Comparable operating profit remained firm

Comparable operating profit remained firm


-- Comparable operating profit EUR 1,833 (1,888) million, -3%
-- Earnings per share EUR 1.46 (1.48), -1%, decreased due to accounting
treatment of derivatives used for hedging (effect EUR -0.18 per share)
-- Russian investment programme accelerated
-- 70% of Power Division's forecast volume for 2011 hedged at EUR 45 per MWh
and 40% for 2012 hedged at EUR 44 per MWh
-- Fortum's Board proposes a dividend of EUR 1.00 per share




Key figures IV/10 IV/09 2010 2009
-------------------------------------------------------------------------------
Sales, EUR million 1,902 1,563 6,296 5,435
-------------------------------------------------------------------------------
Operating profit, EUR million 321 522 1,708 1,782
-------------------------------------------------------------------------------
Comparable operating profit, EUR million 541 570 1,833 1,888
-------------------------------------------------------------------------------
Profit before taxes, EUR million 285 505 1,615 1,636
-------------------------------------------------------------------------------
Earnings per share, EUR 0.26 0.46 1.46 1.48
-------------------------------------------------------------------------------
Net cash from operating activities, EUR million 221 396 1,437 2,264
-------------------------------------------------------------------------------
Shareholders' equity per share, EUR 9.24 9.04
-------------------------------------------------------------------------------
Interest-bearing net debt 6,826 5,969
(at end of period), EUR million
-------------------------------------------------------------------------------
Average number of shares, 1,000s 888,367 888,230
-------------------------------------------------------------------------------




Key financial ratios 2010 2009
---------------------------------------------
Return on capital employed, % 11.6 12.1
---------------------------------------------
Return on shareholders' equity, % 15.7 16.0
---------------------------------------------
Net debt/EBITDA 3.0 2.6
---------------------------------------------




Fortum's President and CEO Tapio Kuula in connection with the financial
statements bulletin:


“I am pleased with our 2010 results. The Heat and Russia divisions as well as
the Distribution business were able to improve their results from a year ago.
Electricity Sales' results were negatively impacted in the first and last
quarter, mainly due to high wholesale market prices. In the Power Division,
costs increased partly due to continued power upgrade and modernisation
programmes in Swedish associated nuclear generating companies.


The overall Nordic and Russian power consumption continued to increase in 2010.
Industrial activity has clearly picked up in Fortum's key market areas and the
Russian economy has continued a solid path of recovery.


The Russian wholesale power sector reform progressed as planned by the Federal
Government. As of January 2011, the wholesale power market has been fully
liberalised. In addition, the new rules for the long-term capacity market
starting from 2011 have been approved by the Government regarding capacity
supply agreements (CSA - “new capacity”) and competitive capacity selection
(CCS - “old capacity”).


Recovering electricity demand and the development of the capacity market
encouraged Fortum to slightly adjust the schedule of its Russian investment
programme, now to be finalised one year earlier than previously estimated, in
2014. The profits from the Russia Division are estimated to build up in pace
with the capacity increase.


Fortum's updated strategy was launched in September. The strategy builds on the
company's core competence in CO2-free nuclear and hydro power, energy and
resource-efficient combined heat and power production as well as the company's
expertise and proven track-record in operating in competitive energy markets.
In the coming years, Fortum will continue to leverage its strong position in
the Nordic power and heat market while creating solid earnings growth in
Russia.


Further opportunities for future growth stem from the need for CO2-free and
energy-efficient solutions, and increasing demand in fast growing, liberalising
energy markets, especially in emerging Euro-Asian countries. Coupled with the
integration of the European energy market and with Fortum's Russian business'
increasing weight, the importance of the Nordic power price as the main driver
of Fortum's earnings will gradually decrease. The existing electricity
distribution and retail sales businesses will continue to have a substantial
role in the Nordic market. In other regions, Fortum sees more attractive
earnings and growth prospects in power and heat generation.


Our targets for financial key ratios are to achieve return on capital employed
of 12%, a return on shareholder's equity of 14% and a net debt to EBITDA of
approximately 3.


Finally, I want to take the opportunity to thank all Fortum employees for a job
well done."





Financial results


October-December


Group sales were EUR 1,902 (1,563) million. Group operating profit totalled EUR
321 (522) million. Fortum's operating profit for the fourth quarter 2010 was
affected more than usually by the IFRS accounting treatment (IAS 39) of
derivatives used for hedging Fortum's power production. High power forward
prices at year-end 2010 caused mark-to-market valuation of electricity
derivatives to decrease Fortum's operating profit; the full-year impact was EUR
-216 million. The comparable operating profit was not impacted by the
accounting treatment and totalled EUR 541 (570) million. Fortum's cash flow was
not impacted by the accounting treatment.


The accounting treatment affected Fortum's last-quarter 2010 earnings per share
by EUR -0.18.


The total of non-recurring items, mark-to-market effects and nuclear fund
adjustments in the fourth quarter of 2010 amounted to EUR -220 (-48) million.
Of this total, non-recurring items were EUR 7 (8) million.





Sales by division


EUR million IV/10 IV/09 2010 2009
---------------------------------------------------------------
Power 752 663 2,702 2,531
---------------------------------------------------------------
Heat 598 458 1,770 1,399
---------------------------------------------------------------
Distribution* 287 227 963 800
---------------------------------------------------------------
Electricity Sales* 529 410 1,798 1,449
---------------------------------------------------------------
Russia 254 197 804 632
---------------------------------------------------------------
Other 7 17 51 71
---------------------------------------------------------------
Netting of Nord Pool transactions -528 -325 -1,736 -1,095
---------------------------------------------------------------
Eliminations 3 -84 -56 -352
---------------------------------------------------------------
Total 1,902 1,563 6,296 5,435
---------------------------------------------------------------
* Part of the Electricity Solutions and Distribution Division


Comparable operating profit by division


EUR million IV/10 IV/09 2010 2009
----------------------------------------------
Power 336 391 1,298 1,454
----------------------------------------------
Heat 122 104 275 231
----------------------------------------------
Distribution* 91 80 307 262
----------------------------------------------
Electricity Sales* 3 11 11 22
----------------------------------------------
Russia 17 8 8 -20
----------------------------------------------
Other -28 -24 -66 -61
----------------------------------------------
Total 541 570 1,833 1,888
----------------------------------------------
* Part of the Electricity Solutions and Distribution Division


Operating profit by division


EUR million IV/10 IV/09 2010 2009
----------------------------------------------
Power 129 327 1,132 1,363
----------------------------------------------
Heat 124 109 303 252
----------------------------------------------
Distribution* 93 81 321 263
----------------------------------------------
Electricity Sales* 40 37 46 29
----------------------------------------------
Russia 16 8 53 -20
----------------------------------------------
Other -81 -40 -147 -105
----------------------------------------------
Total 321 522 1,708 1,782
----------------------------------------------
* Part of the Electricity Solutions and Distribution Division


January-December


Group sales were EUR 6,296 (5,435) million. Group operating profit totalled EUR
1,708 (1,782) million. High power forward prices at year-end 2010 caused
mark-to-market valuation of electricity derivatives to decrease Fortum's
operating profit. The effect on the operating profit for the full year 2010 was
EUR -216 million. The accounting treatment did not have an impact on Fortum's
cash flow or comparable operating profit. Comparable operating profit totalled
EUR 1,833 (1,888) million.


