Fortum Oyj (FORTUM.HE) Earnings Call Transcript & Summary

Good morning, everyone. A warm welcome to Fortum's Investor Day 2025. It's our pleasure to be able to host all of you both here in the venue in Helsinki and also everyone online watching from various global locations. My name is Ingela Ulfves, and I am heading Investor Relations at Fortum. This event is being recorded, and a replay will be available on our website later today. It has been a while since the last time we gathered representatives from the capital markets to give you deeper and broader insights into our business. Fortum's President and CEO, Markus Rauramo; our CFO, Tiina Tuomela, as well as Simon-Erik Ollus and Mikael Rönnblad representing our businesses are hosting the Investor Day today. During the day, they will provide an overview on the company's operating environment, development of business operations as well as updates on the progress of Fortum's strategy execution and financial targets. Let me briefly walk you through today's agenda. We'll begin with the presentation by Markus on our strategic priorities and growth vision. Next, Tiina will present our new financial targets and how we are promoting long-term earnings growth. After these two presentations, we will have the first Q&A session. At approximately 11:15 we'll take a coffee break. For those of you joining online, please note that the webcast will pause during this break and then resume with the next session. After the break, we'll continue with presentations by Simon on our commercial strategy and business opportunities and Mikael on value creation in our Consumer Solutions business. There will then be another Q&A session before we close the formal part of the event. So after the presentations -- and after the presentations, we'll be asking you to provide feedback about the event and hope that you can spare a moment to give us your valuable input, both here in Helsinki, but also online. And finally, for those attending here in person, we'll invite you to join us for lunch and networking from 1:00 to 2:00. We really look forward to an engaging and insightful day together. And with this, I now hand over to Markus to start.

Thank you very much, Ingela. A warm welcome to our Investor Day from me as well. Today in my presentation, I will outline our plans for creating value in the future, discuss our strategic priorities and present our vision for future growth. The overarching theme of today is value creation in our core operations, both now and in the future. There are multiple approaches to assessing value, but our primary objective is to consistently generate value for shareholders. I will start by discussing our position in the Nordics and how we intend to capitalize on the business opportunities arising from the current operational environment and underlying market fundamentals. Following this, I will address our strategy execution and growth vision. To conclude, I will review the strategic KPIs, key enablers and sustainability topics before closing my presentation. Fortum has a very strong position in the Nordic power market. This statement can be examined from several perspectives. I will address this from the geographical presence, our business portfolio, asset locations and capacities as well as result contribution. Our geographical scope covers the Nordics and Poland. From a value perspective, our core asset portfolio is very valuable as it represents the most relevant and optimal mix possible, flexible hydro and baseload nuclear at scale. Hydro has an unlimited life span, but it is very difficult to build new conventional hydro, except for small capacity increases in connection with maintenance. New nuclear plants, on the other hand, are not economically viable today. Instead, lifetime extensions are currently relevant for nuclear energy. Furthermore, both hydro and nuclear technologies are low carbon, which makes them very attractive to our customers. We have one of the lowest specific carbon emissions among utilities in Europe today. Our nuclear fleet has a total capacity exceeding 3 gigawatts, while our hydro assets amount to almost 4.7 gigawatts. Given that the Nordic power market consumes approximately 400 terawatt hours annually, we are one of the largest players with our outright portfolio of approximately 47 terawatt hours. In addition to power generation, we have district heating operations in Finland and Poland. We are the leading retail company in the Nordics with a lately expanded customer base in Poland. Furthermore, we have an 8 gigawatt renewables development portfolio for future growth and value creation. Our EBITDA for the last 12 months was EUR 1,258 million -- EUR 1.3 billion and our comparable operating profit was EUR 930 million. As one of the largest Nordic energy providers, we are well positioned to serve our customers, and we aim to be their first choice. We have the offering that our customers request, including the scale, which makes us attractive as an energy supplier and partner. Next, some words about the European power markets and why Nordics overall is the place to be for our customers. The recent discussion topic is why various industrial companies, especially data centers, are so interested in establishing their businesses in the Nordics. There are a few clear reasons. One is the power price level. There are large variations between power prices in Europe and the Nordics has the most affordable prices. The main reason is the energy mix, hydro, nuclear and renewables with basically no fossil fuels. What are the other advantages? Very low emissions, very robust grid and good infrastructure, i.e., roads and harbors, possibilities for waste heat utilization, abundant land and water areas and skilled workforce, just to mention a few. Large land areas mean that we could build more supply when demand increases. Simon will come back to this in more detail a bit later