FORTUM - For a cleaner world - Equity story of Investor / Analyst material January 2022
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Equity story of FORTUM – For a cleaner world Investor / Analyst material January 2022
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
Content Fortum in brief 4 – 12 Fortum’s strategy 13 – 21 Energy market transition 22 – 26 Interim report Q3 2021 27 – 47 Appendices 48 European and Nordic power markets 49 – 57 Fortum’s Nordic power generation in detail 58 Fortum’s evolution and strategic route 59 Historical achieved prices 60 Dividend 61 IR contact 62 3
Fortum in brief
Fortum in brief
Power generation assets
Key figures 20201
Sales EUR 49.0 bn
Comparable EBITDA EUR 2.4 bn
Total assets EUR 57.8 bn
Personnel 19,933
Main businesses1 Sales (€) Volume2 Capacity
India
Power 20.8 bn 142 TWh 50.3 GW
Gas 22.4 bn ~370 TWh 7.6 bcm3
Heat 0.8 bn 30 TWh 19.5 GW
1) Until 31 of March 2020 Uniper's contribution to the income statement was recognised in the Share of profit/loss of associates and joint ventures.
2) For Power - Power generation, for Gas - Long-term gas supply contracts and for Heat – Heat production
3) Gas storage capacity, billion cubic meters
4
Fortum in brief
Strong position to drive the energy transition in Europe
3rd largest 3rd largest 3rd largest 4th largest
power generator CO2-free power generator nuclear generator gas storage operator
in Europe and Russia in Europe in Europe in Europe
5
6
100
200
0
300
500
600
400
TWh
EDF
Rosenergoatom
EPH incl. LEAG
Europe
RusHydro
NNEGC Energoatom
Vattenfall
Fortum+Uniper
En+
Enel
ENGIE
Iberdrola
Statkraft
RWE
Source: Company information, Fortum analyses, 2019 figures pro forma.
CEZ
EnBW
Verbund
E.ON
Axpo
EDP
Slovenské elektrárne
Hafslund E-CO
Hidroelectrica
Ørsted
Gazprom
Acciona
SSE
Naturgy
Centrica
EPS
Alpiq
Norsk Hydro
Agder Energi
Ukrhydroenergo
Hydro
Nuclear
BKK
Lyse Energi
Other, incl. bio
DEI
Wind, solar, geoth.
EPH
PGE
Power generation by type
DTEK
Inter RAO UES
Consolidated Fortum is the third largest CO2-free power generator in
T Plus
Fortum in brief
Sibgenco
Fortum in brief
Renewables and CO2-free power generation capacity of Fortum
14.8 GW
Hydro Wind & Solar Nuclear
8.4 GW 1.9 GW 4.5 GW
7
Fortum in brief
Fortum is well positioned for the energy transition
Third largest CO2-free power generator in Europe with growing
portfolio of wind and solar
Significant provider of flexible hydro and gas-fired power generation
Major provider and trader of gas for Europe’s energy and industrial
customers
Versatile portfolio of decarbonisation and environmental solutions
Phase out or exit announced of ~8 GW coal-fired generation by 2030
8
Fortum in brief
Fortum’s CO2-free power generation increases by ~60% as Uniper is
consolidated as a subsidiary
Fortum's power generation, TWh
150
Fortum*:
Other
Coal
• CO2-free generation
120
Gas 45%
CO2-free
• Gas-fired power
90
generation 45%
60
• Share of coal-fired
generation 9%
30
• Share of coal of sales
revenue ~1%
* based on 2020 reported figures
0
Note: Fortum actuals 1990-2020. Uniper consolidated from Q2/2020 onwards, Q1/2020 generation of Uniper excluded.
9
Fortum in brief
Fortum is a forerunner in sustainability Fortum is listed in several
sustainability indices and ratings:
Our purpose is to drive the change for a cleaner world. We are securing a fast
and reliable transition to a carbon-neutral economy by providing customers
and societies with clean energy and sustainable solutions. This way we deliver
excellent shareholder value.
3rd largest CO2-free generator in Europe
CO2-free power generation, including renewable and nuclear power, was 64 TWh in 2020.
73% of power generation in Europe, and 45% of total power generation was CO 2-free.
Specific CO2 emissions
Fortum’s specific CO2 emissions from total energy production in Europe were
188 gCO2/kWh in 2020, and 287 gCO2/kWh globally.
Growing in solar and wind
Targeting a multi-gigawatt wind and solar portfolio, which is subject to the capital
recycling business model. Targeting an indicative growth capex for EUR 3 billion
for 2021-2025, of which 50-55% to renewables.
Signatory of TCFD
Fortum an official signatory of TCFD on March 2021
MSCI ESG RATINGS DISCLAIMER STATEMENT: THE USE BY FORTUM CORPORATION OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO
NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION OF FORTUM CORPORATION BY MSCI. MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS, AND ARE PROVIDED
‘AS-IS’ AND WITHOUT WARRANTY. MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI.
