Fortum discusses its capital expenditure and increases TGC-10 efficiency improvement target in Capital Markets Day
Stock Exchange Release
30.10.2008 at 8.30 EET
Fortum discusses its capital expenditure and increases TGC-10 efficiency
improvement target in Capital Markets Day
Fortum Capital Markets Day for analysts, portfolio managers and bankers is held
today on 30 October in Espoo, Finland. During the event, Fortum management will
discuss the company's strategy and financial position.
Fortum confirms its strategy focusing on the Nordic countries, Russia and the
Baltic rim area, and stresses the strength of its balance sheet and its good
liquidity. The company had liquid funds amounting to EUR 1.7 billion and undrawn
committed credit facilities of EUR 1.9 billion on 28 October. Fortum's maturing
debt for the reminder of 2008 is EUR 0.3 billion and for 2009 EUR 0.5 billion.
There is significant flexibility in Fortum's investment programme - the level of
annual investments can be adjusted depending on the overall economic conditions
and availability of funding at a reasonable cost. The annual level of Fortum's
capital expenditure including investments in Russia is estimated to be within a
range of EUR 1.0-1.5 billion during 2009-2013. In 2009, capital expenditure is
expected to be close to the higher end of the range. During 2009, two new
combined heat and power plants (Suomenoja, Finland and Tartu, Estonia) will be
commissioned bringing volume and earnings growth.
Fortum's Russian acquisition, Territorial Generating Company 10 (TGC-10) has
committed and contractually obligated to an extensive investment programme which
will increase its electricity generation capacity by approximately 70% to 5,300
MW by 2013. The value and timing of the investment programme in new capacity,
initially estimated by TGC-10 at EUR 2.2 billion, has been reviewed as the
contract negotiations and programme execution have progressed. The Russian
capacity investment programme is now estimated to amount to approximately EUR
2.5 billion. Out of this, approximately EUR 400 million will have been spent
Fortum has put considerable efforts into integrating TGC-10 to Fortum. Fortum
management model, organisational structure and the way of working were in place
at the beginning of September. The integration has proceeded well and several
targets for efficiency improvements have been identified. Consequently, the
previously announced annual efficiency improvements of at least EUR 30 million
are expected to increase to over EUR 100 million and to be reached in 2011.
In April 2008, Fortum made a mandatory public tender offer (MTO) for the entire
share capital of TGC-10 to TGC-10's minorities. The MTO has now been completed.
Fortum's ownership in TGC-10 reached approximately 93.4% including shares owned
by TGC-10's fully-owned subsidiary. Fortum has paid approximately EUR 443
million for share purchases under the MTO. The total consideration for Fortum's
current ownership in TGC-10 amounts approximately to EUR 2.5 billion including
the EUR 1.3 billion new share issue Fortum subscribed to in February.
TGC-10 will continue to be a key focus area for Fortum also in the coming years.
SVP Corporate Communications
Juha Laaksonen, CFO, Fortum Corporation, +358 50 4524519
Mika Paloranta, Vice President, IR, Fortum Corporation, +358 50 4524138
NASDAQ OMX Helsinki
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 9,000 professionals in the Nordic and Baltic countries, Russia, Poland and India. In 2017, our sales were EUR 4.5 billion. Fortum's share is listed on Nasdaq Helsinki. www.fortum.com