Fortum Corporation · This presentation does not constitute an invitation to underwrite, subscribe for, ... or otherwise acquire or dispose of any Fortum shares. Past performance

Fortum Corporation Interim report January–June 2014 18 July 2014

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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.

Q2 2014 Results

Key figures (EUR) II/14 II/13 I-II/14 I-II/13 2013 LTM Sales, million 1,016 1,205 2,489 2,858 5,309 4,940

Comparable EBITDA, million 382 429 1,009 1,093 1,975 1,892

Operating profit, million 295 429 2,629 905 1,508 3,232

Comparable operating profit, million 255 289 732 813 1,403 1,322

Profit before taxes, million 284 388 2,626 878 1,398 3,146

Earnings per share 0.28 0.35 2.81 0.80 1.36 3.36

Items affecting comparability 0.05 0.12 2.14 0.08 0.10 2.16

Net cash from operating activities, million 455 282 1,022 749 1,548 1,821

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Summary of the second quarter of 2014

• Good results despite seasonality, low spot prices and rouble

• Strong cash flow from operations

• Norwegian electricity distribution business sale completed

• The target for the Russia Segment in Russian roubles (RUB 18.2 billion) to be reached during 2015 is intact, but the euro result level will be volatile and with current exchanges rates lower than EUR 500 million

• Finnish Government decided not to introduce the power plant tax (so called windfall tax)

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Market conditions in the second quarter 2014 Nordic countries • Power consumption in the Nordic countries declined marginally compared to the same

period in 2013 • Hydro reservoirs at long-term average • Nordic system spot prices EUR 13 per MWh lower compared to 2013, while Finnish and

Swedish area prices approximately EUR 5-7 per MWh lower

European business environment and carbon market • The European Parliament election held in May • New EU energy and environment state aid guideline came into force • Energy security and efficiency in focus in EU triggered by the political crises in Ukraine

Russia • Power consumption in Fortum’s operating areas on same level as in corresponding

period in 2013 • Spot price for power increased by 15% (in RUB) in the First price zone compared to the

same period in 2013

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Nordic water reservoirs

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Source: Nord Pool Spot

Q1 Q2 Q3 Q4

20

40

60

80

100

120

rese

rvoi

r con

tent

(TW

h)

0

2000 2003 2013 2012 reference level 2014

Wholesale price for electricity

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Source: Nord Pool Spot, NASDAQ OMX Commodities Europe

0

10

20

30

40

50

60

70

80

90

100

110EUR/MWh Nord Pool Spot System Price Forwards

15 July 2014

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

0

30

60

90

120

150

USD

/ bb

l

Crude oil price (ICE Brent)

2006 2007 20102008 2009 20122011 2013 2014 20150

7

14

21

28

35

EUR

/ tC

O2

CO2 price (ICE ECX EUA)

2006 2007 20102008 2009 20122011 2013 2014 2015

0

50

100

150

200

250

USD

/ t

Coal price (ICE Rotterdam)

2006 2007 20102008 2009 20122011 2013 2014 20150

20

40

60

80

100

GB

p / t

herm

Gas price (ICE NBP)

2006 2007 20102008 2009 20122011 2013 2014 2015

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Source: ICE

Market prices 15 July 2014; 2014-2015 future quotations

Fuel and CO2 allowance prices

Price development in the Nordic region and Russia

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Includes capacity income

-34% +17%

-10% +2%

Q2: Low spot prices burdened Power and Technology - Russia improved

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Comparable operating profit, EUR million

* The divested distribution operations are included in the segment information until the closing of the transactions

*

January- June: Good results despite seasonality, low spot prices and weak rouble

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Comparable operating profit, EUR million

* The divested distribution operations are included in the segment information until the closing of the transactions

*

Financials

Comparable and reported operating profit

II/2014 II/2013 II/2014 II/2013 I-II/2014 I-II/2013 I-II/2014 I-II/2013

Power and Technology 183 210 151 338 434 513 413 600 Heat, Electricity Sales and Solutions 11 13 67 24 59 70 112 75