10Fortum in brief
Fortum's power generation and heat production by source
Fortum’s power generation in 2020 * Fortum's heat production in 2020 *
Natural gas 45% Natural gas 56%
Total Total
Waste1% power generation Others 1% heat production
Wind, solar 1% Heat pumps,
Bio 1% 142.1 TWh Hydropower 23% electricity 3% 29.6 TWh
Bio 5%
Coal 9%
Waste 9%
Nuclear power 20% Coal 26%
* Uniper consolidated as of Q2/2020
11Fortum in brief
Fortum key profitability drivers
Key market drivers: Fortum profitability drivers: Fortum Group’s indicative EBITDA by
business and market exposure
Power market European power generation
• EU coal/nuclear capacity closures • CO2-free generation: prices and volumes,
hedging, PPAs
• Growing share of renewables
• Gas-fired generation: capturing the
• Importance of gas-fired generation merchant upside
• Commodity prices • Coal exit path, value from sites
• Increasing interconnections between Gas midstream business
Nordics, Continental Europe, and the UK • Long-term contracts and sales
• Weather conditions • Gas storage, spread, and volatility
• Increased demand from decarbonisation • Optimisation business, price volatility
and electrification
Russia power generation
Gas market
• Thermal CSAs gradually shifting to CCS
• Decreasing gas production in Europe scheme, selective modernisation projects
• More volatile gas demand • Renewables capacity with higher CSAs
• Gas storage value • Berezovskaya 3 (CSA)
• Weather conditions Growth based on strategy
Source: Fortum & Uniper financial reporting
PPA= Power Purchase Agreement
CSA= Capacity Supply Agreements
12 CCS= Competitive Capacity Selection (=KOM)Fortum’s strategy
Our strategy – Driving the clean energy transition and delivering
sustainable financial performance
For a cleaner world
Strengthen and grow in CO2-free Leverage strong position in gas
Transform own operations to power generation to enable the energy transition Partner with industrial and
carbon neutral infrastructure customers
• Supply significant flexible and • Provide security of supply and
• Phase out and exit coal reliable CO2-free power generation flexibility in the power system • Provide decarbonisation and
• Transform gas-fired generation environmental solutions
• Grow sizeable portfolio of • Secure supply of gas for heat,
towards clean gas renewables power, and industrial processes • Build on first-mover position in
hydrogen
Value creation targets
Carbon neutral as a Group latest by 2050, Sustainable financial performance through
Strong financial position and over time
in line with the Paris Agreement, and in our attractive value from investments, portfolio
increasing dividend
European generation latest by 2035 optimisation, and benchmark operations
13Fortum’s strategy
Measuring success for Fortum
Climate and environmental targets:
• Group carbon neutral latest by 2050 (Scope 1, 2, 3)
• European generation carbon neutral latest by 2035 (Scope 1, 2)
• CO2 emission reduction of at least 50% by 2030 in European
generation (Scope 1, 2)
• Scope 3 GHG emissions reduction of at least 35% by 2035
(compared to base-year 2021)
• Biodiversity target: Number of major voluntary measures enhancing
biodiversity ≥12 in 2021
Financial targets: Shareholder value creation:
• Financial net debt/comparable EBITDA below 2x • Portfolio optimisation and delivering on investments
• Hurdle rates for new investments • Realising financial benefits from the cooperation with Uniper
• Rating of at least BBB
• Stable, sustainable, and over time increasing dividend
Social targets:
• Safety target: Total recordable incident frequency (TRIF)Fortum’s strategy
Fortum – A leader in clean power and gas
Core Grow Strategic transformation
Transform own operations Assets and businesses that have Businesses with potential Businesses and assets outside
to carbon neutral a role in energy transition and to grow profitably strategic scope
generate good cash-flow in the energy transition
Hydro Ambitious
Onshore wind
Strengthen and grow in coal exit plan
CO2-free power generation
District heating business
Nuclear Solar in the Baltics
Leverage strong position
in gas to enable Increasingly clean Hydrogen and 50% stake in
the energy transition gas-fired generation clean gas Stockholm Exergi
Consumer Solutions
Provide decarbonisation Industrial and business
Gas midstream
and environmental solutions infrastructure solutions
for industrial and District heating business
infrastructure customers in Poland
15Fortum’s strategy
Strategic steps going forward
2014-2020 2021-2022 2023-2025
Major transformation Balance sheet focus Growth in clean power and gas
Active portfolio rotation with Step up in Group EBITDA Growth in strategic areas
focus on assets essential in the Secure strong balance sheet Sustainable financial performance
energy transition and with good with benchmark operations
cash flow Rating of at least BBB
Details of strategy implementation Cooperation financial benefits
Uniper acquisition
and first investments Target to increase dividend
Focus on aligned strategy
Target to increase dividend
Flat dividend
16Fortum’s strategy
Indicative capital expenditure for growth investments
in 2021-2025 – renewables and clean gas
1 Renewables
On-shore wind and solar
2 Hydrogen and clean gas
Industrial decarbonisation solutions
3 Environmental and security of supply solutions
Waste-to-Energy, recycling, industrial and TSO services
4 Other
Venturing, innovation, digitalisation
Capital expenditure will depend on market conditions, asset rotation, and balance sheet strength
17Fortum’s strategy
Fortum is growing towards gigawatt scale target in
solar and wind power generation PORTFOLIO STATUS CAPACITY, MW FORTUM SHARE, MW SUPPLY STARTS/STARTED
FINLAND 470 246
Ånstadblåheia 10 MW
● Kalax Operational 90 18 Q4 2020
(Fortum share) ● Pjelax-Böle & Under construction 380 228 Q2 2024 latest
