Comparable and reported operating profit MEUR Comparable operating profit Reported operating profit I/2014 I/2013 I/2014 I/2013 Power and Technology Heat, Electricity Sales and Solutions Russia Distribution , Other Total , Non-recurring items (mainly to the sale of the Finnish electricity distribution business), IFRS accounting treatment (IAS 39) of derivatives and nuclear fund adjustments had an impact on the reported operating profit EUR 1,856 (-47) million in the first quarter 44

45 Cash flow statement MEUR I/2014 I/ LTM Operating profit before depreciations 2, ,129 3,995 Non-cash flow items and divesting activities -1, ,152 Financial items and fx gains/losses Taxes Funds from operations (FFO) ,469 1,634 Change in working capital Total net cash from operating activities ,548 1,647 Paid capital expenditures , Acquisition of shares Other investing activities 2, ,483 Cash flow before financing activities 2, ,157 45

46 Key ratios MEUR LTM 2013 EBITDA 3,995 2,129 Comparable EBITDA 1,938 1,975 Interest-bearing net debt 4,838 7,793 Comparable net debt/ebitda Return on capital employed, ROCE (%) Return on shareholders equity, ROE (%) Good liquidity committed credit lines total EUR 2.2 billion 46

47 Debt Maturity Profile Bonds Financial institutions Other long-term debt CPs Other short-term debt MEUR , , TOTAL 1,249 7,827 per 31 Mar, 2014 per 31 Dec, 2013 Average Interest Rate (incl. swaps and forwards) 3.7% 3.6% Portion of floating / fixed debt 41/59% 51/49% 47

48 Outlook Nordic markets Fortum continues to expect that the annual electricity demand growth will average 0.5% in the coming years Electricity is expected to continue to gain share of total energy consumption Russia Fortum s goal is to achieve an operating profit level (EBIT) of about EUR 500 million runrate in its Russia Segment during 2015 Fortum is evaluating its targets on a continuing basis, and will do so also once the political and economic situation stabilises. The company will then estimate if there still are possibilities to achieve the current target or if a new target level should be set Key drivers and risks Wholesale price of electricity and volumes demand and supply fuels hydrological situation power plant availability CO2 emissions allowance prices 48

49 Outlook Annual capex estimate excluding potential acquisitions 2014 EUR 0.9 to 1.1 billion (incl. Finnish distribution Q1/2014, excluding Fortum Värme) Hedging Rest of the year 2014 approx. 55% hedge ratio at approx. EUR 44/MWh 2015 approx. 25% hedge ratio at approx. EUR 42/MWh Target for efficiency programme is to improve cash flow by EUR 1 billion during Taxation Effective tax rate for the Group 19-21% In Finland, a power plant tax has been adopted from the beginning of It will be implemented provided that the EU Commission approves it. Fortum has filed a complaint. If implemented, the estimated impact on Fortum would be approximately EUR 25 million annually 49

50 Hedging improves stability and predictability 2009 onwards thermal and import from Russia excluded 50

51 Fortum's efficiency programme Efficiency programme proceeding according to plan Total annual cost savings visible in all divisions Improved working capital efficiency Divestments of non-core assets totalling approximately EUR 300 million WHY WHAT WHEN SPEED - Cash flow improved by EUR 1 billion FLEXIBILITY CAPEX EUR million WORKING CAPITAL Reduction DIVESTMENTS EUR 500 million FIXED COSTS Reduce EUR 150 million compared to

52 Facts of Distribution MEUR Fortum s Swedish distribution operations in 2013 Operating profit 263 Comparable operating profit 246 Comparable EBITDA 384 Capital expenditure 121 Number of employees 515 Volume of distr. Electricity, TWh 27.8 Number of el. Distr. Custom. ( 000) 903 January 2013: Strategic assessment commenced December 2013: Assessment has been completed, divestment the best alternative Evaluation of divestment opportunities country by country Closing by the end of Q1/2014: Divestment of Distribution Finland Closing by the end of Q2/2014: Divestment of Distribution Norway Ongoing: Evaluation of divestment opportunities by country 52

53