FORTUM Power and heat company in the Nordic area, Russia, Poland and the Baltics

Investor/Analyst materialMarch 2012

2

Disclaimer

This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Fortum shares.

Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

Fortum today, pages 4 -17

European and Nordic power markets, pages 19 - 30Data on Fortum’s nuclear fleet, pages 31 - 37

Russia, pages 39 - 46Data on capacity payments, pages 42 - 43Fortum’s investment programme, page 46

Financials and outlook, pages 48 – 56Hedges, pages 54 - 55

Content

4

Foreign investors 27.8%Finnish State 50.8%

Other Finnish investors 9.9%

Households 8.3% Financial and insurance institutions 3.2%

• Power and heat company in the Nordic countries, Russia, Poland and the Baltics• Listed at the Helsinki Stock Exchange since 1998• Among the most traded shares on the NASDAQ OMX Helsinki stock exchange• Market cap ~17 billion euros

More than 100,000 shareholders

29 February 2012

5

Total ~ 8,630 MEUR

1999 2001 20032000 2002 2004

0.18 0.23 0.26 0.310.42

0.58

2005

1.12

Dividend per shareEUR

0.13

1998

0.58

0.54

2006

1.26

0.73

0.53

• Proposed dividend 2011 EUR 1.00 per share, in total ~EUR 0.9 billion

• Dividend policy of 50-60% payout of previous year's results on the average

2007

1.35

0.77

0.58

2008

1.00

Capital returns

72% 103% 78% 58%

1.00

2009

68%

1.00

2010

68%

1.00

2011

50%

6

Organisational structure

Business Divisions

President and CEOTapio Kuula

Electricity Solutions and Distribution (Espoo)

Executive Vice PresidentTimo Karttinen

Power (Espoo)Executive Vice President

Matti Ruotsala

Heat (Stockholm)Executive Vice President

Per Langer

Russia (Chelyabinsk)Executive Vice President

Alexander Chuvaev

FinanceExecutive Vice President and

Chief Financial OfficerJuha Laaksonen

Corporate Relations and Strategy

Executive Vice PresidentAnne Brunila

Corporate Human ResourcesSenior Vice President

Mikael Frisk

Staff Functions

Country responsibles: Timo Karttinen / Finland, Norway; Per Langer / Sweden, Poland, Baltics; Alexander Chuvaev / Russia

77

Strategy

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 supply security, and deliver excellent value to our shareholders.

Mission

Leverage the strong Nordic core

Create solid earnings growth in Russia

Build platform for future growth

Competence in CO2

-free hydro, nuclear and energy efficient CHP production,and energy markets competence

Fortum’s Mission and Strategy

8

Strategy builds on our competences and industry beliefs

88

• Electricity solutions and distribution part of the Nordic core

More attractive growth prospects in power and heat generation

Two strong platforms for growth

• Nordic power wholesale and heat market

• Russian power and heat market

Competitiveness key for long term value creation

• Sustainable business models cannot rely on a continuous high level of subsidies

Integrating European energy markets and a gradual decrease in the weight of the Nordic power price

• Leverage our competences in nuclear, hydro and CHP

• Industrial restructuring opportunities

Strong focus on delivering value and stable returns to shareholdersStrong focus on delivering value and stable returns to shareholders

9

Our geographical presence today

TGC-1 (~25%)Power generation ~7 TWhHeat sales ~8 TWh

OAO Fortum Power generation 17.4 TWhHeat sales 26.7 TWh

Russia

PolandPower generation 0.6 TWhHeat sales 4.3 TWh

Baltic countriesPower generation 0.4 TWhHeat sales 1.1 TWhDistribution cust. ~24,000*

Nordic countriesPower generation 53.1 TWhHeat sales 17.2 TWhDistribution customers 1.6 millionElectricity customers 1.2 million

Nr 2 Power generation

Electricity sales

Nr 2

Nr 1 Heat

DistributionNr 1

Key figures 2011Sales EUR 6.2 bnOperating profit EUR 2.4 bn Personnel 10,800

Great BritainPower generation 1.2 TWhHeat sales 2.1 TWh

* Distribution business sold Jan 1, 2012

10

Power DivisionFortum’s power generation, physical operation and trading as well as expert services for power producers.

Heat DivisionCombined heat and power generation, district heating and cooling activities and b- to-b heating solutions.

Electricity Solutions and Distribution DivisionFortum's electricity sales and distribution activities. Two business areas: Distribution and Electricity Sales.

Russia DivisionPower and heat generation and sales in Russia. It includes OAO Fortum and Fortum’s slightly over 25% holding in TGC-1.