Non-recurring items, mark-to-market effects and nuclear fund adjustments during
the financial year amounted to EUR -125 (-106) million. The share of
non-recurring items was EUR 93 (29) million and consisted of sales gains from
the Swedegas and Karlskoga Energi & Miljö shares in Sweden as well as the
Kurgan Generating Company, Federal Grid Company and St. Petersburg Sales
Company shares in Russia.


The average Swedish krona (SEK) rate was approximately 10% stronger against the
euro during 2010 than in 2009. The positive translation effect caused by the
higher average SEK rate impacted the comparable operating profit by
approximately EUR 103 million. The translation effect mainly impacted the Power
Division. The strong SEK had a negative impact on the cash flow.


The share of profits of associates and joint ventures was EUR 62 (21) million.
The improvement was mainly due to the improvement in the contribution from
Hafslund ASA.


The Group's net financial expenses decreased to EUR 155 (167) million. The
decrease is attributable to lower interest expenses. The change in fair value
of financial instruments was EUR 12 (-1) million.


Profit before taxes was EUR 1,615 (1,636) million.


Taxes for the period totalled EUR 261 (285) million. The tax rate according to
the income statement was 16.2% (17.4%).


The profit for the period was EUR 1,354 (1,351) million. Fortum's earnings per
share were EUR 1.46 (1.48). The effect on earnings per share by the accounting
treatment of derivatives was EUR -0.18.


Non-controlling (minority) interests amounted to EUR 54 (39) million. These are
mainly attributable to Fortum Värme Holding AB, in which the city of Stockholm
has a 50% economic interest.


Cash flow from operating activities totalled EUR 1,437 (2,264) million and was
affected by the realised foreign exchange gains and losses, which amounted to
EUR -535 (298) million during 2010. The foreign exchange gains and losses
mainly relate to the rollover of foreign exchange contracts hedging loans to
Fortum's Swedish subsidiaries.


Fortum's financial key ratios: return on capital employed was
11.6%(12.1%),return on shareholders' equity was 15.7%(16.0%)and net debt to
EBITDA was 3.0 (2.6 at the end of 2009) for the year 2010. The comparable net
debt to EBITDA was 2.8.





Market conditions


Nordic countries


During the fourth quarter, the average system spot price for power in Nord Pool
was EUR 62.1 (36.6) per megawatt-hour (MWh). The Finnish and Swedish area
prices were above the system price level, at EUR 66.5 (40.0) per MWh in Finland
and EUR 66.6 (40.0) per MWh in Sweden. The difference between the system price
and the Finnish and Swedish area prices was mainly due to cheaper import from
Germany and the Netherlands that helped to keep prices down in southern Norway
and Denmark. Especially during cold weather, there is not enough transmission
capacity from southern Norway and Denmark to Sweden and northern Norway.
Exports are reduced to keep the balance in the Oslo area in Norway.


In 2010, the average system spot price for power in Nord Pool was EUR 53.0
(35.0) per MWh. The Finnish and Swedish area prices were above the system price
level, at EUR 56.6 (37.0) per MWh in Finland and EUR 56.8 (37.0) per MWh in
Sweden. The difference between the system price and the Finnish and Swedish
area prices was mainly attributable to the first and the fourth quarter. In the
first quarter, reduced nuclear availability in Sweden coupled with the reduced
transmission capacity resulted in higher prices in Sweden and Finland. In the
last quarter, the hydrological deficit in both Sweden and Norway together with
the reduced transmission capacity affected the prices.


At the beginning of 2010, the Nordic water reservoirs were 7 terawatt-hours
(TWh) below the long-term average. At the end of 2010, the Nordic water
reservoirs were at historically low levels, 29 TWh below the long-term average
and 20 TWh below the levels at the end of 2009.


According to preliminary statistics, the Nordic countries consumed 111 (103)
TWh of electricity in the last quarter of 2010, which was about 8% more than in
the previous year. The increase was mainly due to higher industrial consumption
and colder than normal weather. During 2010, the Nordic countries consumed in
total about 396 (378) TWh of electricity - about 5% more than in 2009. The
increase was mainly due to the cold weather in the first and last quarter and
higher industrial consumption.


Russia


According to preliminary statistics, Russia consumed 277 (271) TWh of
electricity in the fourth quarter of 2010, about 2% more than in the
corresponding period of the previous year. During 2010, Russia consumed about
1,005 (964) TWh of electricity. The increase is mainly due to the general
recovery of the Russian economy and increased industrial activity.


OAO Fortum operates in the Tyumen and Chelyabinsk areas. In the Tyumen area,
where industrial production is dominated by the oil and gas industries,
electricity demand was approximately at the same level compared to the previous
year. The recession did not affect electricity demand in the Tyumen region in
the previous year and therefore year-on-year electricity demand was flat. In
the Chelyabinsk area, which is dominated by the metal industry, electricity
demand increased by about 4% in the fourth quarter and by approximately 9%
during 2010 compared to the previous year. The increase is mainly due to the
recovery in industrial consumption.


The average electricity spot price, excluding capacity price, in the First
price zone (European and Urals part of Russia) increased 22% to RUB 886 (728)
per MWh in the fourth quarter of 2010.


More detailed information about the market fundamentals is included in the
tables at the end of the report.





Fortum's CO2-emissions


Climate change mitigation, the reduction of carbon dioxide emissions and energy
efficiency are important for Fortum.


Fortum's target in the EU is to decrease its emissions in power generation to
less than 80 grams per kilowatt-hour (g/kWh) by 2020 as a five-year average.
During 2010 the five-year average performance is below the target level at 69
g/kWh. In heat production, the aim has been to reduce the specific emissionsin
each EU country by at least 10% from 2006 until 2020. Outside the EU, Fortum is
committed to increasing energy efficiency and thereby reducing specific
emissions.


In 2010, approximately 66% (69%) of the power generated by Fortum was CO2-free.
The corresponding figure for Fortum's power generation within the EU was 86%
(91%).


Fortum's total CO2-emissions in 2010 amounted to 25.3 (22.0) million tonnes
(Mt), of which 9.7 (7.7) Mt were within the EU's emission trading scheme (ETS).





