Interim Report January-June 2016Fortum Corporation

20 July 2016

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.

Any references to the future represent the management’s current best

understanding. However the final outcome may differ from them.

Summary of the second quarter of 2016

– Operationally, the quarter met our expectations, as the availability in our plants was good

and ongoing projects progressed as planned• Lower volumes, rouble and lower achieved power price continue to burden profits

– Some positive signs were seen during the second quarter, although the overall business

environment continues to be demanding. The end of the quarter was also characterized

by increased commodity market volatility, partly explained by the British EU exit vote

– We have now taken several important steps in the implementation of our new strategy• The highlight of the quarter was the announcement to buy Ekokem – diversifies our revenue

streams while maintaining a strong link to our traditional core

– In Sweden, key political parties came to an agreement on energy policy – The decisions

are positive and a step in the right direction, as all production forms are more evenly

taxed

– In Russia, the CSA (new capacity) time frame was decided to be 10 years

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Q2/2016: Operationally a good quarter, but weak power prices continue to burden profits

4

Key figures (MEUR), continuing operations II/2016 II/2015 I-II/2016 I-II/2015 2015 LTM

Sales 768 794 1,757 1,834 3,459 3,382

Comparable EBITDA 209 228 566 624 1,102 1,044

Operating profit 67 144 437 494 -150 -207

Comparable operating profit 122 143 397 486 808 719Share of profits of associates and joint ventures 38 22 105 80 20 45

Profit before taxes 61 143 451 493 -305 -347

Earnings per share, EUR 0.06 0.13 0.43 0.46 -0.26 -0.29

Net cash from operating activities -5 229 370 745 1,228 853

Fortum’s solutions for sustainable cities – urban environment with empowered citizens

A forerunner in sustainable city solutions in a circular economy

Local fuels:

Bio, waste

Excess heat

from industry

and data centers

Recycling and optimal

use of waste as energy Systems for balancing

demand and supply

Intelligent systems

for electric traffic

New consumer solutions

for optimizing energy usage

Retail electricity

and services

Renewable consumer

offerings

Storages for

energy

Ekokem

Ekokem

• Households and consumers

• Industrials, companies

• City administrations

City as a customer…

High quality of life

• Climate friendly

• Resource efficient

• Security of supply

• Empowered consumers

• Advanced heating, cooling and electricity solutions

• Waste and recycling solutions

• Sustainable consumer solutions

• Participation in flexible energy markets

DUON

Info24

Ekokem – a Nordic market leader

Wide service offering

• Handling and recycling of materials and waste

• Recovery and final disposal solutions, including waste

to energy and high thermal treatment of hazardous

waste

• Soil remediation and environmental construction

Good customer

relations

• Industrial and municipal operators

• Approximately 10,000 active customers

Main revenue

sources

• Environmental and waste treatment services

• District heat sales

• Recycled materials

Key figures in 2015

• Sales EUR 258 million

• Reported EBITDA EUR 55 million

• Comparable EBITDA EUR 57 million

• Waste incineration 0.4 mton

• Hazardous waste incineration 0.3 mton

• District heat sales 0.9 TWh/a

• Electricity generation 0.1 TWh/a

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Riihimäki

Kumla

Nyborg

Klaipeda

Kaunas

ready 2019

Zabrze

ready 2018

Brista and

Högdalen

Ekokem’s Circular Economy Village – Globalizing Finnish clean tech competence

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• Together Fortum and Ekokem

form a circular economy

champion

- Accelerated growth

- Complementing expertise

and service and solutions

offering

• Excellent fit to Fortum’s strategic

focus on sustainable city

solutions

• Both companies provide

solutions in energy and waste

treatment applying world leading

technologies and competences© Ekokem

Market conditions in the second quarter of 2016

8

Nordic countries

• The electricity consumption in the Nordic countries was equal to Q2/2015 and

totalled 86 (87) TWh

• Market prices have recovered somewhat but are still low – impacted by

tightening of the hydrological situation as well as increased coal prices

– The average system spot price was EUR 23.9 (20.7) per MWh

– The average area price in Finland was EUR 30.2 (25.8) per MWh and in Sweden SE3

(Stockholm) EUR 26.5 (21.1) per MWh

• The market price of CO2 emission allowances (EUA) was volatile during the

quarter and dropped to EUR 4.5 per tonne at the end of June 2016

Russia

• Russian electricity consumption was 230 (230) TWh. The corresponding figure

in Fortum’s operating area in the First price zone (European and Urals part of

Russia) was 176 (178) TWh

• The average electricity spot price, excluding capacity price, increased by 3% to

RUB (Russian rouble) 1,166 (1,132) per MWh in the First price zone

Nordic water reservoirs

9

Source: Nord Pool

Q1 Q2 Q3 Q4

20

40

60

80

100

120

rese

rvo

ir c

on

ten

t (T

Wh

)

0

2000 2003 20152014 reference level2016

Wholesale price for electricity

10

Source: Nord Pool, Nasdaq Commodities

0

10

20

30

40

50

60

70

80

90

100

110

EUR/MWh Nord Pool System Price Forwards

15 July 2016

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Price development in the Nordic region and Russia

11

Includes capacity income

+15%

-2%-11%

-1%

NOTE: Achieved power price in roubles increased 9%

Q2: Lower volumes and achieved price in Generation and City Solutions burdened results

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Comparable operating profit, EUR million