Nygårdsfjellet 6 MW
Kristinestad Norr
(Fortum share) Sørfjord 20 MW NORWAY 181 36
(Fortum share) ● Nygårdsfjellet Operational 32 6 2006 and 2011
● Ånstadblåheia Operational 50 10 2018
Solberg 15 MW ● Sørfjord Operational 99 20 Q4 2019- Q1 2021
(Fortum share) Kalax 18 MW Ulyanovsk-2 25 MW
SWEDEN 76 15
(Fortum share) (Fortum share)
● Solberg Operational 76 15 2018
Ulyanovsk
RUSSIA 3,410 2,441
35 MW 35 MW solar
power plants ● Bugulchansk Operational 15 15 2016-2017
● Pleshanovsk Operational 10 10 2017
Volgograd 44 MW ● Grachevsk Operational 10 10 2017
(Fortum share) Operational /
● Kalmykia 78+38 39+19 Q4 2021- H2 2022
Under construction
Rostov 174+25 MW Astrakhan 170 MW
(Fortum share)
● Ulyanovsk Operational 35 35 2018
(Fortum share)
● Ulyanovsk 2 Operational 50 25 1.1.2019
Kalmykia Bhadla 31 MW (Fortum share)
● Rostov Operational 349+50 174+25 Q1 2020- Q4 2021
100 MW wind Amrit 2 MW (Fortum share) ● Kalmykia Operational 200 100 1.12.2020
39 MW solar ● Astrakhan Operational 339 170 Q4 2021
(Fortum share) Operational /
Kapeli 4 MW (Fortum share) ● Volgograd 88+17 44+9 Q4 2021- Q4 2022
Under construction
● Samara Under construction 233 117 Q4 2022
● GPB JV Under development 498 249 2022-2023
● Fortum Under development ~1,400 ~1,400 2025-2027
First focus markets Pavagada 44 MW INDIA 185 81
(Fortum share) ● Amrit Operational 5 2 2012
Wind power plants ● Kapeli Operational 10 4 2014
Solar power plants ● Bhadla Operational 70 31 2017
● Pavagada Operational 100 44 2017
TOTAL 4,322 2,819
Under development 1,898 1,649
*) NOTE: Table numbers not accounting; tells the size of renewables projects. All not consolidated to Fortum capacities. All
Under construction 668 373
figures in MW and rounded to nearest megawatt. Additionally, target to invest 200 – 400 million euros in India solar and
create partnership for operating assets. Under construction includes investment decisions made. Operational 1,756 797
18Fortum’s strategy
Strong commitment to maintain rating of at least BBB
Ambition is to preserve financial flexibility and good Long term leverage target:
access to capital markets.
Financial net debt/comparable EBITDA
Fortum will carefully manage its balance sheet going
forward focusing onFortum’s strategy
Return targets for new investments
Return targets for new investments: Group 2021 capital expenditure,
including maintenance and
WACC+ hurdle rate: excluding acquisitions,
+100 bps for green investments is estimated to be EUR 1.4 billion
+200 bps for other investments
• Maintenance of EUR 700 million
The requirement might be higher depending on, e.g., business model and technology • Growth of EUR 700 million
and will be evaluated case-by-case.
~EUR 3 bn Capital expenditure will depend on market conditions,
growth capex asset rotation, and balance sheet strength
for 2021-2025
20Fortum’s strategy
Fortum and Uniper cooperation estimated to deliver significant financial
benefits
Cooperation benefits focus on monetary, safety,
and environmental actions
• Positive cash impact on a consolidated group basis
is estimated to be ~EUR 100 million annually
• > EUR 50 million of these annual benefits gradually
materialising by the end of 2023 and reaching full
annual impact in 2025
• Approx. 450 people have been involved in various
work streams
21Energy market transition
Europe committed to be a forerunner in reducing GHG emissions across
all sectors
• EU is tightening both its 2030 and 2050
emissions targets
– Requires emission reductions in all sectors,
especially residential & commercial, transport,
and industry
• Sector coupling – clean electricity and gas
enable other sectors to decarbonise
– Emissions from some industrial and heavy
transport sectors are difficult to abate by
electrification
• Successful energy transition must balance
– Sustainability
– Affordability
– Security of supply
22Energy market transition
Energy transition will increase demand for electricity and hydrogen
Electricity
Hydrogen
Feedstocks
Agriculture
Industry
Transport
Residential and
commercial
Source:
IHS Markit Net Zero
Carbon Europe
scenario
23Energy market transition
Nordic, Baltic, Continental and UK markets are integrating
– Interconnection capacity growing to over 13 GW by mid-2024
• Several new interconnectors have started DK1-DE maximum transmission capacity has been
Current Nordic/Baltic 1
operation, and more are under construction upgraded from 1,780 MW to 2,500 MW in July 2020
or decided to be built interconnector New 400 MW DK2-DE connection via Kriegers Flak
2
projects offshore wind area in operation December 2020
• New interconnections will increase the
EU’s Connecting Europe Facility co-financed 3rd EE-LV
Nordic export capacity from the current A 3
transmission line, in operation January 2021
10.4 GW to over 13 GW by summer 2024
4 NO-DE NordLink is in commercial operation at
maximum export of 1,444 MW from March 2021
+ 3000 MW
NO-UK 1,400 MW North Sea Link (NSL) is now
14.1 C 5
Interconnection capacity (GW)
13.4 13.4 operating at 700 MW and due to be ready Q2/2022
12.4 1,400 MW Denmark - UK Viking Link is being built
6 to be ready by end-2023
11.0 5
10.4 3 DK1-DE capacity to grow by further 1,000 MW to
4 B 7 3,500 MW with a new 400 kV line by Q2/2024
8.2
6 1 700 MW LT-PL Harmony Link to be built by 2025 as
6.9 9 8
a part of the Baltic synchronisation project
8
7 2 700 MW Hansa PowerBridge DC link between
4.3
9
Sweden and Germany by 2026/2027
2.4 New interconnectors New Nordic lines A 800 MW 3rd 400 kV line SE1-FI ready in 2025
… Existing interconnectors B 700 MW SE3-SE4 east coast parallel line in 2027
C 800 MW with first measures on SE2-SE3 by 2028
2000 2010 … 2020 2021 2022 2023 2024 2025 2026 2027 Russia Poland Germany
24 Estonia Netherlands
Years in the chart above refer to a snapshot of 1st of January each year.
