Interim Report January-June Fortum Corporation 20 July 2016

Transcription

1 Interim Report January-June 2016 Fortum Corporation 20 July 2016

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. Any references to the future represent the management s current best understanding. However the final outcome may differ from them. 2

3 Summary of the second quarter of 2016 Operationally, the quarter met our expectations, as the availability in our plants was good and ongoing projects progressed as planned Lower volumes, rouble and lower achieved power price continue to burden profits Some positive signs were seen during the second quarter, although the overall business environment continues to be demanding. The end of the quarter was also characterized by increased commodity market volatility, partly explained by the British EU exit vote We have now taken several important steps in the implementation of our new strategy The highlight of the quarter was the announcement to buy Ekokem diversifies our revenue streams while maintaining a strong link to our traditional core In Sweden, key political parties came to an agreement on energy policy The decisions are positive and a step in the right direction, as all production forms are more evenly taxed In Russia, the CSA (new capacity) time frame was decided to be 10 years 3

4 Q2/2016: Operationally a good quarter, but weak power prices continue to burden profits Key figures (MEUR), continuing operations II/2016 II/2015 I-II/2016 I-II/ LTM Sales ,757 1,834 3,459 3,382 Comparable EBITDA ,102 1,044 Operating profit Comparable operating profit Share of profits of associates and joint ventures Profit before taxes Earnings per share, EUR Net cash from operating activities ,

5 Fortum s solutions for sustainable cities urban environment with empowered citizens A forerunner in sustainable city solutions in a circular economy Advanced heating, cooling and electricity solutions Waste and recycling solutions Sustainable consumer solutions Participation in flexible energy markets High quality of life Climate friendly Resource efficient Security of supply Empowered consumers Ekokem Local fuels: Bio, waste Storages for energy Renewable consumer offerings Excess heat from industry and data centers City as a customer Households and consumers Industrials, companies City administrations Retail electricity and services New consumer solutions for optimizing energy usage DUON Ekokem Recycling and optimal use of waste as energy Systems for balancing demand and supply Intelligent systems for electric traffic Info24

6 Ekokem a Nordic market leader Wide service offering Handling and recycling of materials and waste Recovery and final disposal solutions, including waste to energy and high thermal treatment of hazardous waste Soil remediation and environmental construction Good customer relations Industrial and municipal operators Approximately 10,000 active customers Riihimäki Main revenue sources Environmental and waste treatment services District heat sales Recycled materials Kumla Brista and Högdalen Key figures in 2015 Sales EUR 258 million Reported EBITDA EUR 55 million Nyborg Klaipeda Kaunas ready 2019 Comparable EBITDA EUR 57 million Waste incineration 0.4 mton Hazardous waste incineration 0.3 mton District heat sales 0.9 TWh/a Zabrze ready 2018 Electricity generation 0.1 TWh/a 6

7 Ekokem s Circular Economy Village Globalizing Finnish clean tech competence Together Fortum and Ekokem form a circular economy champion - Accelerated growth - Complementing expertise and service and solutions offering Excellent fit to Fortum s strategic focus on sustainable city solutions Both companies provide solutions in energy and waste treatment applying world leading technologies and competences Ekokem 7

8 Market conditions in the second quarter of 2016 Nordic countries The electricity consumption in the Nordic countries was equal to Q2/2015 and totalled 86 (87) TWh Market prices have recovered somewhat but are still low impacted by tightening of the hydrological situation as well as increased coal prices The average system spot price was EUR 23.9 (20.7) per MWh The average area price in Finland was EUR 30.2 (25.8) per MWh and in Sweden SE3 (Stockholm) EUR 26.5 (21.1) per MWh The market price of CO 2 emission allowances (EUA) was volatile during the quarter and dropped to EUR 4.5 per tonne at the end of June 2016 Russia Russian electricity consumption was 230 (230) TWh. The corresponding figure in Fortum s operating area in the First price zone (European and Urals part of Russia) was 176 (178) TWh The average electricity spot price, excluding capacity price, increased by 3% to RUB (Russian rouble) 1,166 (1,132) per MWh in the First price zone 8

9 reservoir content (TWh) Nordic water reservoirs reference level 2016 Q1 Q2 Q3 Q4 Source: Nord Pool 9

