Fortum Corporation: Interim Report January - June 2006

Fortum Corporation STOCK EXCHANGE RELEASE 19 July 2006

Interim Report January - June 2006


Good performance continued

January-June in brief (continuing operations)
- Comparable operating profit EUR 772 (654) million, +18%
- Profit before taxes 779 (571) million, +36%
- Earnings per share EUR 0.64 (0.45), +42%
- Strong cash from operating activities EUR 786 (516) million
- Fortum Espoo acquisition closed (former E.ON Finland)
- Return on shareholders' equity target revised to 14%


Key figures, II/06 II/05* I-II/06 I-II/05* 2005 Last
12
continuing operations
months

(LTM)

Sales, EUR million 948 858 2,291 1,991 3,877
4,177
Operating profit, EUR 312 227 784 633 1,347
1,498
million
Comparable operating profit, 286 261 772 654 1,334
1,452
EUR million
Profit before taxes, EUR 287 185 779 571 1,267
1,475
million
Earnings per share, EUR 0.25 0.17 0.64 0.45 1.01
1.21
Net cash from operating 483 454 786 516 1,271
activities, EUR million
Shareholders’ equity per 7.83 7.64 8.17
share, EUR
Interest-bearing net debt 4,320 3,595 3,158
(at end of period), EUR
million
Average number of shares, 880,508 872,316 872,613
1,000s

*) Oil operations were deconsolidated and disclosed as discontinued operations
as of Q1/2005. The capital gain was recorded in discontinued operations Q2/2005.

Key financial ratios, 2005 LTM
continuing operations

Return on capital employed, % 13.5 14.5
Return on shareholders’ equity, % *) 13.5 15.6
Net debt/EBITDA, % 1.8 2.3

*) Return on equity for continuing operations is calculated based on profit for
the period from continuing operations divided by total equity at the end of the
period. Profit for the period from discontinued operations
has been subtracted from total equity as at 31 December 2005.

Fortum's comparable operating and reported operating profit improved during the
first half or the year. The comparable operating profit was EUR 118 million
higher than a year ago, EUR 772 (654) million. Also the reported operating
profit was higher at EUR 784 (633) million.

The Board of Directors has revised Fortum's target for return on shareholders'
equity in line with the company's targeted capital structure. The new target is
14% or higher. The target for return on capital employed remained at the earlier
level of 12% or higher.

On 26 June Fortum acquired 99.8% of the shares in Fortum Espoo Oyj (former E.ON
Finland Oyj). The purchase price for the shares was approximately EUR 750
million.

Fortum Espoo has been consolidated in Fortum's June 2006 closing balance sheet.
The acquisition had no effect on Fortum's income statement for the first half of
the year. In segment reporting Fortum Espoo is included in the segment Other. In
the next interim report Fortum Espoo will be presented according to the
appropriate segments in Fortum.

Sales and results for continuing operations

April - June

Group sales stood at EUR 948 (858) million. Group operating profit totalled EUR
312 (227) million. Comparable operating profit increased by EUR 25 million to
EUR 286 (261) million.

Fortum Generation's achieved Nordic power price was EUR 34.7 per megawatt-hour,
up by 15% from a year ago. The average spot price of electricity in Nord Pool
(the Nordic power exchange) was EUR 44.4 (29.3), approximately 52% higher than
during the corresponding period in 2005.

The comparable operating profit of the Power Generation segment was higher than
last year, mainly due to Fortum Generation's higher achieved Nordic power price,
despite the negative effect from increased taxes on nuclear capacity and hydro
property.

The Markets segment's operating profit was clearly lower than last year.
Markets' procurement costs have increased due to higher electricity forward
prices in Nord Pool. At the same time, the intense retail competition is
pressing sales prices.

Sales from continuing operations, by segment

EUR million II/06 II/05 I-II/06 I-II/05 2005 LTM

Power Generation 560 476 1,203 1,010 2,058 2,251
Heat 229 206 709 591 1,063 1,181
Distribution 162 160 381 362 707 726
Markets 400 298 947 690 1,365 1,622
Other 20 22 40 45 91 86
Eliminations -423 -304 -989 -707 -1,407 -1,689
Total 948 858 2,291 1,991 3,877 4,177

Operating profit from continuing operations, by segment

EUR million II/06 II/05 I-II/06 I-II/05 2005 LTM

Power Generation 222 125 506 348 825 983
Heat 41 50 160 162 269 267
Distribution 55 56 136 127 251 260
Markets 3 8 6 14 32 24
Other -9 -12 -24 -18 -30 -36
Total 312 227 784 633 1,347 1,498

Comparable operating profit from continuing operations, by segment

EUR million II/06 II/05 I-II/06 I-II/05 2005 LTM

Power Generation 208 172 501 396 854 959
Heat 35 37 161 144 253 270
Distribution 53 55 134 121 244 257
Markets 2 8 2 15 30 17
Other -12 -11 -26 -22 -47 -51
Total 286 261 772 654 1,334 1,452

January - June

Group sales from continuing operations stood at EUR 2,291 (1,991) million. Group
operating profit from continuing operations totalled EUR 784 (633) million.
Comparable operating profit was EUR 772 (654) million.

In January-June, the average Nord Pool spot price was EUR 44.9 (27.6) per
megawatt-hour or 63% higher than during the corresponding period in 2005.

The comparable operating profit of the Power Generation segment was higher,
mainly due to Fortum Generation's 17% higher achieved Nordic power price of EUR
36.0 (30.8) per megawatt-hour.

The first half year's comparable operating profit of the Heat segment was EUR 17
million higher than last year. The sales and the comparable operating profit of
the Heat segment improved due to much colder weather in the beginning of the
year. Increased usage of bio fuels compensated the effect of higher gas and oil
prices. The acquisitions of two district heating companies in Poland also
increased the result.

The sales of the Distribution segment were higher than last year. The segment's
comparable operating profit increased compared to last year mainly because last
year's first quarter was negatively affected by the storms in Sweden and Norway.

The sales of the Markets segment were higher than during the corresponding
period in 2005 due to an increased number of business customers, increased
electricity consumption and higher retail prices on electricity. The segment
reported lower comparable operating profits than last year. The main reason for
lower profits is the challenging market environment, where end-customer prices
are lagging behind the Nord Pool forward price development.

Profit before taxes from continuing operations was EUR 779 (571) million.

The Group's net financial expenses from continuing operations amounted to EUR 46
(78) million. The decrease is mainly attributable to a lower average level of
debt, lower interest rates and a positive EUR 17 (5) million change in the fair
value of derivatives, which do not qualify for hedge accounting under IAS39.

The share of profit of associates and joint ventures from continuing operations
was EUR 41 (16) million. When calculating for the share of profits in Hafslund
ASA, Fortum has in accordance with Fortum's accounting policies reclassified
Hafslund ASA's accounting treatment for the shareholding in Renewable Energy
Corporation ASA (REC). Hafslund ASA is showing the fair value change in the
shareholding through the income statement, while Fortum is showing the fair
value change in equity. The positive fair value change during 2006 based on
the number of shares reported by Hafslund in Q1 was approximately EUR 340
million at the end of June 2006.

Minority interests accounted for EUR 34 (32) million. The minority interests are
mainly attributable to Fortum Värme Holding, in which the City of Stockholm has
a 50% economic interest.

Taxes for the period totalled EUR 180 (149) million. The tax rate according to
the income statement was 23.1% (26.1%).

The profit for the period was EUR 599 (422) million. Fortum's earnings per share
were EUR 0.64 (0.45). Return on capital employed was 14.5% for the last twelve
months (13.5% at year-end 2005), and return on shareholders' equity was 15.6%
for the last twelve months (13.5% at year-end 2005).

