Fortum Oyj — Earnings Release 2021

Nov 12, 2021

Fortum’s January–September 2021 Interim Report: Strong performance in an exceptional commodity market

Fortum’s January–September 2021 Interim Report: Strong performance in an exceptional commodity market

FORTUM CORPORATION JANUARY–SEPTEMBER 2021 INTERIM REPORT 12 NOVEMBER 2021 AT
9:00 EET

This release is a summary of Fortum’s 2021 January–September 2021 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.

July–September 2021

· Comparable EBITDA was EUR 574 (132) million
· Comparable operating profit was EUR 260 (-179) million
· Operating profit was EUR -3,105 (-1) million, mainly impacted by changes in
fair values of non-hedge-accounted derivatives partly offset by capital gains
from divestments
· Comparable share of profits of associates and joint ventures was EUR 9 (19)
million
· Comparable earnings per share were EUR 0.19 (-0.10)
· Earnings per share were EUR -0.82 (0.19)
· Cash flow from operating activities totalled EUR 2,274 (790) million

January–September 2021

· Comparable EBITDA was EUR 2,401 (1,187) million
· Comparable operating profit was EUR 1,466 (416) million
· Operating profit was EUR -2,600 (1,141) million, mainly impacted by changes
in fair values of non-hedge-accounted derivatives partly offset by capital gains
from divestments
· Comparable share of profits of associates and joint ventures was EUR 127
(593) million. The comparison period includes Uniper for the fourth quarter of
2019 and first quarter of 2020
· Comparable earnings per share were EUR 1.22 (0.99)
· Earnings per share were EUR -0.12 (1.62)
· Cash flow from operating activities totalled EUR 3,394 (1,792) million
· Financial net debt-to-comparable EBITDA ratio for the last 12 months at 0.6
times, clearly below the target level of <2 times
· On 2 July, Fortum concluded the sale of its district heating business in the
Baltics. Total consideration of approximately EUR 710 million
· On 20 September, Fortum concluded the sale of its 50% ownership in Stockholm
Exergi for a total consideration of EUR 2.9 billion
· S&P and Fitch upgraded rating outlook to “stable”, BBB rating reaffirmed

Summary of outlook

· The Generation segment’s Nordic generation hedges: approximately 75% at EUR
34 per MWh for the remainder of 2021, approximately 65% at EUR 32 per MWh for
2022, and approximately 40% at EUR 31 per MWh for 2023
· The Uniper segment’s Nordic generation hedges: approximately 85% at EUR 25
per MWh for the remainder of 2021, approximately 85% at EUR 22 per MWh for 2022,
and approximately 55% at EUR 21 per MWh for 2023
· Capital expenditure, including maintenance but excluding acquisitions, is
expected to be approximately EUR 1,400 million in 2021

Key figures*

EUR million III/202 III/202 I-III/2 I-III/2 2020 LTM
1 0 021 020
Reported
Sales 23,700 14,049 62,322 27,736 49,015 83,601
Operating profit -3,105 -1 -2,600 1,141 1,599 -2,142
Share of profit/loss of 11 25 152 543 656 265
associates and joint
ventures
Net profit -1,768 103 -1,117 1,444 1,855 -706
Net profit (after non -721 174 -103 1,443 1,823 276
-controlling interests)
Earnings per share, EUR -0.82 0.19 -0.12 1.62 2.05 0.31
Net cash from operating 2,274 790 3,394 1,792 2,555 4,157
activities

EUR million III/202 III/202 I-III/2 I-III/2 2020 LTM
1 0 021 020
Comparable
EBITDA 574 132 2,401 1,187 2,434 3,648
Operating profit 260 -179 1,466 416 1,344 2,394
Share of profit/loss of 9 19 127 593 656 190
associates and joint
ventures
Net profit (after non 170 -93 1,086 874 1,483 1,695
-controlling interests)
Earnings per share, EUR 0.19 -0.10 1.22 0.99 1.67 1.90

EUR million 30 31 Dec LTM
Sept 2020
2021
Financial net debt (at 2,126 7,023
period-end)
Adjusted net debt (at 4,419 9,784
period-end)
Financial net 2.9 0.6
debt/comparable EBITDA

* Uniper has been consolidated as a subsidiary from 31 March 2020. Previously,
Uniper's contribution to the income statement was recognised in the Share of
profit/loss of associates and joint ventures

Fortum’s President and CEO Markus Rauramo:

“Our operating environment in the third quarter has been marked by exceptional
market dynamics and extreme commodity price movements. At the end of September,
the forward price for 2022 delivery of natural gas in Europe (TTF hub) was 270%
higher compared to a year ago. The factors behind the development are manyfold –
ranging from the strong economic recovery which has boosted energy consumption
globally, to the cold weather in the first half of the year in Europe, Western
Russia and Asia, which left gas storages depleted. At the same time Europe’s
domestic gas production is dwindling, LNG cargos are finding more lucrative
destinations on other continents and one-off events have to an extent limited
also pipeline imports. The increased gas prices reflect a tight supply-demand
balance for the winter, but forward prices indicate gradually normalising
conditions thereafter.

The Continental and UK power prices have mirrored the high commodity prices,
mainly the gas price. At the same time, spot power prices have also increased
considerably in the Nordics following high prices in Continental Europe, very
low hydro reservoir levels and below normal wind power production.

Overall we can be satisfied by the resilience of our Group in the third quarter.
Our Uniper segment’s gas midstream business recorded a significant earnings
improvement that prompted Uniper to update its guidance for full-year 2021.
Considering the exceptional liquidity and funding requirements due to the
turbulent market and high prices, Uniper fared well as part of our large and
financially solid Group.