Russia 28 20 28 20 102 61 101 61

Distribution 45 60 63 61 164 197 2,030 197

Other -13 -14 -13 -14 -27 -28 -28 -28

Total 255 289 295 429 732 813 2,629 905

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Comparable operating profit

Reported operating profit MEUR

• Non-recurring items (mainly to the sale of the Finnish electricity distribution business), IFRS accounting treatment (IAS 39) of derivatives and nuclear fund adjustments had an impact on the reported operating profit EUR 41 (140) million in the second quarter and 1,897 (93) million in the first half year.

Comparable operating profit

Reported operating profit

Note: The divested distribution operations are included in the segment information until the closing of the transactions.

Power and Technology

MEUR II/2014 II/2013 I-II/2014 I-II/2013 2013 LTM

Sales 487 548 1,072 1,213 2,252 2,111

Comparable operating profit 183 210 434 513 859 780

Net assets 6,113 6,402 6,355

Comparable RONA % 13.8 12.6

Gross investments 37 43 72 70 181 183

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Q2 2014 • Lower achieved power price – average

spot price EUR 13 per MWh lower, area prices EUR 5-7 per MWh lower

• Higher hydro production • Nuclear volumes lower due to timing and

length of annual maintenance outages • 6/10 annual nuclear maintenance

outages completed

H1 2014 • Lower achieved power price – average

spot price EUR 12.5 per MWh lower, area prices EUR 6-10 per MWh lower

• Higher hydro production – normalised hydro inflow and reservoir levels

• Nuclear availability high in all reactors expect Oskarshamn 2

Heat, Electricity Sales and Solutions

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Q2 2014 • Divestments made in Finland in 2013

burdened CHP volumes (despite new capacity)

• Divestment of the Norwegian heat business completed


Sales 269 308 715 839 1,516 1,392


Net assets 2,176 2,287 2,295



H1 2014 • Exceptionally warm weather, and

divestments made in Finland in 2013 burdened both CHP volumes (despite new capacity) and retail sales.

• Fortum Värme contributed associated company result with EUR 48 million.

Russia Q2 2014 • Comparable operating profit improved

due to CSA capacity payments, better electricity and heat spreads and increased efficiency

• Reversal of provisions EUR 4 (10) included

• Overall, weakened rouble affected negatively approximately EUR 3 million


Sales 234 251 567 595 1,119 1,091


Net assets 3,870 3,793 3,846



H1 2014 • Positive effect from CSA capacity

payments, better electricity and heat spreads, improved bad debt collections and increased efficiency

• Overall, weakened rouble affected negatively approximately EUR 17 million

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Distribution

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Q2 2014

• Norwegian electricity networks sale finalised

• Volumes in Sweden in line with last year


Sales 148 227 449 566 1,064 947


Net assets 2,642 3,742 3,745



H1 2014

• Finnish and Norwegian electricity networks sale finalised

• Fortum continues evaluating the possible future divestment opportunity of the Swedish electricity distribution business

Note: The divested distribution operations are included in the segment information until the closing of the transactions

Income statement MEUR II/2014 II/2013 I-II/2014 I-II/2013 2013 LTM

Sales 1,016 1,205 2,489 2,858 5,309 4,940

Other income and expenses 761 916 1,758 2,046 3,906 3,618

Comparable operating profit 255 289 732 813 1,403 1,322

Items affecting comparability 41 140 1,897 93 106 1,910

Operating profit 295 429 2,629 905 1,508 3,232

Share of profit of associates and jv’s 37 34 109 112 178 175

Financial expenses, net -48 -75 -113 -140 -289 -262

Profit before taxes 284 388 2,626 878 1,398 3,146

Income tax expense -37 -74 -124 -160 -186 -150

Net profit for the period 247 314 2,502 718 1,212 2,996

Non-controlling interests 0 0 4 3 8 9

EPS, basic (EUR) 0.28 0.35 2.81 0.80 1.36 3.36

EPS, diluted (EUR) 0.28 0.35 2.81 0.80 1.36 3.36

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Cash flow statement MEUR II/2014 II/2013 I-II/2014 I-II/2013 2013 LTM

