President and CEO Markus Rauramo:

(text from Financial Statements Bulletin 2020 )

"The year 2020 will be remembered first and foremost for the Covid-19 pandemic that shook the world and impacted the lives and livelihoods of people all around the globe. While the utilities sector, and Fortum more specifically, was also affected by the pandemic, we suffered clearly less than many other sectors and companies. Our focus through the challenging times was – and continues to be – on securing the well-being of our employees and thereby ensuring uninterrupted supply of power and heat to our customers and the societies around us.

Over the course of the year, we stood up to the challenge very well and successfully operated our power plants, carried out the annual overhauls, and secured the construction and commissioning of new power plants without major disturbances. In the Nordics we commissioned both the 90-MW Kalax and 99-MW Sørfjord wind parks, and in Russia we brought a total of 550 MWs of wind capacity to the market. At the same time, our subsidiary Uniper’s construction projects at Irsching and Scholven in Germany and the modernisation of the Surgutskaya power plant in Russia are proceeding according to plan.

We have also continued our strategy execution tenaciously. During the year, we increased our ownership in Uniper from 49.99% to approximately 76%, and consolidated Uniper as a subsidiary into our financials as a separate reporting segment. One of the key focus areas in 2020 was intensifying the cooperation between Fortum and Uniper. As a result, we presented an updated strategy covering the whole Fortum Group at the beginning of December. Building on our strong position in CO2-free power generation and gas as well as our expertise in sustainable industrial and infrastructure solutions, the strategy focuses on driving the clean energy transition. With determined execution of our strategy, we intend to deliver sustainable financial performance and target a growing dividend over the years to come. Our strategy is aligned with the goals of the Paris Agreement, targeting carbon neutrality for the Group by 2050 and in our European generation already in 2035.

As part of our strategy execution in 2020, we continued to optimise our portfolio and decided to divest our district heating businesses in Joensuu and Järvenpää in Finland after a strategic review. The sales gains recorded for these assets totalled EUR 722 million. The strategic reviews of our district heating assets in the Baltics, Poland, and Sweden as well as of our Consumer Solutions business are ongoing.

In 2020, Europe took determined strides on climate policy. The EU’s Green Deal package with a clear commitment to climate neutrality by 2050 and tighter emissions reduction targets for 2030 was a truly welcome development as it bundles up all EU policy areas and all sectors of society. Until now, the focus of decarbonisation has largely been on the power sector, but the Green Deal has a society-wide approach. The tighter targets will be translated into a substantially tighter EU emission trading system in the upcoming years and the expansion of it is also on the table. This is something we for several years have been advocating for and we are very pleased with the development. This decision has also supported the price of CO2 emission allowances, which are trading around twice the price compared to a year ago. The hydrogen economy also took several steps forward, with the EU Commission and several member states presenting their hydrogen strategies. This is a very welcome development, as the role of hydrogen made from CO2-free power will play a key role in decarbonising the European economy, including many sectors that are hard to decarbonise, such as heavy transport and some industrial processes.

The market conditions in 2020 were characterised, not only by the pandemic and market volatility, but for us even more so by the wet hydrology in the Nordics that pushed power prices heavily down. Towards the end of the year, CO2 emission allowance and commodity prices started to recover, which was also reflected in increasing power prices. While 2020 was a rough year for many energy commodities, European gas and power demand suffered only mildly – both in the region of a 3-4% decrease year-on-year.

The 2020 financial results for our Generation segment were burdened by the low power prices and low nuclear volumes especially in the fourth quarter. Our successful hedging significantly alleviated the effect of the low power prices. In the City Solutions segment, the result declined on warm weather and low power prices, while Consumer Solutions’ results continued to improve. Despite the impact of the pandemic in the first half of 2020 and the lower power margins, our Russia segment fared well operationally, and the result decline was to a large extent due to the change in the Russian rouble exchange rate. Uniper’s results generally follow a seasonal pattern with the first and fourth quarters being the strongest. As a result of the strong hedging and optimisation in the power and gas business, the fourth-quarter 2020 results of the Uniper segment significantly contributed to Fortum’s comparable operating profit.

In line with our updated dividend policy and what we communicated in early December, the Board of Directors proposes a dividend of EUR 1.12 per share for the financial year 2020, an increase from the stable dividend we have been paying for several years.

Finally, I would like to thank all our employees for their dedication and hard work during the challenging times and for their flexibility and willingness to quickly adapt to the new ways of working brough on by the Covid-19 pandemic. For the year 2021, the focus will be on strategy execution, further deepening the cooperation with Uniper, and delivering on the collaboration benefits identified thus far with Uniper. At the same time, we will continue to target a strong financial position and maintaining our solid investment-grade rating."