FORTUM Power and heat company in the Nordic area, Russia and the Baltics. Investor / Analyst material August 2015

Transcription

1 FORTUM Power and heat company in the Nordic area, Russia and the Baltics Investor / Analyst material August 2015

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 Content Fortum today pages 4 16 European and Nordic power markets pages Fortum s nuclear fleet pages Russia pages Fortum s investment programme page 31 Historical achieved prices page 32 Q (some graphs updated) pages Financials and outlook pages

4 Appr. 121,000 shareholders Power and heat company in the Nordic countries, Russia, Poland and the Baltics Listed at the Helsinki Stock Exchange since 1998 Among the most traded shares on the Nasdaq Helsinki stock exchange Market cap ~14 billion euros Finnish households 9.6% Financial and insurance institutions 2.3% Other Finnish investors 7.9% Finnish State 50.8% Foreign investors 29.4% 31 Jully

5 Capital returns: 2014 EUR 1.30 per share ~ EUR 1.2 billion Fortum s dividend policy is based on the following preconditions: The dividend policy ensures that shareholders receive a fair remuneration for their entrusted capital, supported by the company s long-term strategy that aims at increasing earnings per share and thereby the dividend. When proposing the dividend, the Board of Directors looks at a range of factors, including the macro environment, balance sheet strength as well as future investment plans. Fortum's target is to pay a stable, sustainable and over time increasing dividend of 50-80% of earnings per share excluding one-off items 5 year dividend per share (EUR) history 1.3* Fortum has since 1998 annually paid dividends in total ~11,648 MEUR % % % % % *Dividend of EUR 1.10 per share, and in addition an extra dividend EUR 0.20 per share for

6 Our strategic route Skandinaviska Elverk Gullspång Birka Energi 50% Fortum 50% Stockholm Gullspång merged with Stockholm Energi Stora Kraft Birka Energi 50% 100% Østfold Shares in Hafslund Shares in Lenenergo TGC-1 established Länsivoima 45% 65% Lenenergo shares Länsivoima 100% Elnova 50% 100% District heating in Poland Oil business spin-off E.ON Finland IVO Fortum Neste TGC-10 Divestment of Lenenergo shares Divestment of Fingrid shares Divestment of heat operations outside of Stockholm Divestment of small scale hydro Divestment of non-strategic heat business Divestment of electricity distribution business Divestment of electricity distribution and heat businesses Divestment of Grangemouth power plant Divestment of Gasum shares Divestment of electricity distribution business 6

7 Fortum s Mission and Strategy Mission Fortum s purpose is to create energy that improves life for present and future generations. We provide sustainable solutions for society and deliver excellent value to our shareholders. Strategy Build on the strong Nordic core Create solid earnings growth in Russia Build a platform for future growth Strong competence in CO 2 -free hydro and nuclear, efficient CHP production and energy markets 7

8 Fortum s reporting segments and divisions Power and Technology Hydro, nuclear and thermal power generation Power Solutions with expert services Portfolio management and trading Technology and R&D functions The segment incorporates two business divisions: Hydro Power and Technology Nuclear and Thermal Power Heat, Electricity Sales and Solutions Combined heat and power (CHP) production District heating activities and business to business heating solutions Solar business Electricity sales and related customer offering Corporate Sustainability Russia Power and heat generation and sales in Russia Includes OAO Fortum and Fortum s slightly over 29% holding in TGC-1 8

9 Our current geographical presence Power generation Heat Electricity sales Nordic countries Power generation Heat sales Electricity customers 48.0 TWh 3.3 TWh 1.3 million Key figures 2014 Sales EUR 4.1 bn Comparable operating profit EUR 1.1 bn Balance sheet EUR 21 bn Personnel 8,200 Russia OAO Fortum Power generation Heat sales 23.3 TWh 26.0 TWh Poland Power generation 0.7 TWh Heat sales 3.4 TWh Baltic countries Power generation Heat sales 0.7 TWh 1.2 TWh India Power generation 9 GWh 9