Market conditions

According to preliminary statistics, the Nordic countries consumed 88 (86) TWh
of electricity during the second quarter of the year, which was 2% up compared
to last year.

During the second quarter, the average spot price for power in Nord Pool, the
Nordic power exchange, was EUR 44.4 (29.3) per megawatt-hour or 52% higher than
in the corresponding period in 2005 and 2% lower than in the previous quarter.
During the first half year, the average spot price for power in Nord Pool was
EUR 44.9 (27.6) per megawatt-hour, or 63% higher than in the corresponding
period in 2005. The high spot price is due to a weakening hydrological
situation, high market prices for CO2 emissions, and cold weather in the first
quarter.

During the first half year, the average market price for CO2 emissions was EUR
22.6 (13.8) per tonne, or 64% higher than during the corresponding period of the
previous year. During the second quarter, the average market price for CO2
emissions was EUR 18.9 (18.5) per tonne CO2, or 2% higher than during the
corresponding period in 2005. The prices varied significantly during the second
quarter. In the beginning of April, the prices climbed to about EUR 30 per tonne
CO2 and in the beginning of May dropped to about EUR 10 per tonne CO2 due to the
release of realised emission data for 2005, which were lower than the annual
average allocation. During June, the prices have stabilised to about EUR 16 per
tonne CO2.

The year started with a 7-TWh surplus in the Nordic water reservoirs compared to
the long-term average, but the hydrological situation weakened during the first
half of the year. At the end of June, the Nordic water reservoirs were 14 TWh
below the average and 11 TWh below the corresponding level in 2005. The decrease
was due to both lower inflows to the reservoirs and high hydro power production
in the beginning of the year.

In Continental Europe, the spot price dropped during the second quarter. The
German spot price has been lower than in Nord Pool, resulting in net imports
from Germany to the Nordic countries.

Total power and heat generation figures

Fortum's total power generation during January-June was 28.1 (26.8) TWh, of
which 27.5 (26.2) TWh was in the Nordic countries, representing 13% (13%) of the
total Nordic electricity consumption.

Fortum's total power and heat generation figures are presented below. In
addition, the segment reviews include the respective figures by segment.

Fortum's total power and II/06 II/05 I-II/06 I-II/05 2005 LTM
heat generation, TWh

Power generation 12.8 12.1 28.1 26.8 52.3 53.6
Heat generation 4.9 4.5 15.1* 14.2 25.1 26.0

* Including a corrected first-quarter volume of 10.2 TWh (instead of 11.6 TWh)

Fortum's own power II/06 II/05 I-II/06 I-II/05 2005 LTM
generation by source, TWh,
total in the Nordic countries

Hydropower 4.6 5.2 10.4 10.8 21.2 20.8
Nuclear power 6.5 5.9 13.5 12.9 25.8 26.4
Thermal power 1.4 0.8 3.6 2.5 4.2 5.3
Total 12.5 11.9 27.5 26.2 51.2 52.5

Share of own production, %, II/06 II/05 I-II/06 I-II/05 2005 LTM
total in the Nordic countries

Hydropower 37 44 38 41 42 40
Nuclear power 52 49 49 49 50 50
Thermal power 11 7 13 10 8 10
Total 100 100 100 100 100 100

Total power and heat sales figures

Fortum's total power sales were 31.2 (30.2) TWh, of which 30.5 (29.5) TWh were
in the Nordic countries. This represents approximately 15% (15%) of Nordic
electricity consumption during January-June. Heat sales in the Nordic countries
amounted to 11.8 (11.0) TWh and in other countries to 4.0 (2.4) TWh.

In the table below, Fortum's Nord Pool transactions are calculated as a net
amount of hourly sales and purchases at the Group level.

Fortum's total electricity II/06 II/05 I-II/06 I-II/05 2005 LTM
and heat sales, EUR million

Electricity sales 520 454 1,188 1,000 2,002 2,190
Heat sales 192 164 585 481 867 971

Fortum's total electricity II/06 II/05 I-II/06 I-II/05 2005 LTM
sales by area, TWh

Sweden 6.9 6.9 15.3 15.1 30.4 30.6
Finland 6.3 6.0 14.0 13.4 26.0 26.6
Other countries 0.9 0.7 1.9 1.7 3.3 3.5
Total 14.1 13.6 31.2 30.2 59.7 60.7

Fortum's total heat sales II/06 II/05 I-II/06 I-II/05 2005 LTM
by area, TWh

Sweden 1.8 1.7 6.0 5.6 9.5 9.9
Finland 2.1 1.7 5.7 5.3 9.8 10.2
Other countries* 1.0 0.9 4.1 2.5 4.5 6.1
Total 4.9 4.3 15.8 13.4 23.8 26.2

*) Including the UK, which is reported in the Power Generation segment, other
sales.


SEGMENT REVIEWS

Power Generation

The business area comprises power generation and sales in the Nordic countries
and the provision of operation and maintenance services in the Nordic area and
selected international markets. The Power Generation segment sells its
production to Nord Pool. The segment includes the business units Generation,
Portfolio Management and Trading (PMT), and Service.

EUR million II/06 II/05 I-II/06 I-II/05 2005 LTM

Sales 560 476 1,203 1,010 2,058 2,251
- power sales 460 381 1,018 834 1,682 1,866
- other sales 100 95 185 176 376 385
Operating profit 222 125 506 348 825 983
Comparable operating profit 208 172 501 396 854 959
Net assets (at period-end) 6,351 5,970 5,954
Return on net assets, % 14.0 17.0
Comparable return on net 14.5 16.6
assets,%

The segment's power generation during the second quarter amounted to 11.6 (11.1)
TWh in the Nordic countries.

In January-June, the segment's power generation in the Nordic countries was 24.9
(23.9) TWh, of which about 10.4 (10.8) TWh or 42% (45%) was hydropower-based,
13.5 (12.9) TWh or 54% (54%) nuclear power-based, and 1.0 (0.2) TWh or 4% (1%)
thermal power-based. The decrease in hydro power generation was due to a
weakened hydrological situation. The increase in thermal power generation was
due to higher spot prices, and the increase in nuclear power generation was due
to different timing of annual refuelling outages compared to the previous year.

Power generation by area, II/06 II/05 I-II/06 I-II/05 2005 LTM
TWh

Sweden 6.7 6.5 14.5 14.0 28.4 28.9
Finland 4.9 4.6 10.4 9.9 18.8 19.3
Other countries 0.3 0.3 0.6 0.6 1.1 1.1
Total 11.9 11.4 25.5 24.5 48.3 49.3

Nordic sales volume, TWh 12.9 12.3 27.8 26.7 52.6 53.7
of which pass-through 1.1 1.0 2.4 2.4 4.5 4.5
sales

Sales price, EUR/MWh II/06 II/05 I-II/06 I-II/05 2005 LTM
Generation's Nordic power 34.7 30.1 36.0 30.8 31.2 33.9
price*

*) For the Power Generation segment in the Nordic Countries, excluding pass-
through sales.

In the second quarter, the average spot price for power in Nord Pool was 52%
higher than a year ago. Fortum Generation's average achieved Nordic power price
(excluding pass-through items) in the second quarter was 15% higher than a year
ago, mainly due to improved hedging prices and higher spot prices. During the
first half of the year, Fortum Generation's achieved Nordic power price was 17%
higher, while the average spot price in Nord Pool was 63% higher than during the
corresponding period in 2005. The related sales volume was 11.8 (11.3) TWh in
the second quarter and 25.4 (24.3) TWh for the first six months of the year.

