fortum in 3 minutesapps.fortum.fi/investors/fortum in 3 minutes_march_2017.pdfwe employ some 8,000...
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Fortum’s financial targets
Published on February 2016 Fortum’s long-term over the cycle financial targets give guidance on our value creation potential, new growth strategy and business activities.
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COMPARABLE NET DEBT/EBITDA
Around 2.5
3
2
1
-1
0
-2
16
12 13
20
15
10
5
015 16
RETURN ON CAPITAL EMPLOYED %
At least10%
We are a forerunner in sustainability
RUSSIA
• The targeted operating profit (EBIT) level of RUB 18.2 billion in Russia is targeted to be reached during 2017-2018
• The euro-denominated result level will be volatile, due to the translation effect
ANNUAL CAPEX ESTIMATE, EXCLUDING POTENTIAL ACQUISITIONS
• In 2017, approximately EUR 800 million (maintenance capex below EUR 300 million)
TAXATION
• Effective tax rate for 2017 for the Group 19-21%
Business drivers and risksNORDIC MARKETS
• One of the key factors influencing Fortum’s business performance is the wholesale price of electricity in the Nordic region
• Fortum continues to expect that the annual electricity demand growth will be approximately0.5% on average in the coming years
• Electricity is expected to continue to gain share of total energy consumption
• Generation sensitivity: achieved price 1 EUR/MWh = EUR ~45 million in annualcomparable operating profit
Fortum is a leading clean-energy company that provides its customers with electricity, heating and cooling as well as smart solutions to improve resource efficiency. We want to engage our customers and society to join the change for a cleaner world. We employ some 8,000 professionals in the Nordic and Baltic countries, Russia, Poland and India, and 62% of our electricity generation is CO2 free. In 2016, our sales were EUR 3.6 billion. Fortum’s share is listed on Nasdaq Helsinki (FORTUM).
There are four megatrends that shape the energy sector: Climate change and resource efficiency; Urbanisation; New technologies
and digitalisation; and Active customers. These megatrends will bring profound changes – not only to how energy is produced and sold to customers, but also to how it is consumed. The megatrends will also push to maximise the value of resources, such as waste and biomass.
Sustainability is an integral part of our strategy. The tight link between business operations and corporate responsibility underscores the importance of sustainability as a competitive advantage. In our operations, we give balanced consideration to economic, social and environmental responsibility
Key facts 2016:Exchange:Nasdaq Helsinki
ISIN: FI0009007132
Ticker: FORTUM
Industry: Electric Utilities
Sales EUR 3,632 million
Capex EUR 1,435 million
Comparable operating profit EUR 644 million
Employees:8,100
Drive productivity and industry transformation
Create solutions for sustainable cities
Build new energy ventures
Grow in solar and wind
MissionWe engage our customers and society to drive the change towards a cleaner world. Our role is to accelerate this change by reshaping the energy system, improving resource efficiency and providing smart solutions. This way we deliver excellent shareholder value.
Strategy
MegatrendsClimate change and resource efficiencyUrbanisationDigitalisation, new technologies
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Generation
This division is responsible for the large scale power production, physical optimisation and trading activities in the Nordic area. The division comprises nuclear, hydro and thermal power production, portfolio management and trading, industrial intelligence and nuclear services.
This division is responsible for developing sustainable city solutions into a growing business for Fortum. The division comprises heating and cooling, waste to energy, biomass and other circular economy solutions and services as well as electricity sales and services.
Russia division comprises Fortum’s power and heat generation and sales activities in Russia.
Including two development units: Technology and New Ventures - to speed up innovation and new business development. Responsible for Fortum’s R&D activities.
M&A and Solar & Wind Development - Fortum strives to create value by driving utility industry consolidation and restructuring through transformational mergers and acquisitions in its current home markets and in the integrating European market. The efforts to target a gigawatt-scale solar and wind portfolio.
