Nordic Electricity Retail MarketChristian Lundberg

President, Fortum Markets

Capital Markets DayJune 17, 2004

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Become the energy supplier of choice

Fortum focuses on the Nordic energy market as a platform for long-term profitable growth

Excel in business performance

Create the leading

power and heat company

Become the energy supplier

of choice

Strengthen position as the leading clean fuels refining

companyTargetsTo be Nordic # 1• Customer base• Customer

satisfaction and loyalty

• Business performance

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Fragmented Nordic electricity retail market2003

14 million electricity customers~ 1 million B2B customers

2,5 million115 TWh+17 TWh*

5,2 million145 TWh+7 TWh*

3,0 million85 TWh+7 TWh*

3 million35 TWh+3 TWh*

Demand ~ 380 TWhGrowth 03-2010 ~+34 TWh*

Fortum 1.2 million ( 9%)

Vattenfall**

Hafslund

others

Nesa68%

E.ON

** in addition Vattenfall owns 50% of Plusenergi (~400 000 customers)

*Source: Eurprog 2003; Nordel, Company reports

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Fortum Markets - energy solutions and services

BusinessIdea

• For trust, convenience and effectiveness, with environmental awareness, we offer a wide range of energy solutions and services

• Second largest electricity sales company in the Nordic area –Operations Sweden, Finland and Norway – 1.2 million electricity retail customers– Electricity purchases through Nord Pool

• Largest heating oil supplier in Finland– 0.1 million customers

1.2 million electricity customers

0.70.4

0.1

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2003 was a year of turnaround for Markets

Turnaround from•better risk management• improved business processes •cost reductions

Delivering major improvements in results

Net sales Operating profit TurnoverEURMillion1,6

1,2801,540

EURMillion

-20-10

01020304050

-11

43Heating oilElectricity

33.2 33.535TWh

00,20,40,60,8

11,21,41,61,8

2

2002 2003

Mt

1.3 1.2

0

0,4

0,8

1,2

2002 200305

1015202530

2003 20032002 2002

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First to create a pan-Nordic and efficient operation

• Nordic streamlined organisation― Truly Nordic organisation and governance covering three countries

―Nordic wide quality management system, ISO9001 and ISO14001

• Enhanced customer interfaces and offerings―Uniform Nordic brand

―Common set of energy products and services

― Significant improvement in service levels

• Development of operational excellence― Significant improvement in cost efficiency

―Harmonised operational processes

―Nordic portfolio structure and hedging process with tools for real time execution

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Fortum has developed a deep customer insight as basis for further growth

Coordinated and focused actions

*Signifi-cance

Behavior*

1 2 3

4 5

86 79s

9b

Acquire new external customers.Targets group:"Twins" of segment 1,2 and 34

2

3

1

5

4

•Behaviour•Significance

Not relevant

B2C:

B2B:

Common languageCustomer knowledge

Growth strategy

Segment and valuechain analysis

Customer segmentation

8

Platform for further growth in place

• Efficient internal processes

• Streamlined organisation

• In-depth understanding of customers

• Financial strength

9

Customers are learning and getting more active• Industry credibility is questioned

– Basic customer services not fulfilling expectations– Perceived high prices

• Consumer prices peaked winter 2003

• Uncertainty drives activity and customer churn– Customers are more actively choosing fixed price contracts or supply

solutions– Mixed expectations on price development

• Small customers sign short term contracts• Large industrial users have the tendency to ask for contracts

covering several years

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For active players like Fortum the market offers a great opportunity for growth

• Active positioning among the players to restore credibility

• The industry (Sweden) is defining a joint agenda for improving the service levels towards the customers

• Increased market activity

11

Fortum leverages the full corporate capability

• Development of Customer Value Management in each part of Fortum

―Customer segmentation and prioritization

―Offering innovation

―Relationship building and value-based selling

12

Our focus forward is customer orientation for organic growthAddressing customer needs whilst understanding the importance of the basics

Competitive Differentiators

BusinessHygiene Factors

Industry Credibility Factors

Customer

Organic growth

Assurance of hygiene factors

Joint industry initiatives

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Actions for improving customer services

• Convenient customer entry– One customer service!

– Improved Web-interface

– Customer Care Team

– Certified Customer Service Technicians

• Improved services– New simplified bill

– Post-debiting based on actual consumption

– "Learn with Fortum"

– Service levels and availability

• Supporting infrastructure– New Customer Care and Billing system

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Enforced market activity

• Extended marketing and sales activity

― Value based solutions in B2B segments

― Launch of offerings developed for segment specific needs

― Attractive new product features

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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.