Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Non-Deal Roadshow (September 2003)
39 slides from Fortum Oyj's roadshow presentation, September 2003
Slide 1: A leading energy company in the Nordic area – Investor Meetings
– a leading energy company in the Nordic area Investor Meetings September 2003
Slide 2: Overview of Fortum
Overview of Fortum Second largest Nordic generator and supplier of power The leading provider of district heating in Finland and Sweden The leading Nordic refiner of clean traffic fuels Total assets EUR 16.5 billion (30 June 2003) Privatised in December 1998 • Market capitalisation EUR 6.3
Slide 3: Fortum's strategy
Fortum’s strategy Fortum focuses on the Nordic energy market as a platform for long-term profitable growth Create the Become the Strengthen leading energy supplier position as the power and heat of choice leading clean company fuels refining company Excel in business performance 3
Slide 4: Highly fragmented Nordic market – even big actors have modest shares
Highly fragmented Nordic market – even big actors have modest shares* 14 million distribution 14 million electricity Generation customers customers 380 TWh Fortum others Fortum others Fortum others Vattenfall Vattenfall Vattenfall E.ON E.ON 67% 66% Hafslund 44% Nesa Hafslund Statkraft E.ON PVO Statk
Slide 5: The Nordic market is large and very fragmented
The Nordic market is large and very fragmented Others 3 largest players 356 TWh Others 5 largest players Fortum Vattenfall Others 523 TWh The 387 TWh largest E.ON/ player Sydkraft Statkraft 499 TWh Production in 2001 5 Sources: EU Report, Brussels 3.12.2001; Förteagsinformation; Eurprog 2001
Slide 6: Integrated Nordic Power Market
Integrated Nordic Power Market Power Flows to and from Nordic Market (2002, GWh) – Total electricity demand in the 200 Nordic countries approximately 386 TWh in 2002 – Nordic electricity prices lowest in SWEDEN Europe FINLAND – Only 4%-6% of total current electricity demand can be NORWAY 7,900 impor
Slide 7: Development in supply and demand
Development in supply and demand Nordic supply/demand trends TWh/a 500 New capacity will be required 400 Efficient use of resources should be prioritized 300 Incentives for investments both in supply and demand 200 100 Prices should be market- 0 based 1990 2000 2010E 2020E Other/undefined Peat
Slide 8: Supply – investments in production capacity
Supply – investments in production capacity EUR/MWh 60 Investments are based on rational reasons 50 This is why price signals are required 40 New base-load capacity Investments to new base-load capacity require requires a price level of 30-35 30 a price level of 30-35 EUR/MWh for the longterm
Slide 9: Consistency and determination
Consistency and determination 9 billion worth of restructuring 2000-2003 Rearrangement of Power Plant Engineering Focus on core Norwegian E&P assets Transmission businesses and the Stora Enso power assets Engineering Nordic area Hafslund ASA Østfold Merger of Shares in Espoon Sähkö Fredrikstads Läns
Slide 10: Maintaining the strong niche position
Maintaining the strong niche position USD/bbl 6 Historically, Fortum´s margins have averaged $2 above 5 international refining margin This premium is foreseen 4 sustainable by 3 focusing on higher value- added products 2 benefiting from diesel demand growth 1 improving configuration of 0 t
Slide 11: Fundamental Changes in the European Oil Sector
Fundamental Changes in the European Oil Sector Consolidation and privatisations New environmental Nordic Region Russian Upstream requirements Asset sales in the Nordic region – e.g. Acquisitions of TNK by BP and Sibneft by Norsk Hydro, Swedish Yukos Major demand shift Shell away from gasol
Slide 12: Opportunity for deeper cooperation with Russian oil industry