on. It is good to note that Central Europe has roughly doubled their power price level. Today, the interconnection capacity amounts to 11.7 gigawatts and it will grow to 13.2 gigawatts by the end of 2026. This means more than 100 terawatt hours export and import possibilities between the Nordics and Continental Europe. Cables are owned by the DSOs, and they are working automatically. This also means that in case of potential market tightness, power flows in both directions. Then over to the most interesting discussion topic at the moment, what demand projections look like and how consumption could evolve over time? Here, we illustrate longer-term demand projections as reported by the Nordic DSOs, how they anticipate the power consumption to develop across various industrial sectors over time and related projects within the Nordic region. In June 2025, the Nordic transmission system operators, TSOs, updated their projections for power demand in the Nordics. According to the update, power demand is expected to grow to 550 terawatt hours per year by 2030. The estimate decreased slightly from previous estimates and indicates a delay in expected hydrogen production demand. However, it also highlights increased demand from data centers and other sectors by 2030. By 2050, demand is estimated to increase to 975 terawatt hours per year, which means that annual demand would have more than doubled from the current 400 terawatt tower level. Naturally, the very long term is uncertain. No one knows for sure how the demand will materialize, but this gives an indication of the direction. At Fortum, based on our discussions with customers, we continue to see robust underlying demand from various industrial sectors. And we believe that this well reflects power demand growth longer term. Customer appetite to sign long-term power purchase agreements of up to 10-year duration is currently low. However, we see interest to sign contracts with short and midterm durations for 3 to 7 years. Simon will tell more about the commercialization, pricing and customer cases in his presentation. The main take from the current situation is, however, that certain sectors are increasing demand already today, while some sectors seem to grow further out in the future. There is a lot of customer activity going on with a large amount of industrial projects across the Nordics. The most active sectors right now are, as we all know, the data centers. They are also likely to have the fastest time to market, which is why we see par demand from data centers to increase before larger industrial projects. We have prepared ourselves to respond to this increasing demand in the future. Although Nordics is currently slightly oversupplied, if the market tightens, power imports from Central Europe can help meet rising demand by serving as a buffer through interconnectors. This would mean higher prices. The other alternative is to build new supply. Let's have a look at how the new supply situation looks like at the moment. This picture is familiar to many of you. We have now updated the LCOEs for different generation types and related achieved prices. The LCOEs or the levelized cost of energy have increased because of inflation and higher interest rates. We are here looking at both LCOEs and achieved power price for the various technologies. The achieved power prices are calculated based on today's market prices as adjusted for capture rates or value factors. This shows that for new supply to be built, power prices need to be clearly higher compared to today's forward prices. This means that for new capacity to come online, either market prices need to increase or customers need to pay a higher price through a PPA. Let's look in more detail at these different alternatives, starting from the renewables. Onshore wind has an LCOE around EUR 50 per megawatt hour. While it looks to be the cheapest, the achieved power price is very low as the capture rate is currently as low as 50%. This means that if an onshore wind project was built on a merchant basis, the baseload market price would have to be around EUR 100 per megawatt hour. If a project would be combined with the customer PPA, the price could be slightly lower because typically, PPAs are done for 10 years, while wind farms are running for 30 or 35 years. Then the PPA price would be clearly above EUR 50 per megawatt hour. For a customer that wants its power 24x7, wind is not sufficient due to its intermittency. This means that it needs to be complemented with something else, hydro, batteries or some balancing power, which again increases the price. New nuclear is another challenge as investments are high risk and construction times are very long. The LCOE level depends on what kind of project one assumes. In any case, some kind of public derisking and support mechanisms need to be in place for a customer offtake agreement. The most realistic nuclear solution today is lifetime extension for existing nuclear power plants. At the moment, we are the only operator in the Nordics able to offer lifetime extended nuclear power. Nuclear is baseload, and we can offer it at a relatively good price. In discussions with customers, it seems that demand for this product starts to pick up. We are investing approximately EUR 1 billion in the Loviisa lifetime extension to keep the plant running until 2050. And this corresponds to almost 180 terawatt hours additional nuclear power over the extended lifetime. Finnish TVO, i.e., the owner of Olkiluoto, has already made its environmental impact assessment for a potential extension of Units 1 and 2, including a potential 80-megawatt capacity increase per unit. In Sweden, too, there are talks about extending the lifetimes for existing units by 20 years from 60 to 80 years. Assuming lifetime extensions of all existing reactors in the Nordics, it would mean up to 300 terawatt hours of additional volume over a 20-year