CEO's review

This review is published in accordance with Fortum's January-September 2016 Interim Report on 25 October 2016.

Fortum’s President and CEO Pekka Lundmark:

“The third quarter is always challenging due to the seasonality of our business. This year was no
exception. Fortum’s results continued to decline mainly due to significantly lower hydro production
volumes. The decline was partially offset by strong performance in the Russia segment, a clearly
higher achieved power price and higher nuclear volumes compared to the third quarter of 2015.
There are, however, some positive signs on the power market, mainly driven by commodity and
emission prices. Forward market prices increased at the very end of the quarter and are now clearly
higher than at the end of the second quarter.
Another positive development was the Swedish government’s budget proposal in September; it
included the timetable for lowering the real-estate tax on hydro assets and for phasing out the
nuclear capacity tax over the coming years. We are very pleased with the swift decision and the
finalisation of the timetable, which gives regulatory stability to operate the plants and plan the
necessary safety investments. This is completely in line with what we have been advocating for; a
regulation and taxation policy where the different forms of CO2-free production are treated more
As the investment programme in Russia was completed during the spring, OAO Fortum’s new
capacity has been the key driver for the earnings growth in the Russia division.
During the quarter, Fortum finalised the acquisition of Ekokem, a leading Nordic circular economy
company. The deal marks a very important step in the implementation of our strategy and gives us
access to new revenue streams independent on the Nordic power price.
We have continued reducing fixed costs according to earlier announced plan and the progress has
been good. Enabled by our strong net cash position, we will carry on our efforts to grow and we are
constantly looking for good investment opportunities, as outlined in our strategy.“