Fortum Oyj · OMXHEX:FORTUM

Fortum Oyj — H1 2005 Earnings Presentation

26 slides from Fortum Oyj's earnings presentation, Jul 19, 2005

  1. Slide 1: Interim report January - June 2005

    Interim report January - June 2005 19 July 2005

  2. Slide 2: 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. 2

  3. Slide 3: Solid business performance

    Solid business performance • Good results in the first half-year • EUR 654 (608) million comparable operating profit from continuing operations • EUR 633 (655) million operating profit from continuing operations • Earnings per share EUR 0.45 (0.45) from continuing operations • Net cash from operatin

  4. Slide 4: Comparable operating profit

    Comparable operating profit Comparable operating profit represents the underlying business performance by excluding items effecting comparability These are mainly: – accounting effects from fair valuation of financial derivatives for future cash flows where hedge accounting is not applied (IAS 39) –

  5. Slide 5: Comparable operating profit

    Comparable operating profit MEUR I-II/2005 I-II/2004 2004 LTM Power Generation 396 363 730 763 Heat 144 125 207 226 Distribution 121 132 240 229 Markets 15 14 23 24 Other -22 -26 -52 -48 Comparable operating profit 654 608 1 148 1 194 Non-recurring items 18 -7 18 43 Other items affecting comparabili

  6. Slide 6: Development of key market drivers

    Development of key market drivers • 5% decrease in Nord Pool system area price to 27.6 EUR/MWh • Fortum's Nordic Generation power price increased 6% to EUR 30.8 • CO2-free production volumes up 7% and thermal production down 48% – CO2 price up to level of 25 EUR per ton, average in Q2 around 19 EUR

  7. Slide 7: Water & snow reservoirs in Norway & Sweden

    Water & snow reservoirs in Norway & Sweden 130 120 reservoir content [TWh] 110 100 90 80 70 60 50 1 5 9 13 17 21 25 29 33 37 41 45 49 53 2005 2004 2000 reference level 7

  8. Slide 8: Nord Pool power price

    Nord Pool power price €/MWh 60 50 40 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2003 2004 2005 8

  9. Slide 9: Price of EU emission allowances

    Price of EU emission allowances €/tCO2 30 25 20 15 10 5 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2003 2004 2005 9

  10. Slide 10: Key developments

    Key developments • Arbitration process going on to buy E.ON Finland shares owned by E.ON – Extended offer to the city of Espoo • TGC-1 (in North-West Russia) will start its operations in October. Lenenergo ownership increased to 32.8% of voting shares • Heat business growing in Poland and Baltic cou

  11. Slide 11: Fortum's Nordic power generation

    Fortum's Nordic power generation • 4% decrease in Group´s Nordic power Fortum´s Nordic power generation generation, 13% (14%) share of Nordic (TWh) consumption 30 26.2 27.4 • 26% increase in hydro power production. 25 53% decrease in thermal production due 20 to CO2 cost component and low market 15

  12. Slide 12: Power Generation

    Power Generation + Better production mix, higher forward quotations and improved hedging price MEUR I-II/2005 I-II/2004 Net sales 1,010 1,048 Comparable operating profit 396 363 Net assets 5,970 6,142 Comparable RONA, % 13.2 11.5 Business units: Generation, Portfolio Management and Trading, Service

  13. Slide 13: Heat

    Heat District heat and steam sales by area (TWh) 14 • Heat sales up by 1%, 12.4 (12.3) TWh 12.4 12.3 12 • Volume increase through acquisitions 10 in Poland 8 • Sales of electricity produced in CHP 6 plants down by 11%, 2.4 (2.7) TWh 4 2 • Internal efficiency improvements 0 I-II/2005 I-II/2004 Sweden

  14. Slide 14: Heat

    Heat + Positive development in Fortum Värme MEUR I-II/2005 I-II/2004 Net sales 591 559 Comparable operating profit 144 125 Net assets 2,302 2,323 Comparable RONA, % 12.7 11.3 Business units: Heat, Värme 14

  15. Slide 15: Distribution

    Distribution Fortum´s distribution networks transmission (TWh) • 1,380 (1,375) thousand customers 14 12.2 12.0 • Electricity transmitted in distribution 12 networks increased by 2% 10 8 • Automatic Meter Management 6 project launched for all customers (planned to start during 2006) 4 2 • New regulat

  16. Slide 16: Distribution

    Distribution - Storms in Norway and Sweden in the beginning of the year MEUR I-II/2005 I-II/2004 Net sales 362 363 Comparable operating profit 121 132 Net assets 3,036 3,107 Comparable RONA, % 8.7 9.0 Business unit: Distribution 16

  17. Slide 17: Markets

    Markets • Electricity sales totalled 20,8 TWh; 7% decrease • Retail prices remained stable despite rising market prices • Continued positive inflow of customers despite tight competition • Leading seller of environmentally certified electricity 1,2 million electricity customers - private, business a

  18. Slide 18: Markets

    Markets + Increasing amount of customers - Tightened competition MEUR I-II/2005 I-II/2004 Net sales 690 722 Comparable operating profit 15 14 Net assets 159 177 Comparable RONA, % 15.7 24.5 Business unit: Markets 18

  19. Slide 19: Income statement

    Income statement MEUR I-II/2005 I-II/2004 Net sales 1 991 1 986 Expenses -1 358 -1 331 Operating profit 633 655 Share of profit of associates and joint ventures 16 8 Financial expenses, net -78 -125 Profit before taxes 571 538 Income tax expense -149 -131 Profit for the period from continuing operat

  20. Slide 20: Comparable and reported operating profit

    Comparable and reported operating profit Operating profit I-II/2005 Operating profit I-II/2004 Comparable Reported Diff. Comparable Reported Diff. Power Generation 396 348 48 363 394 -31 Heat 144 162 -18 125 131 -6 Distribution 121 127 -6 132 138 -6 Markets 15 14 1 14 21 -7 Other -22 -18 -4 -26 -29

  21. Slide 21: Balance sheet

    Balance sheet MEUR Jun 30 Dec 31 2005 2004 Non-current assets 12 885 15 213 Current assets 1 747 2 354 ASSETS 14 632 17 567 Total equity 6 840 7 650 of which minority interest 176 150 Interest bearing liabilities 4 147 5 240 Non-interest bearing liabilities 3 645 4 677 EQUITY AND LIABILITIES 14 632

  22. Slide 22: Cash flow statement

    Cash flow statement MEUR I-II/2005 I-II/2004 2 004 852 855 1 595 Operating profit before depreciations continuing operations Non-cash flow items and divesting activities -9 -54 -49 Financial items and taxes -243 -85 -341 Funds form operations continuing operations (FFO) 600 716 1 205 Change in worki

  23. Slide 23: Outlook

    Outlook • Annual Nordic electricity consumption predicted to increase by about 1% over the next years • Power forward prices increased for the rest of 2005, mid-July level 37-40 EUR/MWh • Solid performance in the first two quarters • Net debt decreased due to strong cash flow • At the beginning of J

  24. Slide 24: Nord Pool & German electricity market prices

    Nord Pool & German electricity market prices Nord Pool prices German prices 70 65 60 55 50 45 40 EUR/MWh 35 30 25 20 15 10 5 0 2004 2005 2006 24

  25. Slide 25: Good prospects

    Good prospects • Nordic strategy remains unchanged • Solid business performance • Strong financial position • Market fundamentals support further good performance 25

  26. Slide 26: Fortum

    ©@Fortum @Fortum

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