Financial Statements 2003

Fortum Corporation STOCK EXCHANGE RELEASE
5 February 2004 at 9.00 a.m.


Financial Statements 2003

Strong financial performance by Fortum
- moving towards a new company structure

The year in brief

- Decision to separate and list oil business
- Earnings per share 15% up on previous year, fourth-quarter
earnings up by 23%
- Operating profit from ongoing businesses up by EUR 547 million
or 67%
- Very strong cash flow EUR 1,577 million
- Major refinancing arrangements
- Firm foothold in Norway and Russia
- Proposed dividend EUR 0.42 per share (EUR 0.31 in 2002),
an increase of 36%


Key figures IV/03 IV/02 2003 2002

Net sales, EUR million 2,837 3,290 11,392 11,148
Operating profit, EUR million 419 391 1,420 1,289
- excluding non-recurring 385 403 1,360 974
items, EUR million
Profit before taxes, EUR mill. 373 318 1,184 1,008
Earnings per share, EUR 0.27 0.22 0.91 0.79
Shareholders’ equity per share, EUR 7.55 6.97
Capital employed 12,704 13,765
(at end of period), EUR million
Interest-bearing net debt 5,626 5,848
(at end of period), EUR million*)
Investments, EUR million 1,136 4,381
Net cash from operating 1,577 1,351
activities, EUR million
Return on capital employed, % 11.4 11.1
Return on shareholders’ equity, %*) 12.3 10.5
Gearing, %*) 85 80
Average number of employees 13,343 14,053
Average number of shares, 1,000s 846,831 845,642

*) the figure for 2003 includes the impact of the redemption of
the preference shares worth EUR 1.2 billion issued by Fortum
Capital Ltd


2003 was a successful year for Fortum. The company's financial
performance continued to improve: both the operating results and
cash flow from operating activities were clearly strengthened.
The balance sheet and financing structure were significantly
clarified, following an extensive refinancing programme. Net debt
was reduced even though the redemption of the Fortum Capital Ltd
preference shares worth EUR 1.2 billion previously accounted for
as minority interest, was financed with debt.

One of the key financial targets, ROE 12%, was exceeded for the
first time.

In September, Fortum decided to commence preparations to separate
its oil business into a new company and subsequently to list the
company on the Helsinki Stock Exchanges. Fortum also decided to
invest approximately EUR 500 million in an upgrade of the Porvoo
refinery in order to take advantage of well-established market
trends and thereby further improve its competitiveness and
profitability. These strategic decisions will enable Fortum to
further increase its Nordic utility focus and to continue its
active participation in the restructuring of the Nordic power and
heat markets.

Fortum's market position was strengthened in its core business
area, the Nordic countries and the rest of the Baltic Rim.
Important strategic steps were taken in Norway and in north-
western Russia when concluding an agreement with E.ON AG on a
swap of power assets. In addition, Fortum acquired further shares
in Hafslund ASA on the market, thereby increasing its shareholding
interest in the company to 34.1%. In December, a decision was
taken to participate in the new fifth nuclear power unit in
Finland with a 25% share.

The key market drivers - the market price of electricity and the
international oil refining margin - were significantly higher than
during the previous year. The year was characterised by a deficit
in water reservoirs and low hydropower generation resulting in a
higher than normal need for thermal power generation. Nordic
electricity consumption fell somewhat, mainly due to the milder
than normal weather and the price elasticity of demand. However,
Fortum was able to increase its market share of sales volumes to
15% of total Nordic consumption. The Brent Complex reference
margin was more than double that of the previous year. Fortum´s
sales of oil products increased slightly due to increased exports.

The various performance improvement measures contributed to the
positive trend in the results. The integration of Birka Energi
progressed very well. The synergy benefits achieved during 2003
amounted to approximately EUR 130 million. Thus the target set for
2004, EUR 100 million, was exceeded ahead of schedule.

Net sales and results

October-December

Group net sales stood at EUR 2,837 (EUR 3,290 in October-December
2002) million. The decrease was mainly attributable to the gas
and oil business.

Group operating profit totalled EUR 419 (391) million. The
operating profit from ongoing businesses, that is excluding non-
recurring items and discontinuing operations, stood at EUR 385
(339) million, an increase of EUR 46 million compared to the
corresponding period in 2002. Earnings per share were EUR 0.27
(0.22).

Despite the significant fall in electricity market prices, the
results for the power and heat businesses, excluding non-recurring
items, were at the same level as during the corresponding period
last year. Markets´ results improved significantly and Oil
Refining and Marketing's business was boosted by stronger oil
refining margins.

January-December

Group net sales stood at EUR 11,392 million (EUR 11,148 million in
2002).

Net sales by segment

EUR million 2003 2002

Power, Heat and Gas 3,418 3,644
Distribution 688 640
Markets 1,540 1,280
Oil Refining and Marketing 7,192 7,083
Other operations 84 64
Internal invoicing -1,530 -1,668
Total 11,392 11,043
Discontinuing operations*) - 105
Group 11,392 11,148
*) internal sales excluded

Group operating profit totalled EUR 1,420 (1,289) million.
Operating profit excluding non-recurring items stood at EUR 1,360
(974) million, an increase of EUR 386 million over the 2002
figures. Taking into consideration the impact of discontinuing
operations, the rise in operating profit was EUR 547 million. The
net amount of non-recurring items was EUR 60 (315) million. Most
of the non-recurring items were gains on sales of fixed assets.

