Stock exchange release
Fortum completes strategic assessment of its electricity distribution business
12 December 2013, 08:10 EET
FORTUM CORPORATION STOCK EXCHANGE RELEASE, 12 December 2013 at 08.10 EET
Fortum has completed the assessment of the future alternatives of its electricity distribution business that was launched in January 2013. After thorough consideration, the company has concluded that divesting the electricity distribution business is the best solution for the business and its customers, Fortum's shareholders and the company's other businesses. Focusing on electricity and heat production and sales, is estimated to improve Fortum's long-term value creation. Fortum evaluates the possible divestment opportunities country by country.
"Divesting electricity distribution business would, according to our conclusions, give us more strategic freedom and improve our possibilities for higher value creation. During the assessment process, we carefully studied all the alternatives in order to find the best solution for Fortum and the electricity distribution business. I firmly believe that we came to the right conclusion also from the perspective of our distribution customers and the society at large. The development possibilities in the distribution business are better when the business can be developed purely from its own standpoint," says Fortum's President and CEO Tapio Kuula.
The outcome of the assessment has no impact on Fortum's electricity retail customers. Fortum will continue to develop its electricity sales business as an integral part of the company's strategy and offer innovative products and services to its approximately 1.2 million electricity retail customers in the Nordic countries also in the future.
Fortum's goal is to strengthen its balance sheet and prepare for future growth. In accordance with its strategy, Fortum seeks growth in low-carbon power generation, energy-efficient combined heat and power (CHP) production and sales as well as innovative customer offerings. The Nordic and Baltic countries as well as Russia are the geographic home market of Fortum, but the company seeks new business prospects also elsewhere in line with its strategy.
"Along with the global megatrends, such as the ever increasing environmental challenges, the shift in the economic power balance and technological development, the energy sector is currently under turmoil, which is further fuelled by the tough economic times. In periods like these, opportunities may arise that only a company with a stable financial footing can seize," Tapio Kuula concludes.
Fortum Distribution's sales during the 12 months ending at the end of the third quarter 2013 amounted to EUR 1,105 million, comparable operating profit was EUR 356 million and comparable EBITDA was EUR 575 million. This represented an 18% share of Fortum's sales and a 20% share of comparable operating profit. Gross investments in Distribution totaled EUR 285 million during the same period. Net assets at the end of the third quarter 2013 totaled EUR 3,786 million. At the end of the third quarter 2013, the business served approximately 1.6 million customers in Finland, Sweden and Norway and employed 860 people.
Fortum's purpose is to create energy that improves life for present and future generations. In accordance with its strategy, the company’s aim is to build on its strong Nordic core, create solid earnings growth in Russia and build a platform for future growth.
Senior Vice President, Corporate Communications
NASDAQ OMX Helsinki
Tapio Kuula, President and CEO, tel. +358 10 45 24112
Corporate Communications: Helena Aatinen, Senior Vice President, +358 10 45 20480,
Fortum Media Desk +358 40 1982 843
Investor Relations: Sophie Jolly, Vice President, tel. +358 10 45 32552
A press conference (in Finnish) will be held today, 12 December 2013 at 11.00 EET in the auditorium of Fortum’s head office, Keilaniementie 1, Espoo, Finland. The press conference will be webcasted on Fortum’s Finnish website (www.fortum.com/fi).
An international teleconference conducted in English for analysts and investors will be held today, 12 December 2013 at 14.30 EET. The dial-in numbers:
European callers: +44 (0)20 3427 0503
US callers: + 1 212 444 0481
Finnish callers: +358 (0)9 2310 1621
Confirmation code: 3501655
There will be a replay facility available for one week after the teleconference:
European callers: +44 (0)20 3427 0589
US callers: + 1 347 366 9565
Finnish callers: +358 (0)9 2310 1650
Confirmation code: 3501655
A live audio webcast of the call will be available together with the slide presentation on Fortum’s website at www.fortum.com/investors.
Further information on Fortum:
Fortum’s purpose is to create energy that improves life for present and future generations. We provide sustainable solutions that fulfill the needs for low emissions, resource efficiency and energy security, and deliver excellent value to our shareholders.
Fortum is the leading electricity distribution company in the Nordic countries with over 1.6 million network customers; ~903 000 in Sweden, 640 000 in Finland and ~102 000 in Norway. Electricity distribution is a nationally regulated business. At Fortum, the Distribution business area is part of the company’s Electricity Solutions and Distribution Division that is also responsible for retail sales of electricity.
Fortum is the second largest electricity retail company in the Nordic countries with approximately 1.2 million customers in Finland, Sweden and Norway. Electricity sales is a competed business and there are altogether 350 electricity retailers in the Nordic countries.
Fortum’s largest division, Power, consists of Fortum’s power generation, power trading and power capacity development as well as expert services for power producers. Fortum’s Heat Division consists of combined heat and power (CHP) generation, district heating activities and business-to-business heating solutions in the Nordic countries and other parts of the Baltic Rim. The Russia Division consists of power and heat generation and sales in Russia.
In 2012, Fortum’s sales totalled EUR 6.2 billion and comparable operating profit was EUR 1.7 billion. We employ approximately 10,400 people. Fortum’s shares are quoted on NASDAQ OMX