period, meaning 15 terawatt hours per year. The Loviisa extension totals 180 terawatt hours or 8 terawatt hours per year. Then over to our group strategy and execution. Here is the essence of our strategy announced in 2023. We want to power a world where people, businesses and nature thrive together. Achieving this requires us as a company to transform and develop so that we can reliably produce and deliver energy to our customers and drive decarbonization of industries through electrification, which concretely means reduction of emissions. Let's take a closer look at how we are executing our strategy to achieve our goals and targets. Based on the ongoing shift in the power market, where customers and power generators are transitioning from the wholesale commodity market and are increasingly signing bilateral power contracts, Fortum has also shifted its focus to direct interaction with its industrial customers. As our key strategic focus areas, we are now talking about commercialization, operations and development. Let me explain in more detail what I mean. As the large-scale power generator in the Nordics that Fortum is, we want to be our customers' first choice. We want to partner with our industrial customers to be their energy partner and provide them with offerings with flexible solutions. Considering the projected demand growth, this offers us attractive opportunities to grow in long-term supply agreements, PPAs. While we do see a lot of business opportunities around the PPAs over time, we also want to increase profit contribution independent of power prices. For us to be successful in serving our customers, our operations are the key foundation. We need to make sure that our generation fleet remains best-in-class. In addition to availability, productivity and efficiency are crucial. This supports value creation I will also cover the three critical enablers: people, digital, capabilities shortly. As we currently see robust underlying demand and the power market supply-demand balance is expected to tighten, we are preparing for future growth by making sure that we can offer also new capacity to customers going forward. Today, we are allocating resources and capital for this development. To ensure value creation in our strategy execution, we have now set a new return target. Our 14% RONA target is calculated against historical balance sheet values. With this return target, we will ensure that our existing assets are performing well. In addition to our new RONA target, which compares results to historical balance sheet values, our strong focus is on future cash flows. For any new capital to be deployed, it must meet our return targets, and the most attractive investments are always prioritized. Our target is to have a credit rating of at least BBB flat. Our dividend policy remains unchanged with a payout ratio of 60% to 90% of comparable EPS. Tiina will go through our capital allocation principles in more detail in her presentation. I also want to give you some insights into how we look at growth and value creation from an earnings perspective longer term with this illustrative picture. Today, our main focus is on the next 5 years. Growth and value creation potential beyond 2030 depends on the longer-term demand and power price development. The result will, of course, vary based on our achieved power price and is unlikely as smooth as in this illustration. Starting from the Generation segment. Earnings growth is mainly driven by volumes and price. The price component depends largely on the market price development, hedge prices and long-term PPA pricing over time. In addition, the optimization premium adds to the achieved power price. Volumes are driven by availabilities, capacity increases and, for example, lifetime extension of nuclear. Simon will today talk about the opportunities we see in flexibility solutions as part of our customer offering. The potential is based on growing customer demand over time. This includes energy-as-a-service related to heating and cooling, batteries and longer-term potential, pumped hydro storage as well as flexibility service businesses with both B2B and B2C customers also in combination with renewables. For the flexibility solutions, the earnings potential lies further out in time and is expected to only have marginal impact on earnings in the next 5 years. The result performance of Consumer Solutions has clearly improved over the past years, and the business has reached record high results this year. Our ambition is to continue to build on the achieved track record with organic growth. As this is, by its nature, a low-margin business, competitiveness is built on customer satisfaction and efficient, scalable operations. Mikael will come back to this in his presentation later today. On top of this and based on our track record, we are continuously looking at opportunities for inorganic growth, providing that both the strategic fit and valuation to support value creation. For both Power Generation and Consumer Solutions, we view it as likely that we will find future growth opportunities through M&A. Any acquisition will also be subject to our rigorous investment criteria. We have updated our strategic goals and KPIs with metrics to measure our progress and performance going forward. The targets are set for the same key strategic focus areas just discussed, operations, commercialization and development. The aim is to ensure optimal performance, capture long-term opportunities and manage business and market risks. First, operations. Fleet availability is crucial to ensure continued value creation and to meet market and customer needs. The availability rates of our power plants have historically been very good and we continue to strive to improve them. Last year, we achieved our target for the availability rate of hydropower, but we did not reach our long-term target for the availability rate of nuclear power as