Results on last year's levels


July - September 2011

- Comparable operating profit EUR 297 (302) million, -2%
- Earnings per share EUR 0.23 (0.27), -15%
- Volumes in hydro and nuclear generation increased
- Nordic spot prices clearly lower compared to third quarter 2010

January - September 2011

- Comparable operating profit EUR 1,294 (1,292) million, 0%
- Earnings per share EUR 1.52 (1.20), +27%
- Financial position remained strong
- Russian investment programme continued to progress

Key figures                                          III/11 I               II/10 I            -III/11      I-III/10   2010    LTM*
Sales, EUR million     1,144    1,152   4,494   4,394    6,296   6,396
Operating profit,        314      312   1,823   1,387   1,708    2,144
EUR Million
Comparable operating     297      302   1,294    1,292   1,833    1,835
profit,EUR million
Profit before taxes,     240      285   1,696    1,330   1,615    1,981
EUR million
Earnings per share, EUR 0.23      0.27   1.52    1.20     1.46     1.78
Net cash from operating  277       273   1,141   1,216    1,437   1,362
activities, EUR million

Shareholders' equity                     10.05    9.27     9.24    N/A
per share, EUR
Interest-bearing net debt                6,929    6,608   6,826     N/A
(at end of period), EUR million
Average number of shares, 1,000s       888,367   888,367  888,367  888,367

*) Last twelve months

Key financial ratios                2010    LTM
Return on capital employed, %       11.6    13.5
Return on shareholders' equity, %   15.7    18.5
Net debt/EBITDA                      3.0     2.5


- Fortum currently expects that the annual electricity demand growth in the
Nordic countries will be about 0.5% in the coming years
- Power Division's Nordic generation hedges: Rest of 2011, 65% at EUR 47 per
MWh. 2012, 55% at EUR 47 per MWh. 2013, 25% at EUR 46 per MWh

Fortum's President and CEO Tapio Kuula, in connection with the third quarter

“Electricity demand improved slightly both in the Nordic countries and Russia
in the third quarter of 2011 compared to the same period in 2010. Fortum's
operational enhancements and especially the improved hydro levels and nuclear
availability enabled us to deliver satisfactory comparable operating profit as
well as a good cash flow in the quarter. The investments to support our
long-term goals and financial targets continued according to plan. We are
constantly monitoring the need for any steps necessary to offset headwinds that
may occur as a result of the challenging economic situation and business

The underlying fundamentals for energy demand have not changed and the
mitigation of climate change is necessary. Fortum therefore emphasises that the
future energy system should be based on CO2-free power production, energy
security and energy efficiency. We believe that the energy system will
gradually transform from today's traditional power generation technologies,
limited energy sources and fossil fuels towards solar economy. However, changes
in the capital-intensive energy industry are slow. With the exception of hydro
and wind power as well as bio-energy, other production forms in the solar
economy are still in the development phase. Fortum is actively researching
future en¬ergy production technologies, such as solar and wave power and
bio-fuels for combined heat and power production (CHP). However, hydro, nuclear
and CHP continue to be the major sources for power and heat generation for
Fortum. Fortum is continuously developing its existing hydro assets and will
for example participate in the tendering processes for hydropower concession
renewals in France, as announced at the end of last year.

The EU-wide nuclear safety reviews, commenced after the Fukushima accident in
Japan, will be ready in October. They are an important step towards more
uniform international nuclear safety standards. In Fortum's opinion, different
concepts of nuclear power plants should also be considered in the future. Over
the years, Fortum has built up extensive competence in the area of nuclear
power; security, availability and efficiency of Fortum's own power plants are
very high by international standards.”

Financial results

July - September

In July - September, Group sales were EUR 1,144 (1,152) million. Group
operating profit totalled EUR 314 (312) million. Fortum's operating profit for
the third quarter of 2011 was affected by a EUR 23 (-16) million IFRS
accounting treatment (IAS 39) of derivatives mainly used for hedging Fortum's
power production. The comparable operating profit, which was not impacted by
the accounting treatment, totalled EUR 297 (302) million.

The total of non-recurring items, mark-to-market effects and nuclear fund
adjustments in the third quarter of 2011 amounted to EUR 17 (10) million.

The share of profits from associates in the third quarter was EUR -2 (10)
million, of which Hafslund ASA represented EUR 6 (8) million and TGC-1 EUR 0
(0) million. The share of profits from TGC-1 is based on the company's
published IFRS second-quarter interim report. The share of profits from
Hafslund is based on the company's second-quarter interim report; excluding a
write-down of the Hafslund shareholding in Renewable Corporation (REC)
amounting to EUR 20 million which Fortum already included in its second quarter
results (see also Note14).

