Fortum Oyj Corp Ord

Good morning everyone and greetings from a cold Helsinki. A warm welcome to Fortum's joint webcast and news conference for the investor community and media on our full year financial statements 2025. My name is Ingella Ylves and I'm heading the investor relations at Fortum. As always, this event is being recorded and there will be a replay for you later today to be found on our website. With me here in the studio are again our CEO Markus Rauramo and our CFO Tiina Tuomela. Markus and Tiina will present the group's financial and operational performance during the fourth quarter and full year 2025. Now let's go to our presentations, after which we will take your questions in the Q&A session. So I hand over to Markus to start.

Thank you very much, Ingela. A warm welcome to our full year 2025 results call, also from my side. I will start by going through the key elements of our highlights and our financial performance, then say a couple of words about the hydrological situation and our strategic KPIs. After that, Dina will provide more details on the financials and how the operational performance turned into our results. Let me now start with the highlights. Starting with the outright sales price. In the fourth quarter and full year, the achieved power price was slightly below last year's level, 51.4 euro per megawatt hour, compared to 52.5 euros per megawatt hour for the full year. Our realized market price, i.e. the blended price for Fortum's price areas, was almost at the same level as last year, 38.5 euros per megawatt hour in 2025 compared to 38.4 euros per megawatt hour in 2024. One of the clear highlights during last year was the optimization premium. In line with our guidance in the autumn, the realized premium in 2025 was €9.7 per MWh. Last year was abnormal regarding generation volumes. Especially the prolonged unplanned outages at the Oskarshamm nuclear power plant negatively affected volumes. Overall, hydrogen nuclear volumes were 3.9 TWh lower than in 2024 and approximately 6 TWh below the level of normal volumes. Our efficiency improvement program came to an end at the end of 2025. We reduced our annual fixed costs by 100 million euros, excluding inflation. The full run rate will be effective from the beginning of 2026, and we expect our fixed cost to amount to approximately 870 million euros this year. In 2025, we acquired two renewables development project portfolios in Finland from EnerSense and AboEnergy. Fortum's pipeline of onshore wind and solar projects in the permitting phase is now approximately eight gigawatts, with more projects in the early development phase. Our consumer solutions also made one acquisition when we bought Orange Energia in Poland. This doubled our Polish consumer solutions customer base. When it comes to decarbonization of our own fleet, we are making progress through the decarbonization projects in Poland, both in Czestochowa and Sabse. This is in line with our target to exit coal by the end of 2027. At the beginning of the year, we also committed to SBTI validated short and long-term targets and net zero target by 2040. In 2025, 99% of Fortum's power generation came from renewable or nuclear sources, leading to one of the lowest specific CO2 emissions among European utilities. At our investor day in November, we updated and published some new financial targets and new strategic KPIs to support strategy execution going forward. We have a strong balance sheet and good liquidity, so our overall financial position is strong. This gives our board the confidence to propose a dividend of 74 euro cents per share, which corresponds to a payout of 90% of our comparable earnings per share in line with our dividend policy. The dividend is proposed to be paid in one installment in April 2026. Our annual general meeting will be held on the 31st of March. The AGM invitation was published this morning. Then over to our main figures and financial KPIs. Here are our familiar comparable headline KPIs for the group's fourth quarter and for the full year 2025. Almost all KPIs decreased in both periods. The full-year figures reflect the clearly lower generation volumes. In Q4, our comparable earnings per share increased from 18 euro cents to 23 cents per share. Comparable operating profit totaled 251 million euros, while in the previous year it was 257 million euros. Operative cash flow decreased clearly to 53 million euros. On a full year basis, the group's comparable operating profit declined to 924 million euros. Our comparable EPS declined from 1 euro to 82 euro cents per share, and operative cash flow declined from approximately 1.4 billion to 840 million euros. All of these lead to a leverage of 1.2 times for the financial net debt to comparable EBDA ratio. Tiina will go into more details on the result analysis in her part. Next, a few words about the market environment. Let's start by looking at the hydro reservoir situation for the Nordic market. It's good to note that this is not only Fortum's reservoirs, but the whole market. During Q4, the precipitation amounts were slightly above normal, especially in October and December. Hydro inflows were very high, around 11 terawatt hours above normal, due to both high temperatures almost two centigrade above normal and larger than normal precipitation amounts. As a result, spot prices and the Nordic near-term futures development was soft, especially during the latter part of the fourth quarter, before the weather turned cold and dry during the holidays, which led to increasing power prices. Overall, the market hydro reservoir situation in the Nordics is close to normal at the moment, as you can see from this graph on the left-hand side. So it seems that hydro volumes would be closer to normal in 2026. As we also said at our investor day in November, our nuclear volumes are expected to be below our normal annual level of 26 terawatt-hours. Tiina will get back to this. I want to also say a few words about the current Nordic market situation. At the beginning of this year, colder, drier and less windy weather than usual increased demand and reduced the hydro reservoir levels. In