10 Fortum mid-sized European power generation player; major producer in global heat Power generation Largest producers in Europe and Russia, 2013 TWh EDF E.ON Enel RWE Rosenergoatom Gazprom Vattenfall 1) ENGIE Inter RAO UES RusHydro NNEGC Energoat. Iberdrola EuroSibEnergo CEZ Fortum EnBW PGE IES Statkraft DTEK EDP DEI Gazprom IES Inter RAO UES 2 ) Veolia RusHydro EuroSibEnergo Fortum Sibgenco Vattenfall Quadra 2) EDF TGC-2 Lukoil Minskenergo KDHC DTEK Dong Energy PGNiG Tatenergo Enel Fortum Värme Heat production Largest global producers, 2013 TWh Enel EDF E.ON RWE Iberdrola DEI CEZ Centrica EDP Vattenfall SSE EnBW 1) ENGIE Tauron PGE Gas Natural Fenosa Fortum Hafslund Dong Energy Customers Electricity customers in EU, 2013 Millions ) Formerly GDF SUEZ; 2) Veolia incl. Dalkia International and EDF incl. Dalkia's activities in France Source: Company information, Fortum analyses, 2013 figures pro forma, heat production of Beijing DH not available. 10

11 Biggest nuclear and hydro generators in Europe and Russia TWh Total generation Other 400 Nuclear Hydro EDF Rosenergoatom NNEGC Energoatom RusHydro Vattenfall E.ON Enel EuroSibEnergo GDF SUEZ Statkraft Fortum Iberdrola RWE EnBW CEZ Axpo Verbund * Gazprom Hidroelectrica Centrica Alpiq E-CO Energi Ukrhydroenergo Norsk Hydro EPS, Serbia BKK Agder Energi EDP Gas Natural Fenosa DEI SSE ** Inter RAO UES PGE DTEK *** IES 11 Figures 2012 pro forma * incl. MOEK, ** incl. Bashkirenergo, *** incl. TGC-5, TGC-6, TGC-7, TGC-9

12 Fortum in the Nordic electricity value chain Large customers Power generation Nordic wholesale market Power exchange and bilateral agreements Retail customers Private customers, small businesses 12

13 Fortum's power and heat production by source Fortum's power generation in 2014 Fortum's heat production in 2014 Nuclear power 33% Natural gas 31% Natural gas 77% Biomass 1% Coal 5% Waste 1% Peat 1% Biomass 6% Hydro power 30% Coal 15% Total generation 73.4 TWh (Generation capacity 14,624 MW) Total production 34.6 TWh (Production capacity 17,402 MW) 13

14 Fortum's European power and heat production Fortum's European power generation in 2014 Fortum's European heat production in 2014 Nuclear power 48% Coal 38% Biomass 2% Natural gas 2% Coal 4% Oil 1% Heat pumps, electricity 1% Waste 3% Peat 3% Natural gas 29% Hydro power 44% Biomass 25% European generation 50.1TWh (Generation capacity 9,851 MW) European production 8.2 TWh (Production capacity 3,936 MW) 14

15 Fortum a forerunner in sustainability Emissions-free production is Fortum s strategic choice We are highly committed to sustainability. Our purpose is to create energy that improves life for present and future generations. We provide sustainable solutions for society while delivering excellent value to our shareholders. We want to act responsibly, both in the short term and long term. Fortum is listed in several sustainability indexes: Nordic Climate Disclosure Leadership Index (CDLI) STOXX Global ESG Leaders indices oekom OMX GES Sustainability Finland Index ECPI Indices 15

16 Fortum's carbon exposure among the lowest in Europe g CO 2 /kwh electricity, % of Fortum's total power generation CO 2 -free 94% of Fortum s power generation in the EU CO 2 -free Close to 100% of the ongoing investment programme in the EU is CO 2 -free. Average 328 g/kwh DEI RWE Drax SSE CEZ Note: : Fortum s specific emissions of the power generation in 2014 in the EU were 39 g/kwh and in total 177 g/kwh. Only European generation except Fortum total which includes Russia. E.ON Vattenfall EDP Enel Edipower EnBW Gas Natural Fenosa GDF SUEZ Dong Energy Fortum total Iberdrola PVO EDF Verbund Fortum EU Statkraft Source: PWC & Enerpresse, December 2014 Climate Change and Electricity, Fortum 16

17 Carbon market gradually tightening Political decisions strengthening the EU Emissions Trading System Decision on the 2030 greenhouse gas reduction target Backloading decision, implementation started in 2014 Market Stability Reserve (MSR), adoption expected during summer 2015, to be operational 2019 Upcoming review of ETS-Directive Robust and rebalanced EU carbon market foreseen by early 2020 s Current oversupply to halve early 2020 s and gradually cease towards 2030 Gradual appreciation of allowance price. Source: Thomson Reuters Point Carbon 17 EU ETS = European Union Emissions Trading System EUA = allowance in the EU ETS