Fortum's total CO2-emissions IV/10 IV/09 2010 2009
(million tonnes, Mt)
------------------------------------------------------
Total emissions 7.9 6.6 25.3 22.0
------------------------------------------------------
Emissions subject to ETS 3.0 2.7 9.7 7.7
------------------------------------------------------
Free emissions allocation -- -- 5.6 5.5
------------------------------------------------------
Emissions in Russia 4.4 3.9 14.6 13.8
------------------------------------------------------





Fortum's specific CO2-emissions from power generation IV/10 IV/09 2010 2009
(g/kWh)
--------------------------------------------------------------------------------
Total emissions 216 156 189 155
--------------------------------------------------------------------------------
Emissions in the EU 118 60 84 41
--------------------------------------------------------------------------------
Emissions in Russia 541 436 532 493
--------------------------------------------------------------------------------




Division reviews


Power


The Power Division consists of Fortum's power generation, physical operation
and trading as well as expert services for power producers.




EUR million IV/10 IV/09 2010 2009
-------------------------------------------------------------------------------
Sales 752 663 2,702 2,531
-------------------------------------------------------------------------------
- power sales 715 639 2,580 2,413
-------------------------------------------------------------------------------
- other sales 37 24 122 118
-------------------------------------------------------------------------------
Operating profit 129 327 1,132 1,363
-------------------------------------------------------------------------------
Comparable operating profit 336 391 1,298 1,454
-------------------------------------------------------------------------------
Net assets (at period-end) 5,806 5,494
-------------------------------------------------------------------------------
Return on net assets, % 19.5 24.5
-------------------------------------------------------------------------------
Comparable return on net assets, % 22.3 26.4
-------------------------------------------------------------------------------
Capital expenditure and gross investments in shares 35 33 122 153
-------------------------------------------------------------------------------
Number of employees 1,819 1,916
-------------------------------------------------------------------------------


The division's power generation in the Nordic countries amounted to 12.3 (11.1)
TWh during the fourth quarter of 2010. Approximately 90% (96%) of that was
CO2-free.


In 2010, the division's power generation in the Nordic countries was 46.3
(43.7) TWh and approximately 93% (97%) of the division's power generation was
CO2-free.


During the fourth quarter, the division's power generation in the Nordic
countries increased by 11% compared to the corresponding period of the previous
year. Nuclear generation volumes increased year-on-year, although Oskarshamn 3
and Forsmark 2 had operating difficulties and Loviisa 2 had a long scheduled
annual outage. The share of thermal power generation increased significantly
due to higher electricity prices as well as due to the return of the Meri-Pori
power plant to Fortum's own use.


During 2010, the division's Nordic power generation was 2.6 TWh higher than in
2009. Especially thermal generation increased mainly due to high electricity
prices and the end of Meri-Pori lease contract. Also nuclear generation volumes
improved slightly.


Eight out of Fortum's ten owned or associated nuclear power reactors operated
well during 2010. Forsmark 2 was able to overcome the problems related to
modernised valves by replacing them with a different solution: it has been
running at full capacity since the beginning of November. Oskarshamn 3 faced
significant bearing problems with its renewed turbine, which caused production
losses until the end of December. Currently it is running at an approximately
1,050 megawatt (MW) power level, which corresponds to the power level before
the capacity increases. To secure availability during the winter months, the
plan is to run the unit at this power level and to re-start commissioning test
runs on 1 March 2011. After this, the test period will continue until the
scheduled shut down for maintenance on 22 May 2011.




Power generation by source, TWh IV/10 IV/09 2010 2009
----------------------------------------------------------
Hydropower, Nordic 6.0 5.9 22.0 22.1
----------------------------------------------------------
Nuclear power, Nordic 5.4 5.1 22.0 21.4
----------------------------------------------------------
Thermal power, Nordic 0.9 0.1 2.3 0.2
----------------------------------------------------------
Total in the Nordic countries 12.3 11.1 46.3 43.7
----------------------------------------------------------
Thermal power in other countries 0.3 0.3 1.1 1.2
----------------------------------------------------------
Total 12.6 11.4 47.4 44.9
----------------------------------------------------------



Nordic sales volume, TWh 13.7 12.4 51.5 48.8
---------------------------------------------------
of which pass-through sales 0.7 1.0 3.2 3.6
---------------------------------------------------



Sales price, EUR/MWh IV/10 IV/09 2010 2009
-----------------------------------------------------
Power's Nordic power price* 51.4 51.5 49.7 49.8
-----------------------------------------------------
* For the Power Division in the Nordic countries, excluding pass-through sales.


In the fourth quarter of 2010, the Nordic power price achieved by the Power
Division amounted to EUR 51.4 per MWh, which was at about the same level as in
2009.


In 2010, the division achieved a Nordic power price of EUR 49.7 per MWh, which
was at about the same level as in 2009. The clearly higher Nord Pool spot
prices almost offset lower hedge prices. The total achieved price remained
stable due to the higher prices achieved in thermal power during peak hours.


In the fourth quarter of 2010, The Power Division's comparable operating profit
was lower than in the corresponding period of the previous year. A different
production mix and higher costs in the Swedish associated nuclear generating
companies decreased profits.


In 2010, Power's comparable profit decreased. Continued capacity upgrades and
modernisation programmes in Swedish associated nuclear generating companies, a
production mix with increased thermal generation volumes together with an
increase in nuclear-related provisions and the Loviisa 3 project increased
costs in 2010 compared to 2009.


Fortum and the Russian State Atomic Energy Corporation ROSATOM signed a
Memorandum of Understanding on cooperation in the field of nuclear power in
November 2010. Furthermore, Fortum, ROSATOM and the national Bulgarian utility
NEK signed a Memorandum of Understanding on cooperation in the development of
the Belene nuclear power plant in Bulgaria. According to the Memorandum of
Understanding with ROSATOM and NEK, Fortum is endeavouring to participate in
the Belene project by providing competences in nuclear technology and safety.
In relation to technology services, Fortum has reserved an opportunity to
obtain a 1 % share of the equity in the project company that will be
established and will be the owner of the power plant and the electricity
generated by it.


Fortum decided to discontinue the Meri-Pori carbon capture and storage project,
which the company has developed together with Teollisuuden Voima (TVO) at the
companies' jointly-owned Meri-Pori power plant. Previously, also TVO had
decided to withdraw from the project.


Fortum is preparing to participate in the tender processes for hydropower
concessions in France, which are expected to officially start in 2011. In the
frame of the European directive, France is to open up the hydro concession
renewal process for competition. The French Government is thus putting the
first tranche of ten concessions with a total capacity of 5,300 MW into a
tender process in 2011-2015.


At year-end, the Power Division's total power generating capacity was 9,728
(9,709) MW, of which 9,588 (9,569) MW was in the Nordic countries. Hydro power
capacity in the Nordic countries totalled 4,684 (4,666) MW, nuclear power
capacity 3,217 (3,212) MW and condensing capacity 1,687 (1,691) MW.

Heat


The Heat Division consists of combined heat and power (CHP) generation,
district heating activities and business-to-business heating solutions in the
Nordic countries and other parts of the Baltic Rim.