there were unplanned and prolonged outages during this year. Unfortunately, this year, the situation has been even more challenging with the significant impact from the unplanned and prolonged outage, especially at Oskarshamn 3, which has had a significant impact on our nuclear volumes. As announced, now the plant is back online. Our flexible hydropower provides a strong competitive edge with which we create added value. This year, however, our hydro volumes are also below the normal level, mainly due to lower inflows earlier this year. Efforts to ensure high availability for both baseload nuclear and flexible hydro will therefore continue to be very high on our agenda. As said, our strength lies in the optimization of our flexible hydro fleet. Several factors influence the optimization, the most significant of which are power price volatility and environmental certificates. The higher the price volatility, the better opportunities there are for us to generate this premium. This year, the continued power price volatility is one of the main reasons for reaching the optimization premium of approximately EUR 10 per megawatt hour. In addition, the lower volumes in 2025 have a slight positive impact on the premium. For 2026, we expect the optimization premium to be in the range of EUR 8 to EUR 10 per megawatt hour. Forecasting the optimization premium becomes more challenging for future years, which is why we keep the earlier guidance of EUR 6 to EUR 8 from 2027 onwards. In 2024, we achieved a very good result of EUR 8.7. Simon will go more -- into more details in his own presentation on how we generate the premium. Second, commercialization. From the commercial angle, our aim is to stabilize revenue streams. To reduce the power price risk, we hedge our electricity generation to ensure a predictable and stable cash flow. Our target is to increase the share of long-term electricity contracts among contracts with industrial customers. We have now updated our target and aim to have hedged at least 25% of our Nordic wholesale electricity production over a rolling 10-year period by the end of 2028. At the end of 2024, the hedged share of our production for 10 years was 18%. We systematically always hedge the next 2 to 3 years, either on the exchange or over bilateral contracts with our customers. Long-term hedging can and will be done with customer PPAs, long-term power purchase agreement. While we aim to stepwise increase the longer-term hedge ratio over time, we would not jeopardize pricing. We actively focus on optimizing the price as it is the key earnings driver. Simon will talk more about PPAs in his presentation. We have set the target for customer satisfaction index. We aim to reach a CSI of 76 by the end of 2028. Currently, the level is 76. Moving on to development and our targets for how we develop opportunities for growth. The main performance measure is related to our readiness to invest in growth based on customer demand. This means in practice that we are developing investment projects for new onshore wind and solar power generation, which we can offer to customers if and when they request new capacity. This helps to speed up the time to market for our customers. Renewables are the fastest way to build new capacity. I want to stress that we do not intend to build any new merchant renewables capacity in current market conditions. We will only make new investment decisions if the capacity is linked to a PPA. Our goal is to have at least 1.2 gigawatts of ready-to-build capacity by the end of 2028. During this year, we have acquired two development portfolios for renewables, one from Enersense and most recently, one from ABO Wind. Both portfolios comprise projects in Finland. These acquisitions give us valuable future capabilities and options. With these transactions, our project development portfolio totals approximately 8 gigawatts of renewable power projects in permitting phase in the Nordics with more projects in the early stages of development. As a new target, we aim to have the readiness to deploy new flexibility services and assets of up to 2.5 gigawatts by the end of 2028. Part of these are already being developed. What does it take to ensure successful execution of our strategy. Let's take a look at the required enablers. To meet our set targets and guarantee successful strategy implementation, we have identified the following key enablers that we need to strengthen further, culture, digitalization and capabilities. Regarding culture, it is crucial that we have the right competencies needed to successfully develop our businesses. This includes a leadership culture that drives high-performing teams with clear targets and accountability. We aim to transition Fortum into a best-in-class energy leader and digitalization is identified as one of the most critical enablers for future success. We are integrating digital across all processes from operations to leadership so that data-driven decisions and automation become the norm. This accelerates execution and reduces complexity. Digital tools enable us to deliver superior customer experiences and unlock new B2B growth opportunities through tailored solutions and seamless interactions. Automation and advanced analytics improve efficiency, reduce downtime and lower costs, directly impacting margins and reliability. Digital asset monitoring and predictive maintenance extend asset life, reduce risk and optimize performance, thereby protecting capital and improving returns. The final important area is our future capabilities. We are investing in talent and digital systems that align with our strategic priorities. This ensures that every part of the organization is equipped to deliver on our growth and transition objectives. Customer relationships are central to our growth. Deep partnerships enable us to co-create solutions, secure long-term contracts and enhance revenue stability. Efficient