Stock exchange release


09 September 2003, 10:45 EEST

9 September 2003 at 11.45 1 (1)

FORTUM PLANS TO LIST ITS OIL BUSINESS Significant Investment in the Porvoo Refinery Fortum has decided to commence preparations to separate its oil business into a new company and subsequently to list the new company on the Helsinki stock exchange through an initial public offering. Fortum has also decided to invest EUR 500 million to upgrade the Porvoo refinery, in order to take advantage of well established market trends and thereby further improve its competitiveness and profitability. These strategic decisions will enable Fortum to further increase its Nordic utility focus and to continue to participate actively in the restructuring of the Nordic power and heat markets. These measures will also improve the competitive position and commercial prospects of the oil business. Fortum has assessed how to further develop its businesses in the context of the continuing changes in the utility and refining & marketing industries. In light of the capital intensive nature of both industries, Fortum wants to ensure the availability of sufficient resources to fund the attractive investment opportunities which exist in both businesses. Fortum has concluded that an IPO of the oil business best positions both businesses to take advantage of the strategic opportunities they face and provides them with access to separate pools of capital. These measures will create two leading Nordic companies with strong competitive positions in their respective markets. Preparations to separate the oil business have started and Fortum aims at completing the internal reorganisation during the first half of 2004. This will enable a subsequent listing and sale of shares subject to market conditions. The new company will include all of Fortum’s oil refining, marketing, shipping and production assets and operations. Existing employee benefits will remain unchanged following the separation. The creation of an independent refining & marketing company and subsequent stock exchange listing will enable the new company to best pursue an independent strategy and will facilitate the EUR 500 million investment in the Porvoo refinery. The upgrade will further strengthen the refinery’s position as a highly efficient refinery in Northern Europe. The high expected return from the upgrade investment is driven by the Porvoo refinery’s ability to produce more high margin, environmentally benign products from less expensive crude oil. The demand for these products is rapidly growing in Fortum’s key markets. While the total production capacity will remain unchanged, the refinery will be able to significantly increase the production of high margin products, such as sulphur-free diesel, utilising for example more Russian crude. Fortum expects to increase its refining margin premium by at least USD 1/bbl and thus achieve an attractive return on investment using relatively conservative assumptions. The investment is expected to be completed by the end of 2006. The building and engineering works related to the investment amount to approximately 3,000 man-years and the project is expected to result in 100 new permanent jobs. According to President and Chief Executive Officer Mikael Lilius, Fortum has significantly developed its businesses over the past few years. “We have improved profitability markedly. Now we can take advantage of new opportunities in both industries. Today’s decisions will allow us to continue to develop Fortum as the leading utility company in the Nordic region. At the same time, we can ensure the long term competitiveness of the new, independent refining & marketing company.ö Fortum will arrange a press and analyst conference in relation to the announcement today at 3:30pm Finnish time at its head office in Keilaniemi, Espoo. A teleconference for international analysts and investors will be arranged at 5:00 pm Finnish time (GMT+2). To listen to the call please dial +44 (0) 1452 560068. Fortum Corporation Carola Teir-Lehtinen Senior Vice President, Corporate Communications For further information please contact Carola Teir-Lehtinen, tel. +358 10 452 4118 Juha Laaksonen, CFO, tel. +358 10 452 4519 Distribution: Helsinki Exchanges Key media