Source: Fortum Market Intelligence Lithuania United KingdomEnergy market transition
Volatility and uncertainty in the European power market increases the
value of flexible assets
Intermittent renewables
Nuclear and coal closures
Increasing role of gas
Volatility and
Supply-demand balance
uncertainty
Increased interconnection between
Nordics and Continent
Commodity and CO2 prices
Weather conditions
25Energy market transition
Own transformation – coal exit to reach carbon neutrality by 2035 in
European generation
European generation CO2 net emissions:
Carbon neutral in our European generation by
2035 at the latest 2019 2030 2035
Transform own 100% -50% Carbon neutral
operations to carbon • Current trajectory to reduce CO2 emissions
neutral
in our European generation by at least
50%*) by 2030
Coal fired capacity in Europe (GW)
• Exit ~6 GW of coal capacity by end of 2025 10
Strengthen and grow in
CO2-free power • Aim to decarbonise gas-fired power
generation 8
generation and transit to clean gas over
time
6
Leverage strong 4
position in gas to enable Carbon neutral as a group by 2050 at the
the energy transition
latest in line with the Paris Agreement 2
**)
• Reduction of the Group’s coal-fired
0
generation capacity by >50% to ~5 GW by 2020 2025 2030 2035 2040 2045
Partner with industrial
and infrastructure the end of 2025
customers
• Over time transform the Russian business *) Base year 2019
**) Datteln4 decommissioning as defined in the German coal-exit law
portfolio by reducing the fossil exposure
26Interim Report January-September 2021 Fortum Corporation 12 November 2021
Markus Rauramo President and CEO 28
Strong performance in an exceptional commodity market
Comp. OP1 Comp. EPS2 OCF3 Leverage4
Q3
Performance affected by
extraordinary market
fundamentals
9M
Higher achieved power prices and
higher generation volumes with Comp. OP Comp. EPS OCF3
strong physical optimisation
Uniper fully consolidated since
Q2 2020 with strong contribution
from gas midstream
LTM
Comparable operating profit solid 1. Uniper full consolidation since Q2 2020.
at EUR 2.4 bn 2. Comp. EPS 9M 2020 also includes Uniper Q4 2019 result of EUR 0.18 as an associated company.
3. Net cash from operating activities
29 4. Financial net debt to comparable EBITDAEnergy commodities driving power prices
Energy commodities reaching new record highs
EUR / MWh Gas price USD / t
EUR / MWh Gas price (TTF Front-Month)
(TTF Front-Month) USD / t Coal
Coal price
price (ICE API2
(ICEFront-Month)
API2 Front-Month)
200
200 300
300
160
160 240
240
120
120 180
180
80
80 120
120
40
40 60
60
00
Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21
00 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21
Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21
EUR
EUR / tCO
/ tCO 2 2 CO2 2price
CO price (EUA
(EUA DEC
Dec 2021)
2021) EUR / MWh Power prices (Day-Ahead)
100
100 500
500
German
Nordic
80
80 400
400
60
60 300
300
40
40 200
200
20
20 100
100
00 001/07/2020
0 01/10/2020 01/01/2021
Q3/20
Q3/20 Q4/20
Q4/20 Q1/21
Q1/21 Q2/21
Q2/21 Q3/21
Q3/21 Q4/21
Q4/21 Q3/20 Q4/20 Q1/2101/04/2021Q2/21
01/07/2021
Q3/2101/10/2021Q4/21
Source: Refinitiv, Bloomberg, daily prices until 29 December 2021,
30 except power prices until 31 December 2021Gas market driven by economic recovery and supply constraints
Tight market conditions drive global European gas supply decreased vs European gas storages are
gas prices 2019 below average levels
Monthly avg. prices
• Market tightness is a result of: • Majority of European supply sources • European gas storage physical filling
– ongoing economic recovery post-COVID- are underperforming this year, at low levels: by the end of September
19, combined with compared to 2019 (storages were about 75% filled), 15%
– cold winter and spring, below 2016-2020 average and lowest
– increased global competition for LNG, since 2014
– longer-term gas supply underinvested
Security of supply is core and back on the European agenda
31 Source: ICE, NYMEXQ3, normally weak – now supported by
strong market fundamentals
Reconciliation of comparable operating profit
(EUR million)
Generation
higher volumes and higher achieved prices
with successful physical optimisation
Russia
improved underlying performance
offsetting lower contribution from CSAs
City Solutions
higher power prices
Consumer Solutions
negative customer development
Uniper
strong result in global commodities business
32Q1-Q3, almost all segments improved
– significant impact from Uniper results
Reconciliation of comparable operating profit
(EUR million)
Generation
higher achieved power price
Russia
one-off effect and higher power prices
offsetting negative FX
City Solutions
higher power and heat sales
Consumer Solutions
negative customer development
Uniper
fully consolidated from Q2 2020
9M 2020 Generation Russia City Consumer Uniper Other 9M 2021
Solutions Solutions
33Determined execution of our strategy continues
Decarbonisation progressing Renewables growth ramping Balance sheet strengthened
• Discontinuing the use of coal in • Fortum and its wind JV in Russia wins • Closing of 3.6 billion of divestments in
Fortum Russia by the end of 2022 is wind auction with CSA remuneration Q3
moving ahead with the closing of the for new wind power generation – 50% ownership in Stockholm
divestment of Argayash coal-fired corresponding to estimated 1.4 GW of Exergi (EUR 2.9 billion)
CHP in Q3 new capacity, commissioning in 2025– – Baltic district heating business
2027 (EUR 710 million)
• Closing of the Group’s lignite chapter
in Germany with the Uniper’s • Good progress for existing 1.8 GW • Financial net debt/ Comp. EBITDA at
Schkopau divestment closed Russian renewables projects 0.6x, clearly below target ofFortum and Uniper cooperation