project delivery and life cycle optimization reduce risk, accelerate returns and ensure our assets remain competitive. Trading is a key earnings driver. By improving analytics, systems and market access, we capture more value from volatility and optimize portfolio performance. Reliability and cost discipline protect margins and underpin trust with customers and investors. This is essential for delivering predictable cash flows. Finally, on a very important theme for us, namely sustainability and our climate and biodiversity targets. Sustainability and especially climate targets are at the very core of our strategy and one of our key strengths in making us our customers' first choice. Early this year, we announced our ambitious targets confirmed by SBTi, i.e., science-based climate targets. Among other things, we aim for net zero greenhouse gas emissions across the entire value chain by 2040. Our own production emissions are already low, but our goal is to reduce our emissions by 2030 more than the 1.5-degree target would require. In addition, we will exit coal by the end of 2027, and we are on track to reach our specific emissions targets already this year. Especially in the capital markets, we get a lot of credit for the very concretely outlined transition plan. Recently, we have also updated our biodiversity targets. The revised biodiversity targets address the impacts of Fortum's own operations, including land use in all operations, the effects of hydropower on aquatic ecosystems and the supply chain-related land use impacts from sourcing biomass. We have also outlined a concrete transition plan for biodiversity. This brings me to the end of my presentation, and I want to conclude by summing up how we create value from our activities and offer an attractive value proposition and an investment opportunity to our shareholders. First, our comprehensive offering matches evolving customer needs, which makes us an attractive choice for our customers. Second, our competitive and resilient Nordic generation portfolio based on hydro, nuclear and wind power provides us with an absolute competitive advantage. Our best-in-class operations have already proven their ability to create value and generate sustainable cash flows, and we can procure low carbon -- produce low-carbon energy at large scale as required by customers. As mentioned, 99% of our electricity production is already decarbonized. Thirdly, with nuclear and hydro at the core, complemented with renewables, we have both baseload and flexible electricity generation. We can generate added value for shareholders through reliable, flexible and efficient operations. And finally, we have a very strong position in the fragmented Nordic electricity market as one of the largest players in both electricity production and electricity retail. We pay a good return to shareholders, and we have a strong balance sheet. Sustainable cash flow and a strong financial position are at the heart of our operations. This concludes my presentation. And now I will hand it over to Tiina.

Thank you very much, Markus. A warm welcome to our Investor Day also on my behalf. While Markus was elaborating our strategy execution and growth ambition, I will now provide more details around the financials and targets with focus on value creation as Markus outlined in his presentation. I will first go through our achievements in recent years, which provides a solid basis for further development for Fortum, but also create an optimal platform for future growth. We want to maintain our strong financial position to ensure that we have the necessary capacity to capture upcoming business opportunities. Let me start with our recent achievement. The largest part of Fortum's value lies in our flexible hydro and baseload nuclear fleet. Decarbonization of industrial companies is largely driven by electrification, which make our almost fully decarbonized outright generation fleet extremely attractive. Continuous efficiency improvements keep us competitive and drive earnings growth. Having cut EUR 100 million in annual fixed cost, our annual fixed cost level from 2026 onwards is expected to be EUR 870 million. We have been prudent and disciplined in our capital allocation in recent years, which is reflected in our strong balance sheet. This strategy has served us well as we now have the capacity for growth when attractive opportunities appear. Our financial strength is also reflected in our current credit rating of BBB+. Another achieved strength is the solution for final nuclear waste disposal. The Posiva solution is unique, globally the first of its kind and so far, only exist in Finland. Sweden has already started the construction of a similar solution. Overall, nuclear waste and decommissioning liabilities for our share of the nuclear plants are overfunded in Finland and nearly fully funded in Sweden. Turning to our ongoing areas on focus from a value-creation perspective. Flexible hydro generates significant value and earnings. To optimize our earnings, it is crucial that we aim for maximum availability at all times. Flexible hydro is low carbon and clearly more valuable than flexible gas or coal. Hydro has an infinite lifetime and is limited in the sense that basically no new hydro plants can be built. However, we are conducting a feasibility study on the possibility of pumped hydro storage. Reservoirs represent the largest available storage capacity and fuel is both free and low carbon. It is also good to note that we own our hydro plants and the waterfall rights, while in Central Europe, they are normally concessioned, so Fortum benefits from a hydro fleet of perpetual asset, generating low marginal cost of decarbonized power. Markus already highlighted the value and profitability of nuclear lifetime extension, which offers prolonged power generation for several decades. As part of our ambition to build preparedness for future