Power

The Power Division consists of Fortum’s power generation, power trading and power capacity development as well as expert services for power producers.

EUR million II/12 II/11 I-II/12 I-II/11 2011 LTM
Sales 535 574 1,190 1,267 2,481 2,404
- power sales 508 546 1,139 1,203 2,353 2,289
of which Nordic power sales* 473 476 1,042 980 2,041 2,103
- other sales 27 28 51 64 128 115
Operating profit 214 271 581 760 1,476 1,297
Comparable operating profit 222 257 563 582 1,201 1,182
Comparable EBITDA 250 284 619 636 1,310 1,293
Net assets (at period-end)     6,258 5,998 6,247  
Return on net assets, %         24.6 21.3
Comparable return on net assets, %         19.9 19.5
Capital expenditure and gross investments in shares 36 36 60 69 148 139
Number of employees     2,019 1,995 1,847  
             
Power generation by source, TWh II/12 II/11 I-II/12 I-II/11 2011 LTM
Hydropower, Nordic 5.7 4.8 11.8 8.9 21.0 23.9
Nuclear power, Nordic 5.4 5.7 11.9 12.5 24.9 24.3
Thermal power, Nordic 0.0 0.3 0.2 2.0 2.2 0.4
Total in the Nordic countries 11.1 10.8 23.9 23.4 48.1 48.6
Thermal power in other countries 0.3 0.3 0.6 0.6 1.2 1.2
Total 11.4 11.1 24.5 24.0 49.3 49.8
             
Nordic sales volumes, TWh II/12 II/11 I-II/12 I-II/11 2011 LTM
Nordic sales volume 11.5 11.2 24.7 24.4 50.0 50.3
of which Nordic power sales volume* 10.8 10.1 22.8 20.6 44.3 46.5
* The Nordic power sales income and volume does not include thermal generation, market price-related purchases or minorities (i.e. Meri-Pori, Inkoo and imports from Russia).
             
Sales price, EUR/MWh II/12 II/11 I-II/12 I-II/11 2011 LTM
Power's Nordic power price** 43.9 47.4 45.7 47.6 46.1 45.2
** Power's Nordic power price does not include sales income from thermal generation, market price-related purchases or minorities (i.e. Meri-Pori, Inkoo and imports from Russia).

April - June

In the second quarter of 2012, the Power Division’s comparable operating profit in the second quarter was EUR 222 (257) million, i.e. EUR 35 million lower than in the corresponding period in 2011. The system and all area prices were clearly lower during the second quarter of 2012 compared to the same period in 2011. The average system spot price of electricity in Nord Pool was EUR 28.4 (52.3) per MWh. The average area prices in Finland were EUR 32.4 (52.0) per MWh and in Sweden (SE3) EUR 29.6 (52.2) per MWh. The lower prices impacted on the achieved power price which was EUR 3.5 per MWh lower than in the corresponding period in 2011. In addition, the Power Division’s result was burdened by the weak performance at the Oskarshamn nuclear power plant. Production volumes decreased considerably due to the shutdown and prolonged repairs of unit 1 and a strike related to certain outage works at unit 3. These setbacks were partly offset by the significantly increased hydro generation, which was attributable to higher water reservoir levels and inflow in the second quarter compared to the corresponding period in 2011. During the second quarter of 2012, Fortum had no thermal production in the Nordic countries.

The operating profit, EUR 214 (271) million, was affected by non-recurring items, IFRS accounting treatment (IAS 39) of derivatives mainly used for hedging Fortum's power production amounting to EUR -1 (20) million and nuclear fund adjustments (Note 4).

In the second quarter of 2012, the division's total power generation in the Nordic countries was 11.1 (10.8) TWh, which corresponds to an approximately 3% increase compared to the same period in 2011. Power’s achieved Nordic power price amounted to EUR 43.9 per MWh, which was EUR 3.5 per MWh lower than in the second quarter of 2011.

The negative effect of lower nuclear and thermal volumes and the lower achieved power price inspite of higher hydro volumes was approximately EUR 10 million during the second quarter of 2012 compared to the corresponding period in 2011. Operating costs increased by approximately EUR 25 million, mainly due to higher nuclear fuel costs, higher nuclear waste fees in Sweden, higher co-owned nuclear procurement costs mainly caused by longer outages in Oskarshamn, increased depreciation and interest costs as well as inflationary effects.

January - June

In January–June 2012, the Power Division’s comparable operating profit was EUR 563 (582) million, i.e. EUR 19 million lower than in the corresponding period in 2011. The achieved power price was EUR 1.9 per MWh lower than in the corresponding period in 2011 as the system and all area prices were clearly lower in January–June 2012 than during the same period a year ago. The average system spot price was EUR 33.3 (59.2) per MWh and the average area price in Finland EUR 37.5 (58.4) per MWh and in Sweden (SE3) EUR 34.3 (59.0) per MWh. High water reservoir levels as well as high inflow increased hydro generation significantly. Nuclear availability was at a high level in all reactors except Oskarshamn 1 and 3. The total nuclear volume was thus lower than during the corresponding period in 2011. Thermal production was clearly lower than the year before, due to low power prices.

The operating profit was EUR 581 (760) million. A gain of EUR 47 million, related to the divestments of small hydro plants inFinland, was booked into the first quarter of 2012. The operating profit was also affected by the IFRS accounting treatment (IAS 39) of derivatives used mainly for hedging Fortum's power production amounting to EUR -13 (188) million and nuclear fund adjustments (Note 4).

The combined effect of increased hydro generation, lower nuclear and thermal volumes as well as a lower achieved power price had a positive impact of approximately EUR 20 million during January–June 2012 compared to the corresponding period in 2011. Operating costs increased by approximately EUR 40 million, mainly due to higher nuclear fuel prices, higher nuclear waste fees in Sweden, higher co-owned nuclear procurement costs, mainly caused by longer outages in Oskarshamn, increased depreciation and interest costs, as well as inflationary effects and other costs. The increase in waste fees is estimated to be approximately EUR 15 million for the full year 2012. Also the increase in nuclear fuel prices is estimated to be approximately EUR 15 million for the full year 2012.

In January–June 2012, the division's total power generation in the Nordic countries was 23.9 (23.4) TWh, which corresponds to an approximately 2% increase compared to the same period in 2011. Power’s achieved Nordic power price amounted to EUR 45.7 per MWh, which was EUR 1.9 per MWh lower than in the same period of 2011. The system price and both Finnish and Swedish area prices were clearly lower during January–June 2012 compared to the same period in 2011.

Fortum has two fully-owned reactors in Loviisa and the company is also a co-owner in eight reactors at the Olkiluoto, Oskarshamn and Forsmark nuclear power plants. Nuclear availability was at a high level in all of the reactors except Oskarshamn 1 and 3. Oskarshamn 1 was shut down at the end of October 2011 for an extensive turbine overhaul, and according to current data, will stay shut down until 12 September 2012 for further maintenance of the systems. Oskarshamn 3 was shut down for a total of approximately six weeks due to technical problems and a strike related to certain outage works. Oskarshamn 3 was operating at an approximately 100-MW reduced output until the planned annual outage that started 12 April. The outage ended on 4 June, after which the unit has reached the new increased power level of 1,400 MW; however, all power increase-related tests have not yet been completed.

European-wide safety evaluations have been carried out after the Fukushima incident in 2011. As part of the evaluations, so-called peer reviews were carried out in several European nuclear power plants, including the Loviisa nuclear power plant, in March 2012. The European Commission is expected to submit a consolidated report of the national reports to the European Council in October 2012.

Fortum’s preparations for the French hydro concession bidding have progressed as planned.