Total electricity sales volumes remained at the previous year´s
level, whereas heat volumes increased slightly. There was a marked
improvement in the results for the Power, Heat and Gas segment due
to higher electricity prices and improved efficiency of
operations. Excluding non-recurring items, the improvement was
even bigger.

Distribution´s results were somewhat lower than the previous year
due to substantial gains on sales in 2002. Operating profit
excluding non-recurring items was up on the previous year´s
figures.

The results for Markets improved significantly compared to last
year. The main enablers were better risk management, improved
business processes and cost reductions.

The oil refining margins were markedly higher than in 2002, which
gave a major boost to Oil Refining and Marketing´s results.
Shipping enjoyed high freight rates, especially for crude oil. The
fleet utilisation rate continued to be high as a result of renewed
tonnage and specialist knowledge of arctic conditions. The Oil
Retail business also performed well.

Operating profit by segment

EUR mill. 2003 2002

Power, Heat and Gas 780 617
Distribution 247 279
Markets 43 -11
Oil Refining and Marketing 396 253
Other operations -46 -64
Total 1,420 1,074
Discontinuing operations - 215
Group 1,420 1,289

Profit before taxes was EUR 1,184 (1,008) million.

The Group´s net financial expenses were EUR 236 (281) million. The
positive development is a result of strong cash flow, less debt,
the extensive refinancing programme launched in early 2003 and
successful interest risk management during the year.

Minority interests accounted for EUR 90 (73) million of the
results for the period. These minority interests were mainly
attributable to the preference shares issued by Fortum Capital Ltd
in 2000 that were redeemed at year end, and to Fortum Värme
Holding, in which the City of Stockholm has a 50% economic
interest.

Taxes for the period totalled EUR 325 (269) million. The tax rate
according to the income statement was 27.4% (26.7%).

Net profit for the period was EUR 769 (666) million. Earnings per
share were EUR 0.91 (0.79). Return on capital employed was 11.4%
(11.1%) and return on shareholders´ equity was 12.3% (10.5%).

As from 1 March 2002, the former Birka Energi has been 100%
consolidated into Fortum’s figures. Until then, it had been
consolidated using the proportionate method on the basis of 50%
ownership.

SEGMENT REVIEWS

Power, Heat and Gas

The main business area comprises power and heat generation and
sales as well as gas operations in the Nordic countries and other
parts of the Baltic Rim. Fortum is the second largest power
company in the Nordic countries as well as the leading heat
producer in the region.


EUR million IV/03 IV/02 2003 2002

Net sales 860 1,234 3,418 3,644
- electricity sales 484 633 1,877 1,661
- heat sales 235 233 775 686
- other sales 141 368 766 1,297
Operating profit 274 284 780 617
- excluding non-recurring 271 271 779 501
items
Net assets (at end of 8,869 8,748
period)
Return on net assets, % 8.9 7.5

The year was characterised by a deficit in water reservoirs and
low hydropower generation resulting in a higher than normal need
for thermal power generation. At the beginning of the year, the
need for expensive peak load capacity was reflected in high
electricity prices. At the end of the year, prices declined due to
low consumption caused by milder than normal weather.

According to preliminary statistics, electricity consumption in
the Nordic countries decreased by 3% to 378 TWh. Approximately
half of the decrease in the consumption was due to the price
elasticity of demand, caused by very high market prices in the
beginning of the year. The other half was due to the warm weather
during the second half of the year.

During the fourth quarter, the average price of electricity in
Nord Pool, the Nordic power exchange, was EUR 34.1 (49.7) per
megawatt-hour or 31% lower than during the corresponding period in
2002, when the price was exceptionally high. Due to the hedging
and somewhat different sales structure, the price of electricity
sold by Fortum increased slightly.

The average price of electricity in Nord Pool for the whole year
was EUR 36.7 (EUR 26.9 in 2002) per MWh, about 36% higher than in
2002. The corresponding price increase in electricity sold by
Fortum was 31%.

Fortum’s electricity sales in the Nordic countries totalled 57.1
(54.1) TWh and 2.4 (5.9) TWh in other countries. Fortum’s Nordic
sales represented approximately 15% (14%) of total Nordic
electricity consumption.

Power generation in Fortum’s wholly and partly owned power plants
totalled 53.2 (52.2) TWh. In the Nordic countries, Fortum
generated 51.2 (46.5) TWh of electricity, which represented
approximately 14% (12%) of the region’s total consumption. At year
end, Fortum´s electricity generating capacity in the Nordic
countries was 11,186 (11,091) MW, while its total capacity was
11,329 (11,511) MW.

Fortum’s total heat generating capacity was 9,688 (9,175) MW, of
which 8,015 (7,907) MW was in the Nordic countries. Fortum
generated 19.4 (17.8) TWh of heat in its own and partly owned
power plants.

Electricity sales by area

TWh IV/03 IV/02 2003 2002

Sweden*) 7.5 8.4 28.2 28.0
Finland 7.7 7.9 28.9 26.1
Other countries 0.3 0.7 2.4 5.9
Total 15.5 17.0 59.5 60.0

Heat sales by area

TWh IV/03 IV/02 2003 2002

Sweden*) 3.0 3.6 9.5 8.2
Finland 2.9 2.7 10.3 9.8
Other countries 1.1 1.2 3.9 4.5
Total 7.0 7.5 23.7 22.5
*) The effects of Birka Energi`s change of ownership on
electricity and heat sales volumes were 2.4 TWh and 1.4 TWh
respectively in 2002.