early January, there was a consumption record in Finland, and both Sweden and Norway also experienced days with very high demand. The weather conditions, consequent lower hydro reservoir levels and higher demand have increased spot and forward power prices. Spot prices have clearly risen to levels above 100 euro per megawatt hour during past weeks in all Nordic countries, and forward prices for the next quarter have also increased. We continue to focus on our work with customers in all segments. We see consistently high activity levels across various industrial sectors, especially in the data center industry. Recently, we disclosed a small site development project in Finland, where we will be the development partner for a data center of several hundred megawatts. In these kind of cases, our interest is naturally to also act as the power supplier. With our efficient diverse generation fleet, we can offer competitive base load, low carbon nuclear and hydro, which are not weather dependent and volatile. Then over to our strategic KPIs. At the investor day, we updated our strategic goals and KPIs based on our focus areas of operations, commercialization and development. The aim is to ensure optimal performance, capture long-term opportunities and manage business and market risks. First, for operations, we measure fleet availability and optimization premium. Unfortunately, last year, the situation was challenging with the significant impact from the unplanned and prolonged outage, especially at Oskarshamn 3. This has had a significant impact on our nuclear volumes. The outcome for nuclear availability was consequently 75%, far below the target of 90%. While our hydro volumes were below the normal level, mainly due to low inflows in the beginning of the year, the availability was 94%, almost at the target level of 95%. Efforts to ensure high availability for both baseload nuclear and flexible hydro will continue to be very high on our agenda. Our strength lies in the optimization of our flexible hydro fleet. This was proven by the very high optimization premium of 9.7 euros per megawatt hour. For 2026, we expect the optimization premium to be in the range of 8 to 10 euros. Forecasting the optimization premium becomes more challenging for further years, which is why we keep the earlier guidance of 6 to 8 euros per megawatt hour from 2027 onwards. Second, for commercialization, we measure a long-term hedging share of rolling outright volumes on a 10-year basis and CSI or customer satisfaction index. The target is to have at least 25% of our Nordic wholesale electricity production over a 10-year period by the end of 2028. At the end of 2025, the hedged share of our production for 10 years was 19%. For the CSI, we target 76 by 2028, and at the end of last year, it was 76. And for the third area, development, which over time provides us growth opportunities, we have set targets for the ready-to-build pipeline for renewables and also for ready-to-deploy flexibility solutions. At the end of last year, we had 70 megawatts of ready-to-build wind projects. Our target is to have 1.2 gigawatts at the end of 2028. Projects are being developed to match customer demand if and when customers request new capacity. Decisions for new investments would be linked to a PPA. Our project development portfolio totals approximately eight gigawatts of renewable power projects in permitting phase in the Nordics with more projects in the early stages of development. Our flexibility target is to have the readiness to deploy new flexibility services and assets of up to 2.5 gigawatts by the end of 2028. At the end of 2025, we had 730 megawatts of electricity based district heating assets and customer assets under our management, including both market access and demand response. This concludes my part, and I would now like to hand over to Tiina to talk more about business performance.

Thank you, Markus. Good morning, everyone, also on my behalf. I will go through our financials in more detail. Let's start with the key financials. I will start with some of the comparable KPIs. The comparable operating profit for the fourth quarter amounted to 251 million euros, a slight decrease from previous year. In the fourth quarter, both comparable net profit and comparable EPS increased. Our comparable net profit for the quarter increased to 207 million euros. Consequently, our comparable EPS for the fourth quarter increased to 23 euro cents compared to 18 euro cents last year. Comparable EPS for the full year 2025 amounted to 82 euro cents. Our cash flow during the quarter was 114 million euros lower than previous year and totaled 53 million euros, mainly reflecting the lower EBITDA and bigger negative change in working capital compared to the previous year. The main reason for the change in working capital in 2025 comes from higher inventory, mainly nuclear fuel in Lovisa. Then over to the segment result for comparable operating profit. Let's have a look at the fourth quarter first. The group result is almost at the same level as in the previous year, despite the 2.6 euro per megawatt hour lower achieved power price. The result in our generation segment decreased, while both the consumer solutions and other operations segments improved. In the generation segment, comparable operating profit decreased by 20 million to 245 million euros, mainly due to the lower hedge prices, lower sales of guarantees of origins and somewhat higher property taxes for nuclear and hydro in Sweden. Higher volumes partly offset the negative effect. The fourth quarter shows a record performance in our consumer solutions business. The comparable operating profit reached an all-time high fourth quarter level of 26 million euros. This is an increase of 10 million, which mainly relates to improved electricity margins in the Nordics and improved gas margins in the enterprise customer business in Poland. In the other operation segment, comparable operating profit improved by 4 million, showing a negative result of 20 million euros. The main reason for the improvement was the positive effect from divestment finalized in 2024. Then let's move to the