gearing up
• Cooperation is moving ahead
– A joint organisation established at Fortum for the Nordic
Hydro and Physical Trading Optimisation with 400
employees, operations starting in Q1 2022
– Uniper developing for renewables and hydrogen business
– Cooperation in nuclear decommissioning services since
October
– 1,000 colleagues at Fortum and Uniper working with >80
business cooperation projects
• Business continuation and value creation is key
Drive the clean energy transition and delivering sustainable
financial performance
35Bernhard Günther CFO 36
Key financials
MEUR III/ III/ I-III/ I-III/ FY LTM
2021 2020 2021 2020 2020 9M strong financial KPIs
Sales 23,700 14,049 62,322 27,736 49,015 83,601
LTM comparable EBITDA at
Comparable EBITDA 574 132 2,401 1,187 2,434 3,648
EUR 3.65 billion
Comparable operating profit 260 -179 1,466 416 1,344 2,394
Comparable share of profits of
9 19 127 593 656 190
LTM Comparable EPS at EUR 1.90
associates and joint ventures
Comparable profit before
income taxes
243 -182 1,597 928 1,897 2,566 Strong credit metrics with Financial net
debt / Comp. EBITDA of 0.6x clearly
Comparable net profit 170 -93 1,086 874 1,483 1,695
below target level ofReported income statement dominated by changes in fair values
Divestment of
Stockholm Exergi and
Baltic district heating
business
Hedge accounting is
not applied, mainly in
Uniper
Impacted by interest
income
Tax impact from fair
value losses
38Strong cash flow management to secure financial flexibility
MEUR III/ III/ I-III/ I-III/ FY LTM
2021 2020 2021 2020 2020
Comparable EBITDA 574 132 2,401 1,187 2,434 3,648
Non-cash and other items 533 178 914 374 293 833
Paid net financial costs, income taxes and dividends
-33 -38 -342 -267 -308 -383
received
Change in working capital driven by
Change in working capital 1,200 519 422 499 136 59
Net cash from operating activities 2,274 790 3,394 1,792 2,555 4,157
operational liquidity measures in
Uniper
Capital expenditures -278 -331 -849 -682 -1,101 -1,267
Acquisitions of shares -66 -225 -270 -1,643 -1,801 -428
Proceeds from sales of property, plant and equipment 2 4 18 11 16 23
Sales proceeds from divestments of
Divestments of shares and capital returns 3,597 440 3,748 1,223 1,244 3,769 50% ownership in Stockholm Exergi
Shareholder loans to associated companies and JVs -2 -7 -23 -40 -44 -27 and from Baltic district heating
Change in margin receivables -3,956 -221 -5,241 14 -552 -5,807
Change in other interest-bearing receivables -37 27 -101 72 98 -74 Margin receivables increased due to
Net cash from/used in investing activities -739 -313 -2,718 -1,047 -2,140 -3,811 higher prices almost netted…
Proceeds from long-term liabilities 77 -2 142 2,475 2,569 235
Payments of long-term liabilities -69 -53 -696 -467 -507 -736
…with an increase of short-term
Change in short-term liabilities 1,776 -82 2,570 -111 207 2,887
Dividends paid to the owners of the parent 0 0 -995 -977 -977 -995
financing and…
Dividends paid to non-controlling interests -1 0 -145 -147 -160 -158
Change in margin liabilities 1,178 -236 2,358 -430 -623 2,164 …increase in margin liabilities
Other financing items -3 -2 -3 2 -3 -8
Net cash from/used in financing activities 2,959 -375 3,230 346 505 3,389
Net increase in liquid funds 4,494 102 3,906 1,092 920 3,734
39Generation:
Higher achieved power prices
Q3 2021 vs. Q3 2020
• Comparable operating profit +80% mainly due to
– Higher achieved power prices of EUR 43.7, +6.6 per MWh
– Increased nuclear and hydro volumes
• Higher achieved power price
– Higher spot prices and successful physical optimisation
9M 2021 vs. 9M 2020
• Comparable operating profit +30% mainly due to
– Higher achieved prices of EUR 39.5, +4.8 per MWh,
– Increased hydro and nuclear volumes
• Higher achieved power price
– Successful physical and financial optimisation and higher spot prices
40Nordic water reservoirs and wholesale power price
Hydro reservoirs Power price
Reservoir content (TWh) EUR/MWh
120
120 350
350
Realised system price
100
100 300
300
Futures 29 December 2021
250
250
80
80
200
200
60
60
150
150
40
40
Norway 100
100
20
20
50
50
Sweden
2000 2003 2020 2021 Average
00 Finland 0
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Finland Sweden Norway AVG 2000-2018
2019 2020 2021 2022
2000 2003 2020 2021
Source: Nord Pool, Nasdaq Commodities Nordic sys Nordic sys forwards
41Russia:
Solid underlying performance
Q3 2021 vs. Q3 2020
• Comparable operating profit up by 13% to EUR 45 million
– Slight negative effect of changes in CSA payments, lower bond yield, and
higher power prices
– Impact of the Russian rouble exchange rate was EUR 4 million
– Russian power demand recovering with increasing electricity prices and
increased achieved price
9M 2021 vs. 9M 2020
• Comparable operating profit increased by 4%
– EUR 17 million positive effect of the sale of the 116-MW solar project to the
Fortum-RDIF JV
– Higher power prices, slight negative effect of changes in CSA payments,
lower bond yield
– Change in the Russian rouble exchange rate was EUR -19 million
CSA = Capacity Supply Agreement
42City Solutions: Performance improved Q3 2021 vs. Q3 2020 • District heating with higher power prices and higher power sales • Almost all business areas improved its result from the previous year, especially in the areas of waste and metals recycling business • Recorded tax-exempt capital gains of EUR 2,350 million from the sale of 50% ownership in Stockholm Exergi and EUR 254 million the sale of the Baltic district heating business 9M 2021 vs. 9M 2020 • Higher heat sales volumes, higher power prices, and higher Norwegian heat prices • Recorded tax-exempt capital gains of EUR 2.6 billion following the sale of Stockholm Exergi and the sale of the Baltic district heating business 43