18 Market coupling milestones - cross-border power flows optimised by power exchanges Market coupling between NL, BE and FR since 2006 Germany Nord Pool Spot coupling started 11/2009 Market coupling for Central Western Europe (DE, FR, NL, BE) since 11/2010 with a continued coupling with Nord Pool Spot Poland coupled with Nord Pool Spot since December 2010 NorNed (NO-NL) and BritNed (UK-NL) included in 2011 Estonian price area in Nord Pool Spot since 2010 and Lithuanian area since 6/2012. Latvia joined in June 2013 Czech, Slovakia and Hungary coupled together since September Romania joined in November 2014 A common day-ahead market coupling for the whole north-western Europe was started in February Iberia (Spain & Portugal) joined in May Italy and Slovenia joined in February 2015 Flow-based cross-border capacity allocation for further trade optimisation taken into use in May 2015 for the CWE region Lithuania-Poland (LitPol Link) coupling to start by end-2015 CEE (Central Eastern Europe) market coupling region to join in Switzerland waiting for agreement with the EU In addition to day-ahead coupling, intraday market coupling and balancing market integration under development as well /

19 Current transmission capacity from Nordic area is over 5,000 MW Countries Transmission capacity MW From Nordics To Nordics Denmark - Germany 2,225 2,100 Sweden - Germany Sweden - Poland Norway - Netherlands Finland - Estonia ,016 Finland - Russia 320 1,300 Total 5,460 6, Theoretical maximum in transmission capacity ~40 TWh per annum Net export from Nordic area to Continental Europe and Estonia during year 2014 was 13 TWh During the dry year 2013 net export was 3 TWh Approximately 25 TWh of net export is now reachable 700 2,

20 Nordic, Baltic, Continental and UK markets are integrating interconnection capacity will double by 2021 The Northern Seas Offshore Grid and the Baltic Energy Market Integration Plan are included as priority electricity corridors in EU s Infrastructure Guidelines, approved in April 2013 Two 1400 MW NO-UK links as EU Projects of Common Interest: NSN link to England agreed to be ready in 2021, NorthConnect to Scotland still requiring Norwegian permission First direct 1400 MW NO-DE link contracted to be built by end-2019 New MW DK-UK Viking Link not yet decided, but planned to be built by end-2020/2022 EU financial support for a 700 MW DK-NL link, due to be built by 2019 Jutland DE capacity planned to grow by 860 MW by 2020, with further 500 MW increase by 2022 New 400 MW Zealand DE Kriegers Flak connection by 2019 New interconnectors New Nordic lines Existing interconnectors New interconnections will double the export capacity to over 10,000 MW by 2021 New internal Nordic grid investments provide for increased available capacity for export to the Continent and Baltics EU s Connecting Europe Facility co-financing 3 rd EE-LV transmission line, due to be ready by 2020 EU s European Energy Programme for Recovery co-financing 700 MW NordBalt (ready 12/2015) LitPol Link ( MW) to connect the Baltic market to Poland by end-2015/20. It will open a new transmission route from the Nordic market to the Continent Svenska Kraftnät agreed 3/2014 with 50Hertz to study a new Hansa PowerBridge DC link between Sweden and Germany 20

21 Nordic year forwards Year10 Year11 Year12 Year13 Year14 Year15 Year16 Year17 Year18 Year19 Year20 /MWh 10 August Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Source: Nasdaq Commodities

22 Wholesale prices for electricity EUR/MWh Spot prices Forward prices Dutch German Nordic Russian* August * Including weighted average capacity price Source: Nord Pool Spot, Nasdaq Commodities, APX-ENDEX, Bloomberg Finance LP, ATS, NP Market Council, Fortum 22

23 Nordic power generation dominated by hydro, but fossil needed TWh/a Total Nordic generation 390 TWh in 2014 Fossil fuels Nuclear Biomass TWh % Solar Wind Hydro * Denmark Norway Sweden Finland Net export in 2014: 10 TWh Source: ENTSO-E Statistical Factsheet 2014 *) Normal annual Nordic hydro generation 200 TWh, variation +/- 40 TWh. 23

