Quarterly summary of events

Announcements during Q1 2023

New strategy, business structure and Leadership Team

At the beginning of March 2023, the Fortum’s Board of Directors resolved on Fortum’s new strategy. Fortum’s strategic priorities are to deliver reliable clean energy and drive decarbonisation in industries in the Nordics.

The strategy includes new financial and sustainability targets:

• Updated financial guidance to ensure credit rating of at least BBB and optimal financial flexibility for future growth: long-term financial net debt-to-comparable EBITDA of 2.0–2.5 times.
• Disciplined growth in clean energy with capital expenditure of up to EUR 1.5 billion during 2023–2025. Investment hurdles of project WACC + 150–400 basis points will be applied and evaluated against the company’s climate and biodiversity targets.
• Renewed dividend policy with payout ratio of 60–90% of comparable EPS. Fortum’s Board of Directors proposes a dividend of EUR 0.91 per share for the year 2022 corresponding to a pay-out of 75% based on comparable EPS for continuing operations of EUR 1.21 (excluding Russian operations).
• Tightened sustainability and decarbonisation ambitions with updated targets to reach carbon neutrality already by 2030, exit coal by the end of 2027, target for specific emissions and commitment to SBTi (1.5°C) and biodiversity targets. Fortum is already taking steps to reach the new environmental targets and examples of these include the Loviisa nuclear plant lifetime extension, increasing the use on hydro power and the ongoing decarbonisation projects in district heating.

As part of the new strategy, Fortum is also launching a new business structure, operating model and Fortum Leadership Team (FLT). The new business structure mirrors the key value drivers in Fortum’s clean generation portfolio, strong sales and trading capabilities and customer orientation.

From 31 March, 2023, the Fortum Leadership Team will consist of the following members:

• Markus Rauramo, President and CEO
• Mikael Lemström, Executive Vice President, Hydro Generation
• Petra Lundström, Executive Vice President, Nuclear Generation
• Peter Strannegård, Executive Vice President, Renewables and Decarbonisation,
• Simon-Erik Ollus, Executive Vice President, Corporate Customers and Markets
• Mikael Rönnblad, Executive Vice President, Consumer Solutions
• Tiina Tuomela, CFO
• Nebahat Albayrak, Executive Vice President, Sustainability and Corporate Relations
• Eveliina Dahl, Executive Vice President, People and Procurement
• Nora Steiner-Forsberg, Executive Vice President, Legal, General Counsel
• Bernhard Günther, Chief Transformation Officer (CTO), Transformation and IT

Following the new strategy and business structure, Fortum is also revising its financial segment reporting. As of the beginning of 2023 Fortum will report its financial performance in the following reporting segments:

• TheGeneration segmentwill include the Hydro Generation, Nuclear Generation, Corporate Customers and Markets and Renewables and Decarbonisation business units.
• TheConsumer Solutions segmentincludes the Consumer Solutions business unit.
• TheOther Operations segmentincludes the Circular Solutions business unit, Innovation and Venturing activities, enabling functions and corporate management.

Fortum will continue to consolidate and report its Russian operations as a separate segment for the time being; however, Fortum will continue to assess the basis for consolidation in the coming quarters. Fortum is committed to exiting the Russian market and a divestment is being pursued.

Read the release:Fortum renews strategy to drive clean transition; new financial targets and dividend policy and more ambitious environmental targets

Read the release:Fortum updates business and reporting structure, and appoints new members to the Leadership Team

Changes in credit rating

3月9日,标普全球评级(S&P)肯定了堡垒um’s current long-term credit rating at BBB, and revised the outlook from negative to stable. According to S&P the stable outlook reflects the rating agency’s assumption that Fortum's cash flow from power generation will remain significant, but volatile in 2023 and 2024, with electricity prices above historical levels. The rating agency assesses that Fortum has a strong position in the Nordics with an already very low emission profile that supports the business risk profile. It believes that the price risk over time will be reduced by driving decarbonisation of industrial customers and by signing various long-term power supply agreements. In addition, S&P assesses that Fortum’s financial risk position is strong with a headroom that provides good financial flexibility due to very low leverage and good liquidity.

Read the release:kaiyun开云体育

On 21 March, Fitch Ratings (Fitch) affirmed Fortum’s current long-term credit rating at BBB and has revised the outlook from negative to stable. According to Fitch, the change in outlook mainly reflects the positive impact of the Uniper exit for Fortum's credit profile and the company’s commitment to maintain an adequate capital structure with high scrutiny in capex allocation prioritising profitability over growth. Fitch assesses that the company is well positioned to benefit from the strong fundamentals for clean power generation.

Read the release:Fitch Ratings affirms Fortum’s long-term rating of BBB, revises outlook to stable

Dividend distribution proposal

The distributable funds of Fortum Corporation as at 31 December 2022 amounted to EUR 6,291,275,608, including the profit for the financial period 2022 of EUR 1,542,734,239. The Company’s liquidity is good, and the dividend proposed by the Board of Directors will not compromise the Company’s liquidity.

