fortum corporation financial year 2009€¦ · commissioned in 2009 • częstochowa, poland and...
TRANSCRIPT
1
Fortum Corporation Financial year 2009
3 February
2010
Conference call
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.
3
Environment improving towards the end of the year
•
Nordic power consumption 5% down–
Signs of power demand picking up in Q4•
Nordic and Russian Urals power market prices lower than a year ago–
The trough in the early part of 2009, followed by improvement from quarter to quarter during the year
•
Key currencies significantly weaker than a year ago–
Strengthening towards the end of the year•
Longer than planned upgrade outages in Fortum’s nuclear fleet–
Approximately 110 MW capacity increase at Oskarshamn
3 available–
Almost 200 MW more nuclear capacity to come later
4
Stable results
•
Comparable operating profit, EUR 1,888 (1,845) million, higher than in 2008
–
Thanks to hedging stable achieved Nordic sales price in Power–
Strong improvement in Markets and Russia–
SEK translation effect approximately EUR -100 million•
Earnings per share EUR 1.48 (1.74)–
Large differences in sales gains, mark-to-market effects in power derivatives and share of profits of associates in 2008 and 2009
•
Strong cash flow: net cash from operating activities increased
to EUR 2,264 (2,002) million
•
Proposed dividend of EUR 1.00 per share
5
Better performance in Markets and Russia
EUR millionComparable operating profit
-1055
14-59
18881845
66-23
Power2008 Heat Distribution Markets Russia Other 2009
6
Key events and highlights
•
Work ongoing to improve efficiency, accountability and simplicity•
91% (92%) of the generated power CO2
-free in the EU –
still the corner stone of Fortum’s strategy
•
Intensive work for Loviisa
3 nuclear application and the nuclear-CHP option
•
Russia has met expectations–
Russian power reform proceeded as planned–
OAO Fortum’s productivity improved
7
Signs of demand picking up towards the end of 2009
2009 consumption decreased ~5% in the Nordic area372 TWh (393 TWh)
2009 consumption decreased ~5% in Russia• +/-
0% in Tyumen• -11% in Chelyabinsk
-25 %
-20 %
-15 %
-10 %
-5 %
0 %
5 %
10 %
Tyum
en
Che
lyab
insk
Rus
sia
Ura
ls a
rea
Rus
sia
Q1 2009 vs
Q1 2008Q2 2009 vs
Q2 2008Q3 2009 vs
Q3 2008Q4 2009 vs
Q4 2008-25 %
-20 %
-15 %
-10 %
-5 %
0 %
5 %
10 %
Finl
and
Swed
en
Nor
way
Den
mar
k
Nor
dic
Q1 2009 vs
Q1 2008Q2 2009 vs
Q2 2008Q3 2009 vs
Q3 2008Q4 2009 vs
Q4 2008
8
Nordic water reservoirs below normal
Source: Nord Pool
rese
rvoi
r con
tent
(TW
h)
Q1 Q2 Q3 Q40
20
40
60
80
100
120
2003 2008 reference level2009 2010
9
Crude oil price (ICE Brent)
020406080
100120140160
USD
/ bb
l
2006 2007 2008 2009
CO2 price (NP EUA)
05
101520253035
EUR
/ tC
O2
2006 2007 2008 2009
Coal price (ICE Rotterdam)
04080
120160200240
USD
/ t
2006 2007 2008 2009
Gas price (ICE NBP)
0
20
40
60
80
100
GB
p / t
herm
2006 2007 2008 2009
Commodity prices
Source: ICE, Nord Pool
2009 average:63 (98)
2009 average:13 (23)
2009 average:70 (146)
2009 average:32 (62)
10
Price development in the Nordic region and Russia
•
Nord Pool wholesale price in:–
Q4: decreased 28% to 36.6 (50.8) EUR/MWh–
2009: decreased 22% to 35.0 (44.7) EUR/MWh•
Power's achieved Nordic power price in:–
Q4: increased 5% to 51.5 (49.1) EUR/MWh–
2009: increased 1% to 49.8 (49.3) EUR/MWh•
Russian power prices:Market price (Urals hub):–
Q4: increased 28% to 693 (540) RUB/MWh–
2009: decreased 6% to 633 (672) RUB/MWhRegulated price (OAO Fortum)–
Q4: increased 13% to 536 (476) RUB/MWh–
2009: increased 12% to 533 (475) RUB/MWh
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Financials
12
Power•
Successful hedging•
Lower hydro volumes•
Lower nuclear volumes, but more capacity through upgrades
MEUR 2009 2008
Sales 2 596 2 892
Comparable operating profit 1 469 1 528
Net Assets 5 512 5 331
Comparable RONA, % 26.6 28.0
Gross Investments 154 134
Power
13
Heat•
Lower volumes and weaker SEK•
CHP investments: Tartu and Suomenoja
commissioned in 2009•
Częstochowa, Poland and Pärnu, Estonia in 2010
MEUR 2009 2008
Sales 1 394 1 466
Comparable operating profit 227 250
Net Assets 3 786 3 468
Comparable RONA, % 7.2 7.3
Gross Investments 359 431
Heat
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Distribution•
Stable results•
Automatic meter rollout completed in Sweden;
in Finland by 2014
MEUR 2009 2008
Sales 800 789
Comparable operating profit 262 248
Net Assets 3 299 3 032
Comparable RONA, % 8.6 8.2
Gross Investments 193 296
Distribution
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Markets•
Improved results from the turnaround programme•
Lower volumes, focus in profitability
MEUR 2009 2008
Sales 1 449 1 922
Comparable operating profit 22 -33
Net Assets 147 188
Comparable RONA, % 18.6 -15.3
Gross Investments 1 3
Markets
