Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — H1 2001 Earnings Presentation
33 slides from Fortum Oyj's earnings presentation, Aug 2, 2001
Slide 1: Interim Report January-June 2001
Interim Report January-June 2001 2 August 2001
Slide 2: Fortum reporting structure
Fortum reporting structure January-June 2001 Segments Sales Operating Profit Oil and gas upstream 947 119 Oil refining and marketing 3,698 145 Power and heat generation & sales 1,022 205 Electricity distribution 240 81 Service 169 26 Engineering 227 -10 Fortum Corporation/RNR/hyk 2 August 2001 2
Slide 3: Fortum January-June 2001
Fortum January-June 2001 • Performance improvement and focusing of operations continued • Operating profit up by 32%, profit before extraordinary items up by 66% • Earnings per share up by 46% • Strong net cash flow, EUR 744 million • Strengthened balance sheet • Net debt down by EUR 600 million vs.
Slide 4: Strategic actions
Strategic actions • Announced interest in acquiring the remaining shares of Birka Energy AB • Focusing of power generation – sales of power assets in the U.K. and Hungary • Sale of Transmission Engineering • Developing our customerships - Fortum Markets • Disposal of shareholding in Etrem AB, which
Slide 5: Operational actions
Operational actions • Successful maintenance shutdown in Porvoo • Increased production capacity of Citydiesel and base oils • Rearrangements and outsourcing actions in the power and heat technology unit • Restructuring programme of Power Plant Engineering • Rearrangements in the Energy House • Group
Slide 6: Crude Oil Price Performance
Crude Oil Price Performance Brent, weekly average 2000 - 2001 USD/bbl 40 35 30 Price 2001 25 Price 2000 20 15 10 5 0 01.01. 31.03. 30.06. 30.09. 31.12. Fortum Corporation/RNR/hyk 2 August 2001 6
Slide 7: Refining margin, Brent complex
Refining margin, Brent complex weekly average 2000 - 2001 USD/bbl 7 6 5 Margin 2001 4 Margin 2000 3 2 1 0 -1 01.01. 31.03. 30.06. 30.09. 31.12. Fortum Corporation/RNR/hyk 2 August 2001 7
Slide 8: Electricity Price Performance
Electricity Price Performance Nord Pool system price, weekly average 2000 - 2001 EUR/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 2 August 2001 8
Slide 9: Key indicators
Key indicators II/01 II/00 I-II/01 I-II/00 2000 Net sales, MEUR 2 756 2 580 5 958 5 105 11 026 Operating profit, MEUR 251 225 558 422 906 Profit before extraordinary items, MEUR 202 127 448 270 633 Earnings per share, EUR 0,18 0,11 0,38 0,26 0,55 Interest-bearing net debt, MEUR 4 001 4 921 4 626 Ret
Slide 10: Net sales
Net sales Disc M EUR I-II / 01 I-II / 00 2000 Other Oil and Gas Upstream 947 348 945 MEUR Eng Refining and Marketing 3,698 3,578 7,759 Serv 12,000 Elect Power Generation 1,022 887 1,760 P&H Electricity Distribution 240 237 467 10,000 R&M O&G Service 169 151 356 8,000 Engineering 227 273 585 Other Op
Slide 11: Operating Profit
Operating Profit M EUR I-II / 01 I-II / 00 2000 Disc MEUR Oil and Gas Upstream 119 85 218 Other Eng Refining and Marketing 145 141 382 1,000 Serv Power Generation 205 146 211 Elect Electricity Distribution 81 68 127 800 P&H R&M Service 26 2 12 O&G Engineering -10 -6 -21 600 Other Operations -14 -11
Slide 12: Oil and Gas Upstream Today
Oil and Gas Upstream Today Production profile (Producing Assets) • Production cost at USD 10 a 60000 barrel, depreciation included 50000 40000 • The year-end value of oil and BOEPD 30000 gas reserves was EUR 1.4 20000 billion 10000 0 • The share of natural gas 1994 1996 1998 2000 2002 2004 2006 2008
Slide 13: Daily Brent spot prices
Daily Brent spot prices USD/barrel 40 35 30 25 20 15 10 5 0 2.1.1995 2.1.1996 2.1.1997 2.1.1998 2.1.1999 2.1.2000 2.1.2001 Fortum Corporation/RNR/hyk 2 August 2001 13
Slide 14: Oil and Gas Upstream
Oil and Gas Upstream January-June 2001 • Oil and gas production was at an average of 41,200 oil-equivalent barrels a day (33,300). • The average price of oil sold by Fortum was 25.9 USD/bbl (26.3). • Promising test production at the Yushno-Shapinskoye oil field in Russia (SeverTEK) • Our shareholdin
Slide 15: Oil Refining and Marketing Today
Oil Refining and Marketing Today 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 2,000,000 • Gasolines and diesel fuels fulfil the tightest EU requirements.
