CEO's interview

Three questions to President and CEO Tapio Kuula

Fortum’s President and CEO Tapio Kuula:

“Fortum performed well in the first quarter of 2012, despite the continuously demanding business environment. Nordic spot prices were clearly lower than last year. The Nordic water reservoir levels continued to increase and were above the long-term average throughout the first quarter. The strong hydro situation combined with warmer weather and pressed carbon dioxide (CO2) emission allowance prices, among other things, pushed Nordic electricity prices to below last year’s prices and below the continental prices. Electricity demand decreased in the Nordic countries, but increased slightly in Russia compared to the same period in 2011. Characteristic for Fortum’s business is its seasonality and we expect 2012 to be no different. The seasonal differences are driven by hydro levels, power prices, and the normal seasonality of the heat businesses.

In the first quarter 2012 the company’s comparable operating profit was on last year’s level, and both the balance sheet as well as liquidity remained strong.

The Power Division’s first-quarter comparable operating profit was somewhat higher than in the corresponding period in 2011. The system and all area prices were clearly lower, but a higher hedge price kept the achieved power price close to last year’s level. In addition, higher reservoir levels in the beginning of the year, compared to the corresponding period in 2011, increased hydro generation significantly. The Heat Division’s comparable operating profit decreased somewhat mainly due to lower volumes related to divestments in Sweden, Finland and Estonia. The comparable operating profit development in Russia was good, although electricity prices were clearly lower than a year ago. The Distribution business area's comparable operating profit decreased slightly. The decrease was mainly due to the warm weather, especially in March. Electricity Sales' comparable operating profit in the first quarter of 2012 was at last year’s level.

A strong business foundation is essential in a changing business environment. Fortum is committed to continuously improving its operational performance.”