Fortum Corporation Q1 2010€¦ · – SEK translation effect EUR +33 million • Earnings per...
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Fortum Corporation Interim report January-March 2010 27 April 2010
Transcript of Fortum Corporation Q1 2010€¦ · – SEK translation effect EUR +33 million • Earnings per...
Fortum CorporationInterim reportJanuary-March 2010
27 April 2010
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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.
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Business environment improving
• Nordic power consumption up by 7%• Tight supply demand balance in the Nordic area resulted in price
peaks– Cold winter; exceptional low temperature periods– Availability of Nuclear in Sweden still affected by modernisations– Average Nord Pool system spot price up by 56% from a year ago
• Russian power consumption increased by about 6%– Electricity spot price in Russia up by 53% from a year ago
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A strong start for the year
• Comparable operating profit, EUR 651 (602) million – Higher achieved Nordic sales price in Power– Improvement in Russia– SEK translation effect EUR +33 million
• Earnings per share EUR 0.63 (0.46)– Sales gains from Swedegas, Karlskoga Energi & Miljö, Kurgan and
Federal grid company shares
• Net cash from operating activities EUR 521 (822) million – Decline due to financial items and SEK appreciation
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Better performance, except Electricity Sales
EUR millionComparable operating profit
18 10602
6519
21 -11 2
PowerQ1/2009 Heat Distribution ElectricitySales
Russia Other Q1/2010
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Key events and highlights
• Performance development in Russia on track– Russian power reform proceeded as planned– OAO Fortum’s productivity improved– Rules and price parameters for capacity market approved
• Suomenoja CHP plant in full operation• Work continuing to improve efficiency, accountability and simplicity
– Restructuring of the Business Market segment in Electricity Sales• 82% (90%) of the generated power CO2-free in the EU
– Higher thermal condensing generation due to cold weather
• The Government did not approve Fortum's application for Loviisa 3
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Nordic water reservoirs below normal
0
20
40
60
80
100
120
Q1 Q2 Q3 Q4
2003 2008 reference level2009 2010
rese
rvoi
r con
tent
(TW
h)
Source: Nord Pool
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Crude oil price (ICE Brent)
020406080
100120140160
USD
/ bb
l
2006 2007 2008 2009 2010
CO2 price (NP EUA)
05
101520253035
EUR
/ tC
O2
2006 2007 2008 2009 2010
Coal price (ICE Rotterdam)
04080
120160200240
USD
/ t
2006 2007 2008 2009 2010
Gas price (ICE NBP)
0
20
40
60
80
100
GB
p / t
herm
2006 2007 2008 2009 2010
Commodity prices
Q1 average:77 (46)
Q1 average:13 (12)
Q1 average:79 (71)
Q1 average:33 (46)
Source: ICE, Nord Pool
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Price development in the Nordic region and RussiaSpot price for power in NordPool power exchange,
eur/MWh
38.234.0 31.3
36.6
59.5
0
10
20
30
40
50
60
Q1/2009 Q2/2009 Q3/2009 Q4/2009 Q1/2010
Power's Nordic power price, eur/MWh
49.6 48.0 50.2 51.554.5
0
10
20
30
40
50
60
Q1/2009 Q2/2009 Q3/2009 Q4/2009 Q1/2010
Average regulated electricity price for OAO Fortum, RUB/MWhWh
541 525 529 536620
0100200300400500600700800900
Q1/2009 Q2/2009 Q3/2009 Q4/2009 Q1/2010
Spot price for power (market price), Urals hub, RUB/MWh
535603
700 693
817
0100200300400500600700800900
Q1/2009 Q2/2009 Q3/2009 Q4/2009 Q1/2010
+56%
+10%+15%
+53%
Financials
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Power• Higher achieved price supported by higher spot prices• Lower hydro and nuclear volumes• Increased thermal generation• Stronger SEK
MEUR I/2010 I/2009 LTM
Sales 769 688 2 612
Comparable operating profit 424 415 1 463
Net Assets 5 591 5 351
Comparable RONA, % 26.3
Gross Investments 33 52 134
Power
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Heat• Suomenoja CHP plant in operation• Higher heat volumes due to cold weather• Higher power volumes and higher Nord Pool spot price
MEUR I/2010 I/2009 LTM
Sales 651 514 1 536
Comparable operating profit 132 114 249
Net Assets 3 955 3 482
Comparable RONA, % 8.0
Gross Investments 62 70 351
Heat
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Distribution• Higher volumes• Stronger SEK• Automatic meter rollout in Finland to start in 2010
MEUR I/2010 I/2009 LTM
Sales 280 229 851
Comparable operating profit 102 81 283
Net Assets 3 419 3 090
Comparable RONA, % 9.1
Gross Investments 29 36 186
Distribution
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Markets• Higher purchase price of power; Nord Pool price peaks• Restructuring provision for the Business Market segment
MEUR I/2010 I/2009 LTM
Sales 637 469 1 617
Comparable operating profit -13 -2 11