Own power generation by IV/03 IV/02 2003 2002
source, TWh, in the Nordic
countries
Hydropower 5.0 4.0 16.9 18.1
Nuclear power 6.3 6.4 23.8 22.0
Thermal power 2.8 3.4 10.5 6.4
Total 14.1 13.8 51.2 46.5


Share of own production, IV/03 IV/02 2003 2002
%, in the Nordic countries
Hydropower 35 29 33 39
Nuclear power 45 46 46 47
Thermal power 20 25 21 14
Total 100 100 100 100


Distribution

Fortum owns and operates distribution and regional networks and
distributes electricity to a total of 1.4 million customers in
Sweden, Finland, Norway and Estonia.

EUR million IV/03 IV/02 2003 2002

Net sales 186 184 688 640
- distribution network 159 147 569 519
transmission
- regional network 19 26 88 87

transmission
- other sales 8 11 31 34
Operating profit 58 61 247 279
- excluding non-recurring 58 60 227 187
items
Net assets (at end of 3,129 3,199
period)
Return on net assets, % 7.9 9.3

Fortum entered the Norwegian market in the spring of 2003
following its acquisition of Østfold Energi Nett AS with some
93,000 customers.

In December, storms and snow caused some power failures in Sweden,
Finland and Norway, affecting around 60,000 customers in the south-
west of Sweden, 60,000 customers in Finland and 9,000 customers in
Norway. The total cost of the interruptions was around EUR 7
million.

During the fourth quarter, the volume of distribution and regional
network transmissions totalled 6.5 (6.5) TWh and 5.7 (6.6) TWh
respectively.

For the whole year, the volume of distribution and regional
network transmissions totalled 21.9 (20.2) TWh and 21.1 (21.7) TWh
respectively. Electricity transmissions via the regional
distribution network to customers outside the Group totalled 15.8
(15.3) TWh in Sweden and 5.3 (6.3) TWh in Finland.

Volume of distributed IV/03 IV/02 2003 2002*)
electricity by area, TWh
Sweden*) 3.9 4.6 14.2 13.4
Finland 1.8 1.8 6.2 5.4
Norway 0.7 0.0 1.3 0.0
Other countries 0.1 0.1 0.2 1.4
Total 6.5 6.5 21.9 20.2
*) The Birka Energi acquisition accounts for a 1.6 TWh increase in
the volume transmitted via the distribution networks in 2002. The
distribution and regional networks in Sweden have been re-
classified resulting in a slight change in the distribution
volumes.

Number of electricity 31.12.2003 31.12.2002
distribution customers by
area, 1,000s
Sweden 855 890
Finland 400 390
Other countries*) 115 20
Total 1,370 1,300
*) Fortum Distribution AS (formerly Østfold Energi Nett AS) is
included in the figures as of 1 May 2003.

Markets

The Markets segment focuses on the retail sale of electricity and
oil products, mainly heating oil, as well as related services to a
total of 1.3 million private and business customers in Sweden,
Finland and Norway.


EUR million IV/03 IV/02 2003 2002

Net sales 408 418 1,540 1,280
Operating profit 21 -19 43 -11
- excluding non–recurring 21 -19 43 -12
items
Net assets (at end of 16 55
period)
Return on net assets, % 72.0 -11.4


During the fourth quarter, electricity sales totalled 8.7 (9.6)
TWh and sales of heating oil stood at 0.3 (0.4) million tonnes.

In 2003, electricity sales totalled 33.5 (33.2) TWh and sales of
heating oil amounted to 1.2 (1.3) million tonnes. The Markets
business unit buys its electricity and oil products on market
terms.

In Norway, the electricity sales business of Østfold Energi
Kraftsalg AS was integrated into Fortum Markets. At year end,
Fortum had over 83,000 Norwegian electricity customers.

One focus during 2003 was on improvements to customer service and
on quality assurance. As a result, both ISO 9001 and ISO 14001
certificates were awarded to Fortum Markets' Nordic organisation.

Together with better cost control, the business processes
improvement programme launched in the spring made a major
contribution to the turnaround in the unit's results.

Oil Refining and Marketing

The activities of Oil Refining and Marketing cover the production,
refining and marketing of oil as well as logistics. The main
products are traffic fuels and heating oils.


EUR million IV/03 IV/02 2003 2002


Net sales 1,757 1,968 7,192 7,083
Operating profit 78 42 396 253
- excluding non–recurring 62 48 381 205
items
Net assets (at end of 1,402 1,510
period)
Return on net assets, % 27.0 16.0


The Brent Complex reference refining margin in north-western
Europe during the fourth quarter was USD 2.3/bbl (1.9/bbl).

In 2003, refining margins in north-western Europe recovered
appreciably compared to the previous year. The reference margin
used by Fortum averaged USD 2.7 (1.0) per barrel. Fortum's
refining margin remained at around USD 2/bbl higher than this
reference margin.

Crude oil prices showed an upward trend in 2003, climbing to a
peak of USD 34/bbl early in the year. Prices were more moderate
towards the end of the year but nevertheless remained at USD
28–30/bbl. As a result, inventory gains were EUR 13 (57) million.

In September, Fortum decided to invest approximately EUR 500
million in the Porvoo refinery to further enhance the refinery’s
competitiveness and financial performance. The investment is
scheduled for completion by the end of 2006 and will serve to
convert the crude now ending up as heavy fuel oil into sulphur-
free diesel fuel. Production of sulphur-free diesel at the
refinery will grow by about one million tonnes per year. Fortum
currently refines some 4 million tonnes of diesel a year. The
investment does not increase the refinery's total refining
capacity. Fortum’s both refineries are already fully converted to
the production of sulphur-free traffic fuels.