The Board of Directors proposes that a dividend of EUR 0.91 per share be paid for the financial year 2022. The dividend will be paid in two instalments (first instalment EUR 0.46/share and second EUR 0.45/share) and the possible dividend related dates are:

• The ex-dividend date of the first dividend instalment: 14 April 2023
• The record date of the first dividend instalment: 17 April 2023
• 的payment date of the first dividend instalment: 24 April 2023

• The ex-dividend date of the second dividend instalment: 29 September 2023
• The record date of the second dividend instalment: 2 October 2023
• 的payment date of the second dividend instalment: 10 October 2023

Based on the number of shares registered as at 1 March 2023, the total amount of dividend would be EUR 816, 510,663. The Board of Directors proposes that the remaining part of the distributable funds be retained in the shareholders’ equity.

Read the Notice to the AGM 2023 of Fortum Corporation

Other major events in Q1

On 23 March,Fortum and Outokumpu signed a Memorandum of Understanding to explore the decarbonisation of Outokumpu’s steel manufacturing operations with emerging nuclear technologies, such as Small Modular Reactors (SMR).In line with its strategy, Fortum wants to drive decarbonisation and growth for Nordic industries by providing clean energy and CO2-free solutions to its customers. The now-signed agreement initiates a long-term process with the aim to assess potential construction of SMRs in Finland. One possible option for the location would be Tornio region in Finland, where Outokumpu’s largest mill is situated. In the first phase, the goal is to identify potential business models and technical solutions for further development. Any potential investment decisions will be made at a later stage.

Read the release:Fortum and Outokumpu partner to accelerate industrial decarbonisation in stainless steel production

On 21 March, Fortum and Rolls-Royce SMR signed a memorandum of understanding to jointly explore the opportunities for the deployment of small modular reactors (SMR) in Finland and in Sweden. Fortum’s strategic priorities are to deliver reliable clean energy and drive decarbonisation in industries in the Nordics. This agreement is part of Fortum’s feasibility study exploring the prerequisites for new nuclear in Finland and Sweden in cooperation with customers and partners.

Read the release:Fortum and Rolls-Royce SMR to explore joint opportunities for SMRs in Finland and Sweden

On 16 February, the Finnish Government granted a new operating license for both units at Fortum’s Loviisa nuclear power plant until the end of 2050. Over the course of the new licence period, the plant is expected to generate up to 170 terawatt hours of CO2-free electricity. Investments related to the continuation of operations and lifetime extension will amount to an estimated EUR 1 billion until 2050. Over the past five years, Fortum has already invested approximately EUR 300 million in refurbishing the Loviisa power plant. The Loviisa power plant is the first nuclear power plant in Finland. The power plant has two units: unit 1 started operating in February 1977, and unit 2 in November 1980.

Read the release:The Finnish Government has granted a new operating licence for Fortum’s Loviisa nuclear power plant

On 7 February, Fortum announced that it had recorded additional impairments of approximately EUR 990 million related to the Russian segment. In its first-quarter 2022 results, following Russia’s attack and the war in Ukraine and the consequential geopolitical tensions, uncertainties and risks, Fortum recorded impairments of approximately EUR 0.7 billion related to the Russia segment, i.e. fixed assets and goodwill for as well as Fortum’s ownership in TGC-1 and renewables joint ventures. The impairments include changes in Russian rouble rate.

Read the release: Inside information:Fortum to record additional pre-tax impairments of approximately EUR 990 million related to its Russia segment

On 27 January 2023, the Shareholders' Nomination Board of Fortum submitted its proposals to Fortum's Board of Directors for the 2023 Annual General Meeting concerning the number of the Board members, the members to be nominated to the Board of Directors, and the election of the Chair and Deputy Chair, as well as the remuneration to be paid to the Board members.

Read the release:Proposals by Shareholders' Nomination Board of Fortum to the 2023 Annual General Meeting

Geopolitical situation

Russia’s attack war in Ukraine and its decision to use energy as a weapon fundamentally changed the geopolitical situation and operating environment for energy companies in Europe. Throughout the crisis Fortum has focused on ensuring a secure energy supply to customers and managing the adverse effects of the crisis on the company’s stakeholders. The company complies with all applicable laws and regulations, including sanctions, and prepares for various scenarios.

As announced in early March,Fortum has stopped all new investment projects in Russiaand is not providing any new financing to its Russian subsidiaries. On 12 May 2022, in connection to the Q1 2022 interim report,we announced that we are preparing a controlled exit from the Russian market, with potential divestments of its Russian operations as the preferred path. We have already made decisions to replace Russian fuels in our other operating countries.

Fortum俄罗斯业务功能在一个“stand-alone” basis with e.g. separated IT systems. Governance has been segregated to support the planned exit phase, simultaneously ensuring compliance with applicable laws and regulations, including sanctions. Since spring 2022, there are no parent company representatives on the boards of the Russian subsidiaries and the head of Fortum’s Russia division has stepped down from the Fortum Executive Management team.

Read more about Fortum's response to the war in Ukraine

Web page where all information on Fortum’s Russian business is gathered

Financial calendar for 2023

Silent period prior to January–March 2023 Interim Report	11 April–11 May 2023
January–March 2023 Interim Report	11 May 2023 approx. 9:00 EEST
Silent period prior to January–June 2023 Half-year Financial Report 5 July-4 August 2023	5 July–4 August 2023
January–June Half-year Financial Report	4 August 2023 approx. 9:00 EEST
Silent period prior to January–September 2023 Interim Report	3 October–2 November 2023
January–September 2023 Interim Report	2 November 2023 approx. 9:00 EET