FORTUM’S LISTING PREPARATIONS PROCEED - BUSINESS STRUCTURES AND TARGETS FOR EFFICIENCY IMPROVEMENTS SPECIFIED

The Ministry of Trade and Industry has stated today that it will continue the preparations for the sale of Fortum’s shares in order for the marketing of the shares to take place during September, market conditions permitting. The intention is to apply for a listing of Fortum on the Helsinki Exchanges at about the same time.

 

Fortum’s targets and strategies have been specified further. Fortum concentrates on energy in its operations. The Group’s home market is Northern Europe, where the company’s position will be strengthened further. Select international operations will be developed in the liberalising energy market, in particular in the British Isles, continental Europe and South East Asia.

 

From the beginning of next year, Fortum will have five divisions: Oil and Gas, Power and Heat, Operation and Maintenance, Engineering, and Chemicals. The most significant business divisions are Oil and Gas and Power and Heat. Operation and Maintenance and Engineering will support these two. The operations of Chemicals, which is largely independent of Fortum’s energy-related business, will be separately incorporated and ways for maximising the value of Chemicals will be reviewed.

 

- Our aim is to reach 12-15 per cent return on capital employed before taxes and the same 12-15 per cent return target also applies to return on equity after taxes. In order to reach this Group-level target, we have to make our present operations more efficient and invest in new projects and make acquisitions which fulfil these criteria, says Mr. Heikki Marttinen, President and CEO of Fortum.

 

- We will make our operations more efficient by reorganising our divisions. The reorganisation will intensify our focus on energy. We estimate to be able to reduce our annual cost level by about FIM 100 million during the next few years by closer co-operation between IVO and Neste as a result of the new business structure. Part of these savings originates from making our administration more efficient, Marttinen says. 
                                                                                                    

- Also, the current operations will be reorganised. We have estimated that the benefit from the efficiency improvements in the operations of power plants, refineries and service stations will be about FIM 200 million per annum by the year 2000. This includes, for example, rebranding the Kesoil service stations under the Neste brand, and put two units of the Inkoo Power Plant in long term reserve, says Marttinen.

 

- Of course, there will also be non-recurrent costs in the incorporation of the operations of IVO and Neste, which we have estimated to be FIM 550 million. Of this, FIM 517 million has already been paid as transfer tax to the government. The rest consists of various smaller amounts. In addition, there will also be a non-recurrent cost of about FIM 70 million for the rebranding of the service stations, Marttinen continues.

 

Fortum’s investment plans apply mainly to energy projects in Northern Europe.

 

- There are several possibilities, because the demand for electricity and environmentally cleaner traffic fuels are on the increase and the liberalisation of the markets speeds up structural changes, Marttinen predicts.

 

- Fortum’s experience in importing energy from Russia, which has continued without disruption during the recent upheavals, and our participation in East-West co-operation enables us in due course to participate in the long-term opportunities that are opening up between East and West, Marttinen concludes. 

 

Fortum Corporation

 

 

Antti Ruuskanen

Executive Vice President, Communications

 

 

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