Fortum - Interim report (Q1 and Q3)

Fortum January-March 2024 Interim Report: Solid performance and good results despite lower power prices in the Nordics

FORTUM CORPORATION INTERIM REPORT 30 APRIL 2024 AT 9:00 EEST

This release is a summary of Fortum's January-March 2024 Interim Report. The
complete report is attached to this release as a PDF file. It is also available
on the company's website at www.fortum.com/investors

January-March 2024

  · Comparable EBITDA was EUR 622 (781) million.
  · Comparable operating profit was EUR 530 (698) million.
  · Operating profit was EUR 571 (769) million. Items affecting comparability
included fair value changes in non-hedge-accounted derivatives of EUR 39 (62)
million.
  · Comparable earnings per share were EUR 0.48 (0.54).
  · Earnings per share were EUR 0.53 (0.60).
  · Cash flow from operating activities totalled EUR 538 (474) million.

Summary of outlook

  · The Generation segment's Nordic outright generation hedges: approximately
70% at EUR 43 per MWh for the remainder of 2024, and approximately 50% at EUR 42
per MWh for 2025. As of the first quarter of 2024, the hedge ratios and prices
also include the Group's wind generation volumes.
  · The current annual outright portfolio amounts to approximately 47 TWh, an
increase of approximately 2 TWh due to the Olkiluoto nuclear power plant's third
unit and the Pjelax wind farm.
  · Capital expenditure is expected to be approximately EUR 550 million in 2024
of which the maintenance capital expenditure is EUR 300 million.

Key figures, continuing operations

EUR million or as        I/2024    I/2023   2023    LTM
indicated                        restated
Reported
Sales                     2,015     2,265  6,711  6,461
Operating profit            571       769  1,662  1,465
Share of profit/loss of      21        22     59     58
associates and joint
ventures
Net profit                  473       542  1,515  1,446
Net profit (after non       471       540  1,514  1,445
-controlling interests)
Earnings per share, EUR    0.53      0.60   1.68   1.61
Net cash from operating     538       474  1,710  1,774
activities

EUR million or as        I/2024    I/2023   2023    LTM
indicated                        restated
Comparable
EBITDA                      622       781  1,903  1,744
Operating profit            530       698  1,544  1,376
Share of profit/loss of      12        10      7      9
associates and joint
ventures
Net profit (after non       430       483  1,150  1,097
-controlling interests)
Earnings per share, EUR    0.48      0.54   1.28   1.22

EUR million or as indicated               LTM  2023
Financial position
Financial net debt (at period-end)        528   942
Financial net debt/comparable EBITDA      0.3   0.5

Key figures, total of continuing and discontinued operations

Fortum's condensed consolidated income statement and consolidated cash flow
statement include the Russia segment as discontinued operations in 2023.

EUR million or as indicated                   I/2024    I/2023    2023     LTM
Reported
Net profit (after non-controlling interests)     471       565  -2,069  -2,163
Earnings per share, EUR                         0.53      0.63   -2.31   -2.41
Net cash from operating activities               538       583   1,819   1,774
Comparable
Net profit (after non-controlling interests)     430       517   1,184   1,097
Earnings per share, EUR                         0.48      0.58    1.32    1.22

Fortum's President and CEO Markus Rauramo:

“During the first quarter of 2024, the mild winter in Continental Europe
together with healthy LNG supply and steadily increasing renewable power
generation further contributed to the downward trend in the European gas and
power prices. In the Nordics, January was cold and lead to higher spot prices
especially in Finland and the Baltics, but February and March were somewhat
milder than usual. Driven by decreased Continental European power futures and
above normal precipitation levels, Nordic power futures declined during the
quarter.

The lower Nordic spot power price is reflected in our first-quarter results. The
achieved power price was at a good level but significantly lower than a year
ago. The first-quarter achieved price was supported by a strong, double-digit,
optimisation premium above the annual guidance of 6-8 EUR/MWh. The lower
achieved price is reflected in the Generation segment's result which, however,
was supported by higher hydro volumes and commissioning volumes from the Pjelax
wind farm. After a difficult year in 2023, the Consumer Solutions segment had a
strong first quarter with normalised results, mainly driven by higher
electricity sales margins in more stable market conditions.

S&P Global Ratings (S&P) upgraded Fortum's current long-term credit rating to
BBB+ with Stable Outlook, while Fitch Ratings affirmed our long-term rating of
BBB with Stable Outlook. We are extremely satisfied with S&P's upgrade as it
reflects our systematic efforts to strengthen our financial position and our
strategic focus on clean energy. Our financial position is very strong, and this
supports our objective to maintain a credit rating of at least BBB. At the end
of March, our leverage was at a low level of 0.3 times, and we continue to have
sufficient liquidity and credit lines. To finance potential future investments
in clean energy, we launched our Green Finance Framework in January.