SeverTEK, a joint venture equally owned by Fortum and Lukoil,
commenced oil production in the South Shapkino oil field in north-
west Russia in mid-July. At year end, the total daily production
rates were some 24,000 barrels per day (approx. 1 million tonnes
per year). The planned maximum production rate of 50,000 barrels
per day (of which Fortum’s share is 25,000 barrels per day) is
expected to be reached towards the end of 2004. Fortum’s share in
the proven and commercial reserves of this oil field is estimated
at about 82 million barrels.

The harsh ice conditions in the Gulf of Finland in 2003
significantly increased the level of freight rates. In the second
and third quarters, freight rates stayed at around the average
level, but rose again sharply towards the end of the year.
Fortum's fleet availability and utilisation rate remained at a
good level throughout the year.

Exports of oil products refined by Fortum in Finland amounted to
5.5 (5.2) million tonnes, of which gasolines accounted for 2.8
million tonnes and diesel fuels for 2 million tonnes.


Deliveries of petroleum products refined by Fortum by product
group
1,000 t 2003 2002

Gasoline 4,434 4,595
Diesel 3,886 3,619
Aviation fuel 611 586
Light fuel oil 1,474 1,503
Heavy fuel oil 1,314 1,233
Other 1,672 1,504
Total 13,391 13,040

Deliveries of petroleum products refined by Fortum by area
1,000 t 2003 2002

Finland 7,889 7,845
Other Nordic countries 1,921 1,982
Baltic countries and 62 41
Russia
USA and Canada 1,252 1,276
Other countries 2,267 1,896
Total 13,391 13,040

Business development and restructuring

In January 2003, Fortum and E.ON AG agreed on a swap of power
assets. Fortum acquired assets in Norway and north-western Russia
and sold some non-core assets in Ireland, Germany and southern
Sweden. Transactions relating to this agreement were completed by
the end of June.

The disposal of the Norwegian E&P assets was completed in March.
In June, Fortum divested its retail gas sales operations and
later in the year closed down its gas trading operations in the UK.

In September, Fortum announced that it will commence preparations
to separate its oil business into a new company and to have the
new company listed on the Helsinki Stock Exchanges. The new
company will comprise all of Fortum’s existing oil business with
its refining, marketing, shipping and oil production activities.

This strategic decision will enable Fortum to further increase its
Nordic utility focus and to continue to participate actively in
the restructuring of the Nordic power and heat markets. It will
also improve the competitive position and commercial prospects of
the oil business and create two leading Nordic companies with
strong competitive positions in their respective markets.

Investments and divestments

Fortum acquired 21.4% of the shares in Hafslund ASA, the second
biggest electricity company in Norway with 600,000 electricity
sales customers, 550,000 distribution customers and about 3 TWh of
hydropower production. In addition, Fortum acquired all the shares
in Østfold Energi Nett AS, Østfold Energi Kraftsalg AS and Østfold
Energi Entreprenor AS with a total of 83,000 electricity sales and
93,000 distribution customers, and 49% of Fredrikstads Energi AS
with 77,000 customers. After some further acquisitions from the
market, Fortum owned 34.1% of the share capital in Hafslund at the
end of the year. The total acquisition cost of the Hafslund shares
was approximately EUR 280 million.

Fortum acquired a further 9.5% of the shares in OAO Lenenergo, the
largest utility company in north-west Russia with some 1.3 million
electricity customers and a production capacity of 14 TWh of
electricity and 26.3 TWh of heat. Fortum owned 15.9% of the share
capital and 18.6% of the voting rights at the end of 2003.

Fortum sold its power plants in Burghausen, Germany and Edenderry,
Ireland to E.ON AG. E.ON also acquired the shares and business of
an electricity distribution company in southern Sweden with some
43,000 customers.

Fortum acquired 60% of shares in Tartu Energia, the Estonian
heating company, and 73% of shares in the Polish district heating
company DZT.

The modernisation and expansion of a CHP plant in the Stockholm
area continued through 2003. The investment will create additional
capacity and shift the emphasis of the fuel mix towards recycled
fuels (mainly municipal waste). Annually, the new boiler will
replace 70,000 tonnes of fuel oil with recycled fuel.

The tanker fleet renewal continued, and new retail outlets were
opened in the Baltic States, Poland and in Russia.

Investments in fixed assets during the year totalled EUR 1,136
(4,381) million. Investments excluding acquisitions were EUR 550
(649) million.

The listing of the oil businesses will facilitate a EUR 500
million investment in additional sulphur-free diesel production
capacity at the Porvoo refinery. While the total production
capacity will remain unchanged, the refinery will be able to
significantly increase the production of high-margin products by
utilising more Russian crudes, for example, which are
competitively available as Porvoo is adjacent to established
Russian crude oil export routes to the Western markets. The annual
production of sulphur-free diesel at the refinery will grow by
about one million tonnes and will be mainly replacing heavy fuel
oil production. Fortum expects to increase its refining margin by
at least USD 1/bbl and thus achieve an attractive return on
investment.

The high expected return from the upgrade investment is driven by
the Porvoo refinery’s ability to produce more high-margin,
environmentally benign products from less expensive crude oil. The
demand for these products is rapidly growing in Fortum’s key
markets. The investment is expected to be completed by the end of
2006.