• 0.7 TWh lower hydro volumes

• 0.6 EUR/MWh lower achieved price

• Russian rouble EUR -9 million

• Lower heat sales volumes due

to warm weather

• Lower achieved electricity price

H1: Lower Nordic power prices and weaker Russian rouble

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Comparable operating profit, EUR million

• 3.9 EUR/MWh lower achieved price

• EUR 30 million higher CSA provision release in

2015

• Russian rouble EUR -20 million

• Unfavourable fuel mix

• Lower achieved electricity price

Comparable and reported operating profit

II/2016 II/2015 II/2016 II/2015 I-II/2016 I-II/2015 I-II/2016 I-II/2015

Generation 98 114 32 117 253 317 243 320

City Solutions 7 11 18 9 65 68 81 73

Russia 34 35 36 36 113 132 147 133

Other -18 -17 -18 -17 -34 -32 -34 -32

Total, continuing

operations122 143 67 144 397 486 437 494

Discontinued operations - 32 - 4,314 - 114 - 4,395

Total, Fortum 122 175 67 4,458 397 600 437 4,889

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Comparable

operating profitReported

operating profitMEUR

Fortum's operating profit for the second quarter was impacted by items affecting comparability, including sales

gains and fair value change of derivatives and nuclear fund adjustments for continuing operations, amounting to

EUR -54 (1) million. The corresponding figures for January-June were EUR 40 (8) million

Comparable

operating profit

Reported

operating profit

Income statement

MEUR II/2016 II/2015 I-II/2016 I-II/2015 2015 LTM

Sales 768 794 1,757 1,834 3,459 3,382

Other income and expenses -646 -651 -1,360 -1,348 -2,651 -2,663

Comparable operating profit 122 143 397 486 808 719

Items affecting comparability -54 1 40 8 -958 -926

Operating profit 67 144 437 494 -150 -207

Share of profit of associates and jv’s 38 22 105 80 20 45

Financial expenses, net -44 -24 -91 -81 -175 -185

Profit before taxes 61 143 451 493 -305 -347

Income tax expense -4 -25 -62 -80 78 96

Net profit, continuing operations 57 118 389 413 -228 -252

Net profit, discontinued operations - 4,306 - 4,369 4,369 -

Net profit, Fortum total 57 4,424 389 4,782 4,142 -251

EPS, basic (EUR), continuing operations 0.06 0.13 0.43 0.46 -0.26 -0.29

EPS, basic (EUR), discontinued operations - 4.85 - 4.92 4.92 -

EPS, basic (EUR), Fortum Total 0.06 4.98 0.43 5.38 4.66 -0.29

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Cash flow statement

MEUR II/2016 II/2015 I-II/2016 I-II/2015 2015 LTM

Cash from operating activities:

Realised FX gains/losses -1 35 128 203 292 217

Other funds from operations 18 158 235 472 907 670

Change in working capital -22 36 7 70 29 -34

Cash from operating activities, cont. operations -5 229 370 745 1,228 853

Cash from operating activities, discontinued

operations- 66 - 154 154 -

Cash from operating activities, total Fortum -5 296 370 899 1,381 852

Cash used in investing activities:

Paid capital expenditures -130 -107 -244 -209 -527 -562

Proceeds from divestments 2 1 45 37 55 63

Other investment activities -134 222 -442 241 437 -246

Total investing activities, continuing operations -262 116 -641 69 -35 -745

Total investing activities, discontinued operations - 6,345 - 6,303 6,303 -

Cash used in investing activities, total Fortum -262 6,461 -641 6,372 6,268 -745

Cash flow before financing activities, total Fortum -266 6,757 -271 7,272 7,650 107

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Debt portfolio and average interest rate at the balance sheet dateJune 30, 2016

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1) In addition Fortum has received EUR 178 million based on Credit Support Annex agreements with several counterparties. This amount has been booked as a short term liability

• Total interest-bearing debt EUR

5,216 million

– Average interest 3.5%

(2015: 3.7%)

– Portfolio mainly in EUR and

SEK with average interest

cost 2.1% (2015: 2.6%)

– EUR 722 million (2015: 641)

swapped to RUB, average

interest cost including cost

for hedging 12.2% (2015:

12.8%)

0

250

500

750

1000

1250

1500

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+

Bonds Financial institutions Other long-term debt Other short-term debt

Maturity profile

1)

Fortum has a strong financial position

MEUR LTM 2015

Comparable EBITDA, continuing operations 1,044 1,102

Comparable EBITDA, total Fortum 1,044 1,265

Interest-bearing net debt, total Fortum -934 -2,195

Comparable net debt/EBITDA, total Fortum -0.9 -1.7

ROCE % Return on capital employed, total Fortum -0.7 22.7

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Liquid funds totalled EUR 6.2 billion

Committed credit lines total EUR 2.0 billion

Outlook

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Nordic markets

• Fortum continues to expect that the annual electricity demand growth will be approximately 0.5% on average

• Electricity is expected to continue to gain share of total energy consumption

Russia

• The targeted operating profit level (EBIT) for the Russia segment, RUB 18.2

billion, is expected to be reached during 2017-2018

Annual capex estimate, excluding potential acquisitions

• 2016 approximately EUR 650 million (maintenance capex approximately EUR 300-350 million)

Hedging

• Rest of 2016 approx. 75% hedge ratio at approx. EUR 29/MWh• 2017 approx. 45% hedge ratio at approx. EUR 27/MWh

Taxation

• Effective tax rate for 2016 for the Group 19-21%• Swedish political agreement on reduction of installed nuclear tax as well as

real estate tax rate on hydro assets

For further information:www.fortum.com/investors