EUR million IV/10 IV/09 2010 2009
-------------------------------------------------------------------------------
Sales 598 458 1,770 1,399
-------------------------------------------------------------------------------
- heat sales 428 341 1,269 1,055
-------------------------------------------------------------------------------
- power sales 129 84 368 224
-------------------------------------------------------------------------------
- other sales 41 33 133 120
-------------------------------------------------------------------------------
Operating profit 124 109 303 252
-------------------------------------------------------------------------------
Comparable operating profit 122 104 275 231
-------------------------------------------------------------------------------
Net assets (at period-end) 4,182 3,787
-------------------------------------------------------------------------------
Return on net assets, % 8.4 7.9
-------------------------------------------------------------------------------
Comparable return on net assets, % 7.7 7.3
-------------------------------------------------------------------------------
Capital expenditure and gross investments in shares 117 101 305 359
-------------------------------------------------------------------------------
Number of employees 2,394 2,552
-------------------------------------------------------------------------------


Heat sales volumes during the fourth quarter of 2010 amounted to 8.8 (7.8) TWh
and were mainly generated in the Nordic countries. During the same period,
power sales volumes totalled2.2(1.6) TWh. The volume increase was mainly due to
new combined heat and power (CHP) capacity and the cold weather.


During 2010, heat sales volumes amounted to 26.1 (22.9) TWh and were mainly
generated in the Nordic countries. During the same period, power sales volumes
totalled6.5(4.4) TWh. The increased volumes were a result of cold weather
during the winter months, increased industrial sales and new CHP capacity in
Finland and Estonia.


The division's fourth quarter comparable operating profit improved on the
corresponding period last year and totalled EUR 122 (104) million. The increase
was mainly due to higher power price and volumes as well as due to the stronger
SEK currency.


The comparable operating profit for 2010 for the Heat Division was EUR 275
(231) million. The increase was mainly due to higher volumes and power prices.
Fuel costs were higher than in the previous year. In Sweden, the negative
peak-load impact on production costs during the winter was offset by a stronger
SEK currency.


During the fourth quarter of 2010, commercial operation began at two new CHP
plants, one in Częstochowa, Poland and one in Pärnu, Estonia. Fortum also
started site activities on a new waste-to-energy CHP plant in Klaipeda,
Lithuania, and construction of a new waste-to-energy plant in Brista, near
Stockholm in Sweden. In addition, Fortum signed an agreement to acquire two
Polish power and heat companies from the Polish state. The companies were sold
as part of the privatisation of the power and heat sector in Poland. Also in
the fourth quarter, an agreement was signed on the divestment of Fortum's heat
operations outside the Stockholm area to Macquarie-managedfunds.


During the year, Heat divested some 30 plants comprising smaller heat-only
boilers. The restructuring activities support Fortum's updated strategy that
focuses on the further development of CHP production.


In Sweden, in November 2010, the Swedish Competition Authority (SCA) announced
that the authority dropped its investigation concerning the market position and
price setting of Fortum's district heating in the Stockholm area. The authority
concluded that the real price of district heat has decreased in Stockholm by
1.5% during 2005-2010.

In Finland, taxes on fuels for heat production as well as taxes on electricity
were increased considerably as of 1 January 2011. Tax increases will be
reflected in the end-user prices of heat and electricity accordingly.




Heat sales by area, TWh IV/10 IV/09 2010 2009
-------------------------------------------------
Finland 3.1 2.7 9.6 8.0
-------------------------------------------------
Sweden 3.7 3.2 10.9 9.8
-------------------------------------------------
Poland 1.4 1.4 4.0 3.7
-------------------------------------------------
Other countries 0.6 0.5 1.6 1.4
-------------------------------------------------
Total 8.8 7.8 26.1 22.9
-------------------------------------------------



Power sales, TWh IV/10 IV/09 2010 2009
------------------------------------------
Total 2.2 1.6 6.5 4.4
------------------------------------------


At year-end, the Heat Division's power generating capacity totalled 1,600
(1,446) MW, of which 1,478 (1,412) MW was in the Nordic countries. The Heat
Division's total heat production capacity was 10,448 (10,284) MW, of which
8,488 (8,414) MW was in the Nordic countries.


Electricity Solutions and Distribution


The divisionis responsible for Fortum's electricity sales and distribution
activities and consists of two business areas: Distribution and Electricity
Sales.


Distribution


Fortum owns and operates distribution and regional networks and distributes
electricity to a total of 1.6 million customers in Sweden, Finland, Norway and
Estonia.




EUR million IV/10 IV/09 2010 2009
-------------------------------------------------------------------------------
Sales 287 227 963 800
-------------------------------------------------------------------------------
- distribution network transmission 240 192 820 685
-------------------------------------------------------------------------------
- regional network transmission 24 21 92 75
-------------------------------------------------------------------------------
- other sales 23 14 51 40
-------------------------------------------------------------------------------
Operating profit 93 81 321 263
-------------------------------------------------------------------------------
Comparable operating profit 91 80 307 262
-------------------------------------------------------------------------------
Net assets (at period-end) 3,683 3,299
-------------------------------------------------------------------------------
Return on net assets, % 9.7 8.7
-------------------------------------------------------------------------------
Comparable return on net assets, % 9.3 8.6
-------------------------------------------------------------------------------
Capital expenditure and gross investments in shares 86 63 213 193
-------------------------------------------------------------------------------
Number of employees 962 1,088
-------------------------------------------------------------------------------


The volume of distribution and regional network transmissions during the fourth
quarter of 2010 totalled 8.3 (7.5) TWh and 4.7 (4.4) TWh, respectively.


During 2010, electricity transmission via the regional distribution network
totalled 14.8 (13.6) TWh in Sweden and 2.8 (2.8) TWh in Finland.


The Distribution business area's comparable operating profit in the fourth
quarter was EUR 91 million, an increase of EUR 11 million compared to the
corresponding period of the previous year. The main reasons for the improvement
were higher sales due to the colder weather. The improvement was partly offset
by higher variable, maintenance and fault repair costs. The stronger SEK
improved the comparable operating profit with some EUR 5 million during the
fourth quarter.


During 2010, the business area's comparable operating profit was EUR 307 (262)
million. The improvement was mainly due to higher sales and was partly offset
by higher variable, maintenance and fault repair costs. In addition, the
stronger SEK increased the comparable operating profit by some EUR 20 million.


The pilot rollout of smart metering to network customers in Finland started in
October 2010. Smart metering has several benefits for customers, including
better information about electricity consumption and therefore better control
of it. The new Finnish legislation on meter reading requirements will be
effective as of 1 January 2014.


In Sweden, the new distribution price regulation model will come into effect in
2012. The work with the new model is still ongoing and the parameters are
currently being defined. In Finland, the preparation work for the 3rd
regulatory period (2012-2015) started. Final decisions for the Finnish
regulation model by the regulator are expected in November 2011.


Distribution improves efficiency through automation and by focusing on its core
processes. As a consequence, some field operations were outsourced during the
fourth quarter.