In February, we clarified our strategy by specifying our business portfolio and
capital allocation priorities as well as setting new strategic targets with
measurable key performance indicators. Our renewed strategy, launched in March
2023, remains unchanged, and we continue to implement it determinedly.

One of our strategic priorities is to deliver reliable and clean energy.
Electrification of district heating not only provides clean heating but is also
a source of flexibility for the whole energy system. Our Espoo Clean Heat
programme is based on the same priorities, and we started to build more emission
-free and flexible district heating in Espoo. In addition, we decided to close
down our last coal-fired district heat unit in Espoo, Finland in late April.
Hence, our heating and cooling business will phase out coal one year earlier
than expected. Further, Finland's last coal-fired condensing plant, Meri-Pori,
was transferred to the national production reserve aimed for emergency
situations as of 1 April. Fortum's biggest and Finland's third largest wind
farm, the 380-MW Pjelax in Ostrobothnia, has been gradually commissioned and
will start commercial operations through the power purchase agreement (PPA) with
the Finnish company Helen in July.

Our second strategic priority is to drive decarbonisation of industries for
which we are building preparedness for an electrification and growth phase
longer term. Our aim is to actively facilitate such industry projects and offer
clean and stable power to enable industrial customers to meet their
decarbonisation targets. As decarbonisation drives power demand, this provides
us with growth opportunities longer term through investments in new clean energy
production. As one example, in April we announced a new five-year, progressive
-priced PPA contract with the Swedish ferroalloys producer Vargön Alloys.

Within the scope of our third strategic priority to transform and develop, we
continued our efficiency improvement programme with the target to gradually
lower annual fixed costs by EUR 100 million (excluding inflation) by the end of
2025 with a full run-rate from the beginning of 2026. The Consumer Solutions
business and our IT unit concluded their change negotiations, resulting in
redundancies of approximately 70 people. Fortum expects to reduce its recurring
fixed cost base by more than EUR 50 million by the end of 2024.

Geopolitical tensions remained high during the beginning of the year. In
February, Fortum initiated arbitration proceedings against the Russian
Federation and will claim compensation for the unlawful expropriation of its
Russian assets in order to protect its legal position and shareholder rights.
The economic environment in Fortum's geographical areas is still soft with
elevated inflation, but interest rate cuts are expected to start during the
summer. The political strikes in Finland did not have any significant direct
impacts on Fortum's financial result.

As one of the cleanest power generators in Europe and with a unique ability to
deliver clean energy at a large scale, we want to drive the energy transition by
setting ambitious climate targets in line with the Science Based Targets
initiative (SBTi) Net-Zero Standard. As we announced in April, Fortum has gone
through the SBTi due diligence process after having submitted its official
commitment letter last year. We have already started to set near- and long-term
company-wide emissions reduction targets in line with climate science to reduce
greenhouse gas emissions both in our own operations and in the value chain, to
enable the transition to a low-carbon economy.”

Espoo, 29 April 2024

Fortum Corporation
Board of Directors

Webcast/teleconference

A combined live webcast/teleconference for media, investors, and analysts will
be arranged online on 30 April 2024 at 11:00 EEST on Fortum's website
https://fortum.videosync.fi/q1-2024-result.

To ask questions, please join the teleconference by registering using the
following link: https://palvelu.flik.fi/teleconference/?id=50047355. After the
registration you will be provided with phone numbers and a conference ID to
access the conference. To ask a question, please press *5 on your telephone
keypad to enter the queue.

A recording of the webcast, as well as the transcript will be published after
the event.

Further information:

Investor Relations and Financial Communications: Ingela Ulfves, tel. +358 40 515
1531, Rauno Tiihonen, tel. +358 10 453 6150, Siri Markula tel. +358 40 743 2177,
Pirjo Lifländer, tel. +358 40 643 3317, and investors@fortum.com

Media: Fortum News Desk, tel. +358 40 198 2843

Financial calendar in 2024

Fortum's interim reports in 2024:

  · January-June on 15 August 2024 at approx. 9.00 EEST
  · January-September on 29 October 2024 at approx. 9.00 EET

Distribution:

Nasdaq Helsinki
Key media
www.fortum.com

Fortum
Fortum is a Nordic energy company. Our purpose is to power a world where people,
businesses and nature thrive together. We are one of the cleanest energy
producers in Europe and our actions are guided by our ambitious environmental
targets. We generate and deliver clean energy reliably and help industries to
decarbonise their processes and grow. Our core operations in the Nordics
comprise of efficient, CO2-free power generation as well as reliable supply of
electricity and district heat to private and business customers. For our ~5 000
employees, we commit to be a safe, and inspiring workplace. Fortum's share is
listed on Nasdaq Helsinki. fortum.com (https://www.fortum.com)

Attachments:

Fortum_January-March2024_InterimReport.pdf