Net Assets 163 90
Comparable RONA, % 7.3
Gross Investments 0 1 0
Electricity Sales
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Russia
MEUR I/2010 I/2009 LTM
Sales 244 186 690
Comparable operating profit 16 6 -10
Net Assets 2 489 2 018
Comparable RONA, % 0.5
Gross Investments 91 21 288
Russia• Efficiency improvement programme on track• Slightly higher electricity and heat sales margins• The price parameters for the capacity market approved in
April 2010
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Income statement
MEUR I/2010 I/2009 2009 LTM
Sales 1 947 1 632 5 435 5 750Expenses -1 223 -1 033 -3 653 -3 843
Operating profit 724 599 1 782 1 907Share of profit of associates and jv's 16 -33 21 70Financial expenses, net -27 -32 -167 -162
Profit before taxes 713 534 1 636 1 815Income tax expense -130 -111 -285 -304
Net profit for the period 583 423 1 351 1 511Non-controlling interests 24 17 39 46
EPS, basic (EUR) 0.63 0.46 1.48 1.65EPS, diluted (EUR) 0.63 0.46 1.48 1.65
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Comparable and reported operating profit
Operating profit I/2010 Operating profit I/2009Comparable Reported Comparable Reported Comparable Reported
Power 424 467 415 432 1 454 1 363Heat 132 159 114 115 231 252Distribution 102 113 81 81 262 263Electricity Sales -13 -29 -2 -21 22 29Russia 16 32 6 6 -20 -20Other -10 -18 -12 -14 -61 -105Total 651 724 602 599 1 888 1 782
Operating profit 2009
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Cash flow statement
MEUR I/2010 I/2009 2009 LTM
Operating profit before depreciations 861 721 2 292 2 432
Non-cash flow items and divesting activities -67 1 46 -22
Financial items and fx gains/losses -177 139 146 -170
Taxes -82 -14 -239 -307
Funds from operations (FFO) 535 847 2 245 1 933
Change in working capital -14 -25 19 30
Total net cash from operating activities 521 822 2 264 1 963
Paid capital expenditures -223 -180 -845 -888
Acquisition of shares 0 -50 -85 -35
Other investing activities 88 -7 -44 51
Cash flow before financing activities 386 585 1 290 1 091
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MEUR LTM 2009 2008
EBITDA 2 432 2 292 2 478Net cash flow from operations 1 963 2 264 2 002Interest-bearing net debt 5 679 5 969 6 179Equity 8 465 8 491 8 411Balance sheet total 21 318 19 841 20 278Net debt/EBITDA 2.3 2.6 2.5Return on capital employed (%) 12.3 12.1 15.0Return on shareholders' equity (%) 17.6 16.0 18.7
Key ratiosKey ratios
in Q1 ‘10
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Debt maturity profile
MEUR
2010 980
2011 645
2012 525
2013 560
2014 1,172
2015 322
2016 858
2017 220
2018 78
2019 799
2020+ 1,0180
250
500
750
1000
1250
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020+
Bonds Financial institutions Other long-term debt CPs Other short-term debt
per 31 March, 2010 per 31 December, 2009Duration (years) 1.8 1.8Average interest rate (incl. swaps and forwards) 3.0 % 3.4 %Portion of floating / fixed debt 63 / 37 % 62 / 38 %
Outlook
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Crude oil price (ICE Brent)
020406080
100120140160
USD
/ bb
l
2006 2007 20102008 2009 2011
CO2 price (NP EUA)
05
101520253035
EUR
/ tC
O2
2006 2007 20102008 2009 2011
Coal price (ICE Rotterdam)
04080
120160200240
USD
/ t
2006 2007 20102008 2009 2011
Gas price (ICE NBP)
0
20
40
60
80
100
GB
p / t
herm
2006 2007 20102008 2009 2011
Fuel and CO2 allowance prices
Source: ICE, Nord Pool
Market prices 22 April 2010; 2010-2011 future quotations
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Nord Pool year forwards
Year 15Year 07 Year 08 Year 09 Year 10 Year 11 Year 12 Year 13 Year 14€/MWh
05
1015202530354045505560657075 22 April 2010
2006Q1 Q2 Q3 Q4 Q1
2007Q2 Q3 Q4 Q1
2008Q2 Q3 Q4 Q1
2009Q2 Q3 Q4 Q1
2010Q2
Forwards in late April 2010:• rest of 2010 ~ 46 EUR/MWh• 2011 ~ 44 EUR/MWh• 2012 ~ 43 EUR/MWh
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Hedging of Power division's Nordic sales
Status at the end of March 2010(Status at the end of Dec 2009)
Hedge ratio Hedge price
~ 75% ~ EUR 44 per MWhrest of 2010(~70%) (~ EUR 44 per MWh)
~ 45%(~40%)
~ EUR 43 per MWh(~ EUR 42 per MWh)2011
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Fortum in a strong positionNew capacity to be commissioned in 2010
TypeCapacity
electricity, MWCapacity heat, MW Available
HeatCzęstochowa, Poland CHP bio, coal 65 120 Q3/2010Pärnu, Estonia CHP bio, peat 20 45 end of 2010PowerHydro refurbishment Hydropower 20-30 2010RussiaTyumen 1 CCGT, gas 230 Q3/2010Tobolsk CCGT, gas 200 Q3/2010Chelyabinsk 3 CCGT, gas 220 Q4/2010
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Fortum in a strong positionFortum in a strong position
• A strong start for the year• Flexible, cost-efficient and climate-benign generation portfolio• Russian power reform proceeding and the results of OAO Fortum
improving as planned• Nordic power demand recovering
– back to 2008 level by 2012-2014• Strong financial position and liquidity
