CEO's interview

Fortum’s President and CEO Tapio Kuula, in connection with the second quarter of 2012:

”The result was satisfactory, considering the extremely challenging business environment Fortum operates in at the moment. Operating profit declined in the second quarter mainly due to items affecting comparability, which amounted to approximately EUR 260 million. High uncertainty in Europeand in the world economy in general, has kept the economic activity slow in our main markets. 

The Nordic water reservoir surplus levels continued and were above the long-term average throughout the second quarter. In addition, low carbon dioxide (CO2) emission allowance prices and coal prices have created a downward pressure on system and area prices in the Nordic market. Hence, Nord Pool Spot system prices were at very low levels, and in July the price level has continued to decline. The system price has been as low as at approximately EUR 7 – a level rarely experienced in the 21st century. 

Electricity consumption in the Nordic countries increased slightly during the quarter, however, the increase was attributable to colder weather and partly offset by decreased industrial demand. It reflects well the current demanding economic situation in Europe. According to Finnish Energy Industries (Energiateollisuus ry), the domestic industrial electricity consumption grew only in the chemicals industry. The technology sector development was flat, while consumption in the forest industry has been decreasing since the beginning of the year. Also in Sweden, the industrial demand decreased slightly during January–June 2012.

In Russia, electricity prices also decreased during the second quarter and consumption was somewhat down in the areas Fortum operates in. The very extensive and demanding construction project of the new units in Nyagan will be delayed slightly further. Actions are taken to avoid any further delays. This does not change the overall schedule or financial targets of the investment programme, which is to be finalised at the end of 2014.

A satisfactory result, however, is not good enough. Great effort is put in managing the current situation. The coming months still look challenging, both due to the external market and timing of internal operational actions. Therefore, as in 2011, we expect the income stream to be year-end weighted. The industry-typical seasonality and the external environment may cause short-term volatility; nevertheless, Fortum has a strong financial situation and we are continuing to work according to our long-term strategy.”