- a leading power and heat company in the nordic area...- a leading power and heat company in the...
TRANSCRIPT
- a leading power and heat companyin the Nordic area
Presentation for investorsDecember 2008
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.
3
• Fortum today• European power markets• Russia• Financials, capex and outlook• Supplementary material
4
We intend to keep our leading position
To be the benchmark power and heat company excelling in sustainability
High ethicsCo-operative spiritExcellent performance
Vision
Strategy
Values
Fortum focuses on the Nordic, Russian and Baltic Rim markets as a platform for profitable growth Become the leading power and heat company
Become the energysupplier of choice
Benchmark business performance
Core Purpose
"Our energy improves life for present and future generations"
Creativity and innovation
5
Fortum at a glance
Nordic countriesGeneration 51.1 TWhElectricity sales 58.5 TWhHeat sales 20.4 TWhDistribution cust. 1.6 millionElectricity cust. 1.3 million
Nr 1
Nr 2
Heat
Electricity sales
Distribution
Power generation
TGC-1 (~25%)Power generation ~6 TWhHeat production ~8 TWhTGC-10 Power generation 18 TWhHeat sales 27 TWh
Russia
2007 data
6
Fortum Markets
Large customers
Fortum Business structure
Small customers
Other retail companies
Fortum Distribution
Transmission and system services
Nordic wholesale
market
Nordic wholesale
market
Nord Pool and bilateral
FortumPower
Generation
Deregulated
RegulatedPower
Generation 68%
Heat 18%
Distribution14%
Markets 0%
Fortum's comparable operating profit in 2007
EUR 1,564 million
7
Strong growth in EBITDA and in cash flow
Net debt
4 345 4 466
6 520
0
1 500
3 000
4 500
6 000
7 500
2006 2007 LTM Q3'08
MEUR
EBITDA (LTM)
2 3702 066
1 884
0
500
1 000
1 500
2 000
2 500
2006 2007 LTM Q3'08
MEUR
Adjusted net debt/EBITDA (LTM)
2.3 2.2
2.8
0,0
1,0
2,0
3,0
4,0
2006 2007 LTM Q3'08
Sales gain From Lenenergo shares
Total net cash from operating activities (LTM)
1 1511 550
1 785
0
500
1 000
1 500
2 000
2006 2007 LTM Q3'08
MEUR
Additional dividend from Hafslund
8
Growing capital returns
Total ~ 5,075 MEUR
* With 60% payout ratio** From continuing operations
1999 2001 20032000 2002 2004
0.18 0.23 0.26 0.310.42
0.58
2005
1.12
Dividend per shareEUR
0.13
1998
0.58
**0.
54
2006
1.26
0.73
*0.
53
• Dividend of EUR 1.35 per share, in total ~EUR 1.2 billion
• Mandate for repurchasing of the company’s own shares; maximum EUR 300 million
• Dividend policy of 50 - 60% payout of previous year's results on the average
2007
1.35
0.77
*0.
58
9
• Fortum today• European power markets• Russia• Financials, capex and outlook• Supplementary material
10
Key EU objectives by 2020
Competitiveness Sustainability
Security of supply
• Implementation of internal energy markets
• Energy efficiency +20% (2020)
• Increased resources for technology development
• Development of cross-border transmission• Increase in own production• Enhancement of external energy relations
• Minimum reduction of EU CO2 emissions 20% (2020)
• Renewables 20% (2020)• Development of CO2
capture and storage
11
Huge need for new capacity
Globally ... ... European wide ... ... and in Russia
Source: IEA World Energy Outlook 2006, reference scenario for generation1 Production 2004: 17 408 TWh/IEA 2006
1,700
1 000
1 200
1 400
1 600
1 800
2000 2005 2010 2015 2020
700+ TWh by 2020
Source: Ministry of Industry and Energy
Existing/remaining productionDemand
Source: Eurprog 2006; Europe, EU27; Fortum
1,300 TWh
0
1,000
2,000
3,000
4,000
2000 2005 2010E2015E2020E
TWh TWh
0
5,000
10,000
15,000
20,000
25,000
30,000
~10,000 TWh
20041 2010E 2020E
TWh 2,000
12
Electricity demand resilient to changes in economic conditions
• Nordic demand has grown consistently, also over the recession in early 90’s
• Weather affects demand more than a potential industry slow down
• Supply side variations more important for the demand-supply balance
– Yearly hydro variation up to+/- 40 TWh
– Demand increases 3-4 TWh p.a.