The Swedish government approved the power generation capacity increase of 250 MW
for Oskarshamn third nuclear power unit in June. The increase will be
implemented during the years 2008. Fortum's share of ownership in the Oskarshamn
nuclear power plant entitles the company to slightly over 100 megawatts of the
capacity increase.

In April, Fortum signed a 6-year operation and maintenance contract with
Knapsack Power GmbH & Co. KG, which is owned and operated by Norwegian
Statkraft. The contract is the second of its kind within a year and strengthens
Fortum's position as a significant gas turbine plant operation and maintenance
operator in Germany.

In May, Fortum signed a consulting contract on refurbishing the hydropower
plants of Svetogorsk and Lesogorsk on the river Vuoksi in north-west Russia. The
consultation was ordered by the Territorial Generation Company, TGC-1.

Fortum's agreement to acquire 24.83% of the shares in Kolenergo still awaits the
formal approval of Russian authorities.

Heat

The business area comprises heat generation and sales in the Nordic countries
and other parts of the Baltic Rim. Fortum is a leading heat producer in the
Nordic region. The segment also generates power in the combined heat and power
plants (CHP) and sells it to end-customers mainly by long-term contracts, as
well as to Nord Pool. The segment includes units the Heat and Värme.

EUR million II/06 II/05 I-II/06 I-II/05 2005 LTM

Sales 229 206 709 591 1,063 1,181
- heat sales 179 159 562 465 834 931
- power sales 43 28 112 83 145 174
- other sales 7 19 35 43 84 76
Operating profit 41 50 160 162 269 267
Comparable operating 35 37 161 144 253 270
profit
Net assets (at period- 2,470 2,302 2,551
end)
Return on net assets, % 11.6 11.8
Comparable return on net 11.0 11.9
assets, %

The segment's heat sales during the second quarter amounted to 4.5 (3.8) TWh,
most of which was generated in the Nordic countries. In January-June, heat sales
totalled 14.8 (12.4) TWh. During the same periods, power sales at combined heat
and power plants (CHP) totalled 0.8 (0.8) TWh and 2.5 (2.4) TWh.

Fortum delisted Fortum Wroclaw S.A. from the Warsaw Stock Exchange as of 29
April 2006. Fortum Wroclaw is a district heat distribution company, whose net
sales amounted to approximately EUR 71 million and heat sales to approximately
2.1 TWh in 2005.

In May, Fortum Värme applied for an environmental permit for the planned new bio
fuel CHP plant in Värtan, Stockholm. The plant is expected to generate annually
approximately 1.8 TWh of heat, about 25 % of Stockholm's annual district heating
demand, and around 0.8 TWh of electricity, which corresponds to about 10% of
Stockholm's annual electricity demand.


Heat sales by area, TWh II/06 II/05 I-II/06 I-II/05 2005 LTM

Sweden 1.8 1.7 6.0 5.6 9.5 9.9
Finland 2.1 1.7 5.7 5.3 9.8 10.2
Other countries 0.6 0.4 3.1 1.5 2.4 4.0
Total 4.5 3.8 14.8 12.4 21.7 24.1

Power sales, TWh II/06 II/05 I-II/06 I-II/05 2005 LTM
Total 0.8 0.8 2.5 2.4 4.1 4.2

Distribution

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

EUR million II/06 II/05 I-II/06 I-II/05 2005 LTM

Sales 162 160 381 362 707 726
- distribution network 134 133 322 306 592 608
transmission
- regional network 19 19 43 42 82 83
transmission
- other sales 9 8 16 14 33 35
Operating profit 55 56 136 127 251 260
Comparable operating profit 53 55 134 121 244 257
Net assets (at period-end) 3,121 3,036 3,021
Return on net assets, % 8.8 9.1
Comparable return on net 8.6 9.0
assets,%

During the first six months of the year, the volume of distribution and regional
transmissions totalled 12.8 (12.2) TWh and 9.6 (9.1) TWh, respectively.

Electricity transmissions via the regional distribution network totalled 8.0
(7.5) TWh in Sweden and 1.6 (1.6) TWh in Finland.

The operations in Sweden, Finland and Norway have been stable this year, with a
better than normal grid reliability for our customers. Favourable weather
conditions as well as actions taken to avoid disturbances, for instance cabling
of network and extensive tree trimming, have contributed to these good results.

In May, Fortum signed a service agreement over the delivery of an automated
meter management (AMM) system in Sweden. Approximately 835,000 households and
small businesses in Fortum’s Swedish network areas will be within the new system
by the end of 2008. The first meters will be installed in 2006. By law, all
electricity customers in Sweden must be guaranteed monthly meter reading by
2009. The total value of the AMM procurement agreement is approximately EUR 240
million.

A small part of the Regional Grid in Nokia, Finland, was sold to Vattenfall.

The Energy Authority's supervision of 2003 grid prices for Stockholm is ongoing.
The final decision for the western coast and Stockholm is still pending. There
is still no communication from the authority regarding the 2004 supervision.

The Swedish government has initiated an investigation to comply with the EU
directive on ex-ante grid price regulation, already applied by most other EU
member states. In an ex-ante type of regulation, the regulator has to inform the
grid companies in advance on the pricing principles to be applied. The
investigation is expected to be completed at the latest by 1 March 2007.

Volume of distributed II/06 II/05 I-II/06 I-II/05 2005 LTM
electricity in distribution
network, TWh

Sweden 3.2 3.2 7.9 7.6 14.4 14.7
Finland 1.3 1.3 3.5 3.3 6.3 6.5
Norway 0.5 0.5 1.3 1.2 2.2 2.3
Estonia 0.0 0.0 0.1 0.1 0.2 0.2
Total 5.0 5.0 12.8 12.2 23.1 23.7

Number of electricity 30 June 2006 30 June 2005 31 Dec. 2005
distribution customers by area,
thousands

Sweden 860 860 860
Finland 410 405 410
Other countries 120 115 120
Total 1,390 1,380 1,390

Markets

Markets is responsible for retail sales of electricity to a total of 1.3 million
(incl. Fortum Espoo) private and business customers as well as to other
electricity retailers in Sweden, Finland and Norway. Markets buys its
electricity through Nord Pool.

EUR million II/06 II/05 I-II/06 I-II/05 2005 LTM

Sales 400 298 947 690 1,365 1,622
Operating profit 3 8 6 14 32 24
Comparable operating profit 2 8 2 15 30 17
Net assets (at period-end) 222 159 228
Return on net assets, % 17.4 11.3
Comparable return on net assets, 16.4 8.2
%

During the second quarter, Markets' electricity sales totalled 9.3 (9.0) TWh
with sales for the first six months of the year amounting to 22.0 (20.8) TWh.
The increase of sales compared to the first half of 2005 was mainly due to an
increased number of business customers and higher electricity consumption caused
by colder weather conditions during the winter and spring.

Retail electricity prices on the Nordic market during the second quarter were
higher than in the year before. Despite the increase, the retail price
development especially in Finland has not fully followed the electricity forward
market price increase in Nord Pool.

During the second quarter several successful marketing activities, such as the
launch of the Energihjälpen (Energy Help) concept in Sweden and active new
customer recruitment, were conducted. The private customer base remained nearly
unchanged during the second quarter, whilst the business customer base increased
slightly.

A new customer and billing system was taken into use in April in Sweden. The new
system is an important enabler in becoming the supplier of choice and in
providing high-quality customer service. One-time costs caused by the
implementation of the new customer and billing system in Sweden continued to
affect the segment's result during the second quarter of 2006.
Capital expenditures and investments in shares

Capital expenditures and investments in shares for continuing operations in
January-June totalled EUR 946 (123) million. Investments excluding acquisitions
were EUR 174 (123) million. Fortum paid approximately EUR 750 million for the
acquired shares in Fortum Espoo Oyj.