Consumer Solutions: Challenging market environment Q3 2021 vs. Q3 2020 • Both gas and electricity volumes increased • Comparable operating profit slightly down due to negative customer development combined with tough competition in the Nordic market 9M 2021 vs. 9M 2020 • Challenging market environment combined with tough competition in the Nordic market continued • Negative customer development • Several new digital services were launched • Strategy: Strategic review of the business still ongoing 44
Uniper: Solid underlying performance Q3 2021 vs. Q3 2020 • Global Commodities business was significantly above previous year due to higher result in the gas midstream business • European Generation business benefitted from higher nuclear and thermal production • Russian Power Generation’s Berezovskaya 3 back online since Q2 2021, higher prices and volumes • Operating profit was affected by EUR -6,122 (-121) million of items affecting comparability, mainly related to the fair value change of non- hedge-accounted derivatives 9M 2021 vs. 9M 2020 • Gas mid-stream and international commodity business reflecting successful optimisation • Operating profit was affected by EUR -6,936 (150) million of items * Uniper consolidated from Q2 2020 affecting comparability, mainly related to the fair value change of non- hedge-accounted derivatives 45
Leverage below target and good access to debt capital market
Solid credit metrics
debt
debt
'BBB' long-term issuer credit rating,
stable outlook
netnet
'BBB' long-term issuer credit rating,
Financial
stable outlook
Financial
Target ratio:
< 2x Financial net debt / Comp. EBITDA
Fortum’s objective:
Maintain solid investment grade rating of at least
BBB to maintain financial strength, preserve financial
flexibility, and good access to capital.
Total loans EUR 11,658 million (excl. lease)
Maturity profile
• Average interest of 1.3% (2020: 1.5%) for Group loan
portfolio incl. derivatives hedging financial net
• EUR 716 million (2020: 634) swapped to RUB with
average interest 6.7% (2020: 6.2%) incl. hedging cost
• Average interest of 0.7% (2020: 0.9%) for EUR loans
Liquid funds of EUR 6,236 million
Undrawn credit facilities of EUR 3,689 million
46 *) Maturities due in 2021 include commercial papers of EUR 2,170 million at the end of September of which EUR 1,321 million has been rolled-
over in October from the year 2021 to 2022. Maturities in 2021 also include loans of EUR 661 million with no contractual due date.Outlook
Hedging 2021 Estimated annual capital Russia
Generation Nordic hedges: expenditure, including maintenance CSA changes:
For the rest of 2021: 75% hedged at EUR 34 and excluding acquisitions, of Lower bond yield, 6.3% (7.6%)
per MWh
For 2022: 65% hedged at EUR 32 per MWh EUR 1,400 million Changes in CSA and CCS capacities:
(Q2: 60% at EUR 31) see interim report p. 22-23, 25
For 2023: 40% hedged at EUR 31 per MWh of which maintenance capital expenditure
is EUR 700 million In 2021, in the Russia segment, the negative
Uniper Nordic hedges: financial effect related to the ending of the CSA
Tax guidance for 2021: period of two production units is expected to
For the rest of 2021: 85% hedged at EUR 25
The comparable effective income tax rate exceed the positive effect of three units entering
per MWh
for Fortum is estimated to be in the range the four-year period of higher CSA payments
For 2022: 85% hedged at EUR 22 per MWh
of 20-25%
(Q2: 85% at EUR 24)
For 2023: 55% hedged at EUR 21 per MWh
(Q2: 45% at EUR 22)
47Appendices
European and Nordic power markets
Western European countries exiting coal during this decade
• Sweden and Austria closed their last coal plants during 2020
FI: Phase-out
• France is committed to phase out coal by 2022 DE: Phase-out SE: Last
by mid-2029
by 2038 plant closed
• Portugal has 2023 as national exit goal, but operators aim for full closure 2020
already in 2021
UK: Phase-out by DK: Phase-out
• UK full exit by the end of 2024 by restricting coal plants’ access to market 2024 by 2030
• Italy and Ireland have both announced phase-out by 2025, also Hungary to
close its last coal plant by then
NL: Phase-out by
• Greece has stated 2028 as year for full phase-out end-2029
• Netherlands and Finland have 2029 as regulated phase-out year, Denmark
is committed to 2030 as is Slovakia FR: Phase-out by
2022
• Germany to phase out coal by end-2038 latest, possibly already 2035
AT: Last plant
• Significant coal countries without explicit exit date include e.g. Spain, closed 2020
Czechia and Poland SK: Phase-out
by 2030
– In Spain, significant number of coal plants have recently already closed, and
PT: Phase-out by
operators are underway to close down even the rest by mid-2020s 2023 HU: Last plant
to close 2025
– In Czechia, a multi-stakeholder commission has proposed a coal phase-out
by 2038, but no political decision available as of yet
IT: Phase-out by 2025 GR: Phase-out by
– Poland expects share of coal in the power mix to decline and targets lower- 2028
carbon generation in newbuilds, but no timeline for phase-out of coal exists
Phase-out from Phase-out from Phase-out from
power sector power sector power sector
latest by 2025 latest by 2030 latest by 2040
49European and Nordic power markets
Decarbonisation requires other sectors to join
The new 2030 emissions target will tighten the EU ETS CO2 abatement cost ranges for different sectors
Abatement cost range
Proposed rebasing
Proposed target for 2030
Coal-to-gas switching range
• The EU has agreed to increase the 2030 total emissions reduction target EUA price
to 55% vs 1990.