Fortum will participate in the new fifth nuclear power plant unit
in Finland with a share of approximately 25%. Thus Fortum´s
investment as an equity share will be EUR 180 million during 2004
- 2009, entitling it to approximately 400 MW of the plant´s
capacity. Fortum will also give a shareholders' loan of EUR 45
million.

Fortum has a call option during the first quarter of 2005 to
purchase all of the shares of E.ON Finland Oyj (formerly Espoon
Sähkö Oyj) owned by E.ON at the time of the exercise of the call
option.

Financing

Fortum's net debt decreased by EUR 222 million during 2003 even
though the EUR 1.2 billion preference shares issued by Fortum
Capital Limited accounted for as a minority interest in the
Group’s financial statements were refinanced by debt. At year end,
net debt stood at EUR 5.626 million (EUR 5.848 million in 2002)
and the gearing ratio was 85% (80%). A comparable gearing number,
in which the Fortum Capital Ltd preference shares have been taken
into account as debt, would have been 115% at the end of 2002, as
disclosed in the Interim Report for January-September 2003.

The Group's net financing expenses for 2003 were EUR 236 (281)
million.

During 2003, Fortum successfully completed several significant
financing transactions in accordance with its refinancing plan
aimed at clarifying the Group's financing structure and decreasing
its long-term cost of funding. In February, Fortum Oyj established
a SEK 7 billion Swedish Medium Term Note Programme and in June
issued SEK 1.5 billion of bonds under the programme. In July,
Fortum Oyj established a EUR 4 billion Euro Medium Term Note
(EMTN) Programme and made a EUR 1 billion debt issue under the
programme in November. The funds raised by the issue were used in
December to redeem the above-mentioned preference shares. Also in
November, Fortum Oyj successfully completed an offer made to
holders of approximately EUR 1.3 billion of bonds issued by Fortum
Power and Heat AB to exchange their bonds for new bonds issued
under the Fortum Oyj EMTN Programme.

Group liquidity remained good. At year end, cash and marketable
securities totalled EUR 439 (592) million. The Group also had a
total of approximately EUR 1,600 million available under undrawn
credit facilities. In addition to the unused overdraft facilities,
this included EUR 400 million of bilateral short term credit
facilities renewed in December and EUR 1 billion which was undrawn
under Fortum Oyj's EUR 1.2 billion syndicated bank facility signed
in April.

Fortum Oyj 's credit ratings at year end were at the same level as
at year end 2002. Standard & Poor's long term credit rating for
Fortum Oyj was BBB+ (stable) and Moody's Baa2 (positive outlook).

At year end, the average interest rate of loans after hedging was
4.2%.

Shares and share capital

A total of 270.3 million Fortum shares were traded for a total of
EUR 1,876 million during 2003. The highest quotation was EUR 8.75
(12 December), the lowest EUR 5.66 (20 May), and the average
quotation EUR 6.94. The closing quotation on 30 December was EUR
8.18.

A total of 5.4 million warrants relating to Fortum Corporation’s
1999 bond loan to employees were traded for a total of EUR 16.6
million. The average quotation was EUR 3.08 and the closing
quotation on 30 December was EUR 4.13. A total of 159,520 shares
were subscribed for and entered into the trade register in 2003.
In addition, a total of 16,004 shares were subscribed for but not
entered into the trade register before the year end.

A total of 10,131 warrants relating to Fortum Corporation’s 1999
share option programme for key employees were traded for a total
of EUR 16.5 million. The average quotation was EUR 1,629 and the
closing quotation on 30 December was EUR 2,650. A total of
2,913,000 shares were subscribed for and entered into the trade
register in 2003. In addition, a total of 965,000 shares were
subscribed for but not entered into the trade register before the
year end.

After these subscribtions, Fortum Corporation´s share capital is EUR
2,886,030,415 and the total number of registered shares is
848,832,475. Fortum Corporation’s share capital increased by a
total of EUR 10,446,568.

At year end, the Finnish State´s holding in Fortum was 60.5%. The
proportion of international shareholders stood at 22.2%.

Currently the Board of Directors has no unused authorisations from
the General Meeting of shareholders to issue convertible loans or
bonds with warrants, issue new shares or acquire the company´s own
shares.

Long-term incentive schemes

In addition to the above arrangements, Fortum currently has two
share option programmes for key employees, issued in 2001 and 2002
respectively. At the end of 2003, both option schemes covered some
350 persons. The proportion of shares subscribed for under these
share option schemes is a maximum of 4.5% of Fortum´s present
share capital and voting rights.

In 2003, Fortum launched a new Performance Share Arrangement for
key employees. The potential reward will be based on the
performance of the Group, its business units and the individual
manager as well as appreciation of the Fortum share. In the first
stage the new arrangement concerns some 190 managers.

Fortum estimates that 0.1% to 0.3% of the outstanding Fortum
shares that is 1,000,000 to 2,500,000 shares, will be allocated
under each individual plan. The shares will be bought on the
market and thus there will be no dilution effect. This arrangement
is intended to replace other possible long-term incentive schemes
for senior management.

Group personnel

In 2003, the Fortum Group employed an average of 13,343 (14,053)
people. The reduction is mainly attributable to combining of the
businesses of Birka Energi and Fortum as well as to the formation
of the new associated company Enprima at the beginning of 2003. At
year end, the number of employees totalled 13,046 (13,670), of
which 12,649 (13,118) were permanent employees. The number of
employees in the parent company, Fortum Corporation, at year end
totalled 581 (310).