growth, we have the updated target to develop our ready-to-build renewables portfolio. This provides growth opportunities for us while serving our customers when needed. In order to guarantee value creation, we have said that we would only invest in new renewables if there is a PPA linked to the project. Today, we announced a new growth target. With the flexibility solutions, we aim to broaden our product offering to our customers. Simon will provide more details how we aim to do that. In order to provide you some more concrete result guidance, I want to take you through how we will improve our comparable operating profit in the next 5 years with our own actions. This outline is split in our externally reported segment and the baseline in the comparable operating profit for the last 12 months of EUR 930 million as reported in our Q3 interim report. We expect our results to improve by EUR 330 million by 2030. The power price is the single largest result driver for Fortum. This guidance does not take into account the power price, which means that any assumption for the price need to be added, neither have we included any other external factors. So this is now based on what we can control, i.e., our own actions. My last point is that this improvement is related to the existing fleet and business operations. It does not take into account any potential use of CapEx, no investment nor M&A transactions. Result improvement of EUR 260 million in the Generation segment are mainly related to nuclear and hydro volumes considering the very low volumes of 2025. Naturally, hydro volumes will eventually depend on the inflows. It also includes higher profitability in our heating and cooling business, improved performance in co-owned assets and result from new flexibility services. We are very satisfied with the good performance and all-time high result in Consumer Solutions. The Q3 year-to-date comparable operating profit is EUR 96 million and EUR 112 million for the last 12 months. We expect the result to increase by approximately EUR 40 million towards the end of the period, both to the organic growth and also efficiency improvements. For this and next year, comparable operating profit is expected to be around EUR 100 million. Mikael will tell you how we are doing -- going to do this in his presentation. In the Other Operations segment, the EUR 30 million improvement is mainly driven by further cleanup and streamlining actions as well as cost improvements and digitalization. We expect this improvement to materialize in the next few years. I will now proceed to discuss on our capital allocation principles. Regarding capital allocation, our objective is to maintain a credit rating of at least BBB because the basis of our funding is bonds, we want to ensure continuously good access to the bond market. With the credit rating of BBB, we assess that our leverage for the financial net debt to comparable EBITDA could be a maximum of 2.5x. Today, we are BBB+, both by S&P and Fitch. This definition has been slightly modified as a clarification for the maximum level, as our previously communicated maximum leverage level was a range of 2x to 2.5x. For the next 5 years, our committed capital expenditure is going to be approximately EUR 2 billion. Further, there is potential to invest an additional EUR 2.5 billion. Our preference is to grow through investments. However, it requires highly attractive opportunities. For any new investment, the project needs to meet our investment criteria WACC+ hurdle rate of 150 to 400 basis points. As Markus already said, new capacity requires much higher prices compared to today's levels. Today, we also introduced a new group comparable RONA target to drive efficient use of capital and improve profitability for existing assets, businesses and operations. As this is a long-term target, future investments, acquisitions and pricing decision should support its achievement over time. We remain focused on cash flows, continuous improvements and cost control. Our disciplined capital allocation aims to deliver attractive returns and enhance shareholder value. This supports our continuous ability to pay highly competitive cash dividends, in line with our 60% to 90% comparable EPS payout ratio. The upper end of the range of the payout ratios is applied in a situation with a strong balance sheet and low investments, while the lower end of the range is applied with the high leverage and/or significant investment and high capital expenditure. Then a few words on our balance sheet and focus on cash flow. Today, we are talking a lot about the value creation. It is essential that we use our capital effectively and generate good cash flows. Our comparable EBITDA reflects the underlying cash flow well, i.e., our conversion to cash is very high, close to 100%. We are generally not recording any loss provisions, which would affect the cash conversion. Further, our cash flow is transparent as we are providing separate guidance for relevant items. I will come back to this. After deduction from the EBITDA, financial net debt is assumed to remain relatively balanced based on guided current investment plans. Our balance sheet remains strong. At the end of the third quarter, the financial net debt to comparable EBITDA ratio was 1 compared to the maximum threshold of 2.5x. To be clear, we are not targeting a 2.5x level. You can consider it as a ceiling that we would not wish to exceed. In view of the current market volatility and uncertainty, we prioritized some flexibility. At the corporate level, we maintain a risk policy that provides oversight of future cash flows. This underpins our approach to hedging where we have established a solid track record of successful risk management. Hedging involves balancing, market, credit and liquidity risks. Hedging has largely transitioned from the power exchanges to bilateral contracts with customers. Today, a clear majority