segment for the fall of the full year result. When looking at the waterfall for the whole year, the comparable operating profit shows the same pattern as for the fourth quarter. Compared to the previous year, the result in our generation segment decreased, while both consumer solutions and other operations segments improved. In the generation segment, comparable operating profit decreased clearly by 325 million and amounted to 893 million euros. The main reasons were the lower hydro and nuclear volumes. The result was further impacted by lower HEDS power prices, increased property taxes for nuclear and hydro in Sweden and higher nuclear fuel costs. In the comparison period, the result of the renewables business was positively impacted by a sales gain of 16 million euros from the divestment of the Indian solar power portfolio. Reaching an all-time high level also for the full year, consumer solutions comparable operating profit increased by 46 million and was 122 million euros. Every quarter recorded a record high result. The improvement was mainly a result of improved gas margins in the enterprise customer business in Poland, improved electricity margins in the Nordics and approximately 13 million euros of cost synergies. In the other operation segment, comparable operating profit improved by 25 million and amounted to minus 91 million euros. The main reason was the positive impact from divestment finalized in the circular solution business in 2024. Then over to the balance sheet leverage and liquidity. Our financial position continues to be strong, primarily supporting our objective to maintain a credit rating of at least BBB. It naturally also provides a good financial foundation in this very uncertain and turbulent market environment, but also caters for growth and shareholder returns. In line with our capital allocation principles, we balance leverage, investment and dividends, while always keeping the credit rating in mind. We are very pleased that Fortum's current long-term credit rating by both S&P Global Ratings and Fitch Ratings is BBB+, with stable outlook. For the fourth quarter, I want to go through the reconciliation of our financial net debt. As you can see, it increased slightly. At the end of the third quarter, our financial net debt was around 1.3 billion euros. In the fourth quarter, the operating cash flow was 53 million and investment amounted to 189 million euros. The change in interest bearing receivables amounted to 47 million, while FX and other effects were 13 million euros. Consequently, at the end of the year, our financial net debt was around 1.5 billion euros and the leverage ratio for financial net debt to comparable EBITDA was at 1.2 times. Looking at our debt portfolio and the loan maturity profile, I want to highlight a few things. At the end of the year, our gross debt excluding leases totaled 4.6 billion euros. Our maturity profile is very balanced and there are no large maturities in any single year. Now in February, a 750 million euro bond matures and will be repaid. Bonds are and continue to be our primary source of funding. We continue to have ample liquidity reserves, 6.8 billion euros with 2.9 billion of liquid funds and 3.9 billion of undrawn committed credit facilities and overdrafts. The cost for our 4.6 billion euro loan portfolio is 3.1%, while the interest income that we get for our 2.9 billion euro liquid funds has remained unchanged being 2.1%. With the strong liquidity position, we continue to optimize our cash and credit lines. The overall objective is to have sufficient liquidity while optimizing the balance between debt and cash to minimize funding costs. Then over to the final section, the outlook. The outlook section comprises elements of guidance for outright portfolio, taxes, capex and cost guidance. Let's start from the hedges. At the end of the year, the hedge price for 2026 was 41 euros and hedge ratio was 75%. From the last report, the hedge ratio has increased by 5 percentage points, while the hedge price has remained the same. The hedge price for 2027 is 40 euros, one euro higher compared to last time disclosed, while the hedge ratio increased by 10 percentage points to 55%. Our optimization premium for 2026 is estimated to be between 8 to 10 EUR per MWh and for 2027 onwards between 6 to 8 EUR per MWh. In a normal year, our annual outright volume is approximately 47 TWh. Based on announced outages, nuclear output for 2026 is estimated to be below the normal level of 26 terawatt hours. Based on current market information, we estimate that our nuclear volume will be between 24 to 24.5 terawatt hours in 2026. Consequently, the variable procurement cost will be higher compared to the level in 2025 due to the higher generation volume from associated nuclear units. Our capital expenditure guidance is unchanged, 550 million committed for the year 2026, including maintenance and excluding potential acquisitions. For the period 2026-2030, CAPEX guidance is €2 billion, of which €750 million is growth. Annual maintenance is expected to be €250 million. We have now concluded our fixed cost reduction program for the year 2025. Fixed cost totalled 873 million euros. The new run rate for our fixed cost base in 2026 will be approximately 870 million euros. This includes the fixed cost increase of 20 million euros in the Swedish property tax. While being disciplined, we continue to allocate development costs for growth. These relate, for example, to renewables development, site development, build of the commercial organization and the hydrogen pilot project in Lovisa. The guidance for our corporate tax rate also remained unchanged for 2026. We expect the comparable effective income tax rate to be in the range of 18 to 20 percent. The Finnish government plans to decrease the corporate tax from 20% to 18% from the beginning of 2027. There is, however, no official law in place yet. Our very preliminary estimate is that this would lower the comparable effective income tax by one percentage point from 2027 onwards. This was all for my presentation, and we are now happy to answer your questions. So with this, Ingela, over to you.