Group management

Mr Risto Rinne was appointed President, Oil Sector and member of
the Corporate Executive Committee as of 15 January 2004.

Events after the period under review

Early February, Fortum made an agreement on the purchase of
additional shares of OAO Lenenergo, by which Fortum´s ownership of
the share capital and the voting rights would increase by 5.1% to
21.0%, and by 2.1% to 20.7% respectively. The transaction is
subject to the approval by Russian competition authorities, as
Fortum's ownership in Lenenergo would exceed 20%.

According to its strategy, Fortum has taken further steps in
divesting non-core businesses: the Flow Improver Agent (FIA), a
specialty chemicals business, was sold to M-I Finland Oy, an
affiliate of M-I LLC, headquartered in Texas, USA and a contract
was signed to divest the engineering business in Hungary, ETV-
Eröterv, to the management group of the company.

Outlook

The key market drivers influencing Fortum´s performance are the
market price of electricity and the international oil refining
margin. Other important market drivers are the price of crude oil,
the exchange rates of the US dollar and the Swedish krona. During
2005, emissions trading may become a new key market driver.

During the past five years, the volume of Fortum´s CO2-free power
generation has increased from 30 TWh to 41 TWh. Its share was 78%
of Fortum´s power generation in 2003. With this production
portfolio, Fortum is in a good position considering the possible
impacts of emissions trading.

According to general market information, electricity consumption
in the Nordic countries is predicted to increase by about 1% a
year over the next few years. During 2003, the average spot price
for electricity was EUR 36.7 per megawatt-hour on the Nordic
electricity market, or 36% higher than the corresponding figure in
2002. At the beginning of February, the deficit in water
reservoirs was 15 TWh. In January, the spot price was at the level
of EUR 29 per megawatt-hour. The electricity forwards for February-
May 2004 were in the range of EUR 27-28 per MWh, and for the rest
of 2004 in the range of EUR 26-27 per MWh. For the next 12 months
Fortum's hedging level for electricity sales is approximately 60%.

The annual synergy benefits generated by the creation of a pan-
Nordic power and heat business totalled some EUR 130 million
already in 2003. Additional performance improvement potential has
been identified in the whole Group and the work to capture it has
started.
The continuous operations of the power and heat businesses usually
result in a significantly better performance in the first and last
quarter of the year than in the second and third quarter.

The oil refining reference margin in north-western Europe (Brent
Complex) was considerably higher than in 2002 averaging USD
2.7/bbl (USD 1.0/bbl in 2002). During the fourth quarter, it
averaged USD 2.3/bbl (USD 1.9/bbl). In January 2004, the refining
reference margin averaged USD 3.1/bbl. For several years, the
international refining reference margin has averaged USD 1.5 –
2.0/bbl. Fortum’s premium margin is expected to remain at
the strong levels of previous years. No major maintenance
shutdowns are planned at the refineries during 2004.

The average price for Brent crude oil was USD 28.8/bbl in 2003. In
January 2004, the price averaged USD 31.2/bbl while the
International Petroleum Exchange’s Brent futures for the balance
of the year 2004 was USD 28.3/bbl at the end of January. The price
of crude oil has an impact on the results of Oil Refining and
Marketing through inventory gains and losses.

SeverTEK, a joint venture equally owned by Lukoil and Fortum,
started oil production at the South Shapkino oil field in north-
western Russia in 2003. Production will gradually be increased and
full capacity, 50,000 bbl/d (Fortum´s share 25,000 bbl/d), is
estimated to be reached by the end of 2004. Fortum's 50% share of
SeverTEK's results are consolidated using the equity method.

The refining margins and shipping freights are exposed to the USD
exchange rate volatility and therefore a weakened US dollar will
have a negative impact on the profitability of the oil business.
However, this impact is mitigated because of the forward hedging
policy of the estimated US dollar sales margins.

In 2003, the average euro exchange rates against the US dollar and
the Swedish crona were 1.1346 and 9.1430 respectively. At the end
of December, the exchange rates were 1.263 and 9.080 respectively.

Preparations for listing the oil businesses were started, aiming
at readiness towards the end of the year. The timing of the
planned initial public offering will depend on market conditions,
however.

During 2003, many strategic measures were brought to conclusion
and the company's financial performance was most satisfactory.
Fortum has the prerequisites to excel and efforts will be focused
on improving its future performance in all key areas. Considering
the current market outlook, the company's hedging positions and
the continuing efficiency improvements, Fortum is well-positioned
for another good year.

Dividend distribution proposal

The Group’s non-restricted equity and distributable equity as of
31 December 2003 amounted to EUR 3 479 million. The parent
company’s distributable equity as of 31 December 2003 stood at EUR
1 381 million.

The Board of Directors proposes to the Annual General Meeting that
Fortum Corporation should pay a dividend of EUR 0.42 per share for
2003, totalling EUR 357 million.

The Annual General Meeting will be held on 25 March at 1.00 pm at
Finlandia Hall in Helsinki.


Espoo, 4 February 2004
Fortum Corporation
Board of Directors

Further information:
Mikael Lilius, President and CEO, tel. +358 10 452 9100
Juha Laaksonen, CFO, tel. +358 10 452 4519


The figures have been audited.

Fortum will adopt the International Financial Reporting Standards
(IFRS/IAS) as of 2005.