Fortum sold its approximately 40% holding in Enprima Oy to the Swedish ÅF Group.
The deal was completed on 24 April 2006.

Fortum Espoo

On 2 June 2006, the Finnish Competition Authority approved Fortum's acquisition
of E.ON Finland. The transactions with the City of Espoo and E.ON Nordic
respectively were concluded, and closing and cash payments took place on 26 June
2006. In addition to the approximately EUR 750 million purchase price, Fortum
paid approximately EUR 2 million as an interest for the purchase price to the
City of Espoo, and approximately EUR 16 million compensation to E.ON. The name
of E.ON Finland Oyj was subsequently changed to Fortum Espoo Oyj.

The Competition Authority's approval is subject to the following conditions:
- Fortum divests its power plants in Haapavesi (generation capacity 154 MW) and
Hämeenlinna (generation capacity 65 MW power, 95 MW heat).
- Fortum leases out its 308-MW share of the Meri-Pori thermal power plant until
30 June 2010.

- Fortum sells the equivalent of 1 TWh/a of constant generation capacity in the
Finnish area until 31 March 2011.


On 3 July 2006, Fortum submitted an appeal to the Market Court concerning the
Finnish Competition Authority's decision dated 2 June 2006 on the Fortum Espoo
Oyj acquisition.

Fortum is entitled to redeem the remaining shares of Fortum Espoo Oyj in
accordance with Chapter 14, Section 19 of the Finnish Companies Act. Fortum will
use the redemption right, and presented a redemption claim to the Board of
Directors of Fortum Espoo Oyj on 28 June 2006.

Fortum published the mandatory redemption offer to other shareholders (0.2% of
the shares) in Fortum Espoo Oyj on 30 June 2006. The redemption price is EUR
68.36 per each share in Fortum Espoo Oyj.

Fortum will apply for the delisting of the shares in Fortum Espoo Oyj when the
ownership of all shares in the company has been transferred to Fortum. This is
estimated to take place during autumn 2006.

At the end of the reporting period, Fortum owned a total of 15,598,424 Fortum
Espoo Oyj shares. This corresponds to 99.8% of the shares and the voting rights
of Fortum Espoo Oyj.

In 2005, E.ON Finland had a turnover of EUR 234 million, a production capacity
of 171 MW power and 1,452 MW heat, roughly 162,000 electricity distribution
customers and personnel of approximately 350 permanent employees.

Fortum currently expects annual synergies of around EUR 15-20 million gradually
as of 2007 from the integration of Fortum Espoo Oyj.

Financing

Net debt at the end of the second quarter 2006 stood at EUR 4,320 million (EUR
3,158 million on 31 Dec 2005); the increase in net debt is primarily linked to
the dividend payment in March and the Fortum Espoo acquisition in June. During
the second quarter Fortum successfully completed two major financing
transactions. The aim of these transactions was to finance the purchase of
Fortum Espoo and the EUR 500-million share repurchase program as well as to
finance maturing debt in 2006. A ten-year EUR 750 million bond and a two-tranch
SEK denominated bond (three and five years) totalling 4,500 million
(approximately EUR 490 million) were issued under Fortum's Euro Medium-Term Note
Program.

Group liquidity remained good. At end of the second quarter, cash and marketable
securities totalled EUR 666 million. The Group also had access to approximately
EUR 1,315 million of undrawn committed credit facilities.

The Group's net financial expenses for the first half of 2006 were EUR 46 (78)
million. The decrease is mainly attributable to a lower average level of debt,
lower interest rates and a positive EUR 17 (5) million change in the fair value
of derivatives which do not qualify for hedge accounting under IAS39.

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 January-June, a total of 438.2 million Fortum Corporation shares totalling
EUR 8,588 million were traded. Fortum's market capitalisation, calculated using
the closing quotation of the last trading day of the quarter, was EUR 17,654
million. The highest quotation of Fortum Corporation shares on the Helsinki
Stock Exchange in the first half of the year was EUR 23.48, the lowest EUR
15.71, and the average quotation EUR 19.60. The closing quotation on the last
trading day of the second quarter was EUR 20.00.

A total of 1,161,630 shares subscribed for based on share option schemes were
entered into the trade register in the second quarter of 2006. After these
subscriptions, Fortum's share capital is EUR 3,001,206,707 and the total number
of registered shares is 882,707,855.

At the end of the second quarter, the Finnish state's holding in Fortum was
51.1%. The proportion of international shareholders stood at 34.9%.

Fortum Corporation's Annual General Meeting on 16 March 2006 authorised the
Board of Directors to decide on repurchasing the company’s own shares. The Board
of Directors decided to start the repurchasing as of 8 June 2006 at the earliest
and the repurchasing will continue until further notice.

At the end of the second quarter 2006 Fortum had bought 1,660,000 own shares
amounting to EUR 30,390,150 with the average price of EUR 18.31 per share.

Group personnel

The average number of employees in the Group during the period from January to
June was 9,024 (11,066). The number of employees at the end of the period was
9,605 (8,989).
Events after the period under review

On 11 July 2006, Teollisuuden Voima Oy (TVO) disclosed that the delay at the
Olkiluoto 3 construction site has increased during recent months. The Supplier
has reported a new forecast to TVO, according to which the plant will be ready
for commercial operation during the second quarter of 2010.

Outlook

The key market driver influencing Fortum's business performance is the Nordic
wholesale price of electricity. Key drivers behind the wholesale price
development are the Nordic hydrological situation, CO2 emissions allowance
prices, fuel prices and the demand for electricity. The Swedish krona exchange
rate also affects Fortum's result, as results generated by Fortum in Sweden are
translated to euros.

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.

In early July, the Nordic water reservoirs were about 17 TWh below the average
and 16 TWh below the corresponding level for 2005. This deficit could affect
Fortum's hydropower production for the rest of the year. In mid-July, the market
price for emissions allowances for 2006 ranged between EUR 16-17 per tonne of
CO2. At the same time, the power price in the forward market for the rest of
2006 was in the range of EUR 54-55 per megawatt-hour, around EUR 48-49 per
megawatt-hour for 2007 and around EUR 45-46 per megawatt-hour for 2008.

During the second quarter, Fortum continued to increase its hedging levels as
the power prices in the forward market were at attractive levels. The recent
prices can be explained partly by the current deficit in Nordic hydro
reservoirs, partly by the high CO2 forward prices. A change in the hydrological
situation as well as a different behaviour by the emissions trading actors can
affect the forward pricing fairly quickly.

At the beginning of July, Fortum had hedged approximately 90% of its Nordic
Power Generation sales volume for the remainder of 2006 at approximately EUR 35
per megawatt-hour. For the calendar year 2007, Fortum has hedged approximately
65% of its Nordic Power Generation sales volume at approximately EUR 39 per
megawatt-hour. These hedge ratios may vary significantly depending on Fortum's
actions on the electricity derivatives markets. Hedge prices are also influenced
by changes in the SEK/EUR exchange rates, as part of the hedges are conducted in
SEK.

Fortum Generation's achieved Nordic power price typically depends on e.g. the
hedge ratio, hedge price, spot price, optimisation of Fortum's flexible
production portfolio even on an hourly basis, and currency changes. If Fortum
would not hedge any of its production volumes, a 1 EUR/MWh change in the spot
price would result in approximately a EUR 50-million change in Fortum's annual
operating profit.

Fortum has performed well in the first half of the year 2006. With favourable
market fundamentals, Fortum is well positioned also for the remainder of 2006
and for 2007.


Espoo, 18 July 2006
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 not been audited.