Sales by division

EUR million                               III/11           III/10          I-III/11          I-III/10            2010         LTM
Power                560    584   1,827   1,950   2,702  2,579
Heat                 212    220   1,259   1,172   1,770  1,857
Russia               156    137     646     550     804    900
Distribution*        203    196     729     676     963  1,016
Electricity Sales*   139    305     695   1,269   1,798  1,224
Other                 27     23      76      44      51     83
Netting of Nord Pool  -99   -264    -615  -1,208  -1,736 -1,143

Eliminations         -54   
-49     -123     -59    -56    -120
Total              1,144  1,152    4,494   4,394   6,296  6,396

* Part of the Electricity Solutions and Distribution Division

Comparable operating profit by division

EUR million       III/11    III/10   I-III/11   I-III/10  2010   LTM
Power                268       267        850       962  1,298  1,186
Heat                 -14      -12         182        153   275    304
Russia               -16      -16          39         -9     8     56
Distribution*         62       61         246        216    307   337
Electricity Sales*     4       11          25          8     11    28
Other                 -7       -9         -48         -38   -66   -76
Total                297      302       1,294       1,292  1,833 1,835

* Part of the Electricity Solutions and Distribution Division

Operating profit by division

EUR million          III/11   III/10   I-III/11   I-III/10   2010  LTM
Power                   273      256      1,033      1,003   1,132 1,162
Heat                    -10      -15        280        179     303   404
Russia                  -16       14         39         37     53    55
Distribution*            60       62        437         228    321   530
Electricity Sales*        6       12          9          6      46   49
Other                     1      -17         25        -66     -147 -56
Total                    314     312      1,823       1,387   1,708 2,144

* Part of the Electricity Solutions and Distribution Division

January - September

In January-September, Group sales were EUR 4,494 (4,394) million. Group
operating profit totalled EUR 1,823 (1,387) million. Fortum's operating profit
for the period was affected by a EUR 272 (5) million IFRS accounting treatment
(IAS 39) of derivatives mainly used for hedging Fortum's power production. The
comparable operating profit, which was not impacted by the accounting
treatment, totalled EUR 1,294 (1,292) million.

Non-recurring items, mark-to-market effects and nuclear fund adjustments in
January-September 2011 amounted to EUR 529 (95) million. Of this total,
non-recurring items totalled EUR 275 (86) million, which mainly relates to the
divestment of the district heat operations and production facilities outside
Stockholm and the divestment of shares in Fingrid Oyj.

The average Swedish krona (SEK) rate was approximately 7% stronger against the
euro than during the corresponding period in 2010. Power Division was burdened
by the higher cost levels due to the SEK/EUR ratio and the euro-denominated
power sales. The strong SEK during the first half of the year also had a
negative impact on the cash flow.

The share of profits of associates and joint ventures was EUR 72 (41) million.
The improvement from last year was mainly due to the improvement in the
contribution from TGC-1 and Hafslund ASA.

The Group's net financial expenses increased to EUR 199 (98) million. The
increase is attributable to higher interest expenses, mainly due to higher SEK
interest rates and to higher average net debt in 2011 than during the
comparable period in 2010. Net financial expenses were also negatively affected
by changes in the fair value of financial instruments of EUR -2 (20) million.

Profit before taxes was EUR 1,696 (1,330) million.

Taxes for the period totalled EUR 278 (236) million. The tax rate according to
the income statement was 16.4% (17.7%). The tax rate excluding mainly the
impact of the share of profits of associated companies and joint ventures as
well as non-taxable capital gains was 20.8% (19.3%).

The profit for the period was EUR 1,418 (1,094) million. Fortum's earnings per
share were EUR 1.52 (1.20). The effect on earnings per share by the accounting
treatment of derivatives was EUR 0.23 (0.00).

Non-controlling (minority) interests amounted to EUR 70 (25) million. These are
mainly attributable to Fortum Värme Holding AB, in which the city of Stockholm
has a 50% economic interest. The increase in January-September 2011, compared
to the corresponding period in 2010, is mainly due to the minority's share, EUR
30 million, of the gain recognised in the first quarter from the divestment of
Fortum Värme's heat businesses outside the Stockholm area.