Publication of results in 2004:
Interim Report 1 January - 31 March 2004 will be published on 22
April 2004
Interim Report 1 January - 30 June 2004 will be published on 28
July 2004
Interim Report 1 January - 30 September 2004 will be published on
21 October 2004


Information on the financial statement release, and and the sensitivity
analysis are available on Fortum’s website at:
www.fortum.com/investors


Fortum Corporation
Carola Teir-Lehtinen
Senior Vice President, Corporate Communications


Distribution:
Helsinki Exchanges
Key media
www.fortum.com


FORTUM GROUP

JANUARY-DECEMBER 2003
Audited
CONSOLIDATED INCOME STATEMENT

MEUR
Q4/03 Q4/02 2003 2002

Net sales 2837 3290 11392 11148
Share of profits of
associated companies 12 15 41 31
Other operating income 56 34 151 370
Depreciation, amortisation
and write-downs -143 -206 -538 -694
Other operating expenses -2343 -2742 -9626 -9566

Operating profit 419 391 1420 1289
Financial income and expenses -46 -73 -236 -281
Profit before taxes 373 318 1184 1008
Income taxes -113 -111 -325 -269
Minority interests -33 -23 -90 -73
Net profit for the period 227 184 769 666


Earnings per share, EUR 0.27 0.22 0.91 0.79
Fully diluted earnings per share 0.26 0.21 0.90 0.78
Average number of shares,
1,000 shares 846831 845642
Diluted adjusted average number
of shares, 1 000 shares 858732 851482

CONSOLIDATED BALANCE SHEET
MEUR
Dec 31 Dec 31
2003 2002
ASSETS
Fixed assets and other long-term investments 14172 14837
Current assets
Inventories 551 504
Receivables 1400 2027
Cash and cash equivalents 439 592
Total 2390 3123
Total 16562 17960

SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Share capital 2886 2876
Other equity 3520 3020
Total 6406 5896
Minority interests 232 1432
Provisions for liabilities and charges 207 233
Deferred tax liabilities 1843 1866
Long-term liabilities 5186 4599
Short-term liabilities 2688 3934
Total 16562 17960

Equity per share, EUR 7.55 6.97
Number of shares, 1,000 shares 848832 845776

CASH FLOW STATEMENT
MEUR Dec 31 Dec 31
2003 2002

Net cash from operating activities 1577 1351
Capital expenditures -550 -649
Acquisition of shares -570 -1771
Proceeds from sales of fixed assets 142 120
Proceeds from sales of shares 1227 889
Change in other investments -67 33
Cash flow before financing activities 1759 -27

Net change in loans -399 209
Dividends paid -264 -220
Other financing items * -1245 30
Net cash from financing activities -1908 19

Net increase (+)/decrease (-) in cash
and marketable securities -149 -8

* In 2003 includes the redemption of Fortum
Capital Ltd preference shares -1200 million euros

KEY RATIOS
Dec 31 Dec 31
2003 2002

Capital employed, MEUR 12704 13765
Interest-bearing net debt, MEUR 5626 5848
Investments, MEUR 1136 4381
Return on capital employed, % 11.4 11.1
Return on shareholders' equity, % 12.3 10.5
Interest coverage 5.8 4.7
FFO / interest-bearing net debt, % 1) 33.2 28.1
Gearing, % 85 80
Equity-to-assets ratio, % 40 41
Average number of employees 13343 14053

1) FFO = Net cash from operating activities before changes
in working capital

NET SALES BY SEGMENTS
MEUR Q4/03 Q4/02 2003 2002

Power, Heat and Gas 860 1234 3418 3644
Distribution 186 184 688 640
Markets 408 418 1540 1280
Oil Refining and Marketing 1757 1968 7192 7083
Other Operations 23 19 84 64
Eliminations -397 -567 -1530 -1668
Total 2837 3256 11392 11043
Discontinuing operations*) - 34 - 105
Total 2837 3290 11392 11148
*) Internal sales excluded
OPERATING PROFIT BY SEGMENTS

MEUR Q4/03 Q4/02 2003 2002

Power, Heat and Gas 274 284 780 617
Distribution 58 61 247 279
Markets 21 -19 43 -11
Oil Refining and Marketing 78 42 396 253
Other Operations -12 -27 -46 -64
Eliminations - -1 - -
Total 419 340 1420 1074
Discontinuing operations - 51 - 215
Total 419 391 1420 1289

NON-RECURRING ITEMS IN OPERATING PROFIT BY SEGMENTS
MEUR Q4/03 Q4/02 2003 2002

Power, Heat and Gas 3 13 1 116
Distribution - 1 20 92
Markets - - - 1
Oil Refining and Marketing 16 -6 15 48
Other Operations 15 -7 24 4
Total 34 1 60 261
Discontinuing operations - -13 - 54
Total 34 -12 60 315

DEPRECIATION, AMORTISATION AND WRITE-DOWNS BY SEGMENTS
MEUR Q4/03 Q4/02 2003 2002

Power, Heat and Gas 60 59 231 236
Distribution 33 34 143 147
Markets 4 6 16 25
Oil Refining and Marketing 40 51 131 152
Other Operations 6 14 17 22
Eliminations - - - -
Total 143 164 538 582
Discontinuing operations - 42 - 112
Total 143 206 538 694

INVESTMENTS BY SEGMENTS
MEUR Q4/03 Q4/02 2003 2002

Power, Heat and Gas 80 92 545 2619
Distribution 98 62 339 1394
Markets 2 - 28 109
Oil Refining and Marketing 59 68 202 177
Other Operations 8 4 22 7
Total 247 226 1136 4306
Discontinuing operations - 34 - 75
Total 247 260 1136 4381