Publication of results in 2006:
Interim Report January-September will be published on 19 October 2006

Distribution:
Helsinki Stock Exchange
Key media
www.fortum.com

Information on the financial statement release is available on Fortum’s website
at: www.fortum.com/investors


FORTUM GROUP
JANUARY-JUNE 2006
Interim Financial Statements are unaudited
CONDENSED CONSOLIDATED INCOME STATEMENT

MEUR Q2/2006 Q2/2005 Q1-Q2 Q1-Q2 2005
Last
2006 2005
twelve

months
Continuing operations:
Sales 948 858 2 291 1 991 3 877 4
177
Other income 20 -11 19 10 101
110
Materials and services -322 -294 -848 -712 -1 -1
461
325
Employee benefit costs -129 -124 -260 -253 -481
-488
Depreciation, amortisation and -97 -101 -195 -204 -407
-398
impairment charges
Other expenses -108 -101 -223 -199 -418
-442
Operating profit 312 227 784 633 1 347 1
498
Share of profit of associates and 6 1 41 16 55
80
joint ventures
Finance costs-net -31 -43 -46 -78 -135
-103
Profit before income tax 287 185 779 571 1 267 1
475
Income tax expense -60 -33 -180 -149 -331
-362
Profit for the period from 227 152 599 422 936 1
113
continuing operations
Discontinued operations:
Profit for the period from - 390 - 474 474
-
discontinued operations
Profit for the period 227 542 599 896 1 410 1
113

Attributable to:
Equity holders of the Company 219 535 565 864 1 358 1
059
Minority 8 7 34 32 52
54
interest
227 542 599 896 1 410 1
113

Earnings per share for profit from total
Fortum Group attributable
to the equity holders of the
company during the year
(in EUR per share)
Basic 0.25 0.61 0.64 0.99 1.55
1.21
Diluted 0.24 0.60 0.63 0.98 1.53
1.19
Earnings per share for profit from
continuing operations attributable
to the equity holders of the
company during the year
(in EUR per share)
Basic 0.25 0.17 0.64 0.45 1.01
1.21
Diluted 0.24 0.16 0.63 0.44 1.00
1.19
Earnings per share for profit from
discontinued operations
attributable to the equity holders
of the company during the year
(in EUR per share)
Basic - 0.44 - 0.54 0.54
-
Diluted - 0.44 - 0.54 0.53
-

CONDENSED CONSOLIDATED BALANCE SHEET
MEUR June 30 June 30
Dec 31
2006 2005
2005
ASSETS
Non-current assets
Intangible assets 121 82
80
Property, plant and equipment 11 244 9 965 10
176
Investments in associates and joint ventures 1 960 1 543 1
610
Other long-term investments 587 581
502
Other long-term receivables 112 89
87
Long-term interest bearing receivables 650 625
620
Total non-current assets 14 674 12 885 13
075
Current assets
Inventories 238 234
256
Trade and other receivables 1 124 961 1
011
Cash and cash equivalents 666 552
788
Total current assets 2 028 1 747 2
055
Total assets 16 702 14 632 15
130

EQUITY
Capital and reserves attributable the
Company's equity holders
Share capital 3 001 2 968 2
976
Other equity 3 899 3 696 4
175
Total 6 900 6 664 7
151
Minority interest 238 176
260
Total equity 7 138 6 840 7
411
LIABILITIES
Non-current liabilities
Interest-bearing liabilities 4 373 3 826 3
118
Deferred tax liabilities 1 839 1 580 1
512
Provisions 613 574
606
Other liabilities 684 545
435
Total non-current liabilities 7 509 6 525 5
671
Current liabilities
Interest-bearing liabilities 613 321
828
Trade and other payables 1 442 946 1
220
Total current liabilities 2 055 1 267 2
048
Total liabilities 9 564 7 792 7
719
Total equity and liabilities 16 702 14 632 15
130

CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

MEUR Share Share Other Fair Treas Retai Minor
Total
capital premi restr value ury ned ity
um icted and share earni
funds other s ngs
reser
ves
Total equity at 2 976 70 2 -117 - 4 220 260 7
411
31.12.2005
Stock options excercised 25 4 -2
27
Translation and other 17 -3
14
differences
Cash dividend -987
-987
Repurchase of own shares -30
-30
Decrease in minority through -50
-50
business combinations
Cash flow hedges -185 -3
-188
Other fair value 342
342
adjustments 1)
Net profit for the period 565 34
599
Total equity at 3 001 74 0 40 -30 3 815 238 7
138
30.06.2006
Total equity at 2 948 62 13 134 - 4 343 150 7
650
31.12.2004
Stock options excercised 20 8 -13
15
Translation and other -78 -10
-88
differences
Cash dividend -506
-506
Share dividend 2) -920
-920
Cash flow hedges -249 34 4
-211
Other fair value 4
4
adjustments
Net profit for the period 864 32
896
Total equity at 2 968 70 0 -111 - 3 737 176 6
840
30.06.2005

1) Includes the fair value change of Renewable Energy
Corporation (REC) shareholding in Hafslund.
2) In 2005 the effect from the share dividend on Fortum Group equity was EUR 920
million. In the parent company the effect on retained earnings was EUR 969
million
in 2005.

CONSOLIDATED CASH FLOW STATEMENT
MEUR June 30 June 30 Dec
31
2006 2005
2005
Cash flow from operating
activities
Operating profit before depreciations 979 837 1
754
continuing operations
Non-cash flow items and -23 6
15
divesting activities
Financial items and realised foreign exchange 22 -88
-107
gains and losses
Taxes -192 -155
-298
Funds form operations continuing operations 786 600 1
364
Change in working capital 0 -84
-93
Net cash from operating activities 786 516 1
271
continuing operations
Net cash from operating activities - 133
133
discontinued operations
Total net cash from operating activities 786 649 1
404
Cash flow from investing activities
Capital expenditures -174 -123
-346
Acquisition of shares -761 -
-127
Proceeds from sales of fixed assets 9 9
30
Proceeds from sales of shares 15 19
26
Change in other investments -15 10
19
Net cash used in investing activities -926 -85
-398
continuing operations
Net cash used in investing activities - 1 155 1
155
discontinued operations
Total net cash used in investing -926 1 070
757
activities
Cash flow before financing activities -140 1 719 2
161
Cash flow from financing activities
Net change in loans 1 029 -846 -1
063
Dividends paid to the Company´s equity -987 -506
-506
holders
Repurchase of own shares -30 -
-
Other financing items 3 11
22
Net cash used in financing activities 15 -1 341 -1
547
continuing operations
Net cash used in financing activities - 29
29
discontinued operations
Total net cash used in financing 15 -1 312 -1
518
activities
Total net increase (+)/decrease
(-) in cash and marketable securities,
continuing operations -125 407
643
De-consolidation of Neste Oil - -63
Total net increase (+)/decrease
(-) in cash and marketable securities,
continuing operations - 344
-

KEY RATIOS 1)
MEUR June 30 March March June 30 Sept 30 Dec 31
Last
2006 31 31 2005 2005 2005
twelve
2006 2005
months
Continuing operations:
EBITDA, MEUR 979 570 509 837 1 178 1 754 1
896
Earnings per share 0.64 0.39 0.28 0.45 0.65 1.01
1.21
(basic), EUR
Capital employed, 12 124 10 605 10 534 10 987 11 154 11 357 12
124
MEUR