Volume of distributed electricity in distribution IV/10 IV/09 2010 2009
network, TWh
--------------------------------------------------------------------------------
Sweden 4.5 3.9 15.2 14.0
--------------------------------------------------------------------------------
Finland 3.0 2.8 10.0 9.4
--------------------------------------------------------------------------------
Norway 0.7 0.7 2.5 2.3
--------------------------------------------------------------------------------
Estonia 0.1 0.1 0.2 0.2
--------------------------------------------------------------------------------
Total 8.3 7.5 27.9 25.9
--------------------------------------------------------------------------------



Number of electricity distribution customers by area, 31 Dec 31 Dec
thousands 2010 2009
--------------------------------------------------------------------------------
Sweden 893 882
--------------------------------------------------------------------------------
Finland 620 611
--------------------------------------------------------------------------------
Other countries 124 123
--------------------------------------------------------------------------------
Total 1,637 1,616
--------------------------------------------------------------------------------



Electricity Sales


The Electricity Salesbusiness area is responsible for retail sales of
electricity to a total of 1.2 million private and business customers as well as
to other electricity retailers in Sweden, Finland and Norway. Electricity
Salesbuys its electricity from the Nordic power exchange.




EUR million IV/10 IV/09 2010 2009
-------------------------------------------------------------------------------
Sales 529 410 1,798 1,449
-------------------------------------------------------------------------------
- power sales 524 400 1,778 1,417
-------------------------------------------------------------------------------
- other sales 5 10 20 32
-------------------------------------------------------------------------------
Operating profit 40 37 46 29
-------------------------------------------------------------------------------
Comparable operating profit 3 11 11 22
-------------------------------------------------------------------------------
Net assets (at period-end) 210 125
-------------------------------------------------------------------------------
Return on net assets, % 38.4 28.9
-------------------------------------------------------------------------------
Comparable return on net assets, % 9.3 18.6
-------------------------------------------------------------------------------
Capital expenditure and gross investments in shares 0 0 0 1
-------------------------------------------------------------------------------
Number of employees 525 611
-------------------------------------------------------------------------------


During the fourth quarter of 2010, the business area's electricity sales
volumes totalled 8.1 (8.3) TWh while electricity sales volumes in 2010 totalled
29.8 (30.0) TWh.The restructuring of the unprofitable Business Market segment
started in February 2010 and has impacted the sales volume of the Electricity
Sales business area from the fourth quarter of 2010 onwards.


Electricity Sales' comparable operating profit in the fourth quarter decreased
and totalled EUR 3 (11) million. Colder than normal weather conditions and the
low hydrological situation that drove the market spot prices significantly up,
were the main reasons for the lower sales margins. This, combined with the
price peaks during the first quarter of 2010, resulted in a lower comparable
operating profit, which totalled EUR 11 (22) million, for the full year 2010.


Russia


The Russia Division consists of power and heat generation and sales in Russia.
It includes OAO Fortum and Fortum's over 25% holding in TGC-1, which is an
associated company and is accounted for using the equity method.




EUR million IV/10 IV/09 2010 2009
-------------------------------------------------------------------------------
Sales 254 197 804 632
-------------------------------------------------------------------------------
- power sales 150 109 505 390
-------------------------------------------------------------------------------
- heat sales 98 76 287 219
-------------------------------------------------------------------------------
- other sales 6 12 12 23
-------------------------------------------------------------------------------
EBITDA 39 28 139 55
-------------------------------------------------------------------------------
Operating profit 16 8 53 -20
-------------------------------------------------------------------------------
Comparable operating profit 17 8 8 -20
-------------------------------------------------------------------------------
Net assets (at period-end) 2,817 2,260
-------------------------------------------------------------------------------
Return on net assets, % 2.4 0.0
-------------------------------------------------------------------------------
Comparable return on net assets, % 0.7 0.0
-------------------------------------------------------------------------------
Capital expenditure and gross investments in shares 257 98 599 218
-------------------------------------------------------------------------------
Number of employees 4,294 4,855
-------------------------------------------------------------------------------


OAO Fortum operates in the well-developed industrial regions of the Urals and
in oil-producing western Siberia.


The Russia Division's power sales volumes amounted to 4.9 (5.3) TWh during the
fourth quarter of 2010. During the same period, heat sales totalled 9.0 (8.9)
TWh. The full-year 2010 power sales volumes were 18.7 TWh (19.5 TWh) and heat
sales volumes 26.8 TWh (25.6 TWh).


During 2010, OAO Fortum sold 61% of its power production at a liberalised
electricity price.




Key electricity, capacity and gas IV/10 IV/09 Change 2010 2009 Change
prices for OAO Fortum
--------------------------------------------------------------------------------
Electricity spot price (market 817 693 124 835 633 202
price), Urals hub, RUB/MWh
--------------------------------------------------------------------------------
Average regulated electricity price 613 536 77 614 533 81
for OAO Fortum, RUB/MWh
--------------------------------------------------------------------------------
Average regulated capacity price, 167 186 -19 169 187 -18
tRUB/MW/month
--------------------------------------------------------------------------------
Average regulated gas price in 2 221 1 937 284 2 221 1 781 440
Urals region, RUB/1000 m3
--------------------------------------------------------------------------------


The Russia Division's comparable operating profit was EUR 17 (8) million in the
fourth quarter of 2010.The improvement was mainly attributable to higher
electricity market prices and OAO Fortum's efficiency improvement programme.


In January-December 2010, the division's comparable operating profit totalled
EUR 8 (-20) million. The improved result was mainly due to higher electricity
market prices and OAO Fortum's efficiency improvement programme, which
progressed well.


OAO Fortum's business is typically very seasonal: Its results are usually
strongest during the first and the last quarters of the year.


The Russian wholesale power sector reform is proceeding. From 1 January 2010
onwards, 60% of all power generated in Russia was sold on the competitive
market. The share increased to 80% at the beginning of July 2010 and the
wholesale power market has been fully liberalised from the beginning of 2011.


The new rules for the long-term capacity market starting from 2011 have been
approved by the Russian Government. The generation capacity built after 2007
under the government capacity supply agreements (CSA) will receive guaranteed
payments for a period of 10 years. Prices for capacity under CSA are defined in
order to ensure a sufficient return on investments. Capacity that is not under
CSA will compete in competitive capacity selection (CCS). In December 2010, the
first CCS for the year 2011 was held in accordance with the new rules of the
long-term capacity market.


Upon completion, OAO Fortum's new capacity will be a key driver for solid
earnings growth in Russia as it will bring income from new volumes sold and
receive considerably higher capacity payments than the old capacity. The
payments for new capacity will be approximately 3-4 times higher than the
average price for the old capacity. The average price of old capacity is
expected to be approximately RUB 165 000/MW/month for OAO Fortum.


In light of the recovering post-crises demand and the development of the
Russian capacity market, Fortum has accelerated the schedule of OAO Fortum's
committed 2,300 MW-investment programmes and plans to commission the last new
units in 2014. The value of the remaining part of the investment programme,
calculated at the exchange rates prevailing at the end of December 2010, is
estimated to be approximately EUR 1.5 billion as of January 2011.