Businessdescription

Comparableoperating profit

Net assets

Volume (TWh)

Drivers

EUR 1,201 million

Distr.: EUR 3,589 millionEl. sales: EUR 11 million

EUR 3,273 million

EUR 278 million Distr.: EUR 295 million El. sales: EUR 27 million

EUR 74 million

Distr.net. 26.1, reg.net. 14.1El. sales: 14.4

Heat sales 22.6 Power sales: 6.2

Nordic generation 48.1

EUR 6,247 million EUR 4,191 million

Fuel mix, heat andpower price

Nordic power price,generation volumes

New capacity, and price for that, power and heat price

Power sales.: 20.2 Heat sales.: 26.7

Distr.: RegulatedEl. sales: Sales margin

Divisions of Fortum

11

Fortum mid-sized European power generation player; Global #4 in heat

* incl. TGC-5, TGC-6, TGC-7, TGC-9, ** incl. TGC-12, TGC-13, *** incl. International PowerSource: Company information, Fortum analyses, 2010 figures pro forma, heat production of Beijing DH not available.28.2.2012 Vattenfall deal pro forma

Largest global producers, 2010 TWh

Largest producers in Europe and Russia, 2010TWh

Power generation Heat productionElectricity customers in EU, 2010

millions

Customers

DEI

Irkutskenergo*) IES

Iberdrola

RusHydroFortum

EnBW

Vattenfall

CEZ

RWE

PGESSE

Statkraft

RosenergoatomGazprom

NNEGC Energoat.

EnelE.ONEDF

0 100 200 300 400 500 600

Inter RAO UES

GDF SUEZ***)

Onexim

Tatenergo

Minsk EnergoKievenergo

IrkutskenergoBashkirenergo

RAO ES EastInter RAO UES

TGC-2

Fortum

Dong EnergyKDHC, Korea

TGC-14

Lukoil

Gazprom

0 20 40 60 80 100 120 140ELCEN, Rom.

Dalkia

SUEK**)

*) IES

Vattenfall

PGNiG

0 20 4010 30

DEICEZ

Enel

CentricaEDP

Iberdrola

SSEEnBW

Fortum

EDFE.ONRWE

Gas NaturalFenosa

PGE

Tauron

GDF SUEZ

HafslundDong Energy

Vattenfall

12

Biggest nuclear and hydro generators in Europe and Russia

Figures 2010 pro forma

TWhE

DF

Ros

ener

goat

om

E.O

N

NN

EGC

Ene

rgoa

tom

Enel

Rus

Hyd

ro

Vatte

nfal

l

GD

F S

UE

Z

Irkut

sken

ergo

Sta

tkra

ft

RW

E

Iber

drol

a

Fort

um

EnBW CE

Z

Verb

und

Kras

noya

rska

ya H

PP

Axpo

Hid

roel

ectri

ca

ED

P

Gaz

prom

Alpi

q

Ukr

hydr

oene

rgo

EPS,

Ser

bia

Gas

Nat

ural

Fen

osa

E-C

O E

nerg

i

Nor

sk H

ydro

DE

I

Agde

r Ene

rgi

Edis

on

BKK

Inte

r RAO

UES

SSE

PGE

IES

050

100150200250300350400450500550600

Total generationOtherNuclearHydro

13

Fortum's carbon exposure among the lowest in Europe

Source: PWC & Enerpresse, Novembre 2011Changement climatique et Électricité, Fortum

Average 337 g/kWh

g CO2 /kWh electricity, 2010

0

200

400

600

800

1000

DE

I

Dra

x

RW

E

CE

Z

SSE

Vat

tenf

all

E.O

N

Ene

l

Don

g

EDP

GD

F S

UE

Z E

urop

e

Uni

on F

enos

a

Iber

drol

a

PVO

Fortu

m to

tal

ED

F

Ver

bund

Fortu

m E

U

Sta

tkra

ft

2011*64%

of Fortum's total power generation CO2 -free86%

of Fortum’s power generation in the EU CO2 -free

Close to 100%

of the ongoing investment programmein the EU CO2-free

84189

Note:Fortum’s specific emission of the power generation in 2011 in the EU were 88 g/kWh and in total 192 g/kWh (*preliminary 2011 numbers).Figures for all other companies include only European generation.

14

Fortum’s strategic route

Stockholm Energi

Gullspång

Birka Energi50% Fortum

50% Stockholm

Länsivoima→100% E.ON Finland

Separation of oil businesses

Gullspång

Skandinaviska

Elverk

Birka Energi50% → 100%

StoraKraft

Länsivoima45% → 65%

Elnova50% → 100%

District heat in Poland 2003 →

Østfold

Shares in Hafslund

Shares in Lenenergo

Starting TGC-1

Divestment of Lenenergo

shares

TGC-10

Lenenergo shares 1998 →

Divestment of Fingrid

shares

Divestment of heat operations

outside of Stockholm

20082005 2006 20072002 2003 20041999 2000 20011996 1997 1998

IVO

2009 2010 2011

Neste

15

Private customers,

small businesses

Retail companies

Fortum in the Nordic electricity value chain

Large customers

Competitive businesses

Regulated businesses

Independent transmission system operator

Independent distribution companies

Generation

Nordic wholesale

market

Power exchanges and bilateral

Transmission and system services

Distribution

16

Fortum's European power and heat production

Nuclear power 45%

Coal 9%

Other 1%

Hydro power 38%

Biomass 3%

European generation 55.3 TWh (Generation capacity 11,422 MW)

Fortum's

European power generation in 2011

Natural gas 4%

European production 22.0 TWh (Production capacity 10,625 MW)

Fortum's European heat production in 2011

Waste 4%Peat 3%

Heat pumps, electricity 12%

Oil 5%

Biomass fuels24%

Natural gas22%

Other 4%

Coal 26%

17

• Dow Jones Sustainability Index World– Fortum is the only Nordic power and heat company

listed in the index

• SAM Sustainability Yearbook 2010, 2011 and 2012

• STOXX®

Global ESG Leaders indices

• oekom

• OMX GES Sustainability Finland Index

• Storebrand

SRI (Fortum, the most responsible electricity company globally in 2006 and 2009)

• Carbon Disclosure Project (sector leader in CDLI index in 2011)

1717

Fortum a forerunner in sustainability

Fortum today, pages 4 -17

European and Nordic power markets, pages 19 -

30Data on Fortum’s nuclear fleet, pages 31 -

37

Russia, pages 38 - 45Data on capacity payments, pages 42 - 43Fortum’s investment programme, page 46

Financials and outlook, pages 48 – 56Hedges, pages 54 - 55

19

2006

2010

2009

2012

2010-

2013

2011

Market coupling milestones - cross-border power flows optimised by power exchanges

• Market coupling between NL, BE and FR since 2006• Germany – Nord Pool Spot coupling started 11/2009• Market coupling for Central Western Europe (DE, FR, BeNeLux)

since 11/2010 with a continued coupling mechanism with Nord Pool Spot

• NorNed cable (NO-NL) included in January 2011• Poland coupled with Nord Pool Spot since December 2010• UK coupling started trough BritNed cable in April 2011• The TSOs and power exchanges are developing a single

market coupling for the whole western Europe by end-2012• In addition to day-ahead coupling, Nordic-CWE intraday market

coupling is due to be realised during 2012 as well• Estonian price area in Nord Pool Spot since April 2010

with full integration of the Baltic States during 2012–2013• EU’s European Target Model for cross-border power trading

sets 2014 as deadline for an EU-wide market coupling

2012

20

700

2100 600 600

350

Current transmission capacity from Nordic area to Continental Europe is ~4000 MW

CountriesTransmissioncapacity MW

From Nordics To Nordics

Denmark - Germany 2 100 1 550

Sweden - Germany 600 600

Sweden - Poland 600 600

Norway - Netherlands 700 700

Total 4 000 3 450

• Theoretical maximum in transmission capacity ~35 TWh per annum

• Net export from Nordic area to Continental Europe in 2011 was ~6 TWh

• During Nordic dry year 2010 net import was ~8 TWh• Approximately 20 TWh net export fairly easily reachable

21

Nordic and Continental markets are integrating – interconnection capacity could double by 2021

New interconnections could double the capacity to over

8000 MW by 2021

First direct 1000 MW NO- DE link could be built by

2018/2021

EU financial support for 700 MW DK-NL link to

connect offshore wind, too

EU support to connect Kriegers Flak offshore wind area to DK&DE; new 400 kV AC cable SE-DK also studied

Jutland – DE capacity to be increased by 500 MW in 2012

and by further 500 MW by 2018 LitPol Link of 1000 MW to connect the Baltic market to Poland by

2015/20. It would open a new transmission

route from the Nordic market to the Continent

New internal Nordic grid investments provide for

increased available capacity for export to the

Continent and Baltics

EU’s European Energy Programme for Recovery cofinancing Estlink 2 and

NordBalt

Both merchant and TSO projects for links to the UK by 2018/21; North Seas Countries’ Offshore

Grid Initiative launched for supergrid development

European Commission included the Northern Seas Offshore Grid and the

Baltic Energy Market Integration Plan as priority electricity corridors in its 2011

Infrastructure Package proposal

22

Nordic water reservoirs

Source: Nord Pool Spot

0

20

40

60

80

100

120

rese

rvoi

r con

tent

(TW

h)

2000 2003 2010 20122011 reference level

Q1 Q2 Q3 Q4

23

Nordic year forwards

Year 15 Year 17Year 09 Year 10 Year 11 Year 12 Year 13 Year 14 Year 161 March 2012

€/MWh

0

10

20

30

40

50

60

70

2007

Q1 Q2 Q3 Q4 Q1

2008

Q2 Q3 Q4 Q1

2009

Q2 Q3 Q4 Q1

2010

Q2 Q3 Q4 Q1

2011

Q2 Q3 Q4 Q1

2012

Source: NASDAQ OMX Commodities Europe

24

Wholesale price for electricity

0

10

20

30

40

50

60

70

80

90

100

110

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

EUR/MWh Nord Pool System Price Forwards

1 March 2012

Source: Nord Pool Spot, NASDAQ OMX Commodities Europe

25

Wholesale prices for electricity

Source: Nord Pool Spot, NASDAQ OMX Commodities Europe, EEX, APX-ENDEX, Bloomberg Finance LP, ATS, Fortum

Dutch

German

Nordic

Russian*

EUR/MWh Spot prices Forward prices

0

10

20

30

40

50

60

70

80

90

100

110

2007 2008 2009 2010 2011 2012 2013* including capacity tariff estimate. E.g 9.4 €/MWh for 2010, 6.8 for 2011 and 5.9 for 2012.

1 March 2012

26

Fuel and CO2 allowance prices

Source: ICE

Market prices 1 March 2012; 2012-2013 future quotations

Coal price (ICE Rotterdam)

04080

120160200240

USD

/ t

2006 2007 20102008 2009 20122011 2013

Gas price (ICE NBP)

0

20

40

60

80

100

GB

p / t

herm

2006 2007 20102008 2009 20122011 2013

CO2 price (ICE ECX EUA)

05

101520253035

EUR

/ tC

O2

2006 2007 20102008 2009 20122011 2013

Crude oil price (ICE Brent)

020406080

100120140160

USD

/ bb

l

2006 2007 20102008 2009 20122011 2013

27

Nordic power generation – dominated by hydro, but fossil needed

Source: ENTSO-E Memo 2010 *) Normal annual Nordic hydro generation 200 TWh, variation +/- 40 TWh.

0

20

40

60

80

100

120

140

Denmark Norway Sweden Finland

Fossil fuels

Nuclear

Biomass

Wind

Hydro *

TWh/a

Total Nordic generation 382 TWh in 2010

Net import in 2010: 18 TWh

25

78

TWh %

71

196

12

7

20

19

51

3

28

Still a highly fragmented Nordic power market

Source: Fortum, company data, shares of the largest actors; pro forma 2010 figures.

30%Fortum

Vattenfall

Dong Energy

Others

Statkraft

E.ONPVO

E-CO Energi

Agder Energi

Norsk HydroHelsinki

Power generation382 TWh

>350 companies

Electricity distribution15 million customers

~500 companies

Electricity retail15 million customers

~350 companies

Others

52%

DongEnergy

Vattenfall

Fortum

E.ON

Göteborg

Helsinki

Hafslund

SEAS-NVE

Statkraft

Bixia

Fortum

Vattenfall

OthersE.ON

53%

SEAS-NVE

Hafslund

HelsinkiGöteborgSyd Energi

DongEnergy

LNI Verkko

29

New capacity needed for increasing demand and retiring capacity replacements

Source: IEA WEO 2011 (New polices scenario)

• Growing global energy demand will be increasingly fulfilled by electricity in the future

• Substantial demand growth in the emerging markets

• Retirements and moderate demand growth in the EU

• Globally, 5 900 GW of new capacity needed by 2035

1) Total new capacity needed for increasing demand and retiring capacity replacements

464

708

544

938

159

204

217

1605

65

657

552

1784

2001

5896New capacity, total (1

Capacity changes, 2011-2035 (GW)

Retiring capacity

~30%~ 50%

~170%

~260%

0%

50%

100%

150%

200%

250%

300%

US Europe Russia China India Otherareas

Worldtotal

Growth, 2009-2035Primary energy demandElectricity generation

30

New capacity, except nuclear, will require over 60 EUR/MWh power price

Other costs ( variation)CO2 cost

Coal Gas Nuclear Hydro Wind Cleancoal

EUR/MWh

Estimated lifetime average cost in nominal 2014 terms.Large variations in cost of new hydro and wind due to location and conditions.

0102030405060708090

100110

0102030405060708090

100110

Source: Nord Pool spot, NASDAQ OMX Commodities Europe

EUR/MWh

Futures1 March 2012

1995 -97 -99 -01 -05 -07 -09 -11 -13-03 -15 -17

3131

Olkiluoto

LoviisaForsmark

Oskarshamn

Olkiluoto

LoviisaForsmark

Oskarshamn

Olkiluoto

LoviisaForsmark

Oskarshamn

Overview of Fortum’s nuclear fleet

LoviisaTwo units, built 1977 and 1981

2 × 488 MW = 976 MW

Fortum’s share: 100 %

Yearly production 8 TWh

Share of Fortum’s Nordic power production: 18 %

OlkiluotoTwo units, built 1978 and 1980 one under construction

880 + 880 MW = 1760 MWUnder construction 1600 MW

Fortum’s share: 27 % (468 MW)

Yearly production 14 TWh Fortum’s share: 4 TWh

Share of Fortum’s Nordic power production: 9 %

OskarshamnThree units, built 1972,1974 and 1985473 + 638 + 1400 = 2511 MW

Fortum’s share: 43 % (1089 MW)

Yearly production 17 TWh Fortum’s share: 7 TWh

Share of Fortum’s Nordic power production: 16 %

ForsmarkThree units, built 1980,1981 and 1985984 + 996 + 1170 = 3150 MW

Fortum’s share: 22 % (699 MW)

Yearly production 25 TWhFortum’s share: 5,5 TWh

Share of Fortum’s Nordic power production: 13 %

32

Teollisuuden Voima Oyj

Karhu Voima0,1

Mankala 8,1

Kemira 1,9

Fortum 26,6 Pohjolan

Voima 56,8

EPV Energia6,5

Ownership structures and formal responsibilities

Forsmarks Kraftgrupp ABForsmarks Kraftgrupp ABForsmark

OKG AktiebolagOKG AktiebolagOskarshamn

Teollisuuden Voima OyjTeollisuuden Voima OyjOlkiluoto

Fortum Power and Heat OyFortum Power and Heat OyLoviisa

OperatorLicenseeSite

OKG Aktiebolag

E.ON 54,5Fortum 43,4

Karlstadkommun 2,1

Loviisa:

Fortum is the owner, licensee and operator with all the responsibilities specified in the Nuclear Energy Act, Nuclear Liability Act, and other relevant nuclear legislation

Forsmarks Kraftgrupp AB

Vattenfall66,0

Fortum 22,2

E.ON 9,9

SkellefteåKraft 2,0Other units: Fortum is solely an owner with none of the

responsibilities assigned to the licensee in the nuclear legislation. Other responsibilities are specified in the Companies Act and the Articles of Association and are mostly financial.

33

Fortum's nuclear power capacity in Nordics

Olkiluoto

LoviisaForsmark

Oskarshamn

• Finnish units world class in availability

• Availability improved in Swedish units

• Overview of production and consumption:www.fortum.com – investors - energy related links

Source: IAEA, NordPool. Rounded numbers.Situation on 5 March 2012

Load factor (%) 2005 2006 2007 2008 2009 2010 2011Planned annual outages days in

2012 (from Jan 1st onwards)Oskarshamn 1 80 51 63 85 68 77 72 24Oskarshamn 2 90 78 76 86 75 90 77 24Oskarshamn 3 85 95 88 70 17 31 75 26

Forsmark 1 85 76 81 81 88 93 79 23Forsmark 2 94 72 85 79 64 39 94 39Forsmark 3 95 92 88 69 86 81 85 16Loviisa 1 95 93 94 86 96 93 94 42Loviisa 2 95 88 96 93 95 89 94 23

Olkiluoto 1 98 94 97 94 97 92 94 16Olkiluoto 2 94 97 94 97 95 95 90 8

24

2012 (from

March

5th onwards)

34

Variety of technologies and ages

PWR = Pressurized Water Reactor The most common reactor type in the world (e.g. all French units, most US units). Also the Loviisa units are PWRs, but based on Russian design. High pressure prevents water from boiling n the reactor. The steam rotating the turbine is generated in separate steam generators.

BWR = Boiling Water Reactor Similar to the PWR in many ways, but the steam is generated directly in the reactor. Popular reactor type e.g. in Sweden, the US and Japan.

*Generation refers to technical resemblence based on KSU classification and not to reactor design generations. All reactors are of Generation II except Olkiluoto-3 (EPR) which is of Generation III.

Unit MWe (net) share [%] share [Mwe] Commercial operation Age Type /

Generation* Supplier

Loviisa-1 488 100,0 488 1977-05-09 34 PWR / 1 AEE (Atomenergoexport)Loviisa-2 488 100,0 488 1981-01-05 30 PWR / 1 AEE (Atomenergoexport)Olkiluoto-1 880 26,6 234 1979-10-10 32 BWR / 3 Asea-Atom / Stal-LavalOlkiluoto-2 880 26,6 234 1982-07-10 29 BWR / 3 Asea-Atom / Stal-LavalOlkiluoto-3 (1600) 25,0 (400) 2014 (?) PWR / 3 Areva / SiemensOskarshamn-1 473 43,4 205 1972-02-06 39 BWR / 1 Asea-Atom / Stal-LavalOskarshamn-2 638 43,4 277 1975-01-01 36 BWR / 2 Asea-Atom / Stal-LavalOskarshamn-3 1400 43,4 607 1985-08-15 26 BWR / 4 Asea-Atom / Stal-LavalForsmark-1 984 23,4 230 1980-12-10 31 BWR / 3 Asea-Atom / Stal-LavalForsmark-2 996 23,4 233 1981-07-07 30 BWR / 3 Asea-Atom / Stal-LavalForsmark-3 1170 20,1 236 1985-08-18 26 BWR / 4 Asea-Atom / Stal-Laval

35

Third party nuclear liability in case of severe accident

35

Sweden(new, not in force)

Finland,temporarylegislation

Current, Sweden

700 M€

200 M€360 M€

500 M€Responsibility of company(insurance or guarantee)

Unlimited companyresponsibility

Convention parties 300 M€

State responsibility

300 M€

500 M€

700 M€

New Parisconvention

700 M€

145 M€

145 M€

Law approved by Parliament in 2010, requires separate decision from Government to come into force.

Has been approved by the Parliament. In force 1.1.2012 onwards.

Current,Finland

240 M€

145 M€ Requires ratification by 2/3 of member states to come into force. In Finland approved by Parliament in 2005.

36

Fortum to get 290 MW CO2 free capacity through upgrades in Sweden

Reactor

OKG 1

Completion

-

Increase 100% (MW)

0

Fortum's capacity increase

(MW)

Additional generation for Fortum

(TWh/a)

Fortum's capacity

after increase

(MW)

Fortum's generation

after increase

(TWh/a)

- 205 ~2

OKG 2 2009, 2015 30 + 180 95 350 ~3

OKG 3 2011 250 110 607 ~5FKA 1 Decision 2013 120 ~25 257 ~2FKA 2 2012 130 30 264 ~2FKA 3 Decision 2013 170 ~35 270 ~2Total ~290 ~2 ~1,950* ~15

Capacity increase and completion timetable based on recent estimate (Nord Pool). At 31.12.2010 Fortum's share of Swedish nuclear capacity was 1,778 MW.

37

Fortum’s investment programme – Nordic region, Poland and Baltic countries

Additional electricity capacity around 800 MW~100% CO2

-free

Project Electricity,

MW Heat,

MW Commissioned

Olkiluoto

3, Finland 400 2014

Swedish nuclear upgrades 290

Refurbishing of hydro power 10-20 annually

Brista, Sweden 20 57 Q4 2013(waste CHP)

Klaipeda, Lithuania 20 60 Q1 2013(waste CHP)

Total ~800 ~225

Jelgava, Latvia 23 45 Q3 2013(biofuel CHP)

Järvenpää, Finland 23 63 Q2 2013(biofuel CHP)

Fortum today, pages 4 -17

European and Nordic power markets, pages 19 - 30Data on Fortum’s nuclear fleet, pages 31 - 37

Russia, pages 39 -

46Data on capacity payments, pages 42 -

43

Fortum’s investment programme, page 46

Financials and outlook, pages 48 – 56Hedges, pages 54 - 55

39

Russia is the World’s 4th largest power market

South

Korea

German

yUSChin

aJa

pan

Russia

India

Canad

a

France

Nordic UK

Brazil

0500

1,0001,500

2,0002,500

3,0003,500

4,0004,500

TWh

Data 2010 based on gross output.Source: BP Statistical Review of World Energy June 2011

40

OAO Fortum (former

TGC-10)• Operates in the heart of Russia’s oil and gas producing

region, fleet mainly gas-fired CHP capacity• 17 TWh power generation, 27 TWh heat production in 2011;

more than Fortum’s Nordic heat sales• Investment programme to add 85%, almost 2,400 MW to

power generation capacity • Annual efficiency improvement reached

EUR 100 million in Q2 2011 (compared to 2008 level)

TGC-1• Slightly over 25% of territorial generating company TGC-1

operating in north-west Russia• ~6,400 MW electricity production capacity (appr. 50% hydro),

~26 TWh/a electricity, ~30 TWh/a heat

40

Fortum - a major player in Russia

OAO Fortum

Tyumen

TobolskMoscow

St. Petersburg

Chelyabinsk

Nyagan

TGC-1

41

0

5

10

15

20

25

30

35

40

€/M

Wh

Day ahead power market prices for Urals

In addition to the power price generators receive a capacity payment.

