European Utilities Key Player Profiles: Fortum

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 1
ANALYSIS 2
European Utilities Key Player Profile: Fortum 2
Datamonitor's Key Player Scorecard examines 31 leading utilities drawn from across Europe's competitive arenas 4
Key Players dominate power generation capacity market share in the Wmed competitive arena 5
Key Players dominate power generation output market share in the Wmed and CEE competitive arenas 6
Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share 7
Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share 8
The Key Player Scorecard assesses utilities across four pillars: Performance, Scale, Growth and Exposure 9
The Performance pillar combines 5 financial metrics to measure business performance 10
The Scale pillar combines financial and operational metrics to measure the size of a utility 11
The Growth pillar measures the rate of growth of a utility's financial and energy resources 12
The Exposure pillar combines both operational and financial measurements of risk 13
Fortum scores 36.9/100 on Datamonitor's European Utility Scorecard and ranks 9 out of the 31 Key Players covered 14
Fortum's scores vary widely across the four Scorecard pillars 16
Fortum achieves an overall ranking of 9, with a utility score of 36.9 21
Fortum's overall ranking is buoyed by the utility's above average scores in Performance and Exposure 22
Fortum outranks the Key Players in Performance, yet maintains a lower level of risk 23
Compared to the average Key Player, Fortum underperforms on both Scale and Growth 24
Fortum is the most profitable Key Player, contributing to a Performance ranking of 1 25
Fortum scores above the Key Player average on each Performance metric 26
Fortum has a top return on sales, yet is surpassed on return on fixed assets by several top ten utilities 27
Fortum has the top return on energy volume of all Key Players 28
Fortum is an average utility on Scale, ranking 15 on this pillar 29
Fortum significantly lags the Key Player average on gas supply volume 30
In generation capacity, Fortum ranks 14 with 11 GW 31
Fortum is a power focused utility, with power volumes of 60 TWh 32
Fortum has a negligible share of Key Player power customers 33
At 60 TWh, Fortum ranks 12 in terms of power volume 34
Fortum ranks 21 in revenue and 11 in net income, respectively 35
Fortum's bottom-ranked revenue growth pulls its Growth ranking down to 30 36
Fortum scores well above the Key Player average on profit and operating cash flow growth, but trails in the other Growth metrics 37
Fortum has an above average operating profit margin, yet a below average price earnings ratio 38
From 2001-2005, Fortum has had average annual profit growth of 20.4%, despite a sharp drop in annual revenue growth (-10.7%) 39
From 2004-2005, Fortum had operating cash flow growth of 13.8%, despite a decline in power supply volume growth of -37% 40
Fortum's strong operating cash flow growth contributes to an above average Exposure rank of 8 41
Fortum scores below average on most Exposure metrics, yet ranks in the top half of Key Players on the overall pillar 42
Fortum's power supply volume obligations exceed its generation output, for a short power NTR of 9,772GW 43
Fortum has a debt to equity ratio of 74.1% 44
Fortum ranks 16 of the 31 Key Players in terms of debt leverage 45
Fortum's operational cash flow has grown 13.8%, despite a drop in energy supply volume of -37% 46
Fortum's business is focused on the Nordic competitive arena 47
Hydropower is Fortum's main generation capacity fuel type 48
Sweden is Fortum's most significant market for power sales 49
Fortum's generation capacity is split between Finland and Sweden 50
Fortum has a negligible share of Key Player power customers 51
Appendix 52
Databook 52
Definitions 71
Definitions 71
Datamonitor Consulting 71
List of Tables
Table 1: The Key Players are drawn from across a diverse range of markets 3
Table 2: The Performance pillar combines 5 financial metrics to measure business performance 10
Table 3: The Scale pillar combines financial and operational metrics to measure the size of a utility 11
Table 4: The Growth pillar measures the rate of growth of a utility's financial and energy resources 12
Table 5: The Exposure pillar combines both operational and financial measurements of risk 13
Table 6: Fortum scores 36.9/100 on Datamonitor's European Utility Scorecard and ranks 9 out of the 31 Key Players covered 15
Table 7: Fortum scores 18.3/25 on the Performance pillar, and ranks 1 out of 31 on this measurement 17
Table 8: Fortum scores 2.5/25 on the Scale pillar, and ranks 15 out of 31 on this measurement 18
Table 9: Fortum scores 5.6/25 on the Growth pillar, and ranks 30 out of 31 on this measurement 19
Table 10: Fortum scores 10.5/25 on the Exposure pillar, and ranks 8 out of 31 on this measurement 20
Table 11: Fortum is the most profitable Key Player, contributing to a Performance ranking of 1 25
Table 12: Fortum is an average utility on Scale, ranking 15 on this pillar 29
Table 13: Fortum's bottom-ranked revenue growth pulls its Growth ranking down to 30 36
Table 14: Fortum's strong operating cash flow growth contributes to an above average Exposure rank of 8 41
Table 15: Return on fixed assets 52
Table 16: Return on sales 53
Table 17: Operating profit margin 54
Table 18: Return on energy volume 55
Table 19: Return on investment 56
Table 20: Generation Capacity / EU25 market total 57
Table 21: Power Supply Volume / EU25 market total 58
Table 22: Gas Supply Volume / EU25 market total 59
Table 23: Net income / Net income of 94 leading utilities 60
Table 24: Revenue / Revenue of 94 leading utilities 61
Table 25: Revenue growth, 2001-2005 CAGR 62
Table 26: Profit growth, 2001-2005 CAGR 63
Table 27: Growth in operating cash flow, 2004 to 2005 64
Table 28: Gas supply volume growth, 2004-2005 65
Table 29: Growth in power supply volume, 2004 to 2005 66
Table 30: Power NTR / Power supply volume 67
Table 31: Gas NTR / Gas supply volume 68
Table 32: Debt leverage 69
Table 33: Growth in operational cash flow - Growth in energy volume 70
List of Figures
Figure 1: Datamonitor's Key Player Scorecard examines 31 leading utilities drawn from across Europe's competitive arenas 4
Figure 2: Key Players dominate power generation capacity market share in the Wmed competitive arena 5
Figure 3: Key Players dominate power generation output market share in the Wmed and CEE competitive arenas 6
Figure 4: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share 7
Figure 5: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share 8
Figure 6: Fortum achieves an overall ranking of 9, with a utility score of 36.9 21
Figure 7: Fortum's overall ranking is buoyed by the utility's above average scores in Performance and Exposure 22
Figure 8: Fortum outranks the Key Players in Performance, yet maintains a lower level of risk 23
Figure 9: Compared to the average Key Player, Fortum underperforms on both Scale and Growth 24
Figure 10: Fortum scores above the Key Player average on each Performance metric 26
Figure 11: Fortum has a top return on sales, yet is surpassed on return on fixed assets by several top ten utilities 27
Figure 12: Fortum has the top return on energy volume of all Key Players 28
Figure 13: Fortum significantly lags the Key Player average on gas supply volume 30
Figure 14: In generation capacity, Fortum ranks 14 with 11 GW 31
Figure 15: Fortum is a power focused utility, with power volumes of 60 TWh 32
Figure 16: Fortum has a negligible share of Key Player power customers 33
Figure 17: At 60 TWh, Fortum ranks 12 in terms of power volume 34
Figure 18: Fortum ranks 21 in revenue and 11 in net income, respectively 35
Figure 19: Fortum scores well above the Key Player average on profit and operating cash flow growth, but trails in the other Growth metrics 37
Figure 20: Fortum has an above average operating profit margin, yet a below average price earnings ratio 38
Figure 21: From 2001-2005, Fortum has had average annual profit growth of 20.4%, despite a sharp drop in annual revenue growth (-10.7%) 39
Figure 22: From 2004-2005, Fortum had operating cash flow growth of 13.8%, despite a decline in power supply volume growth of -37% 40
Figure 23: Fortum scores below average on most Exposure metrics, yet ranks in the top half of Key Players on the overall pillar 42
Figure 24: Fortum's power supply volume obligations exceed its generation output, for a short power NTR of 9,772GW 43
Figure 25: Fortum has a debt to equity ratio of 74.1% 44
Figure 26: Fortum ranks 16 of the 31 Key Players in terms of debt leverage 45
Figure 27: Fortum's operational cash flow has grown 13.8%, despite a drop in energy supply volume of -37% 46
Figure 28: Hydropower is Fortum's main generation capacity fuel type 48
Figure 29: Sweden is Fortum's most significant market for power sales 49
Figure 30: Fortum's generation capacity is split between Finland and Sweden 50
Figure 31: Fortum has a negligible share of Key Player power customers 51