Cash flow from operating activities totalled EUR 1,141 (1,216) million. It was
affected by the realised foreign exchange gains and losses, which amounted to
EUR -215 (-394) million in January-September 2011. The negative currency impact
occurred during the first quarter. The foreign exchange gains and losses relate
to the rollover of foreign exchange contracts hedging loans to Fortum's Swedish

Fortum's financial key ratios for the last twelve months were: return on
capital employed 13.5% (11.6% at the end of 2010), return on shareholders'
equity 18.5% (15.7% at the end of 2010) and net debt to EBITDA 2.5 (3.0 at the
end of 2010). The comparable net debt to EBITDA for the last twelve months was


Key drivers and risks

Fortum's financial results are exposed to a number of strategic, financial and
operational risks. The key factor influencing Fortum's business performance is
the wholesale price of electricity in the Nordic region. The key drivers behind
the wholesale price development in the Nordic region are the supply-demand
balance, fuel and CO2-emissions allowance prices as well as the hydrological

The increasing global economic uncertainty and Europe's sovereign-debt crisis
weakens the outlook for economic growth and recovery, especially in the Euro
zone. This, in combination with a stronger hydrological situation in the Nordic
region, could put downward pressure on the Nordic wholesale price for
electricity in the short to medium term. In the Russian business, the key
factors are the regulation around electricity and capacity markets and
operational risks related to the investment programme. Increased volatility in
exchange rates due to financial turbulence might have both translation and
transaction effects on Fortum's financials especially through the SEK and RUB.

For further details on Fortum's risks and risk management, see Fortum's
Operating and Financial Review and Financial Statements for 2010.

Nordic market

Electricity will continue to gain a higher share of the total energy
consumption. Fortum currently expects that the annual electricity demand growth
in the Nordic countries will be about 0.5% in the coming years.

Oil, coal and gas prices have decreased a few percentages during the third
quarter of 2011. CO2 prices, however, decreased by over 20% at the end of the
quarter due to financial uncertainty in Europe and energy-efficiency proposals
in the EU.

In Germany, forward prices were at approximately the same level at the end of
the quarter as in the previous quarter. Increased water reservoir levels as
well as decreased CO2 price impacted Nordic forward prices which decreased by
about 6%.

In mid-October 2011, the electricity forward price in Nord Pool for the rest of
2011 was around EUR 44 per MWh. The electricity forward price for 2012 was
around EUR 44 per MWh and for 2013 around EUR 44 per MWh. In Germany, the
electricity forward price for the rest of the year was around EUR 59 per MWh
and EUR 56 per MWh for 2012. At the same time, the future quotations for coal
(ICE Rotterdam) for the rest of 2011 were around USD 118 per tonne and the
market price for CO2-emissions allowances (EUA) for 2011 was about EUR 10 per

In mid-October 2011, Nordic water reservoirs were about 4 TWh above the
long-term average and 19 TWh above the corresponding level of 2010.


The Russian wholesale power market was liberalised from the beginning of 2011.
All generating companies continue to sell a part of their electricity and
capacity equalling the consumption of households under regulated prices.

The new rules for the capacity market starting from 2011 have been approved by
the Russian Government. The generation capacity built after 2007 under
government capacity supply agreements (CSA - “new capacity”) will receive
guaranteed payments for a period of 10 years. Prices for capacity under CSA are
defined in order to ensure a sufficient return on investments. Capacity not
under CSA will compete in competitive capacity selection (CCS - “old

In December 2010, the first auction CCS for the year 2011 was held in
accordance with the new rules of the capacity market. The new rules stipulate
that capacity payments under CCS are made according to the available capacity
instead of the previously used installed capacity. This decreases the old
capacity payments for CHP power plants, especially during the summer period.
The original plan to decide the CCS for the 2012-2015 period during the fourth
quarter in 2011 has been changed and now covers only the year 2012.

Upon completion, OAO Fortum's new capacity will be a key driver for solid
earnings growth in Russia as it will bring income from new volumes sold and
receive considerably higher capacity payments than the old capacity. However,
the price differs, depending on age, the location, size and type of the plants
as well as seasonality. The first and fourth quarters have higher old capacity
income than the second and third quarters due to the seasonality of the
business. The return for the new capacity is guaranteed, but could vary
somewhat because it is linked to the Russian Government long-term bonds with 8
to 10 years maturity. After completing the ongoing investment programme Fortum
targets a positive economic value added for the Russia Division.

In light of the improved demand and the development of the Russian capacity
market, Fortum has accelerated the schedule of OAO Fortum's committed
investment programme and is planning to commission the last new units by the
end of 2014. The value of the remaining part of the investment programme,
calculated at exchange rates prevailing at the end of September 2011, is
estimated to be approximately EUR 1.1 billion as of October 2011. The first two
new units started capacity sales in early February and June 2011. The third
unit in Tobolsk was taken into commercial operation on 1 October 2011.