Nordic electricity consumption 1986–2007
0
50
100
150
200
250
300
350
400
450
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
CAGR 1.2%
Source: Nordel, gross consumption
13
Nordic demand breakdown
• Non-industrial demand is forecast to increase +20 TWhby 2020
• Industrial demand to grow by ~10 TWh by 2020
• Net effect on announced closures and investment plans approximately -2 TWh in 2020 demand forecast
• Recent development: Forest industry closing down while metal, mining, oil and chemical industries expanding
Nordic electricity demand, 100% = 400 TWh
10 % Forest net demandForest self-supplied
Other industrialdemandMetalOil and gas
Chemical
Other non-industrialdemandTrade and services,transport
Housing
45%
55%
Source: Nordel, Fortum
14
Nordic market is tight
Source: Nordel / Nordic TSOs
Import needed in the Nordic area
Consumption, demand and import/export in the Nordic at winter peak 2008/2009
(MWh/h) All time Peak Available Import (-)/peak 2008/2009* capacity export (+)
Denmark 6 480 7 100 7 300 200Finland 14 800 15 100 13 200 -1 900Norway 23 050 23 800 24 600 800Sweden 27 300 28 900 28 500 -400Total 69 000 74 900 73 600 -1 300* Temperature corresponding to a ten years winter dayTSO reserves available 5,400 MW
15
Demand is growing – new capacity is needed in the Nordic market
*) Partly decommissioned due to increasing environmental requirements, partly replaced by more efficient new plants; may still be available as peak-load capacity.
Nuclear OL3
Nuclear upgrades
Hydro
CHP
Thermal
Wind
Committed new production ~45 TWh
Demand forecasts for the Nordic market
• Electricity demand is expected to increase by ~35 TWh by 2020 compared to 2007
• Estimated retiring generation approx. 35 TWh*)
• Total need for investments roughly 70 TWh– decisions for another 25 TWh still needed
370
380
390
400
410
420
430
440
450
460
470
2010 2015 2020
TWh
Fortum
Eurprog
DG TREN
Vattenfall
Svensk Energi high
Svensk Energi low
16
New capacity, except nuclear, will require a well over 60 EUR/MWh power price
Estimated lifetime average cost in nominal 2013 terms.Large variations in cost of new hydro and wind due to location and conditions.
EUR/MWh
Coal Gas Nuclear Hydro Wind Cleancoal
0102030405060708090
100110
Other costs ( variation)CO2 cost 30 €/ton
0102030405060708090
100110
1995 -97 -99 -01 -05 -07 -09 -11 -13-03
Source: Nord Pool
EUR/MWh
Futures1 December 2008
17
Current transmission capacity from Nordic area to Continental Europe is ~4000 MW
Countries Stations Transmissioncapacity MW
From Nordel To Nordel
Denmark - Germany 2100 1550
Sweden - Germany 600 600
Sweden - Poland 600 600
Norway - Netherlands 700 700
Total 4000 3450
700
2100 600 600
350
• Theoretical maximum in transmission capacity ~35 TWhper annum
• 2007 net export from Nordic area to Continental Europe was ~9 TWh
• Approximately 20 TWh net export fairly easily reachable• NorNed was taken into use in May 2008
18
Additional700 MW cable NO-NL
studied
New investments could double capacity to Continent by 2020Present interconnections from the Nordic market to the Continent have a total capacity of abt. 4000 MW
New interconnections could double the capacity to over 8000 MW by 2020
700 -1400 MW NO-DE studied
DK-NL link studied
Baltic Wind Link 1100 MW studied to connect SE, DK and DE through the Kriegers Flak
offshore wind park
Jylland – DE capacity to be increased by 500 MW in 2011
and by further 500 MW by 2017
PolLit Link of 1000 MW planned to connect the Baltic market to Poland
by 2012-2016. It would also open a new transmission route from the Nordic market to the
Continent
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 from southern Sweden, Norway and
Denmark
19
Market coupling milestones
• Market coupling between Belgium (BelPEX), Netherlands (APX) and France (Powernext) since November 2006
• Market coupling EEX - Nord Pool started 29 September 2008 but was on 8th October suspended until Q1/'09 due to technical problems
• Market coupling NL-Nord Pool 2009 trough the NordNedcable
– during 2009 implicit auctions, synchronized with market coupling Nord Pool-Germany and Germany-BE/NL/FR
• Market coupling agreement signed in June for DE-F-BeNeLux.
