Why invest in Fortum

Fortum is a European power and gas company and the third largest producer of CO2-free electricity in Europe. Our purpose is to drive the change for a cleaner world. We are securing a fast and reliable transition to a carbon-neutral economy by providing customers and societies with clean energy and sustainable solutions.

Attractive growth and focus on decarbonisation

Fortum is well-positioned to capture opportunities resulting from the energy transition, aimed at curbing climate change. To be successful, the energy transition must balance sustainability, affordability, and security of supply. The energy transition requires not only renewables, but also increasingly clean gas, energy storage, and other flexible solutions to provide security of supply and to decarbonise also industry, transportation, heating, and cooling. Building on our strengths, our future growth will be driven by CO2-free power generation and clean gas, sustainably transforming our own operations to become carbon neutral and engaging customers and society to decarbonise.

In December 2020, Fortum updated the strategy for the whole Fortum Group to drive the clean energy transition and deliver sustainable financial performance. Aligned with the goals of the Paris Agreement, Fortum targets carbon neutrality latest by 2050 with ambitious mid-term targets.

Our strategy builds on four priorities:

Strengthen and grow in CO2-free power generation

  • Fortum’s investment in Uniper was a step-change, increasing the Group’s CO2-free power generation by 60%. We continue to focus on optimising and maintaining our benchmark operations in hydro and nuclear.
  • We will also focus on growing a sizeable portfolio of onshore wind and solar based power generation primarily in Europe to make it a meaningful EBITDA contributor. The target is to build 1.5-2 GW of new capacity by 2025.
  • In our Russian operations we will gradually transform our asset portfolio towards renewables, while over time reducing our fossil exposure.

Leverage strong position in gas to enable the energy transition

  • Fortum is a major player in gas with its benchmark gas-fired power generation and gas midstream business, which provides gas for heating and various industrial needs. As Europe transitions away from coal, our gas assets provide much-needed flexibility to the power system, enabling fast growth in solar and wind power. Our aim is to decarbonise our gas-fired power generation through conversion to clean gases over time.
  • Gas plays a vital role in many areas outside the power market, and we will also continue to focus on the reliable supply of gas for heating and industrial processes. Our aim is to continue to optimise our gas supply and storage, and grow our share of contracted sales to wholesale and industrial customers. In the longer term, natural gas usage will transition towards clean hydrogen and synthetic gases. Our strong position in the gas value chain and CO2-free power generation create good pre-requisites for us to succeed in providing clean hydrogen solutions in the future.

Partner with industrial and infrastructure customers

  • Fortum wants to engage with customers and societies to help decrease their environmental footprints. Accordingly, we aim to provide industrial and infrastructure customers with decarbonisation and environmental solutions, such as grid stability, waste-to-energy, and low-carbon industrial solutions.
  • The development of the hydrogen economy will play a key role in decarbonising Europe. The ambition levels of the EU and several member states are very high. Fortum aims to build on Uniper’s first-mover position in hydrogen, the Group’s position as Europe’s third largest CO2-free power generator, our long-term customer relationships, as well as our strong expertise in engineering, trading, risk management, and gas storage to develop and capture the opportunities in hydrogen as they become commercially available.

Transform own operations to carbon neutral

  • Transforming our own operations to carbon neutrality is a long-standing priority for Fortum. To accelerate the development, we have committed to the following ambitious climate and environmental targets:
    • Carbon neutral, in line with the goals of the Paris Agreement, latest by 2050 at the latest (scope 1, 2, and 3 emissions)
    • Carbon neutral in European generation latest by 2035 at the latest (scope 1 and 2)
    • Reduction of CO2 emissions (scope 1 and 2) in European generation by at least 50% by 2030 (base year 2019)
    • Number of major voluntary measures enhancing biodiversity ≥12 in 2021
  • During 2021, Fortum will develop a target for the reduction of scope 3 emissions addressing the indirect emissions from our fuel sales business (category 11).
  • Fortum’s coal-fired generation capacity will be reduced by more than 50% by the end of 2025, to approximately 5 GW.

Financial targets and aim to grow the dividend

Fortum financial targets and dividend policy were updated in December 2020. Fortum continues to be committed to maintaining a rating of at least BBB.

The long-term financial targets are:

  • Financial net debt/comparable EBITDA below 2x
  • Hurdle rates for new investments of WACC
    • o +100 bps for green investments
    • o +200 bps for other investments

Fortum's dividend policy ‘is to pay a stable, sustainable, and over time increasing dividend’. Fortum’s Board of Directors aims to propose a dividend of EUR 1.12 per share for the year 2020 with the target to increase the dividend going forward.

Fortum is driving its shareholder value by:

Increasing focus in our core competence areas:

  • CO2-free power generation: hydro, nuclear, and growth in onshore wind and solar
  • Benchmark gas-fired power generation and gas midstream business, which provides gas for heating and various industrial needs
  • Uniper’s first-mover position in hydrogen to develop and capture the opportunities in hydrogen as they become commercially available

Significant cooperation financial benefits with Uniper identified

  • estimated to deliver annually more than EUR 50 million by the end of 2023 and approximately EUR 100 million in 2025

A successful implementation of our strategy will create value for the benefit of our shareholders and support our aim to pay an overtime increasing dividend

Fortum CMD

Fortum's strategy

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