of our hedges are done as bilateral contracts. Consequently, our liquidity risk has diminished, given lower margining requirements while credit risk primarily counterparty related has increased. Hedging serves as protection against both price declines and spikes, but its core purpose remains to enhance predictability of future cash flows. Our business structure, which is heavily weighted towards ultra generation, is particularly exposed to power price volatility. Although hedges allow us to manage future cash flows, it is crucial to recognize that price fluctuation enable us flexible hydro asset to capture the optimization premium. As we have guided, this income remains relatively stable, although it is derived from price volatility. Overall, when considering both hedging and optimization premium, a significant portion of our realized result actually originate from stable income sources. Today, we announced an update of our target for hedged share of rolling 10-year outright generation volume to be at least 25% by the end of 2028. Our previous target was to have hedged at least 20% by the end of 2026. At the end of 2024, the hedge share of rolling 10-year volume was 18%. In his presentation, Simon will address pricing and execution of PPAs in further detail. I'm pleased to provide further insight into our capital expenditure planning. In this picture, let's start from the bottom of the graph. For the period 2026 to 2030, a total of approximately EUR 2 billion of CapEx has already been committed. That includes maintenance CapEx of approximately EUR 250 million per year. Committed CapEx for growth for this time period totals approximately EUR 750 million, including announced investment such as the lifetime extensions of the Loviisa nuclear power plant, initiatives for decarbonization and electrification of Espoo district heating network and recently announced decarbonization project in Czestochowa and Zabrze, Poland. Investment to hydropower are partly shown here in growth CapEx and Consumer Solutions investments are customer acquisition costs, which are recorded through CapEx and depreciation in accordance with IFRS 15. Of this total CapEx of EUR 2 billion, approximately EUR 550 million is estimated to materialize in 2026. This includes both maintenance and growth CapEx, but excludes any potential acquisitions. Should attractive investment opportunities arise, there is flexibility to increase CapEx by an additional up to EUR 2.5 billion over this time period. This could include investment in renewables, district heating or potential M&A. However, as I already said, we are not targeting a 2.5x leverage level, and that is why this graph presented potential CapEx is not based on that level. As previously stated, any investment in new generation capacity, including wind projects, would be contingent of securing PPAs to ensure profitability. We have a very solid history of shareholder distribution. We have paid cash dividends every year since Fortum's listing in 1998. In our history, we have also paid special dividends, especially in situation with an overcapitalized balance sheet. Over the entire time period, cash dividends of as much as EUR 21.7 billion have been paid. At the same time, I also want to highlight that we have said that we do not expect to deliver shareholder returns in the form of share buybacks, but rather aim to continue to pay highly competitive dividends. I would also want to take this opportunity to outline our general approach to providing guidance for the capital markets. To offer content clarity on this topic, we have compiled a summary of the toolbox you can use to forecast our earnings. As the company value is driven by future cash flows, we are providing insights into all relevant line items. EBITDA can be estimated through hedges, market prices and optimization premium. Normal annual generation volumes are also known. Depreciation levels are best reflected in the recorded figures for the last 12 months. Maintenance CapEx is below depreciation. Regarding our associated companies, the only relevant one today is DHC, a Finnish district heating company. We record a small annual profit of some EUR 5 million to EUR 10 million. On the associated company line, you see the impact of various nuclear items. These are usually volatile and not possible to guide. For gross debt, liquid funds and interest rate, clear guidance is provided and updated on a quarterly basis. Loan maturities are also clearly disclosed. There is also continuous guidance for the annual comparable income tax rate. Minorities are currently marginal, close to 0. Regarding capital allocation, we provide capital expenditure guidance rather clearly on annual or multiyear basis, distinguishing between maintenance and growth allocation. In addition, shareholder return principles are based on our dividend policy. For the balance between CapEx and dividend, we have said that we use the upper end of the 60% to 90% payout ratio in case we have modest investment and vice versa, apply low end of the range when going through large investments and programs. So with this set of guided elements, one can model our result quite well. With this page, I want to summarize building blocks of our financial performance and targets through which we aim to create value, increase earnings and ensure efficient use of capital. Leverage optimization and hedging are our guidance. The group comparable RONA percentage is a long-term target operating in parallel with our investment criteria. Dividend is a policy and an important element of our shareholder position. All of these contribute to drive value creation for our shareholders. Optimization and hedging drive profitability and manage risk in our outright generation business. Leverage optimizes the use of capital and return targets ensure efficient use of existing and new capital. This concludes my presentation. Over to you, Ingela.