16
Russia
MEUR 2009 2008*
Sales 623 489
Comparable operating profit -26 -92
Net Assets 2 248 2 205
Comparable RONA, % -0.3 -3.8
Gross Investments 218 1 748
•
Efficiency improvement programme on track•
Clearly higher comparable operating profit in Q4 compared
to previous year (EUR +27 million)
* Income statement consolidated from April 1, 2008 onwards
Russia
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Income statement
MEUR IV/2009 IV/2008 2009 2008
Sales 1 563 1 602 5 435 5 636Expenses -1 041 -991 -3 653 -3 673
Operating profit 522 611 1 782 1 963Share of profit of associates and jv's 22 48 21 126Financial expenses, net -39 -54 -167 -239
Profit before taxes 505 605 1 636 1 850Income tax expense -74 2 -285 -254
Net profit for the period 431 607 1 351 1 596Non-controlling interests 25 44 39 54
EPS, basic (EUR) 0.46 0.64 1.48 1.74EPS, diluted (EUR) 0.46 0.64 1.48 1.74
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Operating profit IV/2009 Operating profit IV/2008Comparable Reported Comparable Reported Comparable Reported Comparable Reported
Power 394 330 378 470 1 469 1 335 1 528 1 599Heat 103 108 109 155 227 248 250 307Distribution 80 81 63 61 262 263 248 248Markets 11 19 0 -29 22 22 -33 -35Russia 7 7 -20 -19 -26 -26 -92 -91Other -25 -23 -22 -27 -66 -60 -56 -65Total 570 522 508 611 1 888 1 782 1 845 1 963
Operating profit 2009 Operating profit 2008
Comparable and reported operating profit
The decline in the net profit is also explained by:–
Share of profit of associates and joint ventures EUR 105 million
lower than in 2008–
One-time tax booking in 2008 (changes in a corporate tax rate in Sweden and in Russia)
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Cash flow statement
MEUR IV/2009 IV/2008 2009 2008
Operating profit before depreciations 658 743 2 292 2 478
Non-cash flow items and divesting activities -4 -237 46 -275
Financial items and fx gains/losses -102 326 146 233
Taxes -34 -53 -239 -332
Funds from operations (FFO) 518 779 2 245 2 104
Change in working capital -122 -217 19 -102
Total net cash from operating activities 396 562 2 264 2 002
Paid capital expenditures -266 -338 -845 -1 018
Acquisition of shares -28 -28 -85 -1 242
Other investing activities -27 23 -44 -22
Cash flow before financing activities 75 219 1 290 -280
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MEUR 2009 2008 2007
EBITDA 2 292 2 478 2 298Net cash flow from operations 2 264 2 002 1 670Interest-bearing net debt 5 969 6 179 4 466Equity 8 491 8 411 8 651Balance sheet total 19 841 20 278 17 674Net debt/EBITDA* 2.6 2.5 2.2Return on capital employed (%)* 12.1 15.0 14.0Return on shareholders' equity (%)* 16.0 18.7 15.8
Key ratios
*2007 adjusted for REC and Lenenergo gains
Key ratios
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Debt maturity profileMEUR
2010 857
2011 626
2012 499
2013 558
2014 1,146
2015 310
2016 846
2017 211
2018 75
2019 779
2020+ 9520
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 December, 2009 per 31 December, 2008Duration (years) 1.8 1.5Average interest rate (incl. swaps and forwards) 3.4 % 4.7 %Portion of floating / fixed debt 62 / 38 % 64 / 36 %
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Outlook
23
Commodity pricesCrude 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
Source: ICE, Nord Pool
Market prices 1 February 2010; 2010-2011 future quotations
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Nord Pool year forwards
05
1015202530354045505560657075
Year 15Year 07 Year 08 Year 09 Year 10 Year 11 Year 12 Year 13 Year 141 February 2010
€/MWh
2006Q1 Q2 Q3 Q4 Q1
2007Q2 Q3 Q4 Q1
2008Q2 Q3 Q4 Q1
2009Q2 Q3 Q4 Q1
2010
Forwards in late January 2010:•
rest of 2010 ~ 44 EUR/MWh
• 2011 ~ 42 EUR/MWh
• 2012 ~ 41 EUR/MWh
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Hedging of Power division's Nordic sales
Hedge ratio Hedge price
2010 ~ 70% ~ EUR 44 per MWh
Status at the end of December 2009(Status at the end of Sep 2009)
(~65%) (~ EUR 44 per MWh)
2011 ~ 40% ~ EUR 42 per MWh(~35%) (~ EUR 42 per MWh)
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Fortum in a strong positionNordic power demand back to 2008 level in 2012-2014
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 190 Q3/2010Tobolsk CCGT, gas 210 Q3/2010Chelyabinsk 3 CCGT, gas 220 Q4/2010
New capacity to be commissioned during 2010
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Fortum in a strong position
•
Flexible, low-cost and climate-benign generation portfolio•
Russian power reform proceeding and the results of OAO Fortum improving as planned
•
Nordic power demand recovering•
Good hedging positions•
Strong financial position and liquidity
Fortum in a strong position
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Q & AConference
call
3 February
2010