– during 2009• NL-UK planned trough the BritNed cable• Integration of the Baltic power market into the Nordic power
market is discussed– Baltic Spot price area not before Q3 2009 due to Estonian law
change requirements• Fingrid is studying possibilities to increase flexibility in
electricity trade with Russia
Existin
g
2009
Q32008
2010
20
North-European power markets integrating
• Significant increase in grid capacity planned
• The maximum export capacity from the Nordic market to the Continent and Baltics could double by 2020
• Market coupling proceeding• Nordic energy ministers meeting end-
September: – grid investments to be harmonised
and implemented as soon as possible
• In the EU's Second Strategic Energy Review the Commission will focus oninterconnecting the Baltic states and Poland to form an electricity market around the Baltic Sea
* Based on 7,000 h/a utilisation
0
2 000
4 000
6 000
8 000
2005 2010 2015 2020
MW
0
20
40
60
80
TWh
Connections to/from Continent MWConnections to/from Baltics MW*Theoretical export capacity TWh
Expected development of grid capacity
21
Nordic water reservoirs
Source: Nord Pool
Reservoir content (TWh)
0
20
40
60
80
100
120
20062000 2007 reference level20082003
1 5 9 13 17 21 25 29 33 37 41 45 49week
22
Deficit or excess in water reservoirs affects the spot price
Water + snow compared to normal (TWh)
Nordic spot price (EUR/MWh)
-60
-40
-20
0
20
40
60
80
1/2000 1/2001 1/2002 1/2003 1/2004 1/2005 1/2006 1/2007 1/20080
10
20
30
40
50
60
70
80
23
Nord Pool year forwards – with high volatility
€/MWh
24262830323436384042444648505254565860626466687072
Year 05 Year 06 Year 07 Year 08 Year 09 Year 10 Year 11 Year 12 Year 131 December 2008
2004 2005 2006Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Q1 Q3 Q4 Q1
2007Q2 Q3 Q4 Q1
2008Q2 Q3 Q4
24
Nord Pool forwards and historical development of Fortum full year hedges – managing volatility
2005 2006 2007 2008Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75EUR/MWh
Forward 2007 Forward 2008 Forward 2009 Forward 2010
Hedge avg. 2007 Hedge avg. 2008 Hedge avg. 2009 Hedge avg. 2010
40% 50% 65%40%
55%75%
65%35% 35%
45%
20% 25% 35%55%20%
25
Forward, spot and achieved price of Fortum – beating the spot in 2007 and Q1-Q3/2008
0
5
10
15
20
25
30
35
40
45
50
55
60
2005 2006 2007 2008
EUR/MWh
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Forward 2006 Forward 2007 Forward 2008
Achieved 2006 Achieved 2007 Achieved until Q3 2008
Spot 2006 Spot 2007 Spot until Q3 2008
49.3 €/MWh
42.7 €/MWh39.7 €/MWh
27.9 €/MWh
37.1 €/MWh
48.6 €/MWh
31.2 €/MWh
29.3 €/MWh
26
European prices still clearly above Nordic prices
Source: , ATS
Spot prices Forward pricesEUR/MWh
Dutch
German
Nordic
Russian*
* Including capacity tariff estimate. E.g 2008 10 €/MWh
13 November 20080
10
20
30
40
50
60
70
80
90
100
110
2005 2006 2007 2008 2009 2010
27
Fuel and CO2 allowance prices
Crude oil price (Brent)
020406080
100120140160
USD
/ bb
l
2005 2006 20092007 2008
CO2 price
05
101520253035
EUR
/ tC
O2
2005 2006 20092007 2008
Coal price (API2)
04080
120160200240
USD
/ t
2005 2006 20092007 2008
Gas price (NBP)
020406080
100120
GB
p / t
herm
2005 2006 20092007 2008Source: ; market prices November 2008; 2008-2009 future quotations
Crude oil price (Brent) CO2 price
Coal price (API2) Gas price (NBP)
28
Condensing power fuel and CO2 costs
• Current Nord Pool spot hardly covers the marginal cost for fuel and emissions
• Running a gas fired condensing plant would require a significant increase in Nord Pool spot
Coal32
CO216
Marginal costCoal + CO2
48 E
UR
/MW
h
Gas63
CO2: 8
Marginal costGas + CO2
71 E
UR
/MW
h
Source: Bloomberg spark spread calculator (ESSC): Fuel prices at spot on 27 October 2008 (API2 for coal, BEB at EEX for gas). Thermal efficiency for coal 36%, for gas 49%. CO2 coefficient 0.9 for coal, 0.42 for gas.