Interest-bearing net 4 320 3 900 4 878 3 595 3 333 3 158
N/A
debt, MEUR
Capital expenditure and 946 114 49 123 213 479 1
302
investments in shares,
MEUR
Capital expenditure, 174 71 49 123 207 346
397
MEUR
Return on capital 14.6 19.4 16.4 12.4 11.7 13.5
14.5
employed, % 3)
Return on 13.5
15.6
shareholders' equity, % 2)
Net debt / EBITDA 3) 2.2 1.7 2.4 2.2 2.1 1.8
2.3
Gearing, % 61 60 71 53 47 43
N/A
Equity per share, EUR 7.83 7.11 7.67 7.64 7.86 8.17
N/A
Equity-to-assets 43 44 43 43 47 49
N/A
ratio, %
Total Fortum:

Earnings per share 0.64 0.39 0.38 0.99 1.19 1.55
1.21
(basic), EUR
Capital employed, 12 124 10 605 11 891 10 987 11 154 11 357 12
124
MEUR
Return on capital 14.6 19.4 18.2 16.7 15.3 16.6
14.5
employed, % 3)
Return on 16.3 21.4 19.5 19.2 17.6 18.7
15.9
shareholders'
equity, % 3)
Net debt / EBITDA 3) 2.2 1.7 1.8 1.5 1.5 1.4
2.3
Interest 13.7 16.9 11.6 11.3 10.6 11.6
12.9
coverage
Funds from 36.4 49.6 39.3 44.2 42.9 43.2
31.4
operations/interest-
bearing net debt, % 3)
Average number of 9 024 8 886 13 135 11 066 10 279 10 026
N/A
employees
Average number of 880 508 880 725 871 710 872 316 872 438 872 613 879
324
shares, 1 000 shares
Diluted adjusted 891 451 892 406 883 774 883 629 889 157 887 653 889
979
average number of
shares, 1 000 shares
Number of registered 882 708 881 546 871 854 872 793 872 981 875 294
N/A
shares, 1 000 shares
Number of shares 881 048 N/A N/A N/A N/A N/A
N/A
excluding treasury
shares, 1000 shares

1) Key ratios in 2005 are based on Fortum total numbers including continuing and
discontinued operations if otherwise not stated.
2) Return on equity for continuing operations is calculated based on Profit for
the
period from continuing operations divided by Total equity at the end of the
period.
Profit for the period from discontinued operations has been subtracted from
Total
equity as at 31 December 2005.
3) Quarterly figures are annualised.

SALES BY SEGMENTS
MEUR Q2/06 Q2/05 Q1-Q2 Q1-Q2 2005
Last
2006 2005
twelve

months

Power Generation 560 476 1 203 1 010 2 058 2
251
- of which internal -17 13 -67 68 97
-38
Heat 229 206 709 591 1 063 1
181
- of which internal -7 -1 -15 11 12
-14
Distribution 162 160 381 362 707
726
- of which internal 2 2 4 4 8
8
Markets 400 298 947 690 1 365 1
622
- of which internal 35 22 76 47 101
130
Other 20 22 40 45 91
86
- of which internal 15 15 30 37 63
56
Eliminations 1) -423 -304 -989 -707 -1 407 -1
689
Sales from continuing 948 858 2 291 1 991 3 877 4
177
operations
Sales from discontinued - - - 2 061 2 061
-
operations
Eliminations - - - -20 -20
-
Total 948 858 2 291 4 032 5 918 4
177

1) Eliminations include sales and purchases with Nordpool that is netted on
Group
level on an hourly basis and posted either as revenue or cost depending on if
Fortum is a net seller or net buyer during any particular hour.

OPERATING PROFIT BY SEGMENTS
MEUR Q2/06 Q2/05 Q1-Q2 Q1-Q2 2005
Last
2006 2005
twelve

months

Power Generation 222 125 506 348 825
983
Heat 41 50 160 162 269
267
Distribution 55 56 136 127 251
260
Markets 3 8 6 14 32
24
Other -9 -12 -24 -18 -30
-36
Operating profit from 312 227 784 633 1 347 1
498
continuing operations
Operating profit from - 390 - 517 517
-
discontinued operations
Total 312 617 784 1 150 1 864 1
498

COMPARABLE OPERATING PROFIT BY SEGMENTS, CONTINUING OPERATIONS

MEUR Q2/06 Q2/05 Q1-Q2 Q1-Q2 2005
Last
2006 2005
twelve

months

Power Generation 208 172 501 396 854
959
Heat 35 37 161 144 253
270
Distribution 53 55 134 121 244
257
Markets 2 8 2 15 30
17
Other -12 -11 -26 -22 -47
-51
Comparable operating profit 286 261 772 654 1 334 1
452
from continuing operations
Non-recurring items 15 12 15 18 30
27
Other items effecting 11 -46 -3 -39 -17
19
comparability
Operating profit from 312 227 784 633 1 347 1
498
continuing operations

NON-RECURRING ITEMS BY SEGMENTS
MEUR Q2/06 Q2/05 Q1-Q2 Q1-Q2 2005
Last
2006 2005
twelve

months

Power Generation 6 0 6 0 -3
3
Heat 4 11 5 11 14
8
Distribution 2 1 2 1 1
2
Markets 0 0 0 0 0
0
Other 3 0 2 6 18
14
Total 15 12 15 18 30
27

OTHER ITEMS EFFECTING COMPARABILITY BY SEGMENTS

MEUR Q2/06 Q2/05 Q1-Q2 Q1-Q2 2005
Last
2006 2005
twelve

months

Power Generation 8 -47 -1 -48 -26
21
Heat 2 2 -6 7 2
-11
Distribution 0 0 0 5 6
1
Markets 1 0 4 -1 2
7
Other 0 -1 0 -2 -1
1
Total 11 -46 -3 -39 -17
19

DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES BY SEGMENTS

MEUR Q2/06 Q2/05 Q1-Q2 Q1-Q2 2005
Last
2006 2005
twelve

months

Power 27 28 53 56 112
109
Generation
Heat 30 31 60 62 123
121
Distribution 33 36 68 73 145
140
Markets 5 4 9 8 15
16
Other 2 2 5 5 12
12
Total depreciation,
amortisation and
impairment charges
from continuing 97 101 195 204 407
398
operations
Total depreciation,
amortisation and impairment
charges from
discontinued - - - 36 36
-
operations
Total 97 101 195 240 443
398

SHARE OF PROFITS IN ASSOCIATES AND JOINT VENTURES BY SEGMENTS

MEUR Q2/06 Q2/05 Q1-Q2 Q1-Q2 2005
Last
2006 2005
twelve

months

Power Generation 1) 2 -6 14 -4 23
41
Heat 3 2 14 8 11
17
Distribution 1 6 12 13 20
19
Markets 0 0 1 0 1
2
Other 0 -1 0 -1 0
1
Share of profits in 6 1 41 16 55
80
associates and joint ventures
from continuing
operations
Share of profits in - - - -2 -2
-
associates and joint ventures
from discontinued operations
Total 6 1 41 14 53
80

1) The main part of the associated companies in Power Generation are power
production companies from which Fortum purchase produced electricity at cost.