24 Wholesale electricity price too low to attract investments EUR/MWh Source: Nord Pool spot, Nasdaq Commodities Futures 7 August EUR/MWh Coal condensing Average levelised costs of new electricity generation Onshore wind Nuclear Utility scale Solar PV In Italy Commodity prices are forward prices as of August Large hydro Gas Offshore wind NOTE: The presented figures are calculated based on data from recent public reports and do not represent Fortum s view. Average achieved price ( /MWh) for the production type depends on availability and flexibility. There are large variations in the cost of hydro, wind and solar depending on location and conditions. 24

25 Overview of Fortum s nuclear fleet Commercial operation started Generation Capacity Fortum s share Yearly production Fortum s share of production Share of Fortums Nordic production Majority owner Fortum s share Operated by Unit 1: 1977 Unit 2: 1981 LOVIISA OLKILUOTO OSKARSHAMN FORSMARK Unit 1: 496 MW Unit 2: 496 MW Total: 992 MW 8 TWh 8 TWh Unit 1: 1978 Unit 2: 1980 Unit 3: (Under construction) Unit 1: 880 MW Unit 2: 880 MW (Unit 3: 1,600 MW) Total: 1,760 MW (3,360) 27% 468 MW 14 TWh 4 TWh Unit 1: 1972 Unit 2: 1974 Unit 3: 1985 Unit 1: 473 MW Unit 2: 638 MW Unit 3: 1,400 MW Total: 2,511 MW 43% 1,089 MW 17 TWh 7 TWh Unit 1: 1980 Unit 2: 1981 Unit 3: 1985 Unit 1: 984 MW Unit 2: 1,120 MW Unit 3: 1,170 MW Total: 3,274 MW 22% 720 MW 25 TWh 5.5 TWh 18% 9% 16% 13% Fortum Fortum Pohjolan Voima 26.6% Teollisuuden Voima (TVO) E.ON 43.4% OKG Aktiebolag Vattenfall 22.2% Forsmarks Kraftgrupp Responsibilities Loviisa: Fortum is the owner, licensee and operator with all the responsibilities specified in the Nuclear Energy Act, Nuclear Liability Act, and other relevant nuclear legislation Other units: Fortum is solely an owner with none of the responsibilities assigned to the licensee in the nuclear legislation. Other responsibilities are specified in the Companies Act and the Articles of Association and are mostly financial. 25

26 Fortum's nuclear power in the Nordics Load factor (%) Osakarshamn Oskarshamn Oskarshamn Forsmarks Forsmark Forsmark Loviisa Loviisa Olkiluoto Olkiluoto Source: Fortum Finnish units world class in availability Overview of production and consumption: - energy related links Forsmark Oskarshamn Olkiluoto Loviisa 26

27 Variety of technologies and ages Unit MWe (Net) Share (%) Share (MWe) Commercial operation Age Type/ Generation * Supplier Loviisa 1 Loviisa ,0 100, PWR / 1 PWR / 1 AEE (Atomenergoexport) AEE (Atomenergoexport) Olkiluoto 1 Olkiluoto 2 Olkiluoto (1,600) 26,6 26,6 25, (400) (?) BWR / 3 BWR / 3 PWR / 3 Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval Areva / Siemens Oskarshamn 1 Oskarshamn 2 Oskarshamn ,400 43,4 43,4 43, BWR / 1 BWR / 2 BWR / 4 Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval Forsmark 1 Forsmark 2 Forsmark ,120 1,170 23,4 23,4 20, BWR / 3 BWR / 3 BWR / 4 Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval Asea-Atom / Stal-Laval *Generation refers to technical resemblence based on KSU classification and not to reactor design generations. All reactors are of Generation II except Olkiluoto-3 (EPR) which is of Generation III. Planned capacity increases Oskarshamn 2 in 2017, capacity increase 180 MW (Fortum s share 78 MW), Fortum s share of total capacity after increase 355 MW Forsmark 1 in , capacity increase 120 MW (Fortum s share 27 MW), Fortum s share of total capacity after increase 257 MW PWR = Pressurized Water Reactor The most common reactor type in the world (e.g. all French units, most US units). Also the Loviisa units are PWRs, but based on Russian design. High pressure prevents water from boiling n the reactor. The steam rotating the turbine is generated in separate steam generators. BWR = Boiling Water Reactor Similar to the PWR in many ways, but the steam is generated directly in the reactor. Popular reactor type e.g. in Sweden, the US and Japan. 27