Slide 16: Refining margins in NWE complex refinery
Refining margins in NWE complex refinery USD/barrel 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 Complex Fortum Corporation/RNR/hyk 2 August 2001 16
Slide 17: Oil refining and marketing
Oil refining and marketing January-June 2001 • The average north-west European refining margin was 2.8 USD/bbl (3.6). Fortum´s refining margin was nearly USD 2 higher. • Fortum refined a total of 5.2 (6.0) million tonnes of crude oil and other feedstocks. 3.5 (3.6) million tonnes of petroleum produc
Slide 18: Power and Heat Generation and Sales Today
Power and Heat Generation and Sales Today 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 powe
Slide 19: Nordic Power market prices
Nordic Power market prices EUR/MWh Nord Pool System Weekly Price 50 45 40 35 30 25 20 15 10 5 0 1994 1995 1996 1997 1998 1999 2000 2001 Fortum Corporation/RNR/hyk 2 August 2001 19
Slide 20: Snow + hydro reservoir in Sweden and Norway
Snow + hydro reservoir in Sweden and Norway 1999 2000 2001 Normal snow and water 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 2 August 2001 20
Slide 21: Power and Heat Generation and Sales
Power and Heat Generation and Sales January-June 2001 • The average price of electricity in the Nordic electricity exchange was EUR 24.9 per MWh (12.3). • Fortum´s electricity sales were 28.5 TWh (24.2), heat sales 9.5 TWh (9.3). • The average price of electricity sold by Fortum in the Nordic countr
Slide 22: Electricity Distribution Today
Electricity Distribution Today 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 subsi
Slide 23: Electricity distribution
Electricity distribution January-June 2001 • The distribution of electricity in distribution networks amounted to a total of 8.1 TWh (7.9). • Electricity transmissions via the regional distribution network totalled 3.4 TWh (3.6) in Finland and 4.3 TWh (2.9) in Sweden. • Fortum harmonized the structu
Slide 24: Service
Service January-June 2001 • The energy availability of power plants operated by Fortum Service was good 98.4% (97.5). The five-year average in 1996-2000 was 97.2%. • A number of orders for turbine maintenance and substation projects as well as for transformer maintenance assignments • The operation
Slide 25: Engineering
Engineering January-June 2001 • The restructuring programme for the Power Plant Engineering continued. The measures includednew service offerings, updating business processes and cutting costs. The unit´s performance is moving in the right direction. • Transmission Engineering was sold. • At the end
Slide 26: Income statement
Income statement MEUR I-II /01 I-II / 00 2000 Net sales 5,958 5,105 11,026 Expenses -5,400 -4,683 -10,120 Operating profit 558 422 906 Financial expenses, net -110 -152 -273 Profit before extraordinary items 448 270 633 Extraordinary items 0 -8 -10 Profit before taxes 448 262 623 Income taxes total
Slide 27: Balance sheet
Balance sheet MEUR Jun 30, 2001 Jun 30, 2000 Dec 31, 2000 Fixed assets and other long-term investments 11,417 12,245 11,712 Current assets 2,865 2,737 3,116 Assets 14,282 14,982 14,828 Shareholders' equity 5,135 4,804 5,022 Minority interests 1,282 1,329 1,281 Interest-bearing liabilities 4,496 5,34
Slide 28: Cash flow statement
Cash flow statement MEUR I-II /01 I-II / 00 2000 Net cash from operating activities 744 222 424 Capital expenditures -294 -1 397 -1 742 Proceeds from sales of fixed assets 310 228 518 Change in other investments -12 54 115 Cash flow before financing activities 748 -893 -685 Net change in loans -479
Slide 29: Short-term outlook
Short-term outlook • The Opec target price for crude oil is USD 22 - 28 a barrel, Brent futures for the remainder of 2001 some below USD 25 a barrel. Fortum expects to increase its oil and gas production during the current year by around 25%. • In July, the Brent Complex margin was USD 0.7 a barrel.
Slide 30: Crude oil prices and futures
Crude oil prices and futures Brent, weekly average 2000 - 2001 USD/bbl 40 35 30 Price 2001 Futures 1.8.2001 25 Price 2000 20 15 10 5 0 01.01. 31.03. 30.06. 30.09. 31.12. Fortum Corporation/RNR/hyk 2 August 2001 30
Slide 31: Electricity price performance and futures
Electricity price performance and futures Nord Pool, system price, weekly average EUR/MWh 40 35 30 25 Price 2001 20 Futures 31.7.2001 Price 2000 15 10 5 0 1.1 1.4 1.7 1.10 Fortum Corporation/RNR/hyk 2 August 2001 31
Slide 32: Nord Pool Year Forwards
Nord Pool Year Forwards FWYR-01 FWYR-02 FWYR-03 FWYR-04 200 190 180 170 NOK / MWh 160 150 140 130 120 110 100 01/09/00 01/10/00 01/11/00 01/12/00 01/01/01 01/02/01 01/03/01 01/04/01 01/05/01 01/06/01 01/07/01 01/08/01 01/09/01 Fortum Corporation/RNR/hyk 2 August 2001 32
Slide 33: Our target
Our target Return on Capital Employed and Return on Equity 12% To get there, we • participate in the Nordic energy sector restructuring • continue focusing the business operations • further strengthen our balance sheet • continue performance improvement actions Fortum Corporation/RNR/hyk 2 August 20