?
?
NP Spot52 EUR/MWh
Margin for• Other variable costs• Fixed costs• Return on invested capital
29
• Fortum today• European power markets• Russia• Financials, capex and outlook• Supplementary material
30
Russia is the World’s 4th largest power market – and growing rapidly
Source: IEA, 2008, data 2006*) Ministry of Industry and Energy
8001,0001,2001,4001,6001,8002,0002,200
2000 2005 2010 2015 2020
1,700
2,000
0500
1,0001,5002,0002,5003,0003,5004,000
USChin
aJa
pan
Russia
India
Canad
a
German
y
France
Brazil
Nordic UK
South
Korea
TWh
Demand growth 700+ TWhbefore year 2020
• High scenario 2,000 TWh/a by 2020• Base scenario: 1,700 TWh/a by 2020
Russia is the 4th largest power market in the World
Demand for electricity in Russia to increase 50% by 2020 *)
31
TGC-10
Surgut
Kurgan
Tyumen
TobolskMoscow
St. Petersburg
Chelyabinsk
NyaganKhanty-Mansisk
TGC-1
• Fortum holding 93.4% at the moment (income statement consolidated from 1 April 2008)• TGC-10 operates in the heart of Russia’s oil and gas producing region• EUR 2.5 billion paid of which EUR 1.3 billion remains in the company (share issue) and
will be used for planned EUR 2.5 billion investment program of TGC-10• The acquisition adds appr. 18 TWh/a electricity and appr. 27 TWh/a heat• Annual efficiency improvement to exceed EUR 100 million in 2011• Marginally earnings dilutive for two years• The integration team headed by SVP Tapio Kuula started on 1 April 2008
TGC-10
TGC-1• Fortum holding 25.7% at the moment (associated company) • ~6,250 MW electricity production capacity (appr. 50% hydro), ~24 TWh/a electricity, ~30 TWh/a heat
And some minor assets from shareholdings in companies spun-off from Lenenergo.