28 Third party nuclear liability in case of severe accident In force since Law approved by Parliament in 2010, requires separate decision from Government to come into force. 300 M 300 M Unlimited company responsibility Convention parties 500 M 145 M 500 M State responsibility Responsibility of company (insurance or guarantee) 145 M 240 M Old, Finland 145 M 360 M Current, Sweden 700 M Sweden (new, not in force) 700 M 200 M Finland, temporary legislation 700 M New Paris convention Requires ratification by 2/3 of member states to come into force. In Finland approved by Parliament in

29 Fortum - a major player in Russia OAO Fortum (former TGC-10) Operates in the heart of Russia s oil and gas producing region, fleet mainly gas-fired CHP capacity 23 TWh power generation, 26 TWh heat production in 2014 Investment programme to add 85%, almost 2,400 MW to power generation capacity TGC % of territorial generating company TGC-1 operating in north-west Russia TGC-1 ~7,200 MW electricity production capacity (more than 40% hydro), ~24 TWh electricity, ~28 TWh heat in 2014 St. Petersburg Nyagan OAO Fortum Moscow Tobolsk Tyumen Fortum and Gazprom Energoholding signed a protocol to start a restructuring process of TGC-1. Currently Gazprom Energoholding owns 51.8% of the TGC-1 shares and Fortum 29.5%. As part of the restructuring, Fortum will establish a joint venture together with Rosatom to own the hydro assets of TGC-1, while Gazprom Energoholding continues with the heat and thermal power businesses of TGC-1. By utilising its present stake in TGC-1, Fortum would obtain a 75-plus-percent ownership in the new hydro power company, and Rosatom a 25-minus-percent minority holding. Chelyabinsk 29

30 Day ahead wholesale market prices in Russia Key electricity, capacity and gas prices in the OAO Fortum area II/15 II/14 I-II/15 I-II/ LTM Day ahead power market prices for Urals Electricity spot price (market price), Urals hub, RUB/MWh 1,021 1,132 1,036 1,075 1,089 1,069 Average regulated gas price, Urals region, RUB 3,362 3,362 3,362 3,362 3,362 3, m 3 / MWh Average capacity price for CCS old capacity, trub/mw/month Average capacity price for CSA new capacity, trub/mw/month Average capacity price, trub/mw/month Achieved power price for OAO Fortum, EUR/MWh RUB / MWh In addition to the power price generators receive a capacity payment. Source: ATS 30

31 85% increase in power generation capacity in Russia by 2015 through the investment programme Year Supply starts Power plant Fuel type Existing capacity 2,785 MW New investments 2,388 MW Production type Total capacity 5,173 MW < 2011 Tyumen CHP-2 Gas 755 CHP/Condensing 755 Chelyabinsk CHP-2 Gas, coal 320 CHP/Condensing 320 Argayash CHP Gas, coal 195 CHP/Condensing 195 Chelyabinsk CHP-1 Gas, coal 149 CHP/Condensing Feb/2011 Tyumen CHP-1 Gas CHP/Condensing 681 June/2011 Chelyabinsk CHP-3 Gas CHP/Condensing 576 Oct/2011 Tobolsk CHP Gas CHP/Condensing April/2013 Nyagan 1 GRES Gas 418 Condensing 418 Dec/2013 Nyagan 2 GRES Gas 418 Condensing Jan/2015 Nyagan 3 GRES Gas 418 Condensing 418 2H/2015 Chelyabinsk GRES Gas CHP/Condensing 330 2H/2015 Chelyabinsk GRES Gas 248 CHP/Condensing 248 2,785 MW 2,388 MW 5,173 MW 31

32 Hedging improves stability and predictability 2009 onwards thermal and import from Russia excluded 32

33 Q Results Key figures (MEUR) II/2015 II/2014 I-II/2015 I-II/ LTM Sales, continuing operations ,834 2,094 4,088 3,828 Comparable EBITDA, continuing operations ,457 1,323 Operating profit: Continuing operations ,296 1,191 Discontinued operations 4, ,395 2,030 2,132 4,497 Fortum total 4, ,889 2,629 3,428 5,688 Comparable operating profit: Continuing operations ,085 1,003 Discontinued operations Fortum total ,351 1,219 Profit before taxes: Continuing operations ,232 1,128 Discontinued operations 4, ,394 2,029 2,128 4,493 Fortum total 4, ,887 2,626 3,360 5,621 Earnings per share: Continuing operations Discontinued operations Fortum total Net cash from operating activities, continuing operations ,406 1,352 33