Operating profit before depreciations 427 579 2,909 1,196 2,129 3,842

Non-cash flow items and divesting activities -58 -189 -1,921 -163 -262 -2,020

Financial items and fx gains/losses 29 -100 4 -309 -188 125

Taxes -67 -51 -95 -81 -210 -224

Funds from operations (FFO) 330 240 897 641 1,469 1,725

Change in working capital 125 42 125 107 79 97

Total net cash from operating activities 455 282 1,022 749 1,548 1,821

Paid capital expenditures -168 -201 -330 -411 -1,004 -923

Divestments of shares * 316 2 2,817 37 144 2,924

Other investing activities 171 18 219 126 -83 10

Cash flow before financing activities 774 101 3,727 501 604 3,830

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* Including Proceeds from the interest-bearing receivables relating to divestments

Key ratios

MEUR LTM 2013 EBITDA 3,843 2,129 Comparable EBITDA 1,892 1,975 Interest-bearing net debt 5,008 7,793 Comparable net debt/EBITDA 2.6 3.9

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Return on capital employed, ROCE (%) 18.4 9.0 Return on shareholders’ equity, ROE (%) 28.2 12.0

Good liquidity – committed credit lines total EUR 2.2 billion

Debt Maturity Profile

0

250

500

750

1000

1250

1500

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+

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

MEUR

2014 286

2015 1,014

2016 862

2017 544

2018 628

2019 821

2020 76

2021 545

2022 1,033

2023 112

2024+

TOTAL

1,245

7,166

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per 30 Jun, 2014 per 31 Dec, 2013 Average Interest Rate (incl. swaps and forwards) 4.0 % 3.6 % Portion of floating / fixed debt 39 / 61 % 51 / 49 %

• Efficiency programme proceeding according to plan

• Total annual cost savings visible in all divisions • Improved working capital efficiency • Divestments of non-core assets totalling approximately EUR 400 million

Fortum's efficiency programme 2013-2014

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SPEED - Cash flow improved by EUR 1 billion – FLEXIBILITY

CAPEX EUR 250-350 million

DIVESTMENTS EUR 500 million

WORKING CAPITAL Reduction

FIXED COSTS Reduce EUR 150 million compared to 2012

WHY WHAT WHEN 2013-2014

Outlook

Outlook

Nordic markets • Fortum continues to expect that the annual electricity demand growth will average

0.5% in the coming years • Electricity is expected to continue to gain share of total energy consumption

Russia • The target for the Russia Segment in Russian roubles (RUB 18.2 billion) to be reached

during 2015 is intact, but the euro result level will be volatile and with current exchanges rates lower than EUR 500 million

Key drivers and risks • Wholesale price of electricity and volumes

• demand and supply • fuels • hydrological situation • power plant availability • CO2 emissions allowance prices

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Outlook

Annual capex estimate excluding potential acquisitions • 2014 EUR 0.9 to 1.1 billion (incl. Finnish distribution Q1/2014, Norway 1H/2014, excluding

Fortum Värme)

Hedging • Rest of the year 2014 approx. 55% hedge ratio at approx. EUR 45/MWh • 2015 approx. 30% hedge ratio at approx. EUR 41/MWh

Target for efficiency programme is to improve cash flow by EUR 1 billion during 2013-2014

Taxation

• Effective tax rate for the Group 19-21% • In Finland, the power plant tax (so called windfall tax) has been revoked

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For more information www.fortum.com/investors

Fortum Corporation · This presentation does not constitute an invitation to underwrite, subscribe for, ... or otherwise acquire or dispose of any Fortum shares. Past performance

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