Fortum's January-June 2018 Half-Year Financial Report: Uniper transaction closed – improved results on positive market conditions

FORTUM CORPORATION HALF-YEAR FINANCIAL REPORT JANUARY-JUNE 2018 19 JULY 2018 AT 9:00 EEST

This release is a summary of Fortum’s January-June 2018 Half-Year Financial 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. 

April-June 2018

  • Comparable EBITDA was EUR 282 (219) million, +29%
  • Comparable operating profit was EUR 153 (109) million, +40%
  • Earnings per share were EUR 0.24 (-0.08), of which EUR 0.11 (-0.04) related to items affecting comparability, including capital gains of EUR 0.09 from the sale of the 10% stake in Hafslund Produksjon. In 2017, the impact from a Swedish income tax case was EUR -0.14
  • Cash flow from operating activities totalled EUR 361 (232) million
  • On 26 June 2018, Fortum closed the Uniper offer and became the company's largest shareholder with 47.35%

January-June 2018

  • Comparable EBITDA was EUR 820 (642) million, +28%
  • Comparable operating profit was EUR 558 (421) million, +33%
  • Earnings per share were EUR 0.68 (0.30), of which EUR 0.18 (0.03) related to items affecting comparability, including capital gains of EUR 0.09 from the sale of the 10% stake in Hafslund Produksjon. In 2017, the impact from a Swedish income tax case was EUR -0.14
  • Cash flow from operating activities totalled EUR 634 (514) million

Summary of outlook

  • Generation segment's Nordic generation hedges: approximately 75% hedged at EUR 29 per MWh for the remainder of 2018 and approximately 60% at EUR 28 per MWh for 2019
  • Capital expenditure, including maintenance but excluding acquisitions, expected to be in the range of EUR 600-700 million in 2018

Key financial ratios

2017 LTM
Return on capital employed, %  7.1 8.8
Comparable net debt/EBITDA   0.8 3.6

Key figures

EUR   million or as indicated II/18 II/17 I-II/18 I-II/17 2017 LTM
Sales 1,087 937 2,672 2,169 4,520 5,023
Comparable   EBITDA 282 219 820 642 1,275 1,453
Comparable   operating profit 153 109 558 421 811 948
Operating   profit 256 66 738 456 1,158 1,440
Share of   profits of associates and
  joint ventures
24 35 70 94 148 124
Profit before   income taxes 241 49 734 461 1,111 1,384
Earnings per   share, EUR 0.24 -0.08 0.68 0.30 0.98 1.35
Net cash from   operating activities 361 232 634 514 993 1,113
Shareholders’   equity per share, EUR 13.34 14.22 14.69
Interest-bearing   net debt (at the end of the period) 5,271 605 988

Fortum's President and CEO Pekka Lundmark:

"In September 2017, we announced our intention to launch an offer to become the largest shareholder in Uniper. Since then we have worked persistently to achieve this target. The final regulatory clearances were granted in mid-June, and on 26 June 2018, we closed our offer, thereby becoming the largest shareholder with a 47.35% stake in Uniper.

As Uniper’s largest shareholder we will be a committed, long-term and active partner to the company – to the benefit of all stakeholders. It is fair to say that the process leading up to this day has not been without challenges. Now is the time to reset our relationship with Uniper, and we have reinitiated discussions with Uniper leadership on how to best achieve this. As an initial concrete measure, we have nominated Markus Rauramo, the CFO of Fortum, to join the Supervisory Board of Uniper.

The second quarter was positive for Fortum also in other respects. Following the strong development in the first quarter, market prices continued to evolve favourably with clearly increasing power and emission prices. This is positive for Fortum, which is also reflected in our improved hedging prices for the rest of 2018 and next year.

The increased prices and successful production optimisation clearly boosted the results of the Generation segment and consequently the Fortum Group. The results of City Solutions were a disappointment, with the warm weather reducing heat volumes. The weaker result in our recycling and waste business also burdened the results.

Since the Uniper investment has tightened our balance sheet, our intention is to prioritise our capital expenditure and focus on cash flow optimisation, as we already announced in our first-quarter interim report. These measures are proceeding well. In the second quarter, we focused on efficiency improvements, divested our 10% minority ownership in Hafslund Produksjon, and restructured parts of our renewables portfolio, all actions that clearly contribute to strengthening our cash flow.

In June we agreed to sell the majority of our 185-MW solar power production capacity in India in order to free up capital for further investments. Only three weeks later we won the right to build 250 MW of new solar power in India. We are continuing our renewables investments also in Russia. In June we won the right to build 110 MW of solar power and, together with our partner Rusnano, 823 MW of wind power. All of this is part of our ‘capital recycling‘ strategy, by which we intend to use partnerships and other forms of cooperation to create a more asset-light structure and thereby enable more investments into building new renewable capacity."

Espoo, 18 July 2018

Fortum Corporation
Board of Directors

News conference/webcast

The joint news conference for media, investors and analysts will be held on 19 July at 11.00 EEST at Fortum Head office in Keilalahdentie 2-4, Espoo.

The conference is available as a live webcast on Fortum's web site at www.fortum.com/investors. To participate in the teleconference, please dial in approximately 5 minutes before the beginning of the event using the numbers below:

FI +358 9 7479 0360
UK +44 330 336 9104
US +1 929 477 0338

Passcode: 842469

The webcast will be recorded and published on Fortum's website at www.fortum.com/investors together with the transcript after the event.

Further information:

Pekka Lundmark, President and CEO, tel. +358 10 452 4112
Markus Rauramo, CFO, tel. +358 10 452 1909

Investor Relations and Financial Communications: Ingela Ulfves, tel. +358 40 515 1531, Måns Holmberg, tel. +358 44 518 1518, Rauno Tiihonen, tel. +358 10 453 6150, Pirjo Lifländer, tel. +358 40 643 3317, and investors@fortum.com 

Media: Pauliina Vuosio, tel. +358 50 453 2383 

Financial calendar in 2018

Fortum will publish its January-September 2018 Interim Report on 24 October 2018, at approximately 9:00 EEST.

Fortum’s Capital Markets Day will be held on 13 November 2018 at Fortum's new headquarters in Espoo, Finland.

Distribution:

Nasdaq Helsinki
Key media
www.fortum.com

More information, including detailed quarterly information, is available on Fortum’s website at www.fortum.com/investors

Fortum

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 and 61% of our electricity generation was CO2 free. Fortum's share is listed on Nasdaq Helsinki. www.fortum.com

About Us

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

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