Opportunity for deeper cooperation with Russian oil industry • Crude oils & feedstocks from Russia • Refining at Porvoo and Naantali • Products for western/global markets 12
Slide 13: Separating and Listing of Oil Business
Separating and Listing of Oil Business Process initiated to list Fortum’s oil business as a separate company on the Helsinki stock exchange Investment of EUR 0.5 billion to upgrade the Porvoo refinery The separation and listing will – Enable Fortum to further increase its focus on its Nordic u
Slide 14: IPO Allows Both Companies to Take Advantage of Strategic Opportunities
IPO Allows Both Companies to Take Advantage of Strategic Opportunities Fortum wants to ensure the availability of sufficient resources to secure the strategic development of both businesses – Both businesses very capital intensive The listing of the oil business will enable the new company to be
Slide 15: Implementation of the Separation and IPO
Implementation of the Separation and IPO Process will start by internal separation of the oil business – Expected completion by the end of 1H 2004 The new company will include Fortum’s oil refining, marketing, shipping and production assets and operations Fortum will assess the timing of the I
Slide 16: Leading market positions in the Nordic area
Leading market positions in the Nordic area No 1 No 2 Power Heat generation Retail sales of Oil electricity and refining heating oil Electricity distribution 16
Slide 17: A major Nordic energy player
A major Nordic energy player EBIT Net assets Power & Heat Oil Oil Power & Heat Net sales Oil Power & Heat Based on figures for H1 2003 Power, Heat and Gas; Electricity Distribution; Oil Refining and Marketing 17
Slide 18: Supplementary Material
Supplementary Material | | : af | "a fe ar 5 | Aa +. we r = | BS = = 1G Vi hk “I el" | i j
Slide 19: Continued strong performance
Fortum´s Q1-Q2 2003 Continued strong performance z Significant improvement in ongoing business z Continued strong cash flow z Further strengthening of balance sheet z Strengthened market position in Norway and north-western Russia z Repositioning virtually completed 19
Slide 20: Well performing ongoing business
Well performing ongoing business z Operating profit EUR 761 (749) million, excluding non-recurring items up by 71%: EUR 743 (435) million z EPS EUR 0.49 (0.50) z Net cash from operating activities EUR 1,060 (775) million z Net debt EUR 4,502 (5,848 at the end of 2002) million Return on capital emplo
Slide 21: Income statement
Income statement MEUR l - II / 03 l - II / 02 2002 Net sales 6,028 5,253 11,148 Expenses -5,267 -4,504 -9,859 Operating profit 761 749 1,289 Financial expenses, net -135 -134 -281 Profit before taxes 626 615 1,008 Income taxes total -167 -149 -269 Minority interests -47 -40 -73 Net profit for the pe
Slide 22: Balance sheet
Balance sheet MEUR Jun 30 Jun 30 Dec 31 2003 2002 2002 Fixed assets and other long-term investments 13,908 14,868 14,837 Current assets 2,586 2,688 3,123 ASSETS 16,494 17,556 17,960 Shareholders' equity 6,027 5,682 5,896 Minority interests 1,434 1,443 1,432 Interest-bearing liabilities 5,168 6,609 6
Slide 23: Cash flow statement
Cash flow statement MEUR Jun 30 Jun 30 Dec 31 2003 2002 2002 Net cash from operating activities 1 060 775 1 351 Capital expenditures -244 -250 -649 Acquisition of shares -503 -1 756 -1 771 Proceeds from sales of fixed assets 80 102 120 Proceeds from sales of shares 1 219 754 889 Change in other inve
Slide 24: Outlook
Outlook • Nordic electricity consumption is predicted to increase annually by about 1-2% over the next years. • Power and heat businesses usually result in a significantly better performance in Q1 and Q4 than in Q2 and Q3. • Synergy benefits of Birka Energi integration will exceed the target of EUR