10 Wholesale price for electricity EUR/MWh Nord Pool System Price Forwards July Source: Nord Pool, Nasdaq Commodities 10

11 Price development in the Nordic region and Russia +15% -1% -2% -11% NOTE: Achieved power price in roubles increased 9% Includes capacity income 11

12 Q2: Lower volumes and achieved price in Generation and City Solutions burdened results Comparable operating profit, EUR million 0.7 TWh lower hydro volumes 0.6 EUR/MWh lower achieved price Lower heat sales volumes due to warm weather Lower achieved electricity price Russian rouble EUR -9 million 12

13 H1: Lower Nordic power prices and weaker Russian rouble Comparable operating profit, EUR million 3.9 EUR/MWh lower achieved price Unfavourable fuel mix Lower achieved electricity price EUR 30 million higher CSA provision release in 2015 Russian rouble EUR -20 million 13

14 Comparable and reported operating profit MEUR Comparable operating profit Reported operating profit Comparable operating profit Reported operating profit II/2016 II/2015 II/2016 II/2015 I-II/2016 I-II/2015 I-II/2016 I-II/2015 Generation City Solutions Russia Other Total, continuing operations Discontinued operations , ,395 Total, Fortum , ,889 Fortum's operating profit for the second quarter was impacted by items affecting comparability, including sales gains and fair value change of derivatives and nuclear fund adjustments for continuing operations, amounting to EUR -54 (1) million. The corresponding figures for January-June were EUR 40 (8) million 14

15 Income statement MEUR II/2016 II/2015 I-II/2016 I-II/ LTM Sales ,757 1,834 3,459 3,382 Other income and expenses ,360-1,348-2,651-2,663 Comparable operating profit Items affecting comparability Operating profit Share of profit of associates and jv s Financial expenses, net Profit before taxes Income tax expense Net profit, continuing operations Net profit, discontinued operations - 4,306-4,369 4,369 - Net profit, Fortum total 57 4, ,782 4, EPS, basic (EUR), continuing operations EPS, basic (EUR), discontinued operations EPS, basic (EUR), Fortum Total

16 Cash flow statement MEUR II/2016 II/2015 I-II/2016 I-II/ LTM Cash from operating activities: Realised FX gains/losses Other funds from operations Change in working capital Cash from operating activities, cont. operations , Cash from operating activities, discontinued operations Cash from operating activities, total Fortum , Cash used in investing activities: Paid capital expenditures Proceeds from divestments Other investment activities Total investing activities, continuing operations Total investing activities, discontinued operations - 6,345-6,303 6,303 - Cash used in investing activities, total Fortum , ,372 6, Cash flow before financing activities, total Fortum , ,272 7,

17 Debt portfolio and average interest rate at the balance sheet date June 30, ) Maturity profile Bonds Financial institutions Other long-term debt Other short-term debt Total interest-bearing debt EUR 5,216 million Average interest 3.5% (2015: 3.7%) Portfolio mainly in EUR and SEK with average interest cost 2.1% (2015: 2.6%) EUR 722 million (2015: 641) swapped to RUB, average interest cost including cost for hedging 12.2% (2015: 12.8%) 1) In addition Fortum has received EUR 178 million based on Credit Support Annex agreements with several counterparties. This amount has been booked as a short term liability 17

18 Fortum has a strong financial position MEUR LTM 2015 Comparable EBITDA, continuing operations 1,044 1,102 Comparable EBITDA, total Fortum 1,044 1,265 Interest-bearing net debt, total Fortum ,195 Comparable net debt/ebitda, total Fortum ROCE % Return on capital employed, total Fortum Liquid funds totalled EUR 6.2 billion Committed credit lines total EUR 2.0 billion 18

19 Outlook Nordic markets Fortum continues to expect that the annual electricity demand growth will be approximately 0.5% on average Electricity is expected to continue to gain share of total energy consumption Russia The targeted operating profit level (EBIT) for the Russia segment, RUB 18.2 billion, is expected to be reached during Annual capex estimate, excluding potential acquisitions 2016 approximately EUR 650 million (maintenance capex approximately EUR million) Hedging Rest of 2016 approx. 75% hedge ratio at approx. EUR 29/MWh 2017 approx. 45% hedge ratio at approx. EUR 27/MWh Taxation Effective tax rate for 2016 for the Group 19-21% Swedish political agreement on reduction of installed nuclear tax as well as real estate tax rate on hydro assets 19

20 For further information: