Fortum Oyj

OMXH:FORTUM

Earnings Call Transcript 2021-Q4

[Ingela Ulfves]

Good

morning, everyone,

and

a

warm

welcome

to

our

webcasted

news

conference

on

Fortum's

Full-Year

Results

2021. Just

for

the

record,

this

event

is

being

recorded

and

we

will

provide

a

replay

after

the

event

later

today.

My

name

is

Ingela

Ulfves,

and

I'm

the

Investor

Relations

Head

at

Fortum.

With

me

here

today

are

our

CEO,

Markus

Rauramo;

and

our

CFO,

Bernhard

Günther.

Markus

will

start

by

commenting

on

our

Russian

businesses

before

moving

into

last

year's

performance.

Bernhard

will

then

provide

more

insight

into

the

full-year

2021

results

and

the

drivers.

After the

presentation,

we

will

open

up

for

questions

from

the

teleconference.

We

have

reserved

1

hour

and

15 minutes

for

this

webcast

event

today.

So

with

this,

I

hand

over

to

Markus

to

start.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Thank

you very

much,

Ingela.

Let

me

first

address

what

has

been

on

our

mind

over

the

last

days

and

how

we

assess

our

Russian

exposure.

Following

this,

I

will

then

guide

you

through

the

headline

performance

indicators

and

the

market

drivers

that

have

played

a

substantial

role

especially

in

the

fourth

quarter

with

outstanding

movements

in

commodity

prices.

Additionally,

I

will

share

my

view

on

our

operating

environment

and

link

this

to

how

we

are

progressing

with

our

strategy

implementation. Bernhard

will

walk

you

through

the

numbers

then

in

more

detail.

I

will

start

with

setting

the

frame

looking

at

the

geopolitical

situation. I'm

deeply

saddened

and

concerned

by

Russia's

attack

on

Ukraine.

We

all

are

at

Forutm.

As

Europeans,

we

know

from

our

history

that

military

force

is

the

worst

way

to

solve

political

conflict. Over

the

past week,

we

have

already

witnessed

what

great

suffering

the

war

in

Ukraine

is

causing

people. This

cannot

be

justified.

The

war

has

also shaken

the

relationship

between

Russia

and

Europe

profoundly.

The

damage

done

to

the

ties

that

we

have

built

up

over

decades

will

be

far

reaching.

As

you

know,

Fortum

has

long

business

relationships

and

broad

operations

in

Russia.

So,

we

are

following

the

situation

with

the

highest

attention.

In

this

critical

situation,

it

is

our

duty

to

care

and

to

focus

on

the

well-being

of

our

employees

and

our

commitments

to

our

customers.

We

are

in the

business

of

providing

security

of

supply

of

energy,

and

our

customers

depend

on

us

for

power,

gas,

and

heat

also

in

Russia.

All

of our

operations

are

currently

running

as

normal

so

we

can

fulfill

our

duties

to

our

customers.

At

the

same

time,

business

as

usual

cannot

continue.

For

now,

we

have

stopped

all

new

investment

projects

in

Russia

until

further

notice,

and

we

will

continue

to

reduce

our

thermal

exposure

in

Russia.

We

are

also,

of

course,

closely

monitoring

the

developments

of

sanctions.

The

situation

is

very

dynamic

and

it

is

very

difficult

to

predict

the

impacts

on

our

operations

in

the

future.

Yet,

it

is obviously

clear

that

we

are

complying

with

all

applicable

laws

and

regulations,

including

sanctions

and

preparing

for

various

scenarios.

In

case

the

escalation

of

events

would

hinder

us

from

fulfilling

our

energy

delivery

commitments

to

our

European

customers,

we

would

work

with

our

respective

regulators

and

governments

to

find

a

joint

solution.

In

this

situation, it

is

clearer

than

ever

before

that

Europe

urgently

needs

an

energy

transition,

and

Europe

needs

to

diversify

its

energy

sources.

We're

actively

supporting

a

sustainable

and

secure

European

energy

supply

through

our

investments

into

clean

power,

clean

gas,

and

flexibility.

This

morning's

announcement

on

our

decision

to

apply

for

an

extension

to

the

lifetime

of

our

Loviisa

nuclear

power

plant

in

Finland,

Uniper's

recently

increased

LNG

imports,

and

decision

to

resume

planning

of

a

hydrogen-ready

LNG

terminal

in

Wilhelmshaven

in

Germany

are

clear

examples

of

this

commitment.

Before

I move

on

to

our

annual

results,

let

me

just

say

that

in

this

unprecedented

situation,

we

are

in

great

need

of

resolve

and

a

new

level

of

cooperation

in

energy

across

Europe.

I

want

to

thank

our

colleagues

across

Fortum

and

Uniper

for

their

commitment

and

determination

in

securing

energy

supplies

for

Europe

in

these

uncertain

times.

Then, over

to

the

results.

2021

was

characterized

by

very

volatile

market

fundamentals,

with

unprecedented

commodity

price

levels

resulting

in

an

outstanding

performance

across

the

group. On

a

full

year

level,

we

achieved

highest

comparable

EBITDA,

highest

comparable

operating

profit,

and

best

comparable

EPS

ever

in

Fortum's

history. Even

though

it

is good

to

remember

that

we

had

some

sales

gains

and

consolidated

Uniper

first

time

fully

in

all

our quarters,

the

performance

was

very

strong

despite

the

very

challenging

market

environment.

Worth

mentioning is

also

that

due

to

the

commodity

price

fluctuations

and

IFRS

accounting,

our

reported

EPS

shows

a

negative

result.

Bernhard

will

guide

you

through

this

in

the

financial

section.

Looking

at

the

balance

sheet.

Our

leverage,

defined

as

financial

net

debt

to

comparable

EBITDA,

has

come

down

tremendously.

We

have

substantially

worked

to

strengthen

our

balance

sheet

and

are

way

below

our

set

leverage

target

of

below

2

times.

By

deleveraging,

we

are

well-positioned

to

navigate

through

these

turbulent

times.

Q4

profit

was

operationally

very

strong

as

nearly

all

segments

could

take

profit

from

the

strong

commodities

environment.

On

the

flip

side,

our

Consumer

Solutions

business

suffered

substantially

from

this

market

situation.

It has

been

a

challenge

for

the

whole organization

to

deal

with

this

extreme

market

development,

especially

maintaining

security

of

supply

for

our

customers

and

to

keeping

financial

liquidity

high

in

order

to

manage

the

collateral

requirements

caused

by

rising

prices.

Uniper

took

a series

financial

and

operational

measures,

including

group

support

and

an

undrawn

revolving

credit

line

from

the

German

state-owned

KfW-Bank

to

ensure

sufficient

liquidity.

Those

measures

are

also

reflected

in

the

operating

cash

flow

that

doubled

on

full

year

and

in

the

isolated

quarter. In

this

context,

let

me

highlight

that

we

support

Uniper

management's

proposal

to

put

a

stronger

focus

on

liquidity,

and

investment

capacity,

and

to

cut

the

payout

for

2021

to

the

minimum

dividend

under

German

stock

cooperation

law.

At

the

moment,

I

don't

see

any

reason

for

Uniper

to

pay

a

dividend

going

forward

either.

Fortum's

dividend

policy

is

to

pay

a

stable

and

over

time

growing

dividend.

This is

reflected

in

the

dividend

proposal

of

€1.14,

which

is

a

slight

increase

to

previous

year.

To

sum it

up,

stronger

performance

in

a

volatile

commodity

market

with

an

organization

giving

its

best

serving

our

customers,

working

closely

with

our

suppliers

and

maintaining

our

strong

financial

flexibility.

Now,

over

to

the

underlying

market

fundamentals.

As

I

said,

it

is obvious

that

volatility

increased

on

all

energy

commodities

last

year.

Energy

commodity

prices

soared

in

the

fourth

quarter,

supported

by

ongoing

economic

recovery

and

global

supply

constraints,

especially

in

gas.

Higher

commodity

demand combined

with

longer

term

negative

investment

trends

and

supply

constraints,

created

an

unprecedented

price

rally.

Coal

prices

were

soaring,

and

at

the

same

time,

CO2

prices

reached

record

high

levels.

Consequently,

gas,

coal,

and

carbon

prices

underpinned

the

very

strong

price

development

in

the

European

power

markets. Continental

power

prices

gave

a

boost

to

the

Nordic

spot

price,

which

was

also

supported

by

low

precipitation

and

less

wind.

The

spread

to

German

power

prices

is

nevertheless

quite

large,

especially

in

forward

prices.

Besides

strong

wind

build-out,

internal

transmission

net,

and

interconnector

restrictions

and

bottlenecks

also

affected

the

widening

spread.

Looking

at

the

forwards,

the

market

expects

that

tight

situation

to

continue

in

gas

and

continental

power

markets

until

summer

2023.

So

what is

my

read

of

this

from

a

CEO

perspective?

The

last

12 months

crystallized

four

main

trends

that

I

partly

already

touched.

I

believe

that

amongst

all

the

turbulence,

these

trends

are

still

very

valid.

First,

Europe

is committed

to

be

a

frontrunner

in

reducing

greenhouse

gas

emissions

across

all

sectors

to

fight

climate

change

and

to

accelerate

the

energy

transition.

Sustainability

is

the

license

to

operate.

Secondly,

as

Europe

is

accelerating,

the

build

out

of

intermittent

renewable

capacity

is

replacing

conventional

capacity.

The

need

for

security

of

supply

is

becoming

more

obvious,

not

just in

the

context

of

the

current

crisis,

but

also

in

the

context

of

increasing

electrification

over

time.

Thirdly,

given

the

decreasing

investments

in

conventional

fuels

and

capacity,

supply

imbalances

and

cost

inflation

drove

an

elevated

price

environment,

which

is

jeopardizing

affordability.

Fourthly,

the

current

geopolitical

situation

suggests

that

the

elevated

price

scenario

is

here

to

stay

for

the

longer

term.

The

market

will

further

price

in

uncertainty

and

value

security

of

supply.

While

some of

our

peers

focused

solely

on

the

build

out

of

intermittent

renewables,

we

took

the

conscious

decision

to

focus

on

a

fast

and

reliable

transition

to

a

carbon-neutral

economy.

We

provide

our

customers

and

societies

with

reliable,

flexible

and

clean

power

and

gas,

addressing

the

ultimate

needs

in

the

transition.

And

we

do

this today,

not

in

10 years'

time.

The

core

of our

business

is

the

strong

hydro

and

baseload

nuclear,

making

us

the

third

largest

CO2-free

generator

in

Europe.

We

are

also

a

significant

provider

of

flexibility

with

our

hydro,

increasingly

clean

gas-fired

generation,

and

our

gas

storage

business. 2021

proved

that

our

position

as

a

major

power

generator

in

Europe,

and

as

a

major

provider

of

gas

is

needed

in

the

European

energy

transition.

We

have

a

strong

balance

sheet

and

we

have

the

resilience

to

weather

the

storm.

Our

priority

is

now

to

decarbonize

our

portfolio

and

to

drive

profitable

growth

without

compromising

on

Fortum's

dividend

and

financial

strength.

So,

how

are

we

progressing

against

these

targets?

First,

Fortum

is

a

frontrunner

in

creating

clean

energy

generation

for

decades.

In

addition to

our

already

ambitious

climate

targets

that

covers

Scopes

1

and

2,

we

set

out

our

reduction

target

for

Scope

3,

which

means

indirect

greenhouse

gas

emissions

in

December.

We

will

reduce

these

emissions

by

35%

by

2035

at

the

latest. In

Europe,

we

are

advancing

fast

with

our

coal-exit.

In

our

Uniper

business

in

Germany,

we

were

successful

also

in

the

latest

round

of

auctions

for

the

closure

of

coal-fired

power

plants.

The

bid

for

the

closure

of

the Staudinger

5

power

plant

was

accepted,

making

our

subsidiary,

Uniper,

the

biggest

contributor

in

German

coal-exit

auctions,

more

than

from

any

other

company.

Secondly,

we

are

ramping

up

our

CO2-free

power

generation.

This

year,

we

will

get

the

addition

of

Olkiluoto

3

with

our

share

of

400 megawatts

and

in

addition,

we

decided

to

apply

for

the

lifetime

extension

of

our

fully

on

Loviisa

nuclear

plant.

I

will

come

back

to

this.

We

are

also

proceeding

with

our

investment

in

renewable

growth

which

includes

the

launch

of

our

first

Fortum

and

Uniper

wind

and

solar

team

project.

Pjelax-Böle

and

Kristinestad

Norr

wind

parks

to

be

built

in

cooperation

with

Helen,

the

Helsinki

city

on

utility.

We

also

won

rights

to

build

more

renewables,

both

in

India

and

in

Russia,

over

the

next

years

that

are

backed

by

PPAs

or

CSA

payment.

However,

as

I

said

before,

we

have

now

stopped

any

new

investments

in

Russia

for

the

time

being.

Thirdly,

we

are

providing

security

of

supply

to

the

grid

operators

in

various

forms,

as

well

as

the

industrial

customers.

For

example,

in

Scholven,

we

replaced

an

existing

coal-fired

power

plant

by

a

modern,

combined-cycle

gas

turbine,

and

there

are

plans

to

reduce

its

CO2

emissions

towards

2030

by

converting

from

natural

gas

to

hydrogen.

Additionally,

we

will

have

a

capacity

of

1

gigawatt

of electrolyzers

in

place

by

2030

which

shows

that

we

can

build

on

our

first-mover

position

in

hydrogen.

This

morning, we

disclosed

that

we

have

decided

to

apply

for

a

lifetime

extension

for

our

100%-owned

nuclear

power

plant

in

Loviisa

in

Finland

until

the

end

of

2050. We

are

going

to

offer

170

terawatt

hours

of

additional

CO2-free

power

for

the

European

power

markets

over

the

lifetime

extension.

By

applying

for

the

extension,

we

want

to

support

the

achievement

of

Finland's

and

Europe's

carbon

neutrality

target,

provide

security

of

supply,

and

competitive

and

sustainable

energy. Over

the

last

five

years,

we

have

invested

some

€325

million

in

the

Loviisa

power

plant.

Investments

related

to

continuing

operations

and

the

lifetime

extension

are

estimated

to

be

€1

billion.

With

this,

I

hand

over

to

Bernhard.

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

Yeah. Thank

you,

Markus,

and

a

warm

welcome

also

from

my

side.

As

usual,

I

will

start

today

with

a

financial

overview

of

our

key

comparables.

But

as

this

year

was

a

rather

exceptional

one

in

terms

of

market

price

movements,

I

will

additionally

run

you

through

some

reconciliations

how

the

market

volatility

has

been

impacting

our

P&L,

balance

sheet,

and

liquidity.

To

have

more

time

for

the

Q&A

session,

I

will

comment

the

segments

only

on

an

aggregated

level

today

and

close

with

the

outlook

section.

Starting

with

the financial

overview,

let

me

begin

with

the

obvious.

What

you

see

here

is

a

substantial

increase

across

all

KPIs

following

market

fundamentals

as

Markus

has

said.

These

give

a

comprehensive

view

on

the

strong

underlying

contribution

that

we

have

seen

throughout

the

year,

adding

an

even

stronger

fourth

quarter,

also

in

the

light

of

the

already

good

contribution

we

had

in

2020.

Our

financial

position

improved

following

the

closing

of

a

series

of

divestments,

as

Markus

said,

and

our

credit

metrics

are

now

solid

with

a

financial

net

debt

to

comparable

EBITDA

being

at

just

0.2

times

against

a

target

of

below

2

times.

As

this

is

also

driven

by

liquidity

measures

taken

by

Uniper

and

the

group,

the

ratio

is

expected

to

reverse

somewhat

in

the

course

of

the

year.

The

strong increase

in

commodity

prices

has

impacted

the

P&L,

balance

sheet,

and

liquidity,

and

before

going

into

the

details,

let's

have

the

short

segment

overview.

Looking

at

the

full

year

earnings

figures,

we

see

a

substantial

increase

in

comparable

operating

profits.

Nearly

all

business

segments

are

up

year-on-year

and

could

take

profit

from

the

market

environment.

Here

are,

in

essence,

three

things.

First,

we

could

materialize

on

the

commodity

price

increases

across

the

group.

This

holds true

for

the

Generation

business

with

an

outstanding

surge

in

achieved

prices

and

strong

physical

and

financial

optimization.

The

City

Solutions business

gained

from

higher

heat

prices

and

volumes

and

Uniper's

gas

business

gained

from

the

optionality

in

the

portfolio.

Russia

also

performed

well,

but

we

will

see

lower

CSA

income

going

forward.

Second,

like

all

retailers,

we

suffered

from

the

high

price

levels

in

Q4

and

our

Consumer

Solutions

business

showing

a

negative

year-over-year

delta

and

negative

results

in

Q4.

And

third,

there

are

some

consolidation

effects

at

play

to

bear

in

mind,

and

this

is

that

Uniper

was

only

fully

consolidated

from

Q2

2020

onwards,

and

was

still

included

as

an

associate

company

in

the

first

quarter

of

2020.

In

the

first

quarter

of

2021,

Uniper

contributed

€711

million.

We

also

announced

this

morning

that

we

are

discontinuing

the

strategic

reviews

of

our

Polish

district

heating

business

and

our

Consumer

Solutions

business.

We

have

decided

that

we

will

continue

to

develop

these

businesses

as

part

of

the

group.

Now

over

to

the

P&L.

The

strong increase

in

market

prices

gave

us,

and

especially

our

Uniper

segment,

major

opportunities

to

optimize

the

portfolio.

Next,

to

the

strong

comparable

earnings

picture,

it

had

a

series

of

effects

on

our

reported

figures.

These

movements

are

not

a

source

of

concern,

but

rather

a

normal

course

of

business

running

a

commodities

business.

The

main

issue

is

the

increase

of

the

fair

value

of

our

financial

derivatives

impacting

P&L,

balance

sheet,

and

liquidity.

The

rationale

is

the

following.

As

we

run

the

business

in

a

prudent

manner,

we

hedge

to

lock

in

cash

flows

and

results

to

ensure

continuous

operations,

financial

liquidity,

and

to

deliver

on

our

promise

of

a

stable

and

over

time

growing

dividend.

As

commodity

prices

surged,

the

hedge

deals

decreased

significantly

in

value.

However,

the

corresponding

value

on

underlying

assets

like

power

plants

or

inventories

are

not

reflected

here

as

their

book

values

are

kept

at

historic

costs

under

IFRS.

Consequently,

the

operating

profit

is

negative

for

the

full

year.

This

is

mainly

driven

by

the

Uniper

segment

as

they

have

the

strongest

exposure

to

commodities.

This

mismatch is

only

temporary

and

will

revert

and

resolve

over

time

as

these

products

go

into

delivery

and

the

positions

settle.

Therefore,

as

we

already

saw

in

the

last

quarter,

it

will

turn

back

and

come

as

a

profit.

We

adjusted

for

this

like

for

any

other

one-off

in

the

items

affecting

comparability.

On

the

full

year,

there

is

a

negative

of

€5.4

billion

change

in

the

fair

values

of

derivatives,

mainly

again

in

the

Uniper

segment

as

hedge

accounting

is

applied

only

to

a

limited

extent

there.

The

other

Fortum

segments

are

applying

hedge

accounting,

and

thus

the

volatility

in

valuation

is

balanced

versus

equity. This

effect

is only

partly

compensated

by

the

well-known

capital

gains

of

the

divestments

of

our

50%

stake

in

Stockholm

Exergi

and

the

Baltic

district

heating

also

included

in

the

items

affecting

comparability.

Last

but

not

least, income

tax

is

significantly

positive

as

a

consequence

of

the

recorded

fair

value

losses.

While

the

comparable

income

tax

rate

was

24.2%.

And

now,

over

to

the

balance

sheet.

Here,

the

increase in

commodity

prices

had

a

significant

impact

on

the

derivative

financial

instruments,

especially

again

in

the

Uniper

segment. Please

note

that

those

are

booked

on

a

gross

basis

to

the

balance

sheet.

So,

all

deals

increase

the

balance

sheet,

even

though

maybe

the

same

product

has

been

sought

and

– sold

and

bought

back

and

forth

over

again.

Consequently,

the

substantial

increase

in

the

fair

value

of

our

financial

derivatives

made

the

balance

sheets

tripled

to

roughly

€150

billion from

€57

billion

where

we

were

a

year

ago.

As

most

of

our

hedges

are

placed

at

a traded

market,

the

collateral

and

margining

requirements

have

gone

up

substantially.

Uniper

faced

a

steep

increase

and

volatility

in

variation

margin

calls

in

the

third

and

fourth

quarter

last

year.

We

are

working

closely

together

with

Uniper,

their

business,

as

well

as

their

financing

partners,

to

make

sure

that

those

costs,

and

the

resulting

liquidity

risks

are

properly

managed.

Consequently,

interest-bearing

liabilities

increased

in

context

of

a

series

of

precautious

financing

measures

taken

then.

Additionally,

Uniper

relied

on

a

broad

set

of

tools

and

various

operational

measures

within

the

commodities

portfolio.

Consequently,

at

year-end,

we

had

€7.6

billion

liquid

funds

plus

undrawn

credit

lines

providing

additional

headroom

in

these

turbulent

times.

These

measures taken

are

also

reflected

in

the

cash

flow

statement

now

on

the

next

slide.

In

essence, the

cash

flow

statement

confirms

what

we

have

seen

in

the

balance

sheet.

The

net

cash

out

of

the

change

in

margin

and

receivables

and

liabilities

is

covered

by

additional

financing,

the

sales

proceeds

from

divestments,

and

by

a

high

operating

cash

flow.

This

operating

cash

flow

doubled

from

roughly

€2.5

billion

in

2020

to

close

to

€5

billion

in

2021.

This

was mainly

driven

by

a

higher

cash

effective

EBITDA

due

to

higher

earnings

on

the

one

hand,

but

also

due

to

operational

liquidity

measures

undertaken

by

Uniper

as

we

mentioned

before

on

the

other

hand.

The

cash flow

from

investing

activities

is

clearly

driven

by

the

divestments

and

the

margin

receivables. On

word on our

on

our

financing

activities,

in

order

to

achieve

high

liquidity

in

the

most

cost

efficient

way,

Fortum

and

Uniper

used

a

broad

set

of

financing

tools,

including

commercial

papers,

bank

loans,

inter-group

loans,

and

ultimately

also

operational

measures

within

the

commodities

portfolio.

The

next

slide

now

shows

net

debt

and

our

maturities

profile.

As

you

can

see here,

our

net

debt

declined

significantly.

Let's

look

at

the

major

items

impacting

financial

net

debt.

First,

we

highlighted

cash

flow

from

operating

activities,

including

the

comments

I

made

to

the

previous

slide;

second,

the

divestments

made;

and

third,

the

investments

paid.

Dividends

paid

includes

the

dividends

to

Fortum

shareholders

and

to

the

minority.

The

minority

part

will

reduce

this

year

by

approximately

€100 million,

assuming

that

Uniper's

AGM

will

approve

the

minimum

proposed

dividend.

As

Markus

highlighted,

we

do

not

see

a

reason

for

Uniper

to

pay

dividends

going

forward.

We

see

them

rather

focus

on

liquidity

and

growth

in

the

coming

years.

So,

this

will

enhance

our

cash

flow

and

have

a

positive

effect

on

net

debt.

And

I

mentioned already

before,

the

overall

leverage

KPIs

of

0.2

times

net

debt

over

EBITDA.

So,

I'm

not

going

to

repeat

it

here.

We

currently

have

€16.1

billion

of

gross

debt

and

an

average

interest

rate

on

this

of

1.3%.

Looking

at

the

loan

maturity

profile

in

the

lower

part

of

this

chart,

this

might

appear

a

bit

front

loaded,

but

please

note

that

the

increase

in

short-term

liabilities

is

linked

to

our

cash

reserves

as

we

wanted

to

increase

our

financial

flexibility

in

this

extreme

commodity

market

situation.

At

the

same

time,

our

liquidity

position

is

very

solid,

with

liquid

funds

of

approximately

€7.6

billion.

In

addition,

we

have

signed

new

RCFs

of

€5

billion

and

these

are

undrawn.

So,

overall,

our

liquidity

position

is

solid.

And

regarding

our

rating,

we

are

in

continuous

dialogue

with

our

rating

agencies.

Following

the

liquidity

stretch

at

year

end,

our

rating

was

affirmed

in

January.

And

obviously,

we

now

have

a

new

situation

with

Russia

and

our

discussions

continue

with

the

rating

agency.

Now,

finally,

coming

to

the

outlook.

Our

successful

hedging

has

continued

to

create

predictability

and

visibility.

The

hedge

process

for

Generation –

our

Generation

segment

increased

for

this

year

while

it

is

at

the

same

level

in

Q3

for

the

year

2023.

The

explanation for

the

decline

in

Uniper

Nordic

hedge

prices

is

the

use

of

proxy

hedges,

and

as

those

proxy

hedges

moved

out

of

the

money,

the

hedge

prices

shown

here

went

down.

It

is

also

good

to

note

that

the

year

shown

hedge

prices

are

only

for

outright

volumes,

i.e.

hydro

and

nuclear.

So,

gas

or

coal

are

not

included.

The

same

applies

also

for

the

Uniper

disclosures.

Regarding

CapEx

for

2022,

the

level

is

expected

to

slightly

increase

compared

to

2021,

and

our

total

group

CapEx

is

estimated

to

be

approximately

€1.5

billion,

of

which

maintenance

is

expected

to

be €800

million

roughly.

For

the

year

2022,

maintenance

CapEx

is

at

the

upper

end

of

the

range

of

what

we

would

call

normal

maintenance

CapEx,

which

would

be

in

the

ballpark

of

€750

million. We

have

slightly

narrowed

the

range

for

our

tax

rate

guidance.

At

the

same

time,

the

tax

rate

is

slightly

increased

as

the

result

mix

is

shifting

towards

countries

with

a

higher

tax

rate.

With

this,

I

conclude

our

presentation,

and

we

are

now

ready

to

start

the

Q&A

session.

And

Ingela,

over

to

you.

[Ingela Ulfves]

Thank

you, Bernhard.

And

thank

you

also,

Markus.

We

are

now

ready

to

take

your

questions.

So,

please

state

your

name

and

company

before

asking

the

question.

And

we

will

also

ask

you

now

to

limit

yourself

to

max

two

questions

each.

There

is also

the

possibility

to

ask

questions

on

the

chat.

However,

if

there

are very

many

questions

coming

from

the

teleconference,

we

will

have

to

prioritize

those

and

therefore

ask

you

to

also

leave

your

contact

details

when

posting

a

question

on

the

chat

so

that

we

can

come

back

to

you

later.

So,

with

this,

let's

begin

the

Q&A

session.

Moderator,

we're

ready

to

start.

[Operator]

Thank

you.

[Operator Instructions]



Our

first

question

comes

from

the

line

of

Lueder

Schumacher

of

Société

Générale.

Please

go

ahead.

Your

line

is

open.

[Lueder Schumacher, Analyst, Société Générale SA (UK)]

Good

morning.

And

thank

you

for

the

very

detailed

presentation.

So

many

questions,

but

I shall

try

to

limit

myself

to

two

or

two

and

a

half-ish.

The

first

one

is

on

the

renewed

surge

in

energy

prices

since

last

Wednesday.

If

I

understood

you

right,

Bernhard,

you

said

that

you

have

lined

up

an

additional

€5

billion

credit

line

to

deal

with

I

guess

variation

margin

demands.

Are

you

also

in

a

position

to

extend

the

credit

line

for

Uniper

if

that

would

be

required?

And

also,

Markus,

you

said

that

you

see

no

reason

for

Uniper

to

pay

a

dividend

going

forward

either.

Could

you

maybe

elaborate

a

bit

on

what

exactly

do you

mean

by

that?

Why

should

Uniper

not

pay

a

dividend?

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Okay.

I

can

– I

can

start,

so

first –

first

of

all,

on

the

energy

prices

and

the

margin

impact.

So,

we

have

been

moving

a

lot

of

positions

from

counterparties

that

require

margining

to

non-margining

counterparties,

so

the

exposure

is

smaller

on

that

front.

And

on

the

Uniper

dividend,

the

Fortum

message

is

that

Uniper

should

be

focusing

on

maintaining

its

liquidity

and

focus

on

the

growth

areas.

So,

with

regard

to the –

with

regards to

your

question

that

can

lines

be

extended

further

for

Uniper,

Uniper

put

in

place

the

KfW

transaction,

Fortum

has

arranged

a

long-term

financing,

or

the

financing

also

for

it

–

for

itself,

and

extended

the

credit

line

to

Uniper,

and

we

will

follow

the

situation

and

take

financing

measures

according

and

base

to

the

needs.

[Lueder Schumacher, Analyst, Société Générale SA (UK)]

So

before

you

would

offer

any

additional

credit

line

to

Uniper,

you

would

require

Uniper

to

use

the

€2

billion

from

the

KfW,

which

would

mean

that

the

board

has

to

wait

for

any

kind

of

confirm...

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

No.

This

is

– I

mean,

we

don't

give

any

specific

details

on

this,

Lueder,

and

good

morning

from

my

side

as

well.

But

I

mean,

it's

quite

obvious,

for

example,

as

Fortum

is

currently

on

a

very

strong

liquidity

position,

it

would

be

unwise

to

resort

to

external

financing

while

with

intragroup,

you

still

have

significant

liquidity

buffers.

Yeah.

But

as

Markus

said,

of

course,

we

are

watching

the

situation

and

we

feel

very

comfortable

that

also

within

both

politics,

in

general,

but

also

in

KfW

as

a

state-owned

bank,

there's

much

awareness

of

the

developments

going

on.

[Lueder Schumacher, Analyst, Société Générale SA (UK)]

Okay.

Very

clear.

Thank

you.

[Operator]

Thank

you.

And

our

next

question

comes

from

the

line

of

Vincent

Ayral

of

JPMorgan.

Please

go

ahead.

Your

line

is

open.

[Vincent Ayral, Analyst, JPMorgan Securities Plc]

Yes.

Good

morning to –

sticking

to

two

questions. I'll

come

back

on

the

variation

margins,

but

I'll start

on

Russia. Just

to

understand,

I

mean,

thank

you

for

the

information

on

your

Russian

exposure

here,

it

being

the

Nord

Stream

2

pipeline

or

actually

the

operations

you

have

there

directly

or

indirectly

through

Uniper.

We

do

not

see

any

impairments,

there've

some

sanctions.

Well,

of

course, it

may

be

a

bit

too

early

to

do

it.

It

seems

that

Nord

Stream

2

may

be

looking

maybe,

reportedly,

looking

at

filing

for

bankruptcy.

What

are

the

necessary

conditions

for

you

to

do

an

impairment

on

the

Russian

assets?

Just

to

understand,

there

is

a

red

line

after

which

basically

you

have

to

act

on

this.

So,

which

line

is

it

and

should

we

take

it

that

it's

€5.5

million

impairment

as

per

the

slide?

The

second

question

on

variation

margins.

So,

I

noticed

you

say

that

the Pjelax-Böle

Ukraine

is ongoing.

When

you

size

basically

the

situation

for

the

variation

margins,

are

you

looking

at

exports

or

calendar

forward?

There

is

a

very

large

discrepancy

between

the

two

at

the

moment.

It's

just

for

us

to

understand

and

maybe

which

is

the

one

we

should

look

at

in

order

to

assess

if

the

situation

is

deteriorating

fast

or

extremely

fast.

Thank

you.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Okay.

I

can

take

the

Russian

situation.

And

let

Bernhard

answer

the

technical

side

of

impairment

and

also

the

variation

margin.

So,

to

start

with

the

–

well,

first

of

all,

as

I

said

already

earlier,

we

are

devastated

and

saddened

about

the

situation

what

is

happening.

So,

the

situation

is

serious

and

it

will

have

long-term

consequences,

that

is

clear.

Against

that

background,

the

situation

with our

operations

is

normal.

Our

operations

in

Europe

are

working.

Our

operations

in

Russia

are

working

normally.

Gas

is

flowing

through

all

the

pipelines

that

are

operational.

And

our

main

focus

is

on

the

security

of

supply

of

our

customers,

of

our

European

customers,

to

provide

clean

energy,

clean

gas,

and

the

flexibility

that

they

need.

And

I

highlighted

the

need

for

energy

transition.

We

are

very

well-positioned

for

that.

What

comes

to

the

total

exposure?

You

quoted

our

statement

of

the

€5.5

billion

net

asset

value

in

our

book.

So,

that

comprises

of

Fortum,

Uniper,

and

the

Nord

Stream

2

exposure.

And

then,

naturally,

we

follow

in

the

normal

course

of

business

if

there

are

indications,

impairment

indication

triggers

that

we

would

observe,

and

we

would

have

to

take

action

based

on

that,

and

then

the

technical

part

of

that,

I

give

to

Bernhard.

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

Yeah.

Maybe

just

quickly

asking

back

on

your

variation

margin

question.

Did

I

understand

you

correctly

that

you

alluded

to

the

difference

between

spot

and

forward

curves

we

look

at

– prices

we're

looking

at,

or

was

it

something

different?

[Vincent Ayral, Analyst, JPMorgan Securities Plc]

Yes,

absolutely.

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

Yeah.

Well,

I

mean,

if

we – for

our

overall

exposure

as

Fortum

Group,

including

Uniper,

the

whole

forward

curve

is

much

more

relevant.

Yeah,

so

it's

not

the

immediate

spot

volumes,

which

are

of

a

nature

that

would

cause

major

variation

margin

swings.

So

it's

rather

the

curve

along

the

time

horizons,

at

least

until

the

end

of

the

next

winter

we

are

closely

looking

at.

It's

a

–

we

view

this,

as

Markus

said,

as

a

long-term

business.

It's

about

security

of

supply

and

accordingly,

also,

our

positioning

and

optimization

of

this

business

and

the

hedging

of

this

business

is

conducted.

[Vincent Ayral, Analyst, JPMorgan Securities Plc]

All

right.

Thank

you.

So

if

I

take

it,

basically,

then instead this

would

be

weighted

average

by

the

volumes

and

therefore

the

calendar

2023

maybe

a

bit

more

rather

than

the

spot

in

terms

of...

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

I

mean, in

effect,

without

– without

giving

you

any

specifics.

But

of

course,

we

are

looking

at

the

products

in

the

granularity

that

they are

traded.

Yes.

So,

for

the

first

or

for

the

immediate

period

until

the

next

winter,

you

can

have

monthly

products

and

you

have

quarterly

products,

and

thereafter

the

buckets

get

a

bit

broader.

Yeah.

So

we

hedge

on

as

granular

basis

as

we

can

and

do

this

in

order

to

optimize

also

our

liquidity

exposure

there.

[Vincent Ayral, Analyst, JPMorgan Securities Plc]

Thank

you.

[Operator]

Thank

you.

Our

next

question

comes

from

the

line

of

Deepa

Venkateswaran

from

Bernstein.

Please

go

ahead.

Your

line

is

open.

[Deepa Venkateswaran, Analyst, Bernstein Autonomous LLP]

Thank

you.

So

my

two

questions,

I

wanted

to

focus

on

the

liability

or

consequences

in

case

there's

a

disruption

of

physical

flows

from

Russia,

given

approximately

whatever

the

200 terawatt

hours

of

procurement

contracts

that

Uniper

has,

could

you

maybe

explain

to

us

what

happens

in

that

situation?

Clearly,

the

spot

prices

will

go

high

and

maybe

there

is

actual

shortage

of

gas.

So,

what

happens

in

that

event?

Who

bears

that

loss?

And

obviously,

depending

on

the

extent

of

shortage,

we

could

be

talking

about

some

huge

numbers.

So,

in

that

situation,

in

your

scenario

planning,

I

just

want

to

understand, would

you be

ready

to –

if

Uniper

needs

new

equity,

would

you

be

ready

to

invest

in?

So,

maybe

if

you

could

just

talk

us

through

what

happens

in

these

extreme

scenarios

and

who's

– who

has

to

bear

this

price

consequence?

And

secondly,

on

the

dividend

policy,

while

you

outlined

that

there's a

liquidity

issue

that

Uniper

needs

to

focus

on

now

and

growth

in

the

future,

I

just

wanted

to also

understand

that

isn't

that

also,

by

implication,

a

liquidity

issue

for

you

in

case

things

take

a

turn

for

the

negative?

So,

you're

still

paying

dividend

this

year.

So,

I

was

just wondering

why

preservation

of

cash

at

the

group

level

is

not

relevant

given

the

market

conditions

now.

Thank

you.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Okay.

So,

on

these two

questions,

on

the

gas

supply

side,

we

follow

the

situation

very

closely.

[ph]



Power

laws (00:41:06),

regulation,

and

sanctions

are

developing,

and

we

are

in

continuous

discussion

with

Europe

and

the

respective

national

governments

on

what

are

the

potential

sanction

developments

and

what

would

be

their

consequences

for

the

security

of

supply

for

Europe.

If

there

are

sanctions

that

have

consequences

on

our

business,

which

is

not

the

case

for

the

time

being,

then

that

will

be

discussed

with

the

relevant

authorities

and

governments

what –

what

are

the

impacts.

On

the

practical

side,

how

we

are

helping

Europe

and

our

European

customers

to

deal

with

this

issue,

right

now

is

that,

first

of

all,

we

make

sure

that

the

supplies

currently

work,

Uniper

has

procured

additional

LNG

cargoes

to

Europe

through

its

global

access

to

LNG,

and

we

have

resumed

discussions

with

the

German

government

to

consider

a

hydrogen-ready

LNG

terminal

for

Wilhelmshaven.

Then

for

the

dividend

policy,

our

target

is

and

remains

to

pay

a

stable,

sustainable,

and

over

time

increasing

dividend.

And

that,

that

should

be

underpinned

by

good

results

produced

from

our

existing

and

future

businesses

and

their

good

performance.

So,

we

focus

on

the

performance.

We

focus

on

our

growth.

Clean

electricity,

increasing

the

clean

gas

and

flexibility.

And

as

you

have

seen

today,

we

have

also

announced

the

lifetime

extension

of

Loviisa

to

that

extent,

to

provide

this,

which

will

try

to

support

both

availability,

stable

capacity,

CO2-free

power

and

our

earnings

power

for

years

to

come.

[Deepa Venkateswaran, Analyst, Bernstein Autonomous LLP]

I'm

sorry,

if

I

could

just

ask

a

follow

up

on

that

same

question,

I

mean,

I'm

not

talking

about

sanctions,

but

if

there's

retaliation

by

Russia

and

they turn the

gas

off,

surely

under

that

circumstances,

my

worry,

and

I

note

that

Moody's

has

changed

the

outlook

to

negative,

possibly

due

to

the

LTC

exposure.

So, I'm

just

wondering

in

that

scenario

would

you –

would

you,

if

you

have

to

invest

into

Uniper

and

infuse

equity,

would

you

be

prepared

to

do

that?

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Situation

is

changing

all

the

time.

We

are

observing

all

the

areas

continuously.

And

like

I

said,

we

are

in

active

dialogue

with

respective

governments

on

security

of

supply

and

we

will

comply

with

all

sanctions.

We

will

deal

with

the

situations

and

make

sure

that

the

security

of

supply

continues

to

work

for

Europe

and

our

European

customers.

[Deepa Venkateswaran, Analyst, Bernstein Autonomous LLP]

Okay.

Thank

you.

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

Maybe

to

briefly

add,

Deepa.

I

mean,

you're

probably

referring

to

the

Uniper

LTCs

delivered

to

Germany.

So,

whenever

a

situation

would

arise

that

there

would

be

a

curtailment

of

volumes

which

is

not

caused

by

sanctions,

but

by

other

aspects,

it

could,

of

course,

either

be

force

majeure

because

simply

pipelines

would

be

destroyed

as

a

consequence

of

military

action

or

if

it

is

not.

But

if

it is not,

but

a kind

of

willful

curtailment

by

another

player

beyond

our

control

and

influence.

Then

we

would

assume

it

affects

the

whole

of

the

Central

European

gas

supplies,

and

that

then

there

are

very

clear

emergency

mechanisms

in

the

various

countries,

including

Germany

that

either

the

TSOs

or

the Bundesnetza

are

going

to

step

in

and

basically

balance

this

out.

And

this

then

is

a

kind

of

market

which

will

no

longer

be

played

along

commercial

and

supply

demand

balancing

by

market

forces,

but

just

by

physical

matching

of

the

different

needs

of

demands

by

different

sources

of

supply.

So,

that's

why

you'll

see

us

very

cool

blooded

on

this

risk.

[Deepa Venkateswaran, Analyst, Bernstein Autonomous LLP]

Okay.

Thank

you.

[Operator]

Thank

you.

Our

next

question

comes

from

the

line

of

James

Brand

of

Deutsche

Bank.

Please

go

ahead.

Your

line

is

open.

[James Brand, Analyst, Deutsche Bank AG (UK)]

Hi.

Good

morning

and

thank

you for

the

presentation.

I've

got

two

questions,

one

follows

on

from

Deepa's

line

of

questioning,

which

I

think

is

absolutely key

at

the

moment,

and

what

people

are

really

worrying

about,

and

one

is

a

little

bit

less

relevant

to

current

events,

but

nevertheless

something

I'm

interested

in

so

I'll

ask

it

anyway.

The

first

question

is,

I

guess

along

the

lines

of

the

questions

that

were

just

being

asked,

what

people

seem

to

be

kind

of

most

worried

about

is

if

there

is

a

shortage

of

gas,

the

kind

of

financial

implications

on

the

contracting

side,

and

worrying

that

you

say

that

force

majeure

could

be

an

option,

but

as

I

understand

it,

some

of

the

contracts

out

there

have

force

majeure

clauses.

Some

don't.

And

obviously,

that

could

be

under

extreme

scenarios,

very

big

swings

in

cash

requirements.

I

was

just

wondering

whether

you're

speaking

to

governments

to

make

sure

that

they're aware

of

this

risk

and

whether

you

think

that

–

you

mentioned

in

the

answer

to

the

last

question

that

there'll

be

a

kind

of

reordering

of

the

gas

flows

under

kind

of

current

market

structures,

but

there

might

need

to

be

a

reordering

of

contract

provisions

or

capping

of

prices

to

avoid

significant

financial implications

along

the

kind

of

gas

supply

chain.

Are

you

talking

to

governments

to

make

sure

that

they're aware

of

those

risks?

And then

the

second

question,

a

bit

less

relevant

so

I

apologize,

but

the

Loviisa

life

extension,

you

mentioned

in

your

release

that

you're

estimating

that

you're

going to

spend

€1

billion

of

investment

over

the

lifetime

of

that

plant

through

to

2050. Am

I

right

in

reading

that

that

that's

going

to

average

out

€30 million

of

CapEx

a

year

over

the

next

kind of

30 years

because

I

was

a

little

bit

surprised

that

that

number

wasn't

higher.

Thank

you

very

much.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

So

on

the

first

question

on

how

aware

are

EU

and

the

national

governments,

I

think

we

see

from

the

EU

communication,

and

how

frequently

EU –

the

leaders

of

the

EU

countries

plus

other

countries,

and

the

respective

ministers

are

meeting.

So

my

understanding

is

that

the

situational

awareness

is

very

good

and

Europe

has

been

focusing

on

the

security

of

supply

and

working

actively

to

make

sure

that

Europe

has

the

resilience

to

deal

with

the

situation.

So

understanding

that

that

situational

awareness

also

on

a

detailed

level

is

good

and

the

price

peaks

that

we

saw

in

December

already

raised

the

awareness,

and

I

think

both

the

governments

and

the

regulators

got

a

good

understanding

of

what

the

consequences

are

for

the

market.

Liquidity

needs,

cash

needs,

ability

to

serve

the

contract.

So

awareness

there

is

good.

Indeed,

we

have

invested

in

the

latest

year,

over

€300

million

into

Loviisa

and

€1billion

is

the

CapEx

that

would

then

be

spent

over

the

lifetime

of

the

–

of

the

lifetime

extension

of

the

Loviisa

plant.

[James Brand, Analyst, Deutsche Bank AG (UK)]

Okay,

thank

you.

And

that's

reassuring

in

terms of

your

first

answer,

and

thank

you

for

the

second

answer

as

well.

[Operator]

Thank

you. Our

next question

comes

from

the

line

of

Ajay

Patel

at

Goldman

Sachs.

Please

go

ahead.

Your

line

is

open.

[Ajay Patel, Analyst, Goldman Sachs International]

Good

morning

and

thanks

for

the

presentation.

I

think

one

question

is

just

a

clarification,

and

then

I

have

a

question

following

up.

So,

I

think

you

just

said

that

in

the

case

of

an

emergency

situation

where

supplies

weren't

to come

through

that

there

are

emergency

measures

in

place.

The

TSO

would

step

in.

I

guess

my

question

is,

who

would

take

the

costs

of

all

of

that. So,

if

you

could

give

me

a

little

bit

of

clarity

there.

I'm

not

too

familiar

with

these

emergency

measures.

So,

any

detail

there

could

be

really

helpful.

And

then

just

my

other

question

just

on

Nord

Stream.

How

much

interest

income

did

it

bring

in

the

financial

arrangement

and

what

cash

flows

for

Fortum

specifically

were

you

getting

from

Russia

maybe

over

the

last

few

years

to

give

us

a

sense

of

what

cash

was

coming

to

the

overall

group?

Or

was

it

all

being

reinvested

into

Russia?

Just

wanted

to

get

a

sense

there.

Thank

you

very

much.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Okay.

I

can

start.

I'll

let Bernhard

continue

on

the

emergency

measure.

But

on

the

interest

income

and

cash

flow

from

Russia,

so

indeed,

Uniper

has

been

booking

the

accrued

interest

from

its

lending

and

financing

arrangement

to

Nord

Stream

2.

But

that

has

been

accrued

interest,

and

that's

not

–

that's

visible

on

that

side.

And

then

the

cash

flow

from

Russia.

So,

both

Fortum

and

Uniper

and

previously

E.ON

had

been

taking

cash

dividends

from

Russia.

So,

we

invested

into

the

thermal

CSA

capacities.

And

then

once

the

capacities

were

invested

and

finalized,

then

we

have

been

taking

some

hundreds

of

millions

per

year

from

Russia

in

the form

of

dividends

depending

on

the

year.

But

overall,

still

coming

back

to

the

total

Russia

exposure

and

also

positioning

Nord

Stream

2's

relevance

in

that.

So,

the

total

book

value

of

the

net

assets

for

Fortum,

for

Uniper,

and

the

Nord

Stream

2

lending,

the

net

asset

value

is

about

€5.5

billion,

comparable

operating

profit

around €500

million

which

is

about

20%

of

our

comparable

operating

profit

on

a

group

level

in

2021.

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

Yeah.

To

the

first

question,

I

think

I

said

that

it

could

be

the

TSO

who

steps

in,

it

could

also

be

the

Bundesnetza. Again,

under

other

circumstances,

so

there's

now

a

myriad

of

scenarios

on

how

exactly,

if

curtailments

come,

how

they

are

crossed

and

what

effects

they

would

have.

And

this

is

then

half

dependent

on

what

the

reaction

would

be.

And

since

this

has,

so

far,

never

been

tested

in

practice,

I

think

it

would

then

remain

to

be

seen

how

exactly this

policy –

financial

fallout

from

resolution

of

this

physical

supply

challenge

would

look

like.

But

as

said

by

Markus,

we

are

in

good

shape

for

that,

and

there

are

open

lines

to

the

relevant

players

also

on

the

political

and

regulatory

side.

[Ajay Patel, Analyst, Goldman Sachs International]

Thank

you

very

much.

And

was

there

a

specific

number

on

the

Nord

Stream

interest

that

you

were

booking

that

you

could

give

us

or...

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Yeah. Ingela

and

the

IR

team

can

come

back

to

that

issue

precisely,

to

you,

if

that's

okay.

[Ajay Patel, Analyst, Goldman Sachs International]

Fantastic.

Thank

you very

much

for

the

answers.

[Operator]

Thank

you.

Our

next

question

comes

from

the

line

of

Pasi

Väisänen

of

Nordea.

Please

go

ahead.

Your

line

is

open.

[Pasi Väisänen, Analyst, Nordea Bank Abp]

Great.

Thanks. This

is

Pasi

Väisänen

from

Nordea.

I'm

so

sorry

to

repeat

this

topic

already

highlighted.

But,

so,

do

you

have

a

risk,

or

do

you

not

have

a

risk

related

to

gas

deliveries

in

here

from

Russia

to

Central

Europe

regarding

your

kind

of

contracts

already

made

for

the

gas

and

power?

And

maybe,

secondly,

regarding

this

already

kind

of

used

and €10

billion

to

€12

billion

margin

requirement,

is

there

any

kind

of

counterparty

risk

related

to

this

item?

So,

is

there

any

chance

that

you

may

not

get

to

the

money

back

in

some

particular

circumstances?

Thanks.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

On

the

gas

contract,

so,

we

disclosed

the

number

370

terawatt

hours

of

gas

that

we

procure

with

long-term

contracts.

And

these

are –

these

are

not

back-to-back

contracts,

so

we

don't

have

a

long-term

contract

to

buy

and

then

sell

that

exact

gas.

So,

just

if

there

would

be

disruptions

for

any

of

these

supplies,

then

the

question

would

be

that

how

can

we

from

our

gas

portfolio,

supply

all

of

our

customers?

So,

yes,

if

there's

disruption

in

any

of

the

LTCs,

then

that

risk

exists.

Then

what

comes

to

our

overall

exposure

in

the

total

context,

we

are

one

of

the

many

importers

of

gas

into

Europe,

so

we

are

not

– we

are

not

the

biggest

part

of

either

the

Russian

gas

flows

into

Europe.

So,

if

the

gas

flow

from

Russia

would

stop,

then

it

would

be

a

Europe-wide

problem

and

a

systemic

problem

for

Europe.

And

that's

why

we

come

back

to

that,

the

point

about

European

governments,

the

regulators

being

very

much

on

top

of

the

security

of

supply

issue,

and

to

my

understanding,

they

are

very

aware

of

that.

Indeed,

it

is

so

that

there

is

counterparty

exposure

on

the

margining.

So,

when

cash

is

–

with

the

counterparty,

then

we

have

the

counterparty

cash

credit

risk,

and

we

follow

the

quality

of

these

counterparties

very

closely.

What

comes

to

the

margining?

Overall,

we

have

moved

our

trades

away

from

margining

requiring

counterparties

so

that

pressure

now

with

the

recent

gas

price

movements

is

much

less

on

us

than

it

was

around

the

turn

of

the

year.

[Pasi Väisänen, Analyst, Nordea Bank Abp]

Yeah.

That's

understood.

But

would

it

actually

make

sense

that

you're

actually

now

lowering

the

trading

volumes

just

to

get

the

kind

of

risk

levels

down

in

the

future?

So,

should

we

expect

kind

of

lower

volumes,

and

also

the

lower

probably

assistance

to

underlying

earnings

coming

from

the

trading

in

the

future?

Thanks.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Maybe

it's

important

to

know.

It's

not

trading

volumes;

it's

hedging

volumes.

And,

yes,

of

course,

we

have

reduced

significantly

since

the

commodity

price

volatility

ramped

up

in

the

second

half

of

Q3

last

year,

our

hedging

volumes,

which

is

not

– does

not

say

that

the

business

is

gone,

yeah?

It's

just

that

the

long-term

hedging,

which

was

prevalent

in

this

business

model,

is

now

not

done

in

the

same

way

as

before.

We

have

seen

these

steep

increases

in

volatility

and

price

levels.

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

So,

we

are

continuously

evaluating

the

capital

needs

for

our

different

businesses,

and

that

happens

in

the

normal

course

of

business,

which

obviously

has

intensified

now

for

certain

businesses

in

the

short

run.

But

putting

–

then

maybe

lifting

up

a

little

bit

and

looking

at

the

total

picture

So,

what

arises

from

actually

all

of

the

questions

that

have

been

asked

here

is

the

need

for

the

energy

transition,

is

the

need

for

the

security

of

supply,

need

for

flexibility

and

clean

power,

increasing

the

clean

gas.

And

these

are

all

things

that

we

are

supplying.

The

weight

of

the

Russian

business

for

us

in

our

operating

profit

last

year

was

20%.

We

are

advancing

on

making

investments

into

clean

power.

We

are

advancing

on

making

investments

into

increasing

the

clean

gas

and

flexibility.

And

just

today

and

in

the

recent

days,

and

weeks,

and

months,

we

have

been

making

announcements of

that

direction.

So,

we

feel

that

our

strategy

remains

valid

and

even

more

needed

now

than

it

was

before.

And

our

competencies

are

spot

on

with

the

needs

that

the

society

and

our

customers

have.

[Pasi Väisänen, Analyst, Nordea Bank Abp]

Yeah.

Great.

Thanks.

That

was

all

from

my

side.

I

hear

you.

[Operator]

Thank

you.

And

our

next

question

comes

from

the

line

of

[indiscernible]



(00:58:13).

Please

go

ahead.

Your

line

is

open.

Yeah.

Good

morning.

Thanks,

first

of

all,

for

your

statements

on

Russia,

which

were

quite

clear.

And

I

would

have

a

question

on

about

some

more

clarification

on

the

topic

of

Nord

Stream

2

because

in

the

last

days

we

heard

from

Shell

as

well

Wintershall

that

they

want

to

amortize

their

investment

in

Nord

Stream

2.

So,

could

you

say

something

about

whether

Uniper

is

planning

to

do

the

same?

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

I

mean,

I

think

you're

referring

to

the

announcements

like

Wintershall

that

they

would

impair

their

book

values

on

Nord

Stream

2.

Thisis

clearly

nothing

for

the

closed

accounts

of

2021.

We

will

clearly

reconsider

this

for

the

Q1 numbers,

i.e.

after

the

31st of

March.

We

will

take

a

close

look

at

that,

what

the

current

situation

means.

And

we

all

know

the

rumors

going

back

and

forth

currently

on

Nord

Stream

2.

All

right.

But

you

are

not

planning

to

make

any

statement

on

that

soon

like

at

the

other

investors

did?

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

Not

at

this

point

in

time.

All

right.

Thank

you.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

On

this

account

and

like

any

other

parts

of

our

business,

we

follow

very

closely

what

is

happening.

Like

Bernhard

said,

we

hear

rumors

and

we

hear

information

and

various

statements

from

various

players

and

then,

I

think

you

need

to

look

into

that

what

is

actually

happening

and

what

is

possible

to

happen.

When

there

are

facts,

when

there

is

concrete

knowledge

of

something,

we

will

always

assess

that

information.

But

so

far,

we

hear

certain

rumors

and

we

hear

certain

facts.

And

I'll

go

back

to

that

with

regards,

for

example,

all

of

our

operations.

All

operations

are

working

normally.

If

that

would

change

in

any

part,

then

we

need

to

assess

the

situation,

and

that

may

or

may

not

reflect

into

our

balance

sheet

or

profit

and

loss.

Okay.

Thanks

for

the

clarification.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Thank

you.

[Operator]

Thank

you.

And

our

next

question

comes

from

the

line

of

Iiris

Theman

of

Carnegie.

Please

go

ahead.

Your

line

is

open.

[Iiris Theman, Analyst, Carnegie Investment Bank AB (Finland)]

Hi.

Thanks

for

taking

my

questions.

I'm

not

sure

if

this

was

already

answered.

But

does

Uniper's

oil

contracts

include

these

force

majeure

clause

and

how

long

are

Uniper's

long-term

contracts?

Thanks.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

The

long-term

contracts

can

extend

for

years

and

even

longer,

and

they

are

frame

agreements

that

set

certain

– certain

terms

and

conditions.

The

idea

with

the

whole

long-term

contract,

yeah,

gas

businesses

that

we

have

visibility

into

getting

gas

flows

into

Europe,

and

to

our

European

customers

that

applies

for

pipeline

gas

and

LNG

as

well.

And

then

with

regards

to

the

–

to

the

contractual

terms

and

conditions,

we

will

see

in

due

course,

that

are there

triggering

events

for

some

parts

of

this

contract,

we

follow

that

very

closely,

and

our

focus

is

on

the

security

of

supply

to

our

customers,

which

we

are

working

on

very

actively.

[Iiris Theman, Analyst, Carnegie Investment Bank AB (Finland)]

Okay.

And

if

I

may

just

continue,

so

many

companies

have

left

Russia.

So,

is

this

in

your

plans

in

the

future?

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Like

I

started with,

we

are

devastated

and

sad

by

the

attack

of

Russia

to

Ukraine,

and

it

will

have

longer-term

implications

on

the

relationships

between

Europe

and

Russia.

It's

clear

that

business

cannot

continue

as

usual,

and

because

of

this, we

have

decided

to

stop

making

new

investment

decisions

in

Russia

for

the

time

being.

And

we

will

continue

to

reduce

our

thermal

capacities

in

Russia,

as

we

have

done

before.

But

also

we

have

the

responsibility

to

supply

both

our

European

customers

and

our

Russian

customers

the

heating,

the

electricity

that

we

are

providing

to

them.

And

because

of

that,

also,

our

focus

and

priority

is

on

our

employees

and

their

well-being.

We

have

7,000

colleagues

in

Russia

and

we

look

after

their

safety

and

their

well-being.

So,

these

are

– these

are

in

our

focuses.

[Iiris Theman, Analyst, Carnegie Investment Bank AB (Finland)]

Okay.

Thank

you

very

much.

[Operator]

Thank you.

Our

next

question

comes

from

the

line

of

Louis

Boujard

of

ODDO

BHF.

Please

go

ahead.

Your

line

is

open.

[Louis Boujard, Analyst, ODDO BHF]

Yes,

good

morning.

Thank

you

very

much.

Maybe

two

question.

The

first

one

would

be

regarding

your

discussion

with

respect to

like

the

affected

countries.

And

we

know

that

depending

on

the

decisions

that

may

be

taken

at

European

level,

it

might

have

dramatic

impact,

notably

into

the

bill,

also

final

customer. So,

my

first

question

would

be,

have

you

actually

started

any

discussions

regarding

the

eventual

clawback

provision

[indiscernible]



(01:03:36)

assets?

Or

is

it

something

that

is

absolutely

nothing

to

discussion

at

this

point

– at

this

point

in

time?

My

second

question

and

here

we

will

start

to

go little

bit

into

the

actual

operational

activities

would

be

regarding

the

hedging,

and

the

Nordic

power

market

price.

So

it's

a

bit

better

than

the

Uniper

last

week.

But

anyway,

when we

look

at

the

forward

price,

we

have

the

feeling

that

it

might

have

been

much

better

than

that.

So

could

you

please

let

us

know

what

might

have

impacted

you

or

refrain

you

from

being

better

positioned

into

your

hedging

positions

for the

Nordic

price

for 2022

and

2023?

Thank

you very

much.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

With

regards

to

the

discussion

with

EU,

the

respective

countries

and

governments,

there's

a

continuous

discussion,

whether

it's

the

EU,

UK,

US

on

how

to

react

to

that

to

the

situation

and

the

governments

are

then

in

discussion

with

companies.

How

will

that

impact

companies?

How

will

that

impact

our

societies

and

economies?

And

that's

what

the

governments

are

then

balancing,

advancing –

advancing

their

targets,

but

understanding

also

what

are

the

implications

then

for

the

businesses

and

the

citizens.

With

regards

to

hedging,

our

targets

with

the

hedging

is

to

provide

stability

and

predictability,

visibility

into

our

cash

flow

and

earnings.

Sometimes

when

we

hedge

prices,

after

that

they

go

down,

sometimes

they

go

up.

And

as

we

can

see

from

the

last

few

years,

the

hedging

has

had

either

a

positive

or

negative

impact

compared

to

whether

we

would

have

been

not

hedging

and

that

we've

got

enormous

stability

compared

to

the

price

volatility,

and

we

see

high

value

in

that

predictability.

That

continues

to

underpin

our

hedging

strategy.

[Louis Boujard, Analyst, ODDO BHF]

I'm

sorry,

but

if

I

can

afford

on

the

last

one,

I

understand

that

indeed

it

gives

visibility.

My

question

was

more

if

we

look

at

the

fallout

in

the

Dublin

Nordics

that

you

provide,

we

have

the

feeling

that

it

could

have

been

a

bit

better.

So,

maybe

what

happened

in

the

Q4

that

did

not enable

you

to

improve

a little

bit

more

your

hedging

positions?

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

We

hedge

on

a

continuous

basis

and

we

take

operative

decisions

in

the

–

in

our

trading

and

optimization

team

both

in

Uniper

and

in

Fortum.

Eventually,

over

time,

the

hedging

levels

will

also

reflect

the

forward

prices.

So,

there

can

be

variation

between

quarters,

but

there's

nothing

special

as

such

happening

there

except

that

obviously

you

can

see

the

big

difference

between

the

Fortum

and

Uniper

hedge

prices,

and

that

we

have

opened

up,

Bernhard

referred to

that;

different

price

areas

and

also

the

proxy

hedging

impact

on

Uniper.

And

even

there,

the

target

has

been

to

provide

the

predictability

and

visibility

into

the

cash

flow.

So,

this

truly

underpins

all

the

hedging

activities.

[Louis Boujard, Analyst, ODDO BHF]

Okay.

That's

it.

Thank

you very

much.

[Operator]

Thank

you.

And

our next

question

comes

from

the

line

of

[indiscernible]



(01:07:15).

Please

go

ahead.

Your

line

is

open.

Thank

you.

From

[ph]



Nordea

Credit

Research (01:07:21),

I

would

ask

that

–

as

you

said

already,

your

leverage

is

well

below

your

target,

and

you

are

well-positioned in

a

turbulent

market.

But

could

you

elaborate

more

on

your

financial

flexibility

at

the

moment

and

how it

would

revert?

Like,

will

you

use

the

headroom

and

leverage

more

to

prepare

and

navigate

in

the

turbulent

market

with

minimal

deterioration

in

your

financial

position

or

are

you

planning

to

utilize

it

into

more

investments

into

non-Russian

operations

as

you're referring

your

hold

of

new

investments

into

Russia

or

possible

increase

in

your

ownership

in

Uniper

further?

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Indeed.

I

think

we're

going

into

this

sad

and

very

turbulent

situation

from

a

position

of

strength.

We

can

say

that

our

strategy

with

regards

to

clean

power,

increasingly

clean

gas,

and

flexibility

does

make

sense

and

it

has

yielded

good

results,

the

best-ever

results

on

Fortum

group

level.

Also,

the

strategic

choices

we

have

made

with

regards

to

divestments

and

the

portfolio

rotation

are

resulting

in

a

balance

sheet

that's

well

within

our

leverage

targets.

The

situation

right

now

is leaving

very

quickly.

It

does

not

change

our

fundamental

beliefs

in

our

strategy.

We

think

our

strategy

is

more

valid

than

ever.

And

as

you

saw

today,

even

in

– between in the

middle

of

this

turbulence,

we

are

making

decisions

to

invest

into

this

future

providing,

for

example providing,

for

example, clean,

reliable

energy

to

our

customers.

But

obviously

we

will

be

careful

in

this

kind

of

a

situation

in

how

much

we

are

then

stretching

our

financial

capacity

at

the

moment.

So,

we

are

carefully

observing

the

situation

on

a

continuous

basis,

and

seeing

where

that

develops.

But

I

can

still

underline

is

that

to

me it's

quite

clear

day

after

day

that

what

we

provide

is

in

high

demand,

which

will

also

reflect

in

those

businesses

results

over

time,

that

provide

the

clean

power,

that

provide

the

flexibility,

that

provide

the

predictability.

All

right.

Thank

you.

[Operator]

Thank

you.

Our

next question

comes

from

the

line

of

Piotr

Dzieciolowski

of

Citi.

Please

go

ahead.

Your

line

is

open.

[Piotr M. Dzieciolowski, Analyst, Citibank Handlowy SA]

Hi.

Good

morning,

everybody.

I

have

two

questions,

please.

So,

the

first

one

will

be

on

the

Wilhelmshaven

LNG

terminal.

If

you

had

the

decision

today,

let's

say,

to

rush

up,

how

much

would

it

cost

to

build

it?

So,

what's

the

CapEx

requirement?

And

what's

the

earliest

possible

time

for

you

to

deliver

it?

So,

if

you

can

kind

of

comment

on

this

possible

project.

And

on

the

second

question

I

have

regarding

the

coal

plant

in

Germany

where

you

went

to

the

auction

and

shut

down

some

of

the

assets.

I

wanted

to

understand.

So,

my

understanding

is

these

assets

went

to

the

DSOs. So, they

were

not

commissioned.

Or

how

much

of

the

recently

decommissioned

coal

assets

eventually

do

you

think

could

come

back

to

the

market

if

needed?

Are

we

talking

about

the

4

gigawatt

that

went

offline

last

year

and

the

2

gigawatt.

Can

this

all

be

reversed?

And

are

there

any

other

backup

plants

that

could

maybe,

maybe

stand

up

when

needed?

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

With

regards

to

Wilhelmshaven, so

this

is –

you

know

that

Uniper

had

earlier

similar

plants

and

had,

had

the

open

season,

which

then

didn't

result

actually

in –

in

an

LNG

terminal

to

proceed,

what

role

Uniper

exactly

would

have

in

that

project,

would be

open

as

well.

So,

in

this

kind

of –

in

these

kind

of

cases,

we

could

be

one

of

the

sponsors,

the

roles

are

not

– not

defined

at

this

point

in

time.

And

with

regards to

the

CapEx

of

such

a

terminal,

we're

talking

about

hundreds

of

millions

of

euros.

What

would

be

the

company's

commit

– financial

commitment

to

that?

That

would

remain

to

be

seen.

So,

this

is

early

stages

without

details

at

this

point

in

time.

Then,

with

regards

to

coal

plants,

it

is

exactly

indeed

so

that

Germany

has

gone

ahead

with

its

coal

exit

plan,

arranged

the

tenders,

and

companies

have

tendered

and

some

have

won.

We

have

won

an

award

to

close

down

four

plants

so

far.

And

on

some

of

these

cases,

the

system

operator

then

has

defined

that

these

plants

or

a

plant

shall

remain

in

reserve

to

be

called

if

there's

a

need

for

the

system,

if

these

plants

are

deemed

system

critical.

I

would

imagine

that

this

is

one

of

the –

one

of

the

questions

that,

that

the

authorities

and

regulators

have

to

assess

on

an

ongoing

basis

in

this

situation

that

what

reserve

capacities

are

there

truly

technically

available,

and

how

can

they

be

maintained

in

the

system

and

compensated

for,

to

really

truly

keep

them

available

for

various

purposes.

But

this

– I

would

assume

that

this

is

truly

a

ongoing,

continuous

consideration

for

the

authorities

and

regulators.

[Piotr M. Dzieciolowski, Analyst, Citibank Handlowy SA]

Okay.

Thank

you

very

much.

[Operator]

Thank

you.

And

our

next

question

comes

from

the

line

of

Artem

Beletski

of

SEB.

Please

go

ahead. Your

line

is

open.

[Artem Beletski]

Yes.

Hi

and

thank

you.

So,

I

still

have

two

questions

to

you.

So,

first

of

all,

just

coming

back

to

gas

discussion

topic

and

maybe

what

comes

to

sort

of

gas

contracts,

what

Uniper

has

towards

European

customers.

Could

you

provide

some

color

of what

type

of

structure

of

those

funds

are

we

talking

about,

basically

one-year

or

two-year

contract,

in

general,

what

they

have

on

this

side?

And

the

second

question

is

really

related

to

nuclear

and

just

the

thinking

about

shutdowns,

what

we

have

seen,

for

example,

in

Sweden

over

recent

years.

If

all

of

a

sudden

we

are,

as

I would

say,

clearly

concerned

about

energy

supplies

and

so

on,

is

it

technically

possible

to

basically

restart

those

reaction

-reactors?

And

what

type

of

sorts

of

work

it

is

– needs

to

be

done

on

that

side?

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Yeah.

Okay.

I

can

start

with

the

shutdown.

So,

after

the

shutdown

decisions

of

various

reactors,

then

very

little

decommissioning

plan

exists

and

process

how

to

then

take

out

these

plants.

So,

they

are,

of

course,

in

different

stages.

But

I

would

say

it's

very

difficult

then

to

do

anymore

a

plant

that

is

already

going

through

the

decommissioning

to

then

get

that

back

to

the

market.

What

I

do

recognize

is

that

against

the

background

of

the

huge

need

to

do

the

energy

transition,

there

is

a

renewed

interest

in

nuclear

because

it

does

provide

reliable

CO2-free

power.

There's

a

lot

of

discussion

about

small

modular

reactors

that

could

be

produced

in

series.

And

the

question

then

will

become

that

how

we

learn,

how

could

such

stable

and

permanent

capacity

get

compensation

from

the

market.

What

we

have

seen

is

that

we

have

increased

price

volatility

that

will

continue

when

we

get

more

intermittent

renewables

into

the

system.

So,

eventually,

we

will

have

a

discussion

in

Europe

also

about

how

should

the

market

work,

what

is

the

market

design,

how

does

that

look

like.

But

we

have

–

we

are

one

of

the

largest

nuclear

operators

in

Europe.

And

we

just

took

a

decision

to

extend

the

lifetime

of

our

very

efficient,

one

of

the

best

plants,

if

not

the

best

of

its

type,

to

extend

its

lifetime.

With

regards

to

the

gas

contracts,

do

you

want

to,

Bernhard

comment

on

that

one?

[Bernhard Günther, Chief Financial Officer, Fortum Oyj]

Well,

that's

a

pretty

broad

variety.

Typically,

the

contracts

that

we

supply

our

customers

with

are

of

a

shorter

duration

than

the

long-term

contracts

would

be.

But

the

recent

one

or

two

years,

we have

seen

a

significant

surge

in

demand

for

longer

term

contracts

again.

Yeah.

So,

because

obviously

customers

do

want

some

protection

against

wild

swings

in

commodity

prices

for

their

own

visibility

and

ability

to

plan

their

businesses.

Yeah, so

this

is

going

up,

at

least

in

terms

of

demand.

This

was

a

market

which

was

pretty

dead

a

couple

of

years

ago,

at

least

in

Continental

Europe.

[Artem Beletski]

Okay.

It's

very

clear.

Thank

you.

[Operator]

Thank

you.

As

we

have

reached

our

allotted

time

now,

that

will

be

the

last

question.

So,

I'll

hand

back

to

our

speakers

for

the

closing

comments.

[Ingela Ulfves]

Thank

you

so

much,

operator.

We

will

still

take

two

questions

before

we

conclude.

So

the

first

one

comes

from

Sam

Arie, UBS.

Thank

you,

Markus

and

the

Fortum

team.

I

would

like

to

acknowledge

the

extraordinary

stress

that is

currently

placed

on

your

business

and

thank

you

again

for

your

leadership

and

for

the

many

helpful

comments

today.

My

question

is

about

CU – EU

carbon

price.

You

have always

been

a

supporter

of

higher

carbon

prices,

but

in

the

current

market,

higher

carbon

prices

are

surely

supporting

demand

for

gas

across

Europe. Do

you

see

a

risk

that

the

EU

authorities

will

intervene

somehow

or

bring

– to

bring

the

carbon

price

down

in

order

to

allow

the

maximum

coal

to

run and

reduce

gas

demand

from

the

power

sector?

If

you

can

share

any

view

on

how

that

might

happen

and

when.

The

other

question

comes

from

[indiscernible]



(01:18:10).

In

Russia

Fortum –

in

Russia,

Fortum

has

JV

with

Gazprombank

in

renewable

energy

and

you

are

minority

owner

in

Gazprom

TGC-1.

Do

you

want

to

continue

cooperation

with

these

Russian

state-owned

companies

or

do

you

plan

to

sell

or

give

up

these

stakes?

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Okay. I'll

start

with

the

[indiscernible]

(01:18:33)

questions.

So

we

follow

the

–

we

follow

the

laws,

regulations

and

sanctions

very

closely

and

we will

comply and

we

do comply

with all

sanctions.

Clearly,

the

situation

at

hand

has

long-term

impact,

and

business

as

usual

is

not

possible.

In

the

context

of

our

business

in

Russia,

we

will

not

take

any

new

investment

decisions

for

the

time

being.

And

we

will

reduce –

we

will

continue

to

reduce

our

thermal

exposure

of

our

business.

With

regards

to

the

question

about

the

carbon

price

and

Europe,

we

do

have

a

terrible

crisis

at

hand

in

Ukraine.

But

what

was

also

highlighted

actually

during

this

week

was

the

IPCC

report

highlighting

that

we

have

another

issue

at

hand,

which

is

very

serious,

and

that's

climate

change.

So,

I

do

think

that

we

have

to

make

sure

that

the

energy

transition

happens

to

low

emitting

energy,

to

clean

CO2-free

energy,

to

increasing

the

clean

gases,

and

that

requires

flexibility

and

sector

integration,

gas

is

needed

also

going

forward.

All

sectors

cannot

be

electrified,

but

we

can

increase

the

use

of

electricity,

convert

that

into

clean

gases,

and

over

time,

switch

then

to

a

completely

CO2-free

system.

And

that

is

what

Fortum

is

committed

to

also,

and

Europe

is

committed

to,

and

the

Paris

Agreement

signatories

are

all

committed

to.

So,

we

will

continue, and

I

believe

that

Europe

will

continue

to

work

into

this

direction.

[Ingela Ulfves]

Thank

you

so

much.

Time is

unfortunately

up

now,

so

we

will

have

to

conclude

the

event

here.

The

IR

team

will

come

back

to

the

questions

asked

in

the

chat

that

were

not

answered.

Now,

and

Fortum's

News

Desk

will

get

back

to

the

journalist

questions

that

also

were

posted

in

the

chat.

So,

on

behalf

of

Fortum,

thank

you

everyone

for

your

participation

here

today

and

have

a

nice

rest

of

the

day.

[Markus Heikki Erdem Rauramo, President & Chief Executive Officer, Fortum Oyj]

Thank you, everybody. Have a good day.