CEO's interview

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

”The business environment is extremely demanding and the hydrological situation is putting additional pressure on Nordic prices, which are clearly lower than a year ago. At the same time especially the prolonged outages in Oskarshamn Sweden, has burdened the result significantly. Group comparable operating profit totalled EUR 220 million in the third quarter and was weak as we expected, but still unacceptable.

Fortum has therefore launched an efficiency programme in order to maintain and strengthen its strategic flexibility and competitiveness and to enable the company to continue to reach its financial targets. Targeted actions will increase the efficiency of our core processes and lead to cost reductions.

The economic situation in Europe and globally – and the uncertainty regarding its duration – has affected Fortum and its business operations. External pressures and cost increases affecting the company are making it necessary for us to further develop the efficiency of our operations. According to the European utilities (Eurelectric Gallup poll), political and market risks are currently the biggest risk factors in the power sector. In addition, discussion and decision making around EU emissions trading and CO2 emission allowances have created uncertainty concerning the future carbon market. Also in the Nordic countries, the political climate has become less supportive towards CO2-free generation not dependent on subsidies, i.e. hydro and nuclear generation. In economically uncertain times, political predictability and consistency would be more valuable than ever.

In order to ensure the company’s strategic flexibility and competitiveness, the aim is to improve the company’s cash flow more than EUR 1 billion during 2013–2014, by reducing capital expenditures, divesting non-core assets, reducing fixed costs and through focus on working capital efficiency. Unfortunately, the efficiency programme may have an effect on our personnel. If headcount reductions are needed, they will be implemented on unit level by using natural rotation, rearranging of vacant jobs and by retirement, whenever possible.

Fortum's purpose is to create energy that improves life for present and future generations, the aim is to build on our strong Nordic core business, create solid earnings growth in Russia and build a platform for future growth.”