The main drivers of the clear increase in the comparable operating profit of the
Generation segment were the higher power prices and higher volumes although the
effect was somewhat offset by the fairly high hedge levels. The Russia segment’s
earnings grew due to the economy recovery and strong commodity markets. In City
Solutions, almost all business areas improved, while Consumer Solutions’
earnings decreased following as a result of intensified competition in the
Nordic market.

We have made good progress in our strategy execution and have delivered on our
deleveraging. During the reporting period, we completed the divestment of our
Baltic district heating business for a total consideration of approximately EUR
710 million, followed by the closing of the sale of our 50% ownership in
Stockholm Exergi Holding AB for approximately EUR 2.9 billion. These brought our
financial net debt-to-comparable EBITDA to 0.6 times, significantly below our
set target level of <2 times.

Our position as the largest renewable energy power producer in Russia
strengthened further as the Fortum-Rusnano wind investment fund was awarded
remuneration for new wind power generation in the recent wind CSA (Capacity
Supply Agreement) auction, further expanding our wind and solar power portfolio
in Russia further to 3.4 GW.

We have also continued the decarbonisation of our portfolio with the handover of
Fortum Russia’s Argayash coal-fired combined heat and power plant (CHP) and
Uniper’s Schkopau power plant to their new owners. With Schkopau, the Group’s
lignite chapter in Germany came to an end.

In recent weeks, all eyes have been on Glasgow. The parties of the UNFCCC have
been convening for their 26th conference to discuss the global mitigation
efforts on climate change and the increasing expectations on climate ambition,
financing, and finalising the rules of the Paris Agreement. While the EU is
committed to reaching climate neutrality by 2050 in line with the Paris
ambition, the high energy prices in Europe have understandably sparked a lot of
public discussion. This debate should not result in interventions that slow down
decarbonisation or complicate the negotiations on the execution of the EU’s Fit
for 55 package. For the industry making investments to reach the climate
targets, it is crucial to get clarity of the regulatory framework going forward.

Climate neutrality requires a fast and controlled phase-out of CO\2\-intensive
energy sources and a rapid increase of CO\2\-free power generation to
decarbonise also other sectors. In order to achieve this in Europe, the existing
carbon-free generation should remain online and the permitting processes for new
renewable investments should become faster. The price surge and market
volatility experienced this fall have also highlighted how important natural gas
is for the energy transition and how crucial it is to maintain security of
supply and affordability of energy during the transition. Alongside renewable
energy sources, the role of gas and nuclear power in the energy transition is
central in our Group strategy.

From this perspective, we consider it crucial that both nuclear and gas be
included in the scope of the EU sustainable finance taxonomy. All CO\2\-free
technologies should be treated equally, in line with the scientific analysis of
the Commission research centre (JRC), while natural gas should be given a
transitionary role. Nuclear power is a clean, safe, and competitive source of
energy in climate change mitigation. In Finland, it contributes today to one
third of the Finnish generation mix and will presumably grow further. We are
currently assessing the lifetime extension of our Loviisa Nuclear Power plant
and see nuclear being a crucial solution for decarbonisation and an enabler for
a carbon-neutral world.Espoo, 11 November 2021.”

Fortum Corporation
Board of Directors

Webcast/teleconference

A combined live webcast/teleconference for media, investors, and analysts will
be arranged online at www.fortum.com/investors on 12 November 2021 at 11:00 EET.

To participate in the teleconference and Q&A, dial in using the numbers below:

FI: +358 9 817 10310
UK: +44 333 300 0804
US: +1 631 913 1422

PIN: 92145400#

Further information:

Investor Relations and Financial Communications: Ingela Ulfves, tel. +358 40 515
1531, Rauno Tiihonen, tel. +358 10 453 6150, Carlo Beck, tel. +49 172 751 2480,
Nora Hallberg, tel. +358 40 720 1775, Pirjo Lifländer, tel. +358 40 643 3317,
and investors@fortum.com

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

Financial calendar in 2022

Fortum Corporation’s Financial Statements Bulletin for the year 2021 will be
published on 3 March 2022 at approximately 9.00 EET.

Fortum will publish three interim reports in 2022:

· January–March on 12 May 2022 at approximately 9.00 EEST
· January–June on 12 August 2022 at approximately 9.00 EEST
· January–September 10 November 2022 at approximately 9.00 EET

Fortum’s Financial Statements and Operating and Financial Review for 2021 will
be published during week 10 at the latest.

Uniper will publish its 2021 Annual Report on 23 February 2022.

Uniper will publish its interim reports in 2022:

· Financial Results January–March 2022 on 3 May 2022
· Financial Results January–June 2022 on 2 August 2022
· Financial Results January–September 2022 on 3 November 2022

Distribution:

Nasdaq Helsinki
Key media
www.fortum.com

More information, including detailed quarterly information, is available at
www.fortum.com/investors

Fortum

Fortum is a European energy company with activities in more than 40 countries.
We provide our customers with electricity, gas, heating and cooling as well as
smart solutions to improve resource efficiency. Together with our subsidiary
Uniper, we are the third largest producer of CO2-free electricity in Europe.
Close to 20,000 professionals and a combined balance sheet of approximately EUR
60 billion, we have the scale, competence and resources to grow and to drive the
energy transition forward. Fortum's share is listed on Nasdaq Helsinki and
Uniper's share on the Frankfurt Stock Exchange. www.fortum.com

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