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES BY SEGMENTS

MEUR June 30 June 30
Dec 31
2006 2005
2005

Power Generation 1 593 1 190 1
259
Heat 141 139
133
Distribution 216 205
210
Markets 8 9
8
Other 2 0
0
Total 1 960 1 543 1
610

CAPITAL EXPENDITURE AND INVESTMENTS IN SHARES BY SEGMENTS

MEUR Q2/06 Q2/05 Q1-Q2 Q1-Q2
2005
2006 2005

Power Generation 23 21 43 39
129
Heat 38 21 99 33
212
Distribution 42 25 67 40
115
Markets 2 3 7 4
10
Other 727 4 730 7
13
Capital expenditure and investments 832 74 946 123
479
in shares from continuing operations
Capital expenditure and investments - - - 99
99
in shares from discontinuing
operations
Total 832 74 946 222
578

NET ASSETS BY SEGMENTS
MEUR June 30 June 30
Dec 31
2006 2005
2005

Power Generation 6 351 5 970 5
954
Heat 2 470 2 302 2
551
Distribution 3 121 3 036 3
021
Markets 222 159
228
Other and Eliminations 1 053 231
139
Total 13 217 11 698 11
893

RETURN ON NET ASSETS BY SEGMENTS
% Last twelve
Dec 31
months
2005

Power Generation 17.0
14.0
Heat 11.8
11.6
Distribution 9.1
8.8
Markets 11.3
17.4

COMPARABLE RETURN ON NET ASSETS BY SEGMENTS
% Last twelve
Dec 31
months
2005

Power Generation 16.6
14.5
Heat 11.9
11.0
Distribution 9.0
8.6
Markets 8.2
16.4

Return on net assets is calculated by dividing the sum of the annualised
operating
profit and share of profit of associated companies and joint ventures with
average
net assets.

ASSETS BY SEGMENTS
MEUR June 30 June 30 Dec
31
2006 2005
2005
Power Generation 6 805 6 473 6
522
Heat 2 763 2 556 2
895
Distribution 3 520 3 433 3
448
Markets 609 424
515
Other and Eliminations 1 424 343
216
Assets included in Net assets 15 121 13 229 13
596
Interest-bearing receivables 658 628
620
Deferred taxes 89 73
18
Other assets 168 150
108
Cash and cash equivalents 666 552
788
Total assets 16 702 14 632 15
130

LIABILITIES BY SEGMENTS
MEUR June 30 June 30 Dec
31
2006 2005
2005

Power Generation 454 503
568
Heat 293 254
344
Distribution 399 397
427
Markets 387 265
287
Other and Eliminations 371 112
77
Liabilities included in Net assets 1 904 1 531 1
703
Deferred tax liabilities 1 839 1 580 1
512
Other 835 534
558
Total liabilities included in 4 578 3 645 3
773
capital employed
Interest-bearing liabilities 4 986 4 147 3
946
Total equity 7 138 6 840 7
411
Total equity and liabilities 16 702 14 632 15
130

CHANGES IN INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

MEUR June 30 June 30 Dec
31
2006 2005
2005

Opening balance 10 256 12 041 12
041
De-consolidation of Neste Oil - -1 540 -1
540
Acquisition of subsidiary companies 1 000 7
171
Capital expenditures 174 123
346
Disposals -5 -12
-31
Depreciation, amortisation and -195 -204
-407
impairment
Translation differences 135 -368
-324
Closing balance 11 365 10 047 10
256

QUARTERLY SALES BY SEGMENTS
MEUR Q2 Q1 Q4 Q3 Q2
Q1
2006 2006 2005 2005 2005
2005

Power Generation 560 643 598 450 476
534
- of which internal -17 -50 23 6 13
55
Heat 229 480 325 147 206
385
- of which internal -7 -8 0 1 -1
12
Distribution 162 219 196 149 160
202
- of which internal 2 2 2 2 2
2
Markets 400 547 391 284 298
392
- of which internal 35 41 35 19 22
25
Other 20 20 20 26 22
23
- of which internal 15 15 13 13 15
22
Eliminations -423 -566 -418 -282 -304
-403
Sales from continuing 948 1 343 1 112 774 858 1
133
operations
Sales from discontinued - - - - - 2
061
operations
Eliminations - - - - -
-20
Total 948 1 343 1 112 774 858 3
174

QUARTERLY OPERATING PROFIT BY SEGMENTS
MEUR Q2 Q1 Q4 Q3 Q2
Q1
2006 2006 2005 2005 2005 2005
1)

Power 222 284 296 181 125
223
Generation
Heat 41 119 94 13 50
112
Distribution 55 81 76 48 56
71
Markets 3 3 11 7 8
6
Other -9 -15 -3 -9 -12
-6
Operating profit from 312 472 474 240 227
406
continuing operations
Operating profit from - - - - 390
127
discontinued operations
Total 312 472 474 240 617
533

1) The accounting treatment of CO2 emission allowances was changed retroactively
in Q2/2005 according to the decision of IASB to withdraw the IFRIC 3 Emission
rights with immediate effect.

QUARTERLY COMPARABLE OPERATING PROFIT BY SEGMENTS, CONTINUING OPERATIONS

MEUR Q2 Q1 Q4 Q3 Q2
Q1
2006 2006 2005 2005 2005
2005

Power 208 293 297 161 172
224
Generation
Heat 35 126 97 12 37
107
Distribution 53 81 76 47 55
66
Markets 2 0 8 7 8
7
Other -12 -14 -18 -7 -11
-11
Comparable operating profit 286 486 460 220 261
393
from continuing operations
Non-recurring items 15 0 10 2 12
6
Other items effecting 11 -14 4 18 -46
7
comparability
Operating profit from 312 472 474 240 227
406
continuing operations

QUARTERLY NON-RECURRING ITEMS IN OPERATING BY SEGMENTS

MEUR Q2 Q1 Q4 Q3 Q2
Q1
2006 2006 2005 2005 2005
2005

Power Generation 6 0 -6 3 0
0
Heat 4 1 2 1 11
0
Distribution 2 0 0 0 1
0
Markets 0 0 0 0 0
0
Other 3 -1 14 -2 0
6
Total 15 0 10 2 12
6

QUARTERLY OTHER ITEMS EFFECTING COMPARABILITY
MEUR Q2 Q1 Q4 Q3 Q2
Q1
2006 2006 2005 2005 2005
2005
Power Generation 8 -9 5 17 -47
-1
Heat 2 -8 -5 0 2
5
Distribution 0 0 0 1 0
5
Markets 1 3 3 0 0
-1
Other 0 0 1 0 -1
-1
Total 11 -14 4 18 -46
7

DISCONTINUED OPERATIONS (including eliminations between Fortum and discontinued
operations)

Fortum does not have discontinued operations in the year 2006.

MEUR Q2 Q1-Q2 2005
2)
2005 2005 1)

Sales - 2 061 2
061
Other income 390 395
395
Materials and services - -1 726 -1
726
Employee benefit costs - -57
-57
Depreciation, amortisation and impairment charges - -36
-36
Other expenses - -120
-120
Operating profit 390 517
517
Share of profit of associates and joint ventures - -2
-2
Finance costs-net - -6
-6
Profit before income tax 390 509
509
Income tax expense - -35
-35
Profit for the year from discontinued operations 390 474
474

1) The accounting treatment of CO2 emission allowances was changed retroactively
in Q2/2005 according to the decision of IASB to withdraw the IFRIC 3 Emission
rights with immediate effect.
2) Other income includes the capital gain, EUR 390 million, from the sale of
approximately 15% of the shares in Neste Oil Oyj in 2005.

CONTINGENT LIABILITIES
MEUR June 30 June 30 Dec
31
2006 2005
2005
Contingent liabilities
On own behalf
For debt
Pledges 182 155
144
Real estate mortgages 49 53
49
For other commitments
Real estate mortgages 63 66
66
Other contingent liabilities 141 101
94
Total 435 375
353
On behalf of associated companies and joint
ventures
Pledges and real estate mortgages 3 3
3
Guarantees 192 171
208
Other contingent liabilities 125 182
125
Total 320 356
336
On behalf of others
Guarantees 17 65
2
Other contingent liabilities 2 2
3
Total 19 67
5
Total 774 798
694

Fortum's 100% owned subsidiary Fortum Heat and Gas Oy has a collective
contingent
liability with Neste Oil Oyj of the demerged Fortum Oil and Gas Oy's liabilities
based on the Finnish Companies Act's Chapter 14a Paragraph 6.