• In July 2021, EU Commission put forward a “Fit for 55” package, laying out
the roadmap for achieving the new ambitious climate target
• Proposed EU ETS revisions widen its scope, tighten supply and push for
faster decarbonisation:
− Emissions reduction target increased from 43% to 61% from 2005 level
− EU ETS scope to expand and include maritime sector
− Higher LRF (4.2% instead of 2.2%) combined with cap rebasing
− Free allocation to be gradually phased out
− Higher MSR intake rate (24%) and thresholds (400-833) maintained
− Cross Border Adjustment Mechanism (CBAM) proposed
• Proposed revisions will have to go through the EU legislative process and
are expected to take effect not earlier than late 2022 or 2023 Abatement cost ranges formed of typical values found in industry analyses. Sources: ICIS, Refinitiv, EU Commission.
50European and Nordic power markets
Fortum major player in power, gas and heat
Power generation Gas Heat production
Largest generators in Europe and Russia, 2019 Largest European gas storage operators, 2018 Largest global producers, 2019
TWh TWh TWh
EDF STOGIT Gazprom
Rosenergoatom
T Plus
Fortum+Uniper Storengy
Sibgenco
RWE Hungarian Gas Storage
Gazprom Inter RAO UES
Enel Uniper Energy Storage Veolia
RusHydro NAM RusHydro
Inter RAO UES En+
Vattenfall Astora
EDF
ENGIE Enagas Fortum+Uniper
EPH Quadra
NNEGC Energoat. Gas Storage Poland
KDHC
En+ OMV Gas Storage
TGC-2
Iberdrola
TAQA Gas Storage Vattenfall
CEZ
PGE RAG.Energy.Storage Minskenergo
Statkraft PGE
TERÉGA
T Plus Lukoil
EnBW Depogaz Ploiești Tatenergo
Sibgengo innogy Gas Storage PGNiG
EDP E.ON
EPS Nafta
Kyivteploenergo
Verbund VNG Gasspeicher
Ørsted
Axpo
Conexus Baltic Grid Stockholm Exergi
DTEK
SSE EWE Gasspeicher EPH
E.ON TGC-14
MMBF
Naturgy Helen
DEI GSA CEZ
0 100 200 300 400 500 600 0 40 80 120 160 200 0 20 40 60 80 100 120 140
Source: Company information, Fortum analyses, 2019 figures pro forma. GIE Storage Database.
51 EPH incl. LEAG. No data from China.European and Nordic power markets
Wholesale power prices
EUR/MWh Spot prices Forward prices
350
350
300
300
250
250
German
200
200
Nordic
150
150
Russian*
100
100
50
50
00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Forwards 28 December 2021
Rolling 7-day average spot price until 31 December 2021
* Including weighted average capacity price
52 Source: Nord Pool, Bloomberg Finance LP, ATS, NP “Market Council”, FortumEuropean and Nordic power markets
Nordic year forwards
Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16
Year 17 Year 18 forward Year 19 forward Year 20 forward Year 21 Year 22 Year 23
Year10 Year11 Year12 Year13 Year14 Year15 Year16 Year17 Year18 Year19 Year20 Year21 Year22 Year23
€/MWh 29 December 2021
80 Year22
Year23
70
60
Sep Oct Nov Dec
50 2021 2021 2021 2021
40
30
20
10
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
53 Source: Nasdaq Commodities, BloombergEuropean and Nordic power markets
German and Nordic forward spread
Nordic and German daily spot prices in 2020 – 2021 Nordic and German year 2022 forwards in 2020 – 2021
Sep Oct Nov Dec
2021 2021 2021 2021
EUR/MWh EUR/MWh
450
450 450
450
375
375 375
375
300
300 300
300
225
225 225
225
150
150 150
150
75
75 75
75
00 0
0
01/01/2020Q101/04/2020Q201/07/2020Q301/10/2020Q401/01/2021Q1 01/04/2021Q201/07/2021Q3 01/10/2021Q4 01/01/2020Q101/04/2020Q201/07/2020
Q301/10/2020
Q401/01/2021
Q101/04/2021
Q201/07/2021
Q301/10/2021
Q4
2020 2021 2020 2021
31 December 2021 Nordic Germany 28 December 2021 Nordic YR-22 SYS Germany
YR-22 EEX
54 Source: Nord Pool, BloombergEuropean and Nordic power markets
CO2 price and Nordic spot power price
EUR / tCO2 CO2 price (EUA DEC 2021) & Nordic sys spot price EUR / MWh
350 350 CO2 price (EUA DEC 2021)
Nordic system spot price
300 300
250 250
200 200
150 150
100 100
50 50
0 0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021
Spot power price until 31 December 2021
55 Source: BloombergEuropean and Nordic power markets
CO2 price and Nordic forward price
EUR / tCO2 CO2 price (EUA DEC 2021) & Year 22 forward price EUR / MWh
100 100 CO2 price (EUA DEC 2021)
Nordic year 2022 forward
80 80
60 60
40 40
20 20
0 0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021
Power forward prices until 28 December 2021
56 Source: BloombergEuropean and Nordic power markets
Nordic forward prices and Nordic sys spot averages
Year 18 forward Year 19 forward Year 20 forward Sys spot average 2018 Sys spot average 2019 Sys spot average 2020
EUR/MWh
50
Year 2018 forward System spot 2018 average
Year 2019 forward System spot 2019 average
Year 2020 forward System spot 2020 average
40
30
20
10
0
2.1.2013 2013 2.1.2014 2014 2.1.2015 2015 2.1.2016 2016 2.1.2017 2017 2.1.2018 2018 2.1.2019 2019 2.1.2020 2020
57 Source: BloombergFortum’s Nordic power generation in detail
Fortum’s Nordic and Polish generation capacity
Of which
GENERATION CAPACITY Fortum Uniper NORWAY MW FINLAND MW
Hydro 6,448 1,771 Price areas Hydro 1,553
Nuclear 4,8181 1,9961 NO4, Wind 993 Nuclear 1,487
NO4 SE1
CHP 1,185 2,4 4492 NO1, CHP 24 CHP 375
Other thermal 1,727 1,162 Generation capacity 123 Other thermal 565
Wind 1013,4 - Generation capacity 3,980
FI
SE2
NO3
Generation capacity, MW 14,279 5,378 Of which
SWEDEN Fortum Uniper BALTICS4 AND
NO5
Figures 31 December 2020 NO1 POLAND MW
Price areas
SE2, Hydro 3,185 1,635 Generation capacity, CHP
NO2 SE3
EE 4) SE3, Hydro 1,587 13 in Estonia 434
SE4, Hydro 123 123 in Latvia 284
1) Ringhals 1 (of which Uniper’s share 269 MW) closed at the end of 2020 SE3, Nuclear 3,3311 1,9961 in Lithuania 184
2) Öresundsverket 449 MW facility mothballed in 2018 and sold in August LV 4)
2021 DK1 SE4 SE3, CHP 6 - in Poland 233
3) The capacity includes the Sørfjord 99 MW wind portfolio in Norway, of 1)
2) LT 4) SE4, CHP 4492 4492
which a majority 80% ownership has been sold in January 2021.