Fortum's current holdings in Russia
32
"Power industry law" approved 2003Establishment of Russian power exchange (ATS) 2001Launch of the free-trade sector of the wholesale market
in European & Urals 2003in Siberia 2005
Launch of balancing power segment 2006Launch of new wholesale market model 2006Restructuring of regional "energos" (P&H companies) completeFormation of new companies completeCapacity market 2008Competitive market of ancillary services 2009Financial derivatives market 2009Full liberalisation of the wholesale market 2011 onwards
Key steps in the reform
Russian power industry reform has progressed well
Time
33
Reform – Recent and planned events for 2008-2009
• RAO UES ceased to exist in June 2008
• Market Council established to continue the power market development
• Interest promotion organisation for GenCos established
• Launch of Transitional Capacity Market
• Liberalisation rate increased to 25%
• First capacity auction held in July 2008
• Daily gas trading experiments
• Share issue completed in all TGC's and WGC's except WGC-1
• Increase of power market liberalisation rate to 50%
• Launch of Long Term Capacity Market rules in March 2009
• First long term capacity auction at the end of 2009
• Daily trading of gas
• Launch of exchange traded combined energy and capacity contracts
• Launch of Ancillary Services Market
• Launch of Financial Derivatives Market
Events taken place in 2008 Planned events during 2008-2009
34
Further power market liberalisation
5 %10 %
15 %25 %
30 %
50 %60 %
80 %100 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
1/1/
2007
7/1/
2007
1/1/
2008
7/1/
2008
1/1/
2009
7/1/
2009
1/1/
2010
7/1/
2010
1/1/
2011
100 %
• Further liberalisation of energy market to increase to 50% in July 2009
• The rate of liberalised volume is based on 2007 balance. All new capacity is sold with liberal prices
• The sales to households will remain regulated still after 2011
Share of liberalised trade for existing capacity
35
Currently 25% of electricity sold with liberalised prices
• Day-Ahead-Market for electricity well-functioning and competitive
• All volume sold to Day-Ahead-Market, but market based price formation for about 25% of the volume
1) In addition generators currently receive on average about 10 EUR/MWh capacity paymentUsed EUR/RUB exchange rate of 34.6
European and Urals part power price 1)
development; EUR/MWh
0
5
10
15
20
25
30
35
40
1.1.06 1.7.06 1.1.07 1.7.07 1.1.08 1.7.08
36
ChelyabinskKurgan
Tyumen
NyaganTobolsk
Moscow
2007 2013
MW
+73%+2,270 MW
3,020
0
1,000
2,000
3,000
4,000
5,000
6,000
5,290
Investment programme of TGC-10
Electricity capacity (MW)Plant Fuel type Existing Planned Total
Tyumen CHP-2 Gas 755 450 1,205Tyumen CHP-1 Gas 472 190 662Tobolsk CHP Gas 452 210 662Chelyabinsk CHP-3 Gas 360 220 580Chelyabinsk CHP-2 Coal, gas 320 320Argayash CHP Coal, gas 195 195Chelyabinsk CHP-1 Coal, gas 149 149Chelyabinsk GRES Gas 82 82Nyagan GRES Gas 1,200 1,200Boilers -
TGC-10 3,020 2,270 5,290Kurgan Generation (49%) Gas 235 235
37
Overall integration status
• Integration• The integration process started in April 2008 with an integration team
headed by Tapio Kuula• In October, expatriates to power plants, heat networks and maintenance
companies• Now about 45 persons
• Integration process is in line with the original plan• All major processes understood, changes implemented• Service activities are speeding up, sites audited• New organization structure and Fortum's management model have been in
place since the beginning of September 2008
38
Efficiency improvement to exceed 100 MEUR in 2011
• Purchasing
• Portfolio Management and Trading (PMT)
• Heat regulation
• Heat - technical and business improvements
• Generation - technical improvements
• Others
39
• Fortum today• European power markets• Russia• Financials, capex and outlook• Supplementary material
40
Operational performance improved by 28%
Low sales margin in Markets
1-334418
1337
1048
