FORTUM A leading power and heat company in the Nordic area

Transcription

1 FORTUM A leading power and heat company in the Nordic area Tapio Kuula, President & CEO Fortum Corporation EEI Conference, London, March 15, 21

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 Our geographical presence today Nr 1 Nr 2 Heat Distribution Electricity sales Power generation Poland Heat sales 3.7 TWh Electricity sales 2 GWh Nordic countries Generation 48.1 TWh Electricity sales 54.9 TWh Heat sales 18. TWh Distribution cust. 1.6 million Electricity cust. 1.2 million Baltic countries Heat sales 1.3 TWh Electricity sales.1 TWh Distribution cust. 24,1 Russia TGC-1 (~25%) Power generation ~6 TWh Heat sales ~8 TWh OAO Fortum Power generation 16. TWh Heat sales 25.6 TWh 3

4 Fortum is a mid-sized European power generation player, relatively larger in heat (#4) Power generation Largest producers in Europe and Russia, 28 TWh Heat production Largest global producers, 28 TWh EDF *) IES E.ON Gazprom Enel **) Dalkia RWE+Essent Fortum Gazprom Vattenfall Vattenfall+Nuon RAO ES East Rosenergoatom ***) SUEK GDF SUEZ Tatenergo Iberdrola Bashkirenergo NNEGC Energoat. Onexim RusHydro Irkutskenergo Fortum TGC-2 IES Lukoil CEZ Kievenergo EnBW Minsk Energo Statkraft Irkutskenergo TGC-11 PGE Dong DEI KDHC, Korea WGC-1 Edison Beijing DH TGC-14 Scottish&Southern ELCEN, Rom * incl. TGC-5, TGC-6, TGC-7, TGC-9, *** incl. TGC-12, TGC-13 Source Company information, Fortum analyses, 28 figures pro forma, ** 27

5 Fortum's share performance Fortum's share performance Fortum's share performance since listed Fortum DJ utilities Fortum DJ utilities 5

6 Capital returns Dividend per share EUR Total ~ 6,853 MEUR * Dividend proposal 29 EUR 1. per share, in total ~EUR.9 billion Dividend policy of 5-6% payout of previous year's results on the average % 13% 78% 58% 68% * The BoD proposal for the AGM 6

7 Fortum's carbon exposure among the lowest in Europe g CO 2 /kwh electricity, Average 35 g/kwh 2 41 Source: PWC & Enerpresse, 29 Changement climatique et Électricité 7 DEI Drax RWE CEZ Nuon EDP Scottish&Southern Vattenfall Enel Union Fenosa E.ON Dong Energy GDF Suez Europe Iberdrola PVO British Energy EDF Verbund Fortum Statkraft

8 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), Q3/21 Pärnu, Estonia (biomass/peat CHP), end of 21 Wind power project development Electricity capacity ~8 MW ~95% CO 2 -free Fortum's annual total capital expenditure during the next 4-5 years within a range of billion euros 8

9 Decision-in-Principle application for Loviisa 3 A new 1-18 MW nuclear power plant unit in Loviisa Designed service life of the unit at least 6 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 production Five reactor alternatives The investment cost of one nuclear unit is EUR 4-6 billion The plant site and its basic infrastructure ready, the basic investments in nuclear waste management have been made 9

10 New capacity, except nuclear, will require over 6 EUR/MWh power price EUR/MWh Source: Nord Pool Futures 1 March EUR/MWh CO 2 cost Other costs ( variation) Coal Gas Nuclear Hydro Wind Clean coal Estimated lifetime average cost in nominal 214 terms. Large variations in cost of new hydro and wind due to location and conditions. 1

11 Nordic and Continental markets are integrating interconnection capacity could double by MW link to the UK could connect offshore wind, too; North Seas Countries Offshore Grid Initiative launched for supergrid development New interconnections could double the capacity to over 8 MW by 22 Additional 7 MW cable NO-NL, as well 14 MW NO-DE links studied EU financial support for 7 MW DK-NL link to connect offshore wind, too Jylland DE capacity to be increased by 5 MW in 212 and by further 5 MW by 218 EU support to connect Kriegers Flak offshore wind area to DK&DE; new 4 kv AC cable SE-DK by 217 In the EU's Second Strategic Energy Review the Commission focuses strongly on interconnecting the Baltic states and Poland to form an electricity market around the Baltic Sea New internal Nordic grid investments provide for increased available capacity for export to the Continent and Baltics EU s European Energy Programme for Recovery to cofinance to Estlink 2 and NordBalt LitPol Link of 1 MW to connect the Baltic market to Poland by 215/18. It would open a new transmission route from the Nordic market to the Continent 11