Thank you, Tiina. [Operator Instructions] I think Deepa was first. Please go ahead.

Thank you for the update in person. So I have 2 questions, 1 for each of you. So Tiina, maybe starting with the efficiency target of EUR 330 million. You mentioned EUR 260 million is from Generation. And a big part of that is normalization of volumes, which we generally might have in our models anyway. So can you clarify how much of that is new beyond -- so out of the EUR 260 million, what is like new from -- you mentioned efficiencies of heat, et cetera? So that's my first question. So we know what is the true uplift to our earnings. And then, Markus, in the EUR 2.5 billion target, you did allude to M&A at some point. So I just wanted to understand what is in scope of this M&A? Is it renewable platform acquisitions? Or is it something like more of what you did a few years back if some assets were available from Uniper, for example, what is in scope for this M&A and this EUR 2.5 billion? Sorry, I didn't mention, I'm Deepa from Bernstein.

Okay. Tiina, if you want to go ahead.

So our efficiency target, EUR 330 million. So first of all, this is our own action. It doesn't include any price impact or potential impact of the investments or acquisition and so forth. And as you mentioned, the big part of the EUR 330 million is coming from the Generation, so EUR 260 million for Generation and main part will come from the volumes. So nuclear availability, hydro normal inflows, but also some marginal capacity increases when we do the refurbishment and so forth. The volume, I think the baseline, what you can use is our Q3 last 12 months numbers. So this is the basis where we have built up our earnings potential from these items. And as we know, 2025, the volumes have been lower. So the 12 months volume roughly 41.2 terawatt hours at this stage. Of course, it might change by the end of the year.

Good. Thanks, Tiina. And then over to the EUR 2.5 billion target. The main purpose is that it's scope for organic growth. So it could be renewables investments and it could be flexibility investments. These would be the two main areas. When it comes to M&A, M&A is a potential use of funds as well. And they have a more dynamic impact because on organic investments, you invest first, get cash flows later. So then if we would do M&A, then we would reassess that EUR 2.5 billion, of course, accordingly regarding depending on what would be the acquisition. What acquisitions could include is acquisitions in Consumer Solutions, in district heating and cooling, renewables, operating assets and pipelines and nuclear and hydro, if they were available, which they seldom are. And regarding costs, Orange Energia, Telge are examples. So synergetic bolt-on acquisitions in district heating and cooling. District heating and cooling to be decarbonized and electrified. So typically, it would be now from waste-to-energy and biomass to electrified and then operating assets in renewables, if available and potentially some pipeline in Finland, I would say that our position is very strong already. Uniper is a potential. If it were available, then we would look at it and consider what we could do there.

I think then we continue here in the middle, yes.

It's Harrison Williams from Morgan Stanley. Firstly, can I come back to the 2030 targets. So you say that this is price neutral. Can you clarify how you're adjusting for the optimization premium, if at all, because I guess my understanding is the last 12 months, that's been around EUR 10 megawatt hour, whereas your long-term guidance is EUR 6 to EUR 8 if we take EUR 3 off, that could be EUR 150 million impact. Can I just confirm the math there? And that is your guidance? And then secondly, can I ask on data centers unsurprisingly. So I guess there was nothing firm in the release today. And I think it's fair to say there's probably some expectation. I appreciate maybe not that much has changed since your Q3 results recently, but can you give any color on anything that has changed? Were you expecting something to be able to announce today? Or is everything still a little way down the track? Any further color on timing there would be very helpful.

Thank you. So Tiina, if you want to continue to elaborate on the EUR 330 million and the impacts, and I will take the data center question