-72-29
MEUR
PowerGeneration
I-III 2007 Heat Distribution Markets Russia Other I-III 2008
Consistent hedging strategy and higher hydro power production in Power Generation
Higher fuel and CO2costs in Heat
Distribution – stable business as usual
The first year of integration in Russia
Comparable operating profit
41
Income statement
MEUR III/2008 III/2007 I-III/2008 I-III/2007 2007 LTM
Sales 1 272 860 4 034 3 159 4 479 5 354Expenses -877 -350 -2 682 -1 832 -2 632 -3 482
Operating profit 395 510 1 352 1 327 1 847 1 872Share of profit of associates and jv 8 6 78 223 241 96Financial expenses, net -66 -45 -185 -117 -154 -222
Profit before taxes 337 471 1 245 1 433 1 934 1 746Income tax expense -69 -44 -256 -218 -326 -364
Net profit for the period 268 427 989 1 215 1 608 1 382Minority interest -16 -4 10 31 56 35
EPS, basic (EUR) 0.32 0.48 1.10 1.33 1.74 1.52EPS, adjusted (EUR) 0.32 0.22 1.10 0.87 1.28 1.52
LTM = Last Twelve Months
42
Cash flow statement
MEUR III/2008 III/2007 I-III/2008 I-III/2007 2007 LTM
Operating profit before depreciations 532 623 1 735 1 663 2 298 2 370
Non-cash flow items and divesting activities -56 -263 -38 -268 -286 -56
Financial items and taxes -92 -89 -372 -231 -393 -534
Funds from operations (FFO) 384 271 1 325 1 164 1 619 1 780
Change in working capital 17 -16 115 161 51 5
Total net cash from operating activities 401 255 1 440 1 325 1 670 1 785
Paid capital expenditures -301 -128 -680 -341 -592 -931
Acquisition of shares -442 -247 -1 215 -257 -285 -1 243
Other investing activities 1 282 -44 258 268 -34
Cash flow before financing activities -341 162 -499 985 1 061 -423
43
MEUR LTM 2007 2006in Q3 '08
Sales 5 354 4 479 4 491
Comparable operating profit 1 853 1 564 1 437
Cash flow from operations 1 785 1 670 1 151
Balance sheet total 20 546 17 674 16 839
Interest-bearing net debt 6 520 4 466 4 345
Net debt/EBITDA* 2.8 2.2 2.3
Return on capital employed (%)* 14.1 14.0 13.4
Return on shareholders' equity (%)* 16.7 15.8 14.4
Key ratios
*2007 adjusted for REC and Lenenergo gains
44
Current Fortum Group financial targets
Return on capital employed 12%
Return on shareholder's equity 14%
Net debt/EBITDA 3.0–3.5
45
Capital expenditures EUR 1 - 1.5 billion – significant flexibility
• Annual capital expenditures EUR 1–1.5 billion
• Maintenance/productivity EUR 300–500 million p.a.
• Growth in Nordic and Baltic rim countries EUR 200-500 million p.a.
• Investments in Russian growth on average EUR 500 million per annum
Maintenance
Growth
Russian growth
~ EUR 300–500 m
~ EUR 500 m
~ EUR 200–500 m
Esimated annual Capex 2009-2013
4646
Good Liquidity and sizable committed facilities
In October, Fortum made an additional drawing of EUR 500 million from its committed long term credit lines (EUR 1.5 bn RCF maturing in 2013). This will cover all outstanding debt maturing in 2008.
LIQUID FUNDS AND COMMITTED CREDIT LINES (MEUR)
Liquid FundsCash and cash equivalents 663Bank Deposits over 3 months 516
1 179of which in Russia 1 109
Available Outstanding Total amountCommitted Credit Lines Short Term - Overdrafts 202 11 213Long Term - RCF due 2011 1 200 0 1 200Long Term - RCF due 2013 1 000 500 1 500
2 402 511 2 913Total Liquid funds and available committed credit lines 3 581
4747
Updated debt maturity profile end of October
0
500
1000
1500
2000
2500
Q4/2008 2010 2012 2014 2016 2018+
Bonds Financial institutions Other long-term debt CPs Other short-term debt
MEUR
634
245
2.268
501
1.643
274
738
81
877
534299
48
A turnaround programme launched in Markets
• New management• Product portfolio• Customer segments• Fixed costs
– Union negotiations started in Finland and Sweden, 200 people
• Procurement price• Electricity price increases in Finland and
Sweden– Finland: 9% in Aug, 14% in Dec– Sweden: 13% in Oct
49
Hedging of Power Generation's Nordic sales
Hedge ratio Hedge price
Rest of 2008 ~ 65% ~ EUR 46 per MWh
2009 ~ 55% ~ EUR 53 per MWh
(~70%) (~ EUR 46 per MWh)
(Status at the beginning of July 2008)