41

Day ahead wholesale market prices – increase driven by recovering demand and gas price

2

Key electricity, capacity and gas prices in the OAO Fortum area

III/2009 III/2008IV/2011 IV/2010 20102011

Electricity spot price (market price), Urals hub, RUB/MWh

Average regulated gas price, Urals region, RUB 1000 m3

Average capacity price for CCS ”old capacity”, tRUB/MW/month

Average capacity price for CSA ”new capacity”, tRUB/MW/month

Average capacity price,tRUB/MW/month

Achieved power price for OAO Fortum, EUR/MWh

858 817 925 835

2,548

2,221 2,548 2,221

174

251 160 191

534 n/a 560 n/a

246 251 209 191

28.9 30.5 29.2 27.0

42

Power market liberalisation – two markets

42

Capacity wholesale market Electricity wholesale market

• CSA is the intended mechanism for earning a (reasonable) return on invested capital in new capacity• Capacity prices are a big part of a power generator’s income

– a typical CHP plant ~35%, CCGT ~55%, of revenues• In the day ahead (spot) market, the price mechanism is a day ahead hourly auction. Supply – demand

balance and variable cost (fuel) are the key drivers for the spot price• Financial market for electricity started in June, 2010

Capacity prices- Competitive capacity selection (CCS) and free bilateral agreements (FBA) - A higher, fixed capacity price for new

capacity (CSA* agreements, built after 2007)- Lower capacity price for old capacity, price caps limits the price in some areas- Old capacity intended for households are priced by regulated bilateral agreements (RBA)

Electricity prices- Day ahead (spot) market, financial market, free bilateral agreements (FBA) and regulated bilateral agreements (RBA)- Fully liberalised from 1 Jan 2011 except for volumes intended for households priced by RBA (~10% of volume)

* Capacity supply agreement

434343

Capacity prices for new capacity considerably higher than prices for old capacity prices

• Long term rules and price parameters approved• Both “old” and “new” capacity can participate in capacity auctions• Old capacity (pre 2007) and new capacity priced differently

– Old capacity is priced by capacity auctions; price cap possibility– New capacity under capacity supply agreements to receive guaranteed payments

• The payments for new capacity are based on approved pricing formulas– Vary according to plant size, fuel, geographic location, capital costs, …– Allow the recovery of capital costs and include return on invested capital; the targeted ROCE level 12-14%

(with current government benchmark bond yields)– After three years (2014), the regulator will review the earnings from the electricity-only market and can revise

the payments, same goes after 6 years.

• “Old” capacity prices will depend on auction outcomes, but likely remain relatively low; potentially price caps could limit price

43

4444

Long-term financial target will be dictated by basic economic logic

~EUR 100 million improvement in EBITDA through the efficiency

improvement programme

Invested capitalEUR

~2.5 bn

~4 bn

2011 ~2014

In 2009, WACC for Russia was ~12%

Assuming, having completed the investment programme, an invested capital of

a

b

a

… and an unchanged cost of capital

b

The annual comparable operating profit in Russia needs to be in excess of ~EUR 500 million in order to beat to cost of capital (WACC) …soon after the completion of the investment programme

4545

Key factors behind the profitability improvement in Russia

* Capacity Supply Agreement

Efficiency improvement programme 2008-2011– Increasing heat production profitability– Fuel efficiency improvement– Cost savings

New capacity commissioning 2011-2014– Additional capacity 2,388 MW; +85%– Capacity is sold at CSA* contracts with

guaranteed higher price

Pace of new capacity increase of Fortum investment programme

in Russia

2011 -

638 MW 2012 -

836 MW2013 -

418 MW2014 -

496 MWTotal

-

2,388 MW

4646

85% increase in power generation capacity by the end of 2014 through the investment programme

Power generation capacity (MW)

Plant Fuel type Existing Planned Total

Tyumen CHP-2 Gas 755 755Tyumen CHP-1 Gas 472 209; 2*248 1177 Tobolsk CHP Gas 452 213 665Chelyabinsk CHP-3 Gas 360 216 576Chelyabinsk CHP-2 Gas, coal 320 320Argayash CHP Gas, coal 195 195Chelyabinsk CHP-1 Gas, coal 149 149Chelyabinsk GRES Gas 82 82 Nyagan GRES Gas 3x418 1,254Boilers -

Total 2,785 2,388 5,173

(CHP/Condensing)

(CHP/Condensing)(Condensing)

(Condensing)

Supply date

2012, 2012, 2013

June/2011

Feb/2011; 2014

Oct/2011

Fortum today, pages 4 -17

European and Nordic power markets, pages 19 - 30Data on Fortum’s nuclear fleet, pages 31 - 37

Russia, pages 39 - 46Data on capacity payments, pages 42 - 43Fortum’s investment programme, page 46

Financials and outlook, pages 48 –

56Hedges, pages 54 -

55

4848

Strong financial position

• Electricity will continue to gain a higher share of the total energy consumption