4) The capacity includes the 89 MW CHP assets in the Baltics and DK2 SE4, Other th. 1,162 1,162 in Latvia, Wind 24
the 2 MW wind power plant in Latvia, which have been divested in July 2021.
Gen. capacity 9,843 5,378
PL
Associated companies’ plant (not included in the MWs):
TSE in Naantali;
Stockholm Exergi shares have been divested in September DENMARK, DK1 MW
2021.
Generation capacity, CHP 9
58Fortum’s evolution and strategic route
Fortum’s evolution and historical strategic route
Skandinaviska Birka Energi Länsivoima Elnova Østfold
Elverk 50% Fortum →100% 50% → 100%
50% Stockholm
Gullspång merged Shares in Divestment of Divestment of
with Hafslund Fingrid shares small scale hydro
Gullspång Stora Kraft Birka Energi TGC-1 E.ON Divestment
Stockholm Energi 50% → 100% established Finland of Lenenergo
shares
Shares in Divestment of Divestment of
Länsivoima Lenenergo Lenenergo Oil business heat operations non-strategic
45% → shares → District heating spin-off TGC-10 outside of heat business
65% in Poland → Stockholm
IVO FORTUM
NESTE 1996 1997 1998 2000 2002 2003 2005 2006 2007 2008 2011 2012
2014 2015 2016 2017 2018 2020 2021
Divestments of EUR ~5.2 bn
Divestment of electricity Divestment of DUON Nordkraft wind power Investment in Uniper Divestment of district heating businesses 0.5 GW solar divestment in India
distribution business electricity in Joensuu and Järvenpää
distribution Divestment of recharge infrastructure
Ekokem Restructuring of Divestment of Divestment of district heating
business
Divestment of electricity ownership in Hafslund ownership in business in the Baltics
distribution and heat businesses Hafslund Produksjon Majority owner in Uniper
Turebergs Russian wind power JV Divestment of Stockholm Exergi
Recycling Nordic wind capital recycling (80%)
Divestment of Grangemouth power
plant
Divestment of small hydro
Divestment of Gasum shares
59Historical achieved prices
Hedging improves stability and predictability
– principles based on risk mitigation, (Generation segment)
60
2009 onwards thermal and import from Russia excludedDividend
Fortum’s dividend policy aiming at increasing dividend
Fortum dividends
EUR/share
1,20 1.12
1.10 1.10 1.10 1.10
1,00
Dividend policy: 0,80
“Fortum’s dividend policy is to pay a stable, 0,60
sustainable, and over time increasing dividend.” 0,40
0,20
0,00
2016 2017 2018 2019 2020
61Next events:
Fortum Corporation’s Financial Statements Bulletin for the year 2021 will be published on
3 March 2022
Fortum's Annual General Meeting 2022 is planned to be held on 5 April 2022
The ex-dividend date, 6 April 2022
The dividend payment date, 14 April 2022
January-March Interim Report 2022 on 12 May 2022
January-June Half-Year Report 2022 on 12 August 2022
For more information, January-September Interim Report 2022 on 10 November 2022
please visit www.fortum.com/investors
To subscribe Fortum's releases, please fill out the subscription form on our website
Fortum Investor Relations and https://www.fortum.com/about-us/media/media-room/subscribe-press-releases
Financial Communications
Ingela Ulfves Rauno Tiihonen Carlo Beck Nora Hallberg Pirjo Lifländer Camilla Nikk
Vice President, Manager Manager Manager IR Specialist Coordinator
Investor Relations and
Financial Communication
+358 (0)40 515 1531 +358 (0)10 453 6150 +49 172 751 2480 +358 (0)40 720 1775 +358 (0)40 643 3317 +358 (0)50 516 9484
ingela.ulfves@fortum.com rauno.tiihonen@fortum.com carlo.beck@fortum.com nora.hallberg@fortum.com pirjo.liflander@fortum.com camilla.nikk@fortum.com
Follow us on:
Fortum ForEnergy blog at
www.twitter.com/Fortum www.linkedin.com/company/fortum www.youtube.com/user/fortum
fortumforenergyblog.wordpress.comYou can also read