Slide 25: Outlook
Outlook • The Brent Complex margin has steadily averaged USD 1.5-2 /bbl. In July 2003, it has been averaging USD 2.7/bbl. • Fortum´s premium margin is expected to remain at approximately USD 2/bbl. • No major maintenance shutdowns are planned at the refineries during 2003. • Oil production in north-
Slide 26: Fortum is well-placed
Fortum is well-placed • Well performing businesses, healthy cash flow • Strong balance sheet • Repositioning virtually completed Solid platform to further strengthen our position 26
Slide 27: Earnings per share / Dividend per share
Earnings per share Dividend per share 0.31 0.79 EUR 0.26 0.57 0.23 EUR 0.55 0.41 0.18 1999 2000 2001 2002 1999 2000 2001 2002 27
Slide 28: Group financial targets
Group financial targets • ROCE 12% • ROE 12% • Gearing <70% • Gearing, adjusted *) <100% *) Minority interest of Fortum Capital Ltd (EUR 1.2 billion) treated as debt 28
Slide 29: Water & snow reservoirs in Norway & Sweden
Water & snow reservoirs in Norway & Sweden, week 35/2003 120 110 reservoir content [TWh] 100 90 80 70 60 50 40 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1996 2000 2001 2002 2003 reference level 29
Slide 30: Nord Pool System Spot Price
Nord Pool System Spot Price 120 100 Daily Average Price EUR/MWh 80 33,74 EUR/MWh September 4, 2003 60 40 20 0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 2001 2002 2003 30
Slide 31: Nordic Power Market Prices
Weekly Average Price EUR/MWh 0 20 40 60 80 100 120 1/1994 1/1995 1/1996 1/1997 1/1998 53/1998 52/1999 Futures Prices 03-09-2003 52/2000 31 52/2001 Nordic Power Market Prices 52/2002 Actual System Price 52/2003 52/2004 51/2005 51/2006
Slide 32: Nord Pool Year Forwards
EUR/MWh 17 22 27 32 01/01/02 01/02/02 01/03/02 01/04/02 01/05/02 01/06/02 01/07/02 01/08/02 Year 2003 01/09/02 01/10/02 01/11/02 Year 2004 01/12/02 01/01/03 Year 2005 32 01/02/03 Nord Pool Year Forwards 01/03/03 01/04/03 Year 2006 01/05/03 01/06/03 01/07/03 01/08/03 01/09/03 01/10/03
Slide 33: Refining margins in North West Europe
Refining margins in North West Europe monthly averages USD/barre 6,0 l 4,0 2,0 0,0 -2,0 1995 1996 1997 1998 1999 2000 2001 2002 2003 Average refinery in North West Europe Product prices: cargoes NWE FOB 33
Slide 34: Brent crude spot price
Brent crude spot price USD/barre last 12 months daily l 27,505 $/bbl d.0.yyyy 37 33 29 25 21 17 4.9.2002 4.11.2002 6.1.2003 6.3.2003 7.5.2003 8.7.2003 5.9.2003 Source: Standard & Poor’s Platt’s 34
Slide 35: Fortum share price and Dow Jones STOXX utilities index
Fortum share price and Dow Jones STOXX 600 utilities index weekly averages of closing values, week 1/ 2001 = 100 1,9 1,7 1,5 1,3 1,1 0,9 0,7 0,5 5.1.2001 5.7.2001 5.1.2002 5.7.2002 5.1.2003 5.7.2003 Fortum euro Dow Jones index 35
Slide 36: Number of Fortum shares traded
Number of Fortum shares traded (millions shares/day, weekly average) 5 14 M 4 3 2 1 0 12/98 06/99 12/99 06/00 12/00 06/01 12/01 06/02 12/02 06/03 36
Slide 37: Shareholders as of 31 August 2003
Shareholders as of 31 August 2003 Households 5.4% Financial and insurance institutions 2.9% Other Finnish investors 9.1% International investors 21.8% Finnish State 60.8% Market capitalisation EUR 6.3 billion More than 50,000 shareholders Listed on the Helsinki stock exchange 37
Slide 38: Key sensitivities in 2003
Key sensitivities in 2003 Approximate effect on the Group´s annual EBIT Change in EUR million International refining margin, USD 0.1/bbl +/- 10 Brent crude oil price, USD 1/bbl +/- 10 *) US-dollar, 10% +/- 5 Figures include hedging *) mainly inventory gains and losses Market price of electricity: th
Slide 39: 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. 39