Interim report January-September Fortum Corporation 22 October 2015

Transcription

1 Interim report January-September 2015 Fortum Corporation 22 October 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 IFRS restatement relating to discontinued operations Distribution segment has been reclassified as discontinued operations in Q1/2015. As a result, continuing operations and discontinued operations are presented separately for Fortum Group. Comparative period information for 2014 has been restated accordingly Restated information for the interim periods of 2014 can be found in a stock exchange release published 15 April

4 Global megatrends have great impact on the energy sector globally Climate change and CO 2 emissions price New technologies; digitalisation Shifts in macro economy Urbanisation and electrification Changes in consumer behaviour Resource efficiency 4

5 Focus currently in strategic planning in order to decide our future direction Future direction Decide the best way to increase investments in renewables Look for ways to grow faster in modern energy services for consumers, communities and businesses Keep our eyes open for opportunities as the restructuring of the energy industry proceeds Operational excellence Further increase the productivity of our existing fleet in order to keep it competitive in the current lowprice environment VISION STRATEGY STRUCTURE More concrete actions communicated at the full year release 5

6 Q Results Key figures (MEUR) III/2015 III/2014 I-III/2015 I-III/ LTM Sales, continuing operations ,495 2,955 4,088 3,628 Comparable EBITDA, continuing operations ,000 1,457 1,244 Operating profit: Continuing operations , Discontinued operations ,395 2,066 2,132 4,461 Fortum total ,207 2,778 3,428 4,857 Comparable operating profit: Continuing operations , Discontinued operations Fortum total ,351 1,114 Profit before taxes: Continuing operations , Discontinued operations ,393 2,063 2,128 4,458 Fortum total ,068 2,721 3,360 4,707 Earnings per share: Continuing operations Discontinued operations Fortum total Net cash from operating activities, continuing operations ,011 1,406 1,291 6

7 Summary of the third quarter 2015 Fortum s results burdened by The decision of early closure of nuclear units 1 and 2 in Oskarshamn, Sweden Continued pressure on electricity prices Exceptionally high inflow due to late snow melt created pressure on electricity prices particurlarily in Sweden and Norway. The price in Finland decreased less, as the price area is exposed to a much lesser extent, to hydrological pressure Record high hydroproduction Decision to participate in the Fennovoima nuclear plant project in Finland with a 6.6% share The targeted operating profit level (EBIT) for the Russia segment, RUB 18.2 billion is delayed by 2 to 3 years. Previously this level was targeted to be reached during 2015 after finalising the investment programme 7

8 Market conditions in the third quarter of 2015 Nordic countries Power consumption in the Nordic countries at the same level as in Q Nordic system spot prices approximately EUR 19 per MWh lower than in Q3 2014, while area prices were in Finland EUR 8 per MWh lower and in Sweden EUR 18 per MWh lower European business environment and carbon market The EU Council formally adopted the European Commission s proposal to create a reserve to hold surplus CO2 permits under the EU Emissions Trading System The proposed Market Stability Reserve will become operational in January 2019 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

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

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

11 USD / bbl 150 Crude oil price (ICE Brent) 35 USD / t GBp / therm Fuel and CO 2 allowance prices CO 2 price (ICE EUA) EUR / tco Coal price (ICE Rotterdam) 100 Gas price (ICE NBP) Source: ICE Market prices 19 October 2015; future quotations

12 Price development in the Nordic region and Russia -58% -10% -35% -11% Includes capacity income 12

13 Q3: Low electricity prices continued to impact results negatively somewhat compensated by hydro volumes Comparable operating profit, EUR million 13

14 January - September: Clearly lower achieved power price Comparable operating profit, EUR million 14

15 Financials

16 Comparable and reported operating profit MEUR Comparable operating profit Reported operating profit Comparable operating profit Reported operating profit III/2015 III/2014 III/2015 III/2014 I-III/2015 I-III/2014 I-III/2015 I-III/2014 Power and Technology Heat, Electricity Sales and Solutions Russia Other Total, continuing operations Discontinued operations ,395 2,066 Total, Fortum ,207 2,778 Non-recurring items of continuing operations were EUR -770 (8) million in the third quarter and EUR -778 (67) million in January-September 2015, mainly related to the negative impact from the early closure of Oskarshamn nuclear units 1 and 2 in Sweden 16

17 Impact of early closure of nuclear units 1 and 2 in Oskarshamn EUR -784 million in operating profit Mainly write-down of asset values in OKG AB for unit 1 and 2 Provision for future investments and costs EUR -104 million in share of profits from associates (net of tax) Write-down of Fortum IFRS adjustments for OKG AB, i.e. capitalised borrowing cost and asset retirement obligation EUR +173 million in Income tax expenses Positive income tax effect due to impact of write-downs and provisions in operating profit EUR -710 million net profit EPS effect EUR