Operating lease liabilities
Due within a year 18 14
17
Due after one year and within five years 38 37
31
Due after five years 9 8
9
Total 65 59
57

NUCLEAR RELATED ASSETS AND LIABILITIES
MEUR June 30 June 30 Dec
31
2006 2005
2005

Liability for nuclear waste management according 618 596
618
to the Nuclear Energy Act 1)
Fortum´s share of reserves in the -618 -596
-610
Nuclear Waste Fund 2)
Difference covered by real estate 0 0
8
mortgages 3)

1) The legal liability calculated according to the Nuclear Energy Act in Finland
is EUR 618 (596) million as of 30 June 2006 (and 2005 respectively).
Discounted liability in the balance sheet calculated according to IAS 37 is EUR
421 (404) million as of 30 June 2006.
The main reason for the difference in liability is that the legal liability is
not
allowed to discount to net present value.

2) Fortum contributes to the Nuclear Waste Fund according to the legal
liability.
Fortum´s share of the nuclear waste fund as of 30 June 2006 is EUR 618 (596)
million.
The value of the fund asset in the balance sheet is EUR 421 (404) million as of
30
June 2006 due to IFRIC Interpretation 5, which states that it can not exceed
the
carrying value of the related liabilities.

3) At year end there is a difference between the legal liability and Fortum´s
share of the nuclear waste fund due to yearly revised calculation of the
liability.
The difference is due to timing of the annual calculation of the liability and
will be paid during first quarter the following year.
Fortum has given real estate mortgages as security. The real estate mortgages
are
included in contingent liabilities.

DERIVATIVES
MEUR June 30 June 30
Dec 31
2006 2005
2005

Interest and currency Notional Net Notional Net Notional
Net
derivatives value fair value fair value
fair
value value
value

Interest rate swaps 3 504 -28 3 009 15 2 636
11
Forward foreign exchange 4 420 -9 7 533 154 5 297
69
contracts
Interest rate and 2 577 -26 315 3 2 169
3
currency swaps
Electricity derivatives Volume Net Volume Net Volume
Net
fair fair
fair
value value
value
TWh MEUR TWh MEUR TWh
MEUR

Sales 112 -1 199 80 -465 84
-463
swaps
Purchase 70 781 45 333 49
276
swaps
Purchased options 14 -23 1 2 1
-1
Written 24 7 7 -21 3
2
options
Oil Volume Net Volume Net Volume
Net
derivatives fair fair
fair
value value
value
1000 bbl MEUR 1000 bbl MEUR 1000 bbl
MEUR

Sales swaps and futures 270 -2 45 -1 90
0
Purchase swaps and 784 8 755 12 571
6
futures

ACCOUNTING POLICIES
The condensed financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34, Interim Financial Reporting.
The accounting policies adopted are consistent with those followed in
the preparation of the Group's annual financial statements for the
year ended 31 December 2005.

Acquisition of Fortum Espoo Oyj

Fortum acquired 99.8% of the shares of Fortum Espoo Oyj (former E.On Finland
Oyj)
on 26. June 2006.
Fortum Espoo is consolidated in Fortum's June closing balance sheet using the
consolidated balance sheet of Fortum Espoo Oyj as of 31 March 2006.
Fortum Espoo is a listed company and will publish the January-June 2006 interim
report on 18 August 2006.
No income statement effect has been taken into account. In segment reporting
Fortum
Espoo figures have been included in the segment Other.
The purchase price has preliminarily been allocated to property, plant and
equipment. Fortum Group contingent liabilities and derivatives include Fortum
Espoo
figures as of 31. March 2006. In the next interim report Fortum Espoo figures
will
be presented according to the approriate segments and the provisional purchase
price allocation wil be calculated in more details.

Accounting for the share of profits from Hafslund ASA

According to Fortum Group accounting policies the share of profits from Hafslund
has been included in Fortum Group figures based on the previous quarter
information. Hafslund published January-June 2006 interim report on 18 July, but
Fortum still uses previous quarter information since Hafslund's other interim
reports during 2006 are published later than Fortum's interim reports.

When calculating the share of profits in Hafslund, Fortum has in accordance with
Fortum's accounting policies reclassified Hafslund's accounting treatment for
the
shareholding in Renewable Energy Corporation (REC).
Hafslund has classified the shareholding in REC as financial assets at fair
value
through profit and loss while Fortum has classified the REC shareholding as
available for sale financial assets with fair value changes recorded directly
through equity.
Only if Hafslund would divest shares in REC, the cumulative fair value change
would
effect Fortum's income statement.

Since REC is listed on the Oslo stock exchange as of 9 May 2006, Fortum is
accounting for the fair value change in REC based on the closing price on the
Oslo
stock exchange at each closing date. The amount of shares is based on the amount
published by Hafslund in the previous quarter if other information is not
available. At the end of June 2006 the fair value change during 2006 was
approximately EUR 340 million in Fortum.

Definitions of key
figures
Comparable operating = Operating profit - non-recurring items -
profit other items effecting comparability
Non-recurring items = Mainly capital gains and losses
Other items effecting = Includes effects from financial
derivatives
comparability hedging future cash-flows where
hedge accounting is not applied according
to
IAS 39 and effects from
the accounting of Fortum´s part of the
Finnish Nuclear Waste Fund
where the asset in the balance sheet
cannot
exceed the related liabilities
according to IFRIC interpretation 5.
EBITDA (Earnings = Operating profit continuing operations +
before interest, Depreciation, amortisation
taxes, depreciation
and amortisation) and impairment charges continuing
continuing operations operations
Return on = 100 x Profit for the year
shareholders' equity,
%
Total equity average
Return on capital = 100 x Profit before taxes + interest and other
employed, % financial expenses
Capital employed average
Return on capital = 100 x Profit before taxes continuing operations
employed continuing + interest and other
operations, %
financial expenses continuing
operations
Capital employed continuing operations
average
Return on net assets, = 100 x Operating profit + Share of profit (loss)
in
% associated companies and joint
ventures
ventures
Net assets average
Comparable return on = 100 x Comparable operating profit + Share of
net assets, % profit (loss) in associated companies
and joint ventures (adjusted for IAS
39 effects)
Comparable net assets average
Capital = Total assets - non-interest bearing
employed liabilities - deferred tax liabilities
-
provisions
Net = Non-interest bearing assets + interest-
assets bearing assets related to the Nuclear
Waste Fund - non-interest bearing
liabilities - provisions
(non-interest bearing assets and
liabilities
do not include finance related items,
tax and deferred tax and assets and
liabilities from fair valuations of
derivatives where hedge accounting is
applied)
Comparable net assets = Net assets adjusted for non-interest
bearing assets and liabilities
arising from financial derivatives hedging
future cash-flows where hedge
accounting is not applied according to
IAS 39
Interest-bearing net = Interest-bearing liabilities - cash
debt and cash equivalents
Gearin = 100 x Interest-bearing net debt
g, %
Total
equity
Equity per share, EUR = Shareholder's equity
Number of shares excluding treasury
shares
at the end of the period
Equity-to-assets = 100 x Total equity including minority
ratio, % interest
Total
assets
Net debt / EBITDA = Interest-bearing net debt
Operating profit + Depreciation,
amortisation and impairment charges
Net debt / EBITDA = Interest-bearing net debt
continuing operations
Operating profit continuing operations +
Depreciation, amortisation and
impairment charges continuing
operations
Interest = Operating profit
coverage
Net interest expenses
Earnings per share = Profit for the period - minority
(EPS) interest
Average number of shares during the
period