34 Summary of the second quarter of 2015 Fortum s results continued to be pressured by low electricity prices The second quarter was characterised by among the highest precipitation in recent history, which resulted in high and partly must-run hydro power production Swedish electricity distribution business divestment completed the whole Distribution sale The negotiations on Russian TGC-1 restructuring did not come to conclusions 34

35 Market conditions in the second quarter of 2015 Nordic countries Power consumption in the Nordic countries at the same level as in Q The precipitation was among the highest recorded this century in Norway and Sweden. In addition, by the end of the second quarter, large amounts of the precipitation still remained as snow in Norway, because of the delayed snow melt Nordic system spot prices approximately EUR 5 per MWh lower than in Q2 2014, while Finnish and Swedish area prices EUR 9-11 per MWh lower European business environment and carbon market In May, a compromise was reached on the market stability reserve (MSR) of the EU emissions trading system. In July, the Commission published a proposal to revise the Emissions Trading Directive Russia Power consumption in Fortum s operating areas was on the same level as in Q Electricity spot price (in RUB) in the Urals hub declined 10% compared to Q

36 Nordic water reservoirs reservoir content (TWh) reference level Q1 Q2 Q3 Q4 Source: Nord Pool Spot 36

37 Wholesale price for electricity EUR/MWh Nord Pool Spot System Price Forwards August Source: Nord Pool Spot, Nasdaq Commodities 37

38 Fuel and CO 2 allowance prices 150 Crude oil price (ICE Brent) 35 CO 2 price (ICE ECX EUA) USD / bbl EUR / tco Coal price (ICE Rotterdam) 100 Gas price (ICE NBP) USD / t GBp / therm Source: ICE Market prices 5 August 2015; future quotations

39 Price development in the Nordic region and Russia -19% -10% -23% -14% Includes capacity income 39

40 Q2: Low electricity prices continued to impact results negatively somewhat compensated by hydro volumes Comparable operating profit, EUR million 40

41 January - June: Clearly lower achieved power price Comparable operating profit, EUR million 41

42 Financials

43 Comparable and reported operating profit MEUR Comparable operating profit Reported operating profit Comparable operating profit Reported operating profit II/2015 II/2014 II/2015 II/2014 I-II/2015 I-II/2014 I-II/2015 I-II/2014 Power and Technology Heat, Electricity Sales and Solutions Russia Other Total, continuing operations Discontinued operations , ,395 2,030 Total, Fortum , ,889 2,629 Non-recurring items including approximately EUR -15 million effect from the cancellation of Olkiluoto 4 nuclear power project, as well as an IFRS accounting treatment (IAS 39) of derivatives and nuclear fund adjustments for continuing operations amounted to EUR 1 (23) million in the second quarter and EUR 8 (30) million in January- June

44 Power and Technology Q Clearly higher precipitation had a positive impact on the hydro volumes, but put pressure on the electricity spot price EUR -15 million effect of the cancelled Olkiluoto 4 nuclear power project in Finland H Clearly lower achieved power price First quarter was exceptionally mild Second quarter characterised by among the highest precipitation in recent history MEUR II/2015 II/2014 I-II/2015 I-II/ LTM Sales ,072 2,156 1,988 Comparable EBITDA Comparable operating profit Net assets 6,093 6,113 6,001 Comparable RONA % Gross investments

45 Heat, Electricity Sales and Solutions Q Comparable operating profit on same level as in comparison period -The lower electricity power price was partly compensated by lower fuel costs. H Comparable operating profit improved mainly due lower fuel costs and higher heat prices during the period In retail electricity sales, the customer base continued to grow and the sales margin improved MEUR II/2015 II/2014 I-II/2015 I-II/ LTM Sales ,332 1,267 Comparable EBITDA Comparable operating profit Net assets 2,073 2,176 2,112 Comparable RONA % Gross investments

46 Russia Q Improved result partly offset by lower electricity prices, as well as bad debt provisions for heat trade receivables Russian rouble affected the result negatively by EUR 3 million H Comparable operating profit improved due to positive effect from new units Russian rouble affected the result negatively by EUR 50 million Result includes CSA provision release of EUR 32 million MEUR II/2015 II/2014 I-II/2015 I-II/ LTM Sales , Comparable EBITDA* Comparable operating profit Net assets 3,159 3,870 2,597 Comparable RONA % Gross investments * Excluding the net release of CSA provision 46