In December 2010, a new unit was inaugurated at Fortum's Tyumen CHP-1 power
plant. The unit is the first of the new units in Fortum's extensive investment
programme in Russia; the first unit is estimated to be in commercial operation
during the first half of 2011 and additional two units are estimated to start
their commercial operation during mid-year 2011.


OAO Fortum's efficiency improvement programme is proceeding according to plans.
Efficiency improvements are expected to to be approximately EUR 100 million in
2011 compared to the level at the time of the acquisition in 2008.


At year-end, the Russia Division's total power generating capacity was 2,785
(2,785) MW. At year end, the division's total heat production capacity was
13,796 (13,796) MW.





Capital expenditures, divestments and investments in shares


Capital expenditures and investments in shares totalled EUR 1,249(929)million
in 2010. Investments, excluding acquisitions, were EUR 1,222(862)million.


Fortum expects to start the supply of power and heat from new power plants and
upgrade existing ones as follows:







Type Electricity capacity, Heat Supply starts
MW capacity, *
MW
--------------------------------------------------------------------------------
Heat
--------------------------------------------------------------------------------
Klaipeda, Waste 20 60 2012
Lithuania (CHP)
--------------------------------------------------------------------------------
Power
--------------------------------------------------------------------------------
Hydro Hydropower 10-20 2011
refurbishment
--------------------------------------------------------------------------------
Russia
--------------------------------------------------------------------------------
Tyumen1 Gas (CCGT) 231 1H/2011
--------------------------------------------------------------------------------
Tobolsk Gas (STPP) 200 Mid-2011
--------------------------------------------------------------------------------
Chelyabinsk3 Gas (CCGT) 226 Mid-2011
--------------------------------------------------------------------------------
Nyagan 1 Gas (CCGT) 418 2012
--------------------------------------------------------------------------------
Nyagan 2 Gas (CCGT) 418 2012
--------------------------------------------------------------------------------
*) Start of commercial operation, preceded by test runs, licensing, etc.


Power


In August 2010, Fortum announced that it will acquire a 40% stake in the
Blaiken wind power project in Sweden. The remaining 60% is held by the Swedish
energy company Skellefteå Kraft. Fortum and Skellefteå Kraft's joint venture,
Blaiken Vind AB, is planning to start construction of a wind farm in the
Blaiken region in northern Sweden. The wind farm will have a maximum of 100
wind turbines with a total capacity of 250 MW and an estimated annual
production of 600-720 gigawatt-hours (GWh). According to the plan, the wind
farm will be built in phases, with construction to begin in 2011 and to be
completed in 2015. Fortum's share of the total investment during the project
will amount to a maximum of EUR 160 million.


The Finnish Government gave a negative decision-in-principle on Fortum's
application concerning the construction of a new nuclear power plant unit,
Loviisa 3. Fortum is also, with an approximately 25% interest, a shareholder in
Teollisuuden Voima Oyj (TVO), whose decision-in-principle application for a new
nuclear power plant unit, Olkiluoto 4, was approved by the Finnish Government
and ratified by the Finnish Parliament. Fortum is involved in the project
development.


Through its interest in TVO, Fortum is participating in the building of
Olkiluoto 3, a 1,600-MW nuclear power plant unit in Finland. The AREVA-Siemens
Consortium, TVO's turnkey supplier of Olkiluoto 3, reported that most of the
works will be completed in 2012. The supplier indicated that commissioning will
take eight months, which means regular operation will start during the latter
half of 2013.


In September 2010, Fortum divested its share in the Finnish wind power producer
Hyötytuuli Oy.


Heat


In January 2010, Fortum acquired a CHP plant in Nokia, Finland. The plant's
capacity is around 85 MW heat and 70 MW electricity.


In February 2010, Fortum decided to invest in a new waste-fuelled CHP plant in
Klaipeda, Lithuania. The value of the investment amounts to approximately EUR
140 million. According to plan, the power plant will be ready for production by
the end of 2012 and it will use municipal and industrial waste and biomass as
fuels. The plant's production capacity will be approximately 60 MW heat and 20
MW electricity.


The sale of Fortum's shares in the Swedish gas transmission company Swedegas AB
was closed in February. The gain from the sale was included in the
first-quarter non-recurring items.


In September 2010, Fortum inaugurated a CHP plant in Poland in the city of
Częstochowa. Commercial operation started during the fourth quarter. The plant
is fuelled by biomass (around 25%) and coal. The total value of the investment
was about EUR 135 million. The new Częstochowa CHP plant has a heat production
capacity of 120 MW and an electricity production capacity of 64 MW.


Also Fortum's new CHP plant in Pärnu, Estonia, was synchronised to the grid in
September 2010. Commercial operation started during the fourth quarter. The
total value of the investment was around EUR 80 million. The production
capacity of the biomass- and peat-fired power plant is 50 MW heat and 24 MW
electricity.


In October, Fortum started to build a new waste-to-energy CHP unit in Brista,
Sweden, where it will be part of the Stockholm-region district heating system.
The value of the investment is about EUR 200 million, and the completion of the
new production unit is planned for 2013. The estimated capacity of the unit is
60 MW heat and 20 MW electricity. The plant will be co-owned with Sollentuna
Energi, the energy company of the nearby Sollentuna municipality.


In November, Fortum signed an agreement to acquire two Polish power and heat
companies from the Polish state. The companies were sold as part of the
privatisation of the power and heat sector in Poland. The acquisition
significantly increases Fortum's power production capacity in Poland. The
investment amounted to approximately EUR 21 million and the final closing of
the acquisition was made after the year end, on 3 January 2011.


In December, Fortum and Macquarie-managed funds signed an agreement whereby
Fortum will divest its district heat operations and heat production facilities
outside the Stockholm area in Sweden. The sales price is approximately EUR 200
million. Fortum expects to finalise the divestment during the first quarter of
2011.


In December, Fortum in collaboration with the Naantali, Raisio and Kaarina
municipalities and Turku Energia signed a letter of intent on consolidating
energy production in the Turku area to one co-owned production company, Turun
Seudun Maakaasu ja Energiantuotanto (TSME). Fortum will provide energy
production services to TSME. The district heat produced will be sold to Turku
Energia, the steam to Fortum and the electricity to TSME shareholders. Fortum
owns 50.5% of TSME.


In addition, Fortum divested approximately 30 small heating plants during 2010:
the divestments had a minor impact on results.


The investments and divestments are part of the renewed strategy to focus on
the development of CHP production.


Distribution


In early February 2010, Fortum sold its 49% shareholding in Karlskoga Energi &
Miljö in Sweden to the Karlskoga municipality for approximately EUR 42 million.
The sales gain was included in the first quarter non-recurring items.


Russia


In December 2010, Fortum inaugurated a new unit at its combined heat and power
plant Tyumen CHP-1 in the city of Tyumenin Western Siberia. The new unit was
the first of seven units in Fortum's extensive investment programme in Russia;
the unit is estimated to begin its commercial operation during the first half
of 2011.