12 Signs of demand picking up towards the end of 29 Finland Sweden Norway Denmark Nordic Tyumen Chelyabinsk Russia Urals area Russia 1 % 1 % 5 % 5 % % % -5 % -5 % -1 % -1 % -15 % -2 % -25 % Q1 29 vs Q1 28 Q2 29 vs Q2 28 Q3 29 vs Q3 28 Q4 29 vs Q % -2 % -25 % Q1 29 vs Q1 28 Q2 29 vs Q2 28 Q3 29 vs Q3 28 Q4 29 vs Q consumption decreased ~5% in the Nordic area 372 TWh (393 TWh) 29 consumption decreased ~5% in Russia +/- % in Tyumen -11% in Chelyabinsk Fortum currently expects Nordic power demand to recover back to the 28 level by

13 Improving efficiency, accountability and simplicity Number of employees, 31 Dec New organisation structure was implemented from 1 October 29 onwards A programme targeting improved efficiency, accountability and simplicity initiated The process will continue in

14 Nordic UK Iraq 14 Russia is a large market World s 4th in power Russia Iran Qatar Turkmenistan Saudi Arabia US UAE Nigeria Venezuela Indonesia Saudi Arabia Iran Iraq Kuwait Venezuela UAE Russia Libya Kazakhstan Nigeria US Canada Algeria Oil reserves Natural gas reserves Coal reserves Power generation billion tons billion tons TWh Trillion cubic metres 5 1 US China Japan Russia India Germany Canada France South Korea Brazil US Russia China Australia India Ukraine Kazakhstan South Africa Serbia* Poland Brazil Colombia Figures at the end of 28. Electricity generation Based on gross output. *) incl. Montenegro, Kosovo Source: BP Statistical Review of World Energy June 29

15 Fortum has long experience of successful co-operation with Soviet Union and Russia Construction of hydro power plants in Kola area Construction of Loviisa nuclear power plant Construction of North-West CHP in St. Petersburg Electricity import to Finland Nuclear fuel import to Finland* Agreement on Joint Implementation of Kyoto Protocol with TGC-1 Co-operation Ownerships Permanent presence in Moscow & St. Petersburg Automation & information system deliveries to thermal power plants Safety improvements for nuclear power plants Lenenergo shareholding Lenenergo split TGC-1 Sale of Fortum's stake in Lenergo (Distribution) St Petersburg Sales Co TGC-1 acquisition *) Including single largest purchase agreement of uranium with TVEL OAO Fortum (delisted) 15

16 Further power market liberalisation Share of liberalised trade for existing capacity Further liberalisation of energy market increased to 6% in January 21 The rate of liberalised volume is based on 27 balance. All new capacity is sold with liberal prices The sales to households will remain regulated still after % 9 % 8 % 7 % 6 % 5 % 4 % 3 % 2 % 1 % % 5 % Jan 27 1 % 15 % July 27 Jan % 3 % July 28 Jan 29 5 % July 29 6 % Jan 21 8 % July 21 1 % 1 % Jan

17 Investment programme of OAO Fortum Power generation capacity (MW) Plant Fuel type Existing Planned Total MW 6, 5, 4, 3, 2, 1, +73% +2,27 MW 3,2 5, Tyumen CHP-2 Gas (Condensing) 1,25 Tyumen CHP-1, Q3/21 Gas (CHP/Condensing) 662 Tobolsk CHP, Q3/21 Gas (Condensing) 662 Chelyabinsk CHP-3, Q4/21 Gas (CHP/Condensing) 58 Chelyabinsk CHP-2 Coal, gas Argayash CHP Coal, gas Chelyabinsk CHP-1 Coal, gas Chelyabinsk GRES Gas Nyagan GRES Gas 3x4 (Condensing) 1,2 Boilers - (Kurgan Generation (49%) Gas ) Total 3,2 2,27 5,29 17

18 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 programme; appr. 2,27 MW new capacity 18

19 Strong financial position Key ratios MEUR EBITDA Net cash flow from operations Interest-bearing net debt Equity Balance sheet total Net debt/ebitda* Return on capital employed (%)* Return on shareholders' equity (%)* *27 adjusted for REC and Lenenergo gains 19

20 Nord Pool year forwards /MWh Year 7 Year 8 Year 9 Year 1 Year 11 Year 12 Year 13 Year 14 Q1 Q2 Q3 Q4 Q1 26 Q2 Q3 Q4 Q1 27 Q2 Q3 Q4 Q1 28 Year 15 1 March Q2 Q3 Q4 Q1 21 2

21 Hedging of Power division's Nordic sales Status at the end of December 29 (Status at the end of Sep 29) Hedge ratio Hedge price 21 ~ 7% ~ EUR 44 per MWh (~65%) (~ EUR 44 per MWh) 211 ~ 4% ~ EUR 42 per MWh (~35%) (~ EUR 42 per MWh) 21

22 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 position and liquidity 22

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