The average regulated gas price increased by 15% from the beginning of the year
compared with the average price in 2010. The regulated gas price is expected to
remain unchanged for the rest of 2011. The regulated part of electricity price
is indexed to the regulated gas price and inflation on an annual basis.

Capital expenditure and divestments

Fortum currently expects its capital expenditure in 2011 to be around EUR 1.5
billion and in 2012 to be around EUR 1.6 -1.8 billion, excluding potential
acquisitions. The annual level of Fortum's capital expenditure in 2013-2014 is
estimated to total EUR 1.1-1.4 billion. The main reason for high capital
expenditures in 2011-2012 is the acceleration of Fortum's Russian investment
programme. The annual maintenance capital expenditure is estimated to be about
EUR 500-550 million in 2011, approximately at the level of depreciation.

In March 2011, Fortum divested its district heat operations outside the
Stockholm area in Sweden. The sales price was approximately EUR 220 million. In
addition, Fortum finalised the divestment of its 25% shareholding in the
Finnish transmission system operator Fingrid Oyj in April 2011. The sales price
was EUR 325 million.


The effective corporate tax rate for Fortum in 2011 is estimated to be 19-21%
excluding the impact of the share of profits of associated companies and joint
ventures, non-taxable capital gains and non-recurring items.

As of 1 January 2011, taxes on fuels for heat production as well as taxes on
electricity were increased considerably in Finland. The tax increases are
reflected in end-user prices of heat and electricity, accordingly.

In addition, the Swedish Government increased the hydro property tax rates at
the beginning of 2011. The additional cost from the tax rate increase is
estimated to be approximately EUR 15 million in 2011.


At the end of September 2011, approximately 65% of the Power Division's
estimated Nordic power sales volume was hedged at approximately EUR 47 per MWh
for the rest of the 2011 calendar year. The corresponding figures for the 2012
calendar year are about 55% at approximately EUR 47 per MWh. And the
corresponding figures for the 2013 calendar year are approximately 25% at
approximately EUR 46 per MWh.

The hedge price for Fortum Power Division's Nordic generation excludes hedging
of condensing power margin. In addition, the hedge ratio excludes the financial
hedges and physical volume of Fortum's coal-condensing generation as well as
the division's imports from Russia.

The reported hedge ratios may vary significantly, depending on Fortum's actions
on the electricity derivatives markets. Hedges are mainly financial contracts,
most of them Nord Pool forwards.


The Power Division's Nordic power price typically depends on e.g. the hedge
ratio, hedge price, spot prices, availability and utilisation of Fortum's
flexible production portfolio, and currency fluctuations. Excluding the
potential effects from the changes in the power generation mix, a 1 EUR/MWh
change in the Power Division's Nordic power sales price will result in an
approximately EUR 45 million change in Fortum's annual comparable operating
profit. In addition, the comparable operating profit of the Power Division will
be affected by the possible thermal power generation amount and its profit.

Fortum believes that additional safety criteria may be introduced for new and
nuclear power plants. In 2011, the Power Division's costs are estimated to
remain roughly at the same level as in 2010 excluding the SEK translation and
Swedish hydro property tax effects. The impact of the expired Russian power
import contract is estimated to be approximately EUR -40 million for the
full-year 2011. The Power Division's comparable operating profit is expected to
be more year-end weighted in 2011 compared to 2010, mainly driven by improved
nuclear availability and increased hydro volumes.

In Finland, the budget proposal for 2012 does not include windfall or uranium
taxes - the implementation of which the Government proposed to investigate in
its programme published earlier this year.

According to the legislation in Sweden, the nuclear waste fees and guarantees
are updated at regular intervals. The next period covers 2012 - 2014.The
Swedish nuclear authority has therefore sent a proposal, which indicates an
increase in fees. The Government will decide upon the fees and the guarantees
by the end of 2011.

Fortum has managed its performance well and has maintained a solid financial
position in a volatile and challenging environment. The strong balance sheet,
combined with a flexible, cost-efficient and sustainable generation portfolio,
creates a firm basis going forward.

Espoo, 19 October 2011
Fortum Corporation
Board of Directors

Further information:
Tapio Kuula, President and CEO, tel. +358 10 452 4112
Juha Laaksonen, CFO, tel. +358 10 452 4519

Fortum's Investor Relations, Sophie Jolly, +358 10 453 2552, and Rauno
Tiihonen, +358 10 453 6150 /

More information, including detailed quarterly information, is available on
Fortum's website at

Key media



Fortum's interim report Q3 2011