Fortum sold its shares in Federal Grid Company (Fortum's ownership was 0.119%)
and in Kurgan Generating Company (49% of the voting rights) in Russia during
the first quarter of 2010. The sales gains were included in the first-quarter
non-recurring items.


Fortum divested its approximately 31% holding in joint stock company
Saint-Petersburg Sale Company (JSC SSC) to the Russian INTER RAO UES. The sales
gain was included in the third-quarter non-recurring items.


Other


In December 2010, Fortum's associated company Hafslund ASA, ownership 34.1%,
announced the sale of shares in its fully-owned subsidiary Hafslund Fibernett
AS for a sales price of NOK 1,477 million (approx. EUR 188 million). Hafslund
will book a gain of approximately NOK 900 million (approx. EUR 114 million).
Consequently, Fortum will book a gain of roughly EUR 40 million corresponding
to approximately EUR 0.04 per share. The gain will be booked in the first
quarter of 2011 as profit from associated companies.





Financing


Net debt increased during the last quarter by EUR 218 million to EUR 6,826
million (year end 2009: EUR 5,969 million). The increase in net debt during the
year is mainly linked to the stronger SEK and translation of SEK-denominated
debt in the Group.


Total liquid funds decreased by EUR 424 million from EUR 980 million to EUR 556
million (year-end 2009: 890 million). Liquid funds include cash and bank
deposits held by OAO Fortum and amount to EUR 348 million (year end 2009: 632
million). In addition to the liquid funds, Fortum had access to approximately
EUR 2.9 billion of undrawn committed credit facilities.


The Group's net financial expenses were EUR 155 (167) million. The decrease is
mainly attributable to lower average interest rates in 2010 compared to the
previous year. Net financial expenses include changes in the fair value of
financial instruments of EUR 12 (-1) million.

Net debt to EBITDA for the year 2010 was 3.0 (2.6 at year-end 2009).


Fortum Corporation's long-term credit rating from Moody's and Standard and
Poor's was A2 (stable) and A (stable), respectively.


Shares and share capital


In 2010, a total of 493.4 (580.9) million Fortum Corporation shares, totalling
EUR 9,399 million, were traded on the NASDAQ OMX Helsinki. Fortum's market
capitalisation, calculated using the closing quotation of the last trading day
of the year 2010, was EUR 20,015 million. The highest quotation of Fortum
Corporation shares on the NASDAQ OMX Helsinki during 2010 was EUR 22.69, the
lowest EUR 17.18, and the volume-weighted average EUR 19.05. The closing
quotation on the last trading day of the year 2010 was EUR 22.53 (18.97).


In addition to NASDAQ OMX Helsinki, Fortum shares were traded on several
alternative market places, (for example at Chi-X Europe, BATS and Turquoise).
In 2010, a total of 199.4 million Fortum Corporation shares, or approximately
29% of the total amount of traded shares, were traded on alternative market
places.


At the end of 2010, Fortum Corporation's share capital was EUR 3,046,185,953
and the total number of registered shares was 888,367,045. Fortum Corporation
did not own its own shares.


The Finnish State's holding in Fortum was 50.8% at the end of 2010. The
proportion of nominee registrations and direct foreign shareholders was 30.2%.


The Board of Directors has no unused authorisations from the Annual General
Meeting of Shareholders to issue convertible loans or bonds with warrants or to
issue new shares.

Group personnel


The number of employees at the end of 2010 was 10,585 (11,613 at the end of
2009).


Research and development


Sustainable solutions are the centrepiece of Fortum's strategy, and Fortum's
research and development activities enable environmentally-benign energy
solutions.


Nuclear R&D is the largest and most valuable part of Fortum's R&D portfolio. In
2010, important milestones were achieved e.g. regarding higher burn up of
nuclear fuel and reactor pressure vessel licensing for the Loviisa power plant.


Other important R&D themes in 2010 were CHP development and fuel flexibility,
carbon capture and storage (CCS) as well as sustainable cities. Fortum
continued development work on pyrolysis technology in collaboration with Metso,
UPM and VTT Technical Research Centre of Finland. The bio-oil being generated
in the process can be used to replace heavy fuel oil and thus result in
significantly reduced CO2-emissions. Furthermore, new fuel tests were conducted
using crushed olive stones as fuel at the Värtan power plant in Stockholm.


Fortum has carried out significant R&D during several years on CCS technologies
for large coal condensing power plants, and on CCGT linked to the possibility
of enhanced oil recovery as a storage solution. In 2010, the focus was switched
to solutions for large CHP plants.


Over the year, Fortum actively developed solutions for sustainable urban living
in various projects. Fortum, ABB and the KTH Royal Institute of Technology
received funding (13.4 MSEK) from Swedish Energy Agency and Vinnova for a
pre-study on the design and installation of a smart and flexible large-scale
electricity grid in the sustainable Stockholm Royal Seaport commercial and
residential area.


In September 2010, Fortum and Aalto University agreed on wide-ranging research
cooperation.


The Group's total R&D expenditure in 2010 was EUR 30 million (2009: 30
million). Fortum's R&D expenditure in 2010 was 0.5% of net sales (2009: 0.5%)
and 0.8% of total expenses (2009: 0.9%).





Events after the balance sheet date


In January 2011, Fortum, the Finnish State and Ilmarinen Mutual Pension
Insurance Company came to a preliminary agreement according to which Fortum
will sell its 25%-shareholding in the Finnish transmission system operator
Fingrid Oyj. The State will buy approximately 81% and Ilmarinen approximately
19% of Fortum's Fingrid shares. The transaction is subject to a final agreement
between the parties and to the necessary approvals by their decision-making
bodies. Furthermore, the completion of the transaction requires the approval of
the Finnish Competition Authority.


The sales price for the total amount of shares is EUR 325 million and
consequently, Fortum expects to book a gain of roughly EUR 200 million,
corresponding to approximately EUR 0.22 per share once the transaction has been
completed. Fortum estimates that the divestment will be finalised during the
first half of 2011. The proceeds will be used on general corporate purposes.


Fortum is selling its holding in Fingrid as a result of the EU's third energy
market package that calls for the separation of high voltage transmission and
power generation. The package entered into force in September 2009 and,
according to it, Fortum will have to divest its entire ownership in the Finnish
transmission system operator Fingrid by early 2012.





Outlook


Key drivers and risks


The key factor influencing Fortum's business performance is the wholesale price
of electricity. The key drivers behind wholesale price development are the
supply-demand balance, fuel and CO2-emissions allowance prices as well as the
hydrological situation. The exchange rates of the Swedish krona (SEK) and
Russian rouble (RUB) also affect Fortum's financials. The balance sheet
translation effects from changes in currency exchange rates are booked in
Fortum's equity.


Fortum's financial results are exposed to a number of strategic, financial and
operational risks. For further details on Fortum's risks and risk management,
see Fortum's Operating and Financial Review and Financial Statements for 2009.