18 Power and Technology Q Clearly lower achieved power price Nordic system spot Sweden Record high hydro volumes January-September 2015 Clearly lower achieved power price First quarter unusually mild, second quarter characterised by among the highest precipitation in recent history, and during the third quarter exceptionally high inflow that increased water reservoirs rapidly MEUR III/2015 III/2014 I-III/2015 I-III/ LTM Sales ,282 1,568 2,156 1,870 Comparable EBITDA Comparable operating profit Net assets 5,944 6,083 6,001 Comparable RONA % Gross investments

19 Heat, Electricity Sales and Solutions Q The comparable operating profit was negatively affected mainly by lower achieved power price for power sales from CHP production January- September 2015 Comparable operating on last year s level Lower power price compensated by lower fuel price In retail electricity sales, the customer base continued to grow and the sales margin improved MEUR III/2015 III/2014 I-III/2015 I-III/ LTM Sales ,332 1,228 Comparable EBITDA Comparable operating profit Net assets 2,049 2,188 2,112 Comparable RONA % Gross investments

20 Russia Q Comparable operating profit impacted negatively by Lower electricity prices Weaker rouble January-September 2015 Comparable operating profit improved Russian rouble affected negatively by approximately EUR 54 million Includes CSA provision release of EUR 32 million MEUR III/2015 III/2014 I-III/2015 I-III/ LTM Sales , Comparable EBITDA* Comparable operating profit Net assets 2,736 3,670 2,597 Comparable RONA % Gross investments * Excluding the net release of CSA provision 20

21 Discontinued operations (Distribution) Q3 and January-September 2015 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 III/2015 III/2014 I-III/2015 I-III/ LTM Sales Comparable EBITDA Comparable operating profit Net assets 0 2,634 2,615 Gross investments

22 Income statement MEUR III/2015 III/2014 I-III/2015 I-III/ LTM Sales ,495 2,955 4,088 3,628 Other income and expenses ,930-2,240-3,003-2,693 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 ,369 2,021 2,073 4,421 Net profit, Fortum total ,123 2,587 3,161 4,697 EPS, basic (EUR), continuing operations EPS, basic (EUR), discontinued operations EPS, basic (EUR), Fortum Total

23 Cash flow statement MEUR III/2015 III/2014 I-III/2015 I-III/ LTM Cash from operating activities: Realised FX gains/losses Other funds from operations , Change in working capital Cash from operating activities, cont. operations ,011 1,406 1,291 Cash from operating activities, discontinued operations Cash from operating activities, total Fortum ,050 1,310 1,762 1,502 Cash used in investing activities: Paid capital expenditures Proceeds from divestments Other investment activities Total investing activities, continuing operations Total investing activities, discontinued operations ,303 2,619 2,574 6,258 Cash used in investing activities, total Fortum ,303 2,677 2,816 6,442 Cash flow before financing activities, total Fortum ,353 3,987 4,578 7,944 23

24 Key ratios MEUR LTM 2014 Comparable EBITDA, continuing operations 1,244 1,457 Comparable EBITDA, total Fortum 1,506 1,873 Interest-bearing net debt, total Fortum -1,936 4,217 Comparable net debt/ebitda, total Fortum excluding Värme financing ROCE % Return on capital employed, total Fortum Liquid funds totalled EUR 8.0 billion Committed credit lines total EUR 2.2 billion 24

25 Debt portfolio and average interest rate at the balance sheet date 30 September 2015 (31 December 2014) Maturity profile Bonds Financial institutions Other long-term debt Other short-term debt Total interest-bearing debt EUR 6,096 million Average interest 4.0% (3.7%) Portfolio mainly in EUR and SEK with average interest cost 2.8% (2.9%) EUR 669 million (681) swapped to RUB, average interest cost including cost for hedging 13.8% (11.3%) In addition Fortum has received EUR 200 million based on Credit Support Annex agreements with several counterparties. This amount has been booked as a short term liability 25

26 Outlook

27 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 targeted operating profit (EBIT) level of RUB 18.2 billion in the Russia segment is delayed by 2 to 3 years. Previously the run-rate operating profit level (EBIT) was targeted to be reached during 2015 after finalising the investment programme. 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 27

28 Outlook Annual capex estimate, excluding potential acquisitions 2015 approximately EUR 0.6 billion Hedging Rest of 2015 approx. 65% hedge ratio at approx. EUR 36/MWh 2016 approx. 35% hedge ratio at approx. EUR 34/MWh 2017 approx. 15% hedge ratio at approx. EUR 33/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 was implemented as of 1 August The estimated impact on Fortum is approximately EUR 15 million annually, albeit corporate tax-deductible 28

29 For more information