NET ASSETS BY SEGMENTS
MEUR Dec 31 Dec 31
2003 2002

Power, Heat and Gas 8869 8748
Distribution 3129 3199
Markets 16 55
Oil Refining and Marketing 1402 1510
Other Operations 95 30
Total 13511 13542
Discontinuing operations - 927
Total 13511 14469


RETURN ON NET ASSETS BY SEGMENTS 2)

% Dec 31 Dec 31 Dec 31 Dec 31
2003 2003*) 2002 2002*)

Power, Heat and Gas 8.9 8.9 7.5 6.1
Distribution 7.9 7.2 9.3 6.2
Markets 72.0 71.3 -11.4 -12.4
Oil Refining and Marketing 27.0 26.0 16.0 13.0

2) Return on net assets, % = Operating profit/average net assets
*) Non-recurring items deducted from operating profit

CONTINGENT LIABILITIES
MEUR Dec 31 Dec 31
2003 2002
Contingent liabilities
On own behalf
For debt
Pledges 149 553
Real estate mortgages 91 237
Company mortgages - 32
Other mortgages - 26
For other commitments
Real estate mortgages 55 55
Pledges, company and other mortgages - 8
Sale and leaseback 8 15
Other contingent liabilities 101 474
Total 404 1400

On behalf of associated companies
Pledges and real estate mortgages 12 9
Guarantees 562 345
Other contingent liabilities 182 184
Total 756 538

On behalf of others
Guarantees 15 4
Other contingent liabilities 7 4
Total 22 8
Total 1182 1946
Operating lease liabilities
Due within a year 75 58
Due after a year 103 91
Total 178 149

Liability for nuclear waste disposal 570 545
Share of reserves in the Nuclear Waste
Disposal Fund -560 -535
Liabilities in the balan3) 10 10


3) Mortgaged bearer papers as security
In addition to toher contingent liabilities,
- a guarantee has been given on behalf of Gasum Oy, which covers 75%
of the natural gas commitments arising from the natural gas supply
agreement between Gasum and OOO Gazexport.

Derivatives Dec 31 Dec 31
2003 2002

Interest and currency derivates Contract Fair Not Contract Fair Not
or value rec. or value rec.
notional as an not. as an
value income value income

MEUR
Forward rate agreements 330 - - 2950 -2 -2
Interest rate swaps 4253 -97 -69 6898 21 34
Forward foreign exchange
contracts 4) 8396 129 49 5626 63 30
Currency swaps 333 -3 1 2334 227 60
Purchased currency options - - - 248 9 11
Written currency options - - - 66 1 1

4) Incl. also contracts used for equity hedging

Oil futures and forward
instruments Volume Fair Not Volume Fair Not
value rec. value rec.
as an as an
income income

1000 bbl MEUR MEUR 1000 bbl MEUR MEUR

Sales contracts 22304 -11 -11 10697 -11 -11
Purchase contracts 37239 14 14 12170 13 13
Purchased options 150 - - - - -
Written options 600 - - - - -

Electricity derivatives Volume Fair Not Volume Fair Not
value rec. value rec.
as an as an
income income

TWh MEUR MEUR TWh MEUR MEUR

Sales contracts 58 -100 -65 94 -2065 -1406
Purchase contracts 50 136 101 78 1709 1051
Purchased options - - - 2 1 -1
Written options - - - 6 3 6


Natural gas derivates Volume Fair Not Volume Fair Not
value rec. value rec.
as an as an
income income

Mill.th. MEUR MEUR Mill.th. MEUR MEUR

Sales contracts 8 - - 4072 127 127
Purchase contracts 8 - - 3773 -115 -115
Purchased options - - - 1287 -7 -7
Written options - - - 1335 - -


The fair values of derivative contracts subject to public trading are
based on market prices as of the balance sheet date. The fair values of
other derivatives are based on the present value of cash flows resulting
from the contracts, and, in respect of options, on evaluation models.
The amounts also include unsettled closed positions. Derivative contracts
are mainly used to manage the group's currency, interest rate and
price risk.

QUARTERLY NET SALES BY SEGMENTS
MEUR Q4/03 Q3/03 Q2/03 Q1/03 Q4/02 Q3/02 Q2/02 Q1/02

Power, Heat and Gas 860 626 718 1214 1234 694 783 933
Distribution 186 143 160 199 184 138 156 162
Markets 408 329 327 476 418 286 270 306
Oil Refining and
Marketing 1757 1717 1643 2075 1968 1794 1790 1531
Other Operations 23 22 19 20 19 15 16 14
Eliminations -397 -310 -432 -391 -567 -344 -356 -401
Total 2837 2527 2435 3593 3256 2583 2659 2545
Discontinuing
operations - - - - 34 22 23 26
Total 2837 2527 2435 3593 3290 2605 2682 2571

QUARTERLY OPERATING PROFIT BY SEGMENTS
MEUR Q4/03 Q3/03 Q2/03 Q1/03 Q4/02 Q3/02 Q2/02 Q1/02

Power, Heat and Gas 274 77 136 293 284 28 156 149
Distribution 58 47 61 81 61 34 72 113
Markets 21 14 15 -7 -19 2 4 2
Oil Refining and
Marketing 78 118 75 125 42 76 79 57
Other Operations -11 -16 -2 -17 -27 -17 -10 -12
Eliminations - -1 - - -1 1 1 -1
Total 420 239 285 475 340 124 302 308
Discontinuing
operations - - - - 51 25 120 19
Total 420 239 285 475 391 149 422 327