Nordic market


Fortum currently expects Nordic power demand to recover back to the 2008 level
by 2012-2014. Electricity will continue to gain a higher share of the total
energy consumption. Temperature-corrected power consumption in the Nordic
countries is still approximately 4% (16 TWh)lower than in 2008.


At the end of January 2011, the electricity forward price in Nord Pool for the
rest of 2011 was around EUR 55 per MWh. The electricity forward price for 2012
was around EUR 47 per MWh and for 2013 around EUR 45 per MWh. At the same time,
the future quotations for coal (ICE Rotterdam) for the rest of 2011 were around
USD 116 per tonne and the market price for CO2-emissions allowances (EUA) for
2011 was about EUR 15 per tonne.


At the end of January 2011, Nordic water reservoirs were at historically low
levels and about 29 TWh below the long-term average and 20 TWh below the
corresponding level of 2010.


Russia


The Russian wholesale power sector reform is proceeding. The wholesale power
market has been fully liberalised from the beginning of 2011.


The new rules for the long-term capacity market starting from 2011 have been
approved by the Russian Government. The generation capacity built after 2007
under government capacity supply agreements (CSA - “new capacity”) will receive
guaranteed payments for a period of 10 years. Prices for capacity under CSA are
defined in order to ensure a sufficient return on investments. Capacity not
under CSA will compete in competitive capacity selection (CCS - “old
capacity”). In December 2010 the first CCS for the year 2011 was held in
accordance with the new rules of the long-term capacity market.


Upon completion, OAO Fortum's new capacity will be a key driver for solid
earnings growth in Russiaas it will bring income from new volumes sold and
receive considerably higher capacity payments than the old capacity. The
payments for new capacity will be approximately 3-4 times higher than the
average price for the old capacity. The average price of old capacity is
expected to be approximately RUB 165 000/MW/month for OAO Fortum.


In light of the recovering post-crises demand and development of the Russian
capacity market, Fortum has accelerated the schedule of OAO Fortum's committed
2,300-MW investment programme and plans to commission the last new units by the
end of 2014. The value of the remaining part of the investment programme,
calculated at exchange rates prevailing at the end of December 2010, is
estimated to be approximately EUR 1.5 billion as of January 2011. The first new
unit is estimated to be in commercial operation during the first half of 2011
and additional two units are estimated to start their commercial operation
during mid-year 2011.


The average regulated gas price increased by 15% from the beginning of the year
compared with the average price in 2010. The regulated gas price is expected to
remain unchanged for the rest of 2011. The regulated electricity price is
indexed to the regulated gas price and inflation on an annual basis.


Efficiency improvements are expected to to be approximately EUR 100 million in
2011 compared to the level at the time of the acquisition in 2008.


Capital expenditure and divestments


Fortum's capital expenditure in 2010 was approximately EUR 1.2 billion -
slightly less than indicated earlier. Fortum currently expects capital
expenditure in 2011 and 2012 to be around EUR 1.6 -1.8 billion, excluding
potential acquisitions. The annual level of Fortum's capital expenditure in
2013-2014 is estimated to total EUR 1.1-1.4 billion. The main reason for high
capital expenditures in 2011-2012 is the acceleration in Fortum's Russian
investment programme.


In 2010, Fortum signed an agreement whereby it will divest its district heat
operation facilities outside the Stockholm area in Sweden. The sales price is
approximately EUR 200 million. The divestment is expected to be finalised
during the first quarter of 2011.


In addition, Fortum came to a preliminary agreement over the divestment of its
25%-shareholding in the Finnish transmission system operator Fingrid Oyj. The
sales price is EUR 325 million. The divestment is estimated to be finalised
during the first half of 2011.


Taxation


The Swedish Government has decided to increase hydro property tax rates from
the beginning of 2011. Fortum estimates that the additional cost from the tax
rate increase would be around EUR 15 million.


In Finland, taxes on fuels for heat production as well as taxes on electricity
were increased considerably as of 1 January 2011. Tax increases will be
reflected in end-user prices of heat and electricity accordingly. The windfall
tax was removed from the Government agenda in Finland.


The tax rate is currently in 2011 is estimated to be 19-21%.


Hedging


At the end of December 2010, approximately 70% of the Power Division's
estimated Nordic electricity sales volume for the calendar year 2011 was hedged
at approximately EUR 45 per MWh. For the calendar year 2012, approximately 40%
of the division's estimated Nordic electricity sales volume is hedged at
approximately EUR 44 per MWh.


The reported hedge ratios may vary significantly, depending on Fortum's actions
on the electricity derivatives markets. Hedges are mainly financial contracts,
most of them Nord Pool forwards or standardised futures, consisting of several
types of products and maturities.


Profitability


The first and last quarters of the year are usually the strongest quarters for
the power and heat businesses.


The Power Division's achieved Nordic power price typically depends on e.g. the
hedge ratio, hedge price, spot prices, availability and utilisation of Fortum's
flexible production portfolio and currency fluctuations. Excluding the
potential effects from the changes in the power generation mix, a 1 EUR/MWh
change in Power's achieved Nordic sales price results in an approximately EUR
50 million change in Fortum's annual operating profit.


Fortum's results were solid. The company has a flexible, cost-efficient and
climate-benign generation portfolio. Fortum's financial position and liquidity
are strong.


Dividend distribution proposal


The parent company's distributable equity as of 31 December 2010 amounted to
EUR 4,191,864,236.08. Since the end of the financial period, there have been no
material changes in the financial position of the Company.


The Board of Directors proposes to the Annual General Meeting that Fortum
Corporation pay a cash dividend of EUR 1.00 per share for 2010, totalling EUR
888 million based on the number of registered shares as of 1 February 2011.




Espoo, 1 February 2011

Fortum Corporation

Board of Directors




Further information:

Tapio Kuula, President and CEO, tel. +358 10 452 4112
Juha Laaksonen, CFO, tel. +358 10 452 4519


Fortum's Investor Relations, Sophie Jolly, +358 10 453 2552 and Rauno Tiihonen,
+358 10 453 6150 / investors@fortum.com




The Board of Directors has approved Fortum's 2010 financial statements and
Fortum's

auditors have issued their audit report for 2010 on 1 February 2011. The
condensed interim financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34, Interim Financial Reporting, as
adopted by the EU.

Fortum's Annual General Meeting will take place on 31 March 2011 and the
possible dividend-related dates planned for 2011 are:- Ex-dividend date 1 April
2011, - Record date for dividend payment 5 April 2011 and- Dividend payment
date 12 April 2011 Fortum's annual report for 2010 will be published on week 10
at the latest. Publication of financial results in 2011:

- Interim Report January-March on 28 April 2011 at approximately 9.00 EEST,

- Interim Report January-June on 19 July 2011 at approximately 9.00 EEST and

- Interim Report January-September on 20 October 2011 at approximately 9.00
EEST.


Distribution:
NASDAQ OMX Helsinki

Key media
www.fortum.com

Tables are attached.

More information, including detailed quarterly information, is available on
Fortum's website at www.fortum.com/investors.