President and CEO Markus Rauramo:

January-March 2023 Interim Report

“During the first quarter, commodity prices came down from the peak levels seen in 2022 as the winter turned out to be mild and windy, gas storage levels in Europe remained high and the demand for energy decreased. Nevertheless, power and other commodity prices remained elevated compared to the long-term average. This was due to concerns over security of supply and the effects of Russia’s brutal war in Ukraine as well as worries that the turbulence in the financial sector would further increase global inflation and dampen growth.

Unfortunately, still after a year of full-blown war in Ukraine, there are no signs of peace or a way out of the conflict. Russia continues to use energy as a weapon of war and as a means to exert pressure on Europe. At the end of April, Fortum’s subsidiary PAO Fortum was seized by the Russian authorities under the guise of a presidential decree. As a consequence, we are deprived of our shareholder rights and have assessed that we no longer have control over our Russian operations. In the second-quarter 2023 results, the Russia segment will be deconsolidated and the Russian assets written down in full. We consider Russia’s actions to be a crude violation of international law and of Fortum’s rights as a foreign investor. Fortum is preparing to take all necessary measures to protect its rights under relevant international legislation.

In March, we announced our new strategy and purpose. One strategic priority is to deliver energy reliably, maintain high availability of our plants and focus on optimisation, efficiency and safety of our Nordic fleet. In the first quarter, we were granted a new operating licence for our Loviisa nuclear power plant until the end of 2050. This is a concrete example of ensuring productivity in the long run alongside our ongoing rebuild of the Forshuvud hydropower dam in Sweden. The Loviisa lifetime extension until 2050 offers up to 170 TWh of additional CO2 free power with capital expenditure of approximately EUR 1 billion over some 25 years. In general, the support for nuclear power in Finland is record high at the moment and I am very pleased that TVO’s long-awaited third Olkiluoto nuclear power plant unit in Finland started regular power generation in April and commercial operation in May.

Another priority is to drive decarbonisation in industries. Our aim is to build new clean energy production in partnership with strategic customers and to actively develop projects to enable growth over time. In the first quarter, we announced partnerships with the Finnish steel company Outokumpu and the UK-based Rolls-Royce SMR related to our nuclear feasibility study covering both small modular reactors (SMRs) and conventional nuclear. We also launched a pre-feasibility study with Metsä Group to examine the technological and business potential of the further processing of wood-derived carbon dioxide.

We are committed to ambitious financial and environmental targets and have a new dividend policy to create value for our stakeholders and societies. At the same time, with the new operating model headed by the new Fortum Leadership Team, we are developing a more integrated way of leading and operating at Fortum. Our growth will be selective with growth capital expenditure (excluding acquisitions) of up to EUR 1.5 billion for the next three years.

Fortum's first quarter results improved significantly and comparable operating profit of continuing operations excluding Russia more than doubled to EUR 698 million. The higher achieved power price was the main driver that strengthened the results of the Generation segment. Consumer Solutions’ results fell close to zero mainly due to losses from customer outflow from certain hedged customer contracts in very volatile and high-price market conditions.

At the end of the first quarter, our financial position continued to be solid with undrawn credit facilities of EUR 5.8 billion and liquid funds of EUR 3.7 billion. In March, we repaid the drawn amount of EUR 350 million of the bridge financing loan and cancelled the entire EUR 2.35 billion facility provided by Solidium. Our decisive actions to stabilise our operations have been recognised by the rating agencies. In March 2023, both Standard & Poor’s and Fitch affirmed Fortum’s BBB long-term credit rating and revised the outlook to Stable. We have the aim to refinance the current bank debt during 2023 and to return to the European fixed income market.

The clean energy transition is truly speeding up in Europe, which makes our business more relevant than ever. Fortum is well positioned in this transition. We have the needed expertise and assets, and we aim to take an active role in successfully and affordably driving the transition towards carbon neutrality in the Nordics. We want to power a world where there is a healthy balance between the wellbeing of people and society, the success of businesses, and the diversity of nature.”