(~45%) (~ EUR 51 per MWh)
2010 ~ 20% ~ EUR 55 per MWh
Status at the beginning of October 2008
50
• Flexible power and heat production portfolio
• Integration of Russian TGC-10 proceeding well –over EUR 100 million efficiency improvements by 2011
• Growth through the investment programmes
• Strong financial performance and financial headroom
• Carbon exposure among the lowest among European power utilities
Fortum well positioned for the future
51
• Fortum today• European power markets• Russia• Financials, capex and outlook• Supplementary material
5252
• Olkiluoto 3, Finland, nuclear• Swedish nuclear• Suomenoja, Finland (gas CHP)• Järvenpää, Finland (biomass CHP)• Brista, Sweden (waste CHP)• Refurbishing of existing hydro assets• Wind power, Sweden• Częstochowa, Poland (coal/biomass CHP)• Tartu, Estonia (biomass/peat CHP)• Pärnu, Estonia (biomass/peat CHP)
Fortum's investment programme – Nordic region, Poland and Baltic countries
MW (El.) MW (Heat)
400300240 220
25 5520 60
1501065 12025 5025 45
EUR 200-500 million per annum until 2013– electricity capacity ~1,200 MW– Nuclear investments in associated company balance sheets– ~80% CO2-free
53
Nordic power generation mix
Source: Nordel
0
20
40
60
80
100
120
140
160
Denmark Norway Sweden Finland
Fossil fuels
Nuclear
Waste
Biomass
Wind
Hydro
TWh/a
Total Nordic generation 397 TWh in 2007
4
19
10
214
63
87
TWh
Hydro variance +/- 40 TWh from average
Net import in 2007: 3TWh
1
5
3
54
16
22
%
54
Still a highly fragmented Nordic power market
SEAS-NVE
Fortum
Vattenfall
Others
Hafslund
E.ON50%
HelsinkiStatkraft
GöteborgSyd Energi
Dong Energy
Electricity distribution14 million customers~500 companies
Power generation397 TWh
>350 companies
Fortum
Vattenfall
Dong Energy
Others
Statkraft
30%
E.ONPVO
E-CO Energi
BKKNorsk Hydro
Helsinki
Electricity retail14 million customers~350 companies
51%
Helsinki
Dong Energy
Fortum
VattenfallOthers
E.ON51%
Hafslund
SEAS-NVEStatkraft
ÖstkraftÖresundskraft
Current market shares based on 2007 figures, active players
55
Fortum's carbon exposure is among the lowest in Europe
0
200
400
600
800
1000
1200
DEI
Nuo
n
RW
E
Dra
x
CEZ
Sco
ttish
&S
outh
ern
Uni
on F
enos
a
Ende
sa
Ene
l
EDP
Vat
tenf
all
Don
g En
ergy
E.O
N
Elec
trabe
l
PVO
Iber
drol
a
EDF
Brit
ish
Ene
rgy
Verb
und
Fortu
m
Sta
tkra
ft
g CO 2/kWh electricity
Source:PWC & Enerpresse , 2008Changement climatique et Électricit é
Average 373 g/kWh
2007
g CO 2/kWh electricity
Source:PWC & Enerpresse , 2008Changement climatique et Électricit é
Average 373 g/kWh
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Foreign investors 35.3%Finnish State 50.8%
Other Finnish investors 7.3%
Households 5.0% Financial and insurance institutions 1.6%
• Leading power and heat company in Nordic• Listed at the Helsinki Stock Exchange 1998• More than 50,000 shareholders• Among the most traded shares in Helsinki stock exchange• Market cap ~13 billion euros
A leading Nordic power and heat company
30 November 2008
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Hydro power 37%
Peat 2%
Coal 10%
Other 2%
Nuclear power 46%
Biomass 3%
Total generation 53.2 TWh(Generation capacity 10,768 MW)
Fortum's Nordic power generation in 2006
Fortum's Nordic power generation
Hydro power 39%
Peat 1%
Coal 6%
Other 2%
Nuclear power 49%
Biomass 2%
Total generation 51.1 TWh(Generation capacity 10,775 MW)
Fortum's Nordic power generation in 2007
Natural gas 1%
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Total production 21.9 TWh(Production capacity 9,381 MW)
Fortum's Nordic heat production in 2007
Oil 6%Peat 5%
Heat pumps, electricity 16%
Waste 6%
Biomass fuels 22%
Natural gas 9%
Other 12%
Coal 24%
Fortum's heat production
Total production 26.1 TWh(Production capacity 11,223 MW)
Fortum's total heat production in 2007
Oil 5%
Peat 5%Heat pumps, electricity 14%
Waste 5%
Biomass fuels 19%
Natural gas 19%Other 9%
Coal 24%
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