EUR 417 million EUR 112 million EUR 191 million
Nordic power price, generation volumes Fuel mix, heat and power price, electricity sales market
New capacity and capacity price, electricity and heat price
Nordic generation 45.3TWh CHP sales 2.8TWh, heat sales 8.7TWh, electricity sales 12.3TWh
Power gen. 29.5TWh Heat sales 20.6TWh
EUR 5,815 million EUR 3,052 million EUR 3,284 million
Business description
Comparable operating profit, % of Group op descriptio
Net assets
Volume (TWh)
Drivers
City Solutions Russia Other
Fortum’s reporting structure
Fortum in 3 minutes
Fortum’s carbon exposure is among the lowest in Europe.
201662% of Fortum’s total power generation CO2-free96% of Fortum’s power generation in the EU CO2-free
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g CO2/KWh electrocity, 2015
166
21
Average 311g/KWh
800
600
400
0
200
150.0
Måns HolmbergManager, Investor Relations (Financial communications & Private investors)Tel. +358 44 518 [email protected]
Pirjo LifländerIR Specialist Tel. +358 40 643 [email protected]
Biomass 7%
Fortum’s power generation in 2016in total 73.1 TWh
Nuclear power 33%
Hydro power 28%
Natural gas 33%
Coal 4%
Fortum’s heat production in 2016 in total 27.8 TWh
Heat pumps 1%
Natural gas 71%
Peat 1%
Coal 17%
Waste 3%
Dividend per share (EUR) Debt maturity profile as of 31 December 2016
Strong financial positionGood liquidity – committed credit lines total EUR 2.0 billion
Long-term credit ratingStandard & Poor’s BBB+ (stable)Fitch BBB+ (stable)
• Hedges are disclosed quarterly
• Hedge ratios may vary significantly
• At the end of 2016, Generation’s estimated Nordic power sales volume hedging
~ 60% at EUR 30/MWh for 2017, and ~ 35% at EUR 26/MWh for 2018
Hedging
Biomass 1%
1.10**
2016
1.00
201263%
1.10
201381%
1.30
201437% 24% 196%
1.100.20* 1.10
2015
Sophie JollyVP, Investor Relations and Financial CommunicationsTel. +358 10 453 [email protected]
Investor relations
Rauno TiihonenManager, Investor RelationsTel. +358 10 453 6150 [email protected]
Meeting requests:Arja-Tuula TiainenExecutive Assistant Tel. +358 10 453 [email protected]
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.
• 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.
Dividend policy
* An extra dividend.** Proposal for the AGM
Total interest-bearing debt EUR 5,107 million · Average interest 3.5% (2015: 3.7%)
· Portfolio mainly in EUR and SEK with average interest cost 2.1% (2015: 2.6%)
· EUR 805 million (2015: 641) swapped to RUB, average interest cost including cost for hedging 11.4% (2015: 12.8%)
www.twitter.com/Fortum
http://fortumforenergyblog.wordpress.com
www.linkedin.com/company/fortum
www.youtube.com/user/fortum
Ownership structure on 31 December 2016APPROX. 132,000 SHAREHOLDERS
Households 10.8%
Financial and insurance institutions 1.8%
Other Finnish investors 8.3%
Foreign investors 28.3%
Finnish State 50.8%
0
350
700
1 050
1 400
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027+
Bonds Financial institutions Other long-term debt Other short-term debt
Fortum’s financial calendar 20172 Feb Financial Statements Bulletin 2016
16 Feb Operating and Financial Review for 2016
4 April Annual General Meeting
13 April Dividend payment date
27 April Q1 Interim Report
20 July Half Year Financial Report
26 October Q3 Interim Report
Power generation 46.2 TWhHeat sales 3.7 TWhElectricity customers 1.3 million
Nordic countries
Poland
Baltic countries
Power generation 0.7 TWhHeat sales 1.3 TWh
Power generation 0.6 TWhHeat sales 3.6 TWh
IndiaPower generation 29 GWh
Russia
OAO FORTUM Power generation 25.5 TWhHeat sales 20.7 TWh
Fortum’s geographical precense