47 Discontinued operations (Distribution) Q2 and H On 1 June 2015, Fortum completed the divestment of its Swedish electricity distribution business. Fortum booked a one-time sales gain of approximately EUR 4.3 billion, corresponding to EUR 4.82 per share Table below includes January-March 2014 results for the Finnish, January-May 2014 results for the Norwegian and full year 2014 results as well as January-May 2015 for the Swedish distribution business MEUR II/2015 II/2014 I-II/2015 I-II/ LTM Sales Comparable EBITDA Comparable operating profit Net assets 2,642 2,615 Gross investments

48 Income statement MEUR II/2015 II/2014 I-II/2015 I-II/ LTM Sales ,834 2,094 4,088 3,828 Other income and expenses ,348-1,526-3,003 2,825 Comparable operating profit ,085 1,003 Items affecting comparability Operating profit ,296 1,191 Share of profit of associates and jv s Financial expenses, net Profit before taxes ,232 1,128 Income tax expense Net profit, continuing operations , Net profit, discontinued operations 4, ,369 1,994 2,073 4,448 Net profit, Fortum total 4, ,782 2,502 3,161 5,441 EPS, basic (EUR), continuing operations EPS, basic (EUR), discontinued operations EPS, basic (EUR), Fortum Total

49 Cash flow statement MEUR II/2015 II/2014 I-II/2015 I-II/ LTM Cash from operating activities: Realised FX gains/losses Other funds from operations (FFO) ,096 1,021 Change in working capital Cash from operating activities, cont. operations ,406 1,352 Cash from operating activities, discontinued operations Cash from operating activities, total Fortum ,022 1,762 1,639 Cash used in investing activities: Paid capital expenditures Proceeds from divestments Other investment activities Total investing activities, continuing operations Total investing activities, discontinued operations 6, ,303 2,648 2,574 6,229 Cash used in investing activities, total Fortum 6, ,372 2,706 2,816 6,482 Cash flow before financing activities, total Fortum 6, ,272 3,727 4,578 8,123 49

50 Key ratios MEUR LTM 2014 Comparable EBITDA, continuing operations 1,323 1,457 Comparable EBITDA, total Fortum 1,652 1,873 Interest-bearing net debt, total Fortum -1,846 4,217 Comparable net debt/ebitda, total Fortum excluding Värme financing ROCE % Return on capital employed, total Fortum Liquid funds totalled EUR 8.6 billion Committed credit lines total EUR 2.2 billion 50

51 Debt portfolio and average interest rate at the balance sheet date 30 June 2015 (31 December 2014) Maturity profile Bonds Financial institutions Other long-term debt Other short-term debt Total interest-bearing debt EUR 6,765 million Average interest 4.2% (3.7%) Portfolio mainly in EUR and SEK with average interest cost 2.9% (2.9%) EUR 786 (681) million swapped to RUB, average interest cost including cost for hedging 14.3% (11.3%) 51

52 Outlook

53 Outlook Nordic markets Fortum continues to expect that the average annual electricity demand growth will be on average approximately 0.5% in the coming years Electricity is expected to continue to gain share of total energy consumption Russia The run-rate operating profit (EBIT) level for the Russia Segment, RUB 18.2 billion, is targeted to be reached during 2015, but the euro result level will be volatile, due to the translation effect Key drivers and risks Economic Political Currency Wholesale price of electricity and volumes demand and supply fuels hydrological situation power plant availability CO2 emissions allowance prices 53

54 Outlook Annual capex estimate, excluding potential acquisitions 2015 approximately EUR 0.8 billion Hedging Rest of 2015 approx. 45% hedge ratio at approx. EUR 41/MWh 2016 approx. 25% hedge ratio at approx. EUR 35/MWh Taxation Effective tax rate for 2015 for the Group 19-21% The Swedish Parliament decided to approve the proposed tax increase of 17% on installed nuclear capacity. The tax will be implemented as of 1 August The estimated impact on Fortum is approximately EUR 15 million annually, albeit corporate tax-deductable 54

55 Fortum Investor Relations For more information, please visit Sophie Jolly Vice President +358 (0) Next result publication: Q2/2015 on 17 July 2015 Rauno Tiihonen Manager +358 (0) Marja Mäkinen Manager (SRI) +358 (0) Meeting requests: Arja-Tuula Tiainen Executive Assistant +358 (0) Follow us on: Free IR app for iphone and ipad (App Store) and Android (Google Play) Fortum ForEnergy blog at