• Annual electricity demand growth approximately 0.5%

• Good production portfolio going forward- Growth in Russia

• Hedges create stability

4949

Income statementMEUR IV/2011 IV/2010 2011 2010

Sales 1 667 1 902 6 161 6 296Expenses -1 159 1 361 -4 359 -4 463

Comparable operating profit 508 541 1 802 1 833

Items affecting comparability 71 -220 600 -125

Operating profit 579 321 2 402 1 708Share of profit of associates and jv's 19 21 91 62Financial expenses, net -66 -57 -265 -155

Profit before taxes 532 285 2 228 1 615Income tax expense -88 -25 -366 -261

Net profit for the period 444 260 1 862 1 354Non-controlling interests 23 29 93 54

EPS, basic (EUR) 0.47 0.26 1.99 1.46EPS, diluted (EUR) 0.47 0.26 1.99 1.46

5050

Comparable and reported operating profit

MEURIV/2011 IV/2010 IV/2011 IV/2010 2011 2010 2011 2010

Power 351 336 443 129 1 201 1 298 1 476 1 132Heat 96 122 100 124 278 275 380 303Russia 35 17 35 16 74 8 74 53Distribution 49 91 41 93 295 307 478 321Electricity Sales 2 3 -6 40 27 11 3 46Other -25 -28 -34 -81 -73 -66 -9 -147Total 508 541 579 321 1 802 1 833 2 402 1 708

Comparable operating profit

Reported operating profit

Comparable operating profit

Reported operating profit

• IFRS accounting treatment (IAS 39) of derivatives had a positive impact on the reported operating profit. In the fourth quarter EUR 72 (-221) million, or earnings per share EUR 0.06 (-0.18) In 2011, EUR 344 (-216) million or earnings per share EUR 0.29 (-0.18) 2011.

5151

Cash flow statement

MEUR IV/2011 IV/2010 2011 2010

Operating profit before depreciations 734 468 3 008 2 271

Non-cash flow items and divesting activities -126 222 -726 124

Financial items and fx gains/losses -86 -192 -376 -641

Taxes -32 -107 -394 -355

Funds from operations (FFO) 490 391 1 512 1 399

Change in working capital -18 -170 101 38

Total net cash from operating activities 472 221 1 613 1 437

Paid capital expenditures -421 -432 -1 285 -1 134

Acquisition of shares -18 -20 -62 -28

Other investing activities -38 -23 522 60

Cash flow before financing activities -5 -254 788 335

5252

Key ratios

MEUR 2011 2010 2009EBITDA 3 008 2 271 2 292Comparable EBITDA 2 374 2 396 2 398Interest-bearing net debt 7 023 6 826 5 969Comparable Net debt/EBITDA 3.0 2.8 2.5

Return on capital employed (%) 14.8 11.6 12.1Return on shareholders' equity (%) 19.7 15.7 16.0

Good liquidity – committed credit lines total EUR 2.7 billion

5353

Outlook

• Key drivers and risks– Wholesale price of electricity

• Demand• Fuels• CO2 emissions prices• Water reservoirs• Nuclear availability

• Nordic markets– Annual electricity demand growth estimated to be approximately 0.5%– Electricity continues to gain share of total energy consumption

• Russia– Profits from Russia build up in pace with the capacity increases– Two new units during 2012 in Nyagan– Fortum targets a positive economic value added after completing the ongoing

investment programme

5454

Outlook

• Annual capex (excluding potential acquisitions)– 2012 around EUR 1.6 to 1.8 billion – 2013 and 2014 around EUR 1.1 to 1.4 billion annually

• Hedging– 2012 approximately 65% hedge ratio at approximately EUR 48/MWh(Q3: 55% at EUR 47/MWh)– 2013 approximately 40% hedge ratio at approximately EUR 46/MWh(Q3: 25% at EUR 46/MWh)

• In Finland, the Government budget for 2012 does not include windfall or uranium taxes

• Increase in nuclear waste costs in 2012 - 2014 amounting to EUR 15 million per annum

55

Realised prices quarterly since 2000

0

10

20

30

40

50

60

70

80

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

EUR/MWh

Power's Nordic power price Spot price, SE&FI avg.

2009 onw ards thermal and import from Russia excluded

Hedging improves stability and predictability

2009 onwards new definition

5656

Debt Maturity Profile

0

250

500

750

1000

1250

1500

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+

Bonds Financial institutions Other long-term debt CPs Other short-term debt

per 31 Dec, 2011 per 31 Dec,

2010Average

Interest

Rate

(incl. swaps

and forwards)

4.4%

3.5%Portion

of floating

/ fixed

debt

47 / 53%

49 / 51%

MEUR

2012 925

2013 637

2014 1,247

2015 1,077

2016 873

2017 273

2018 192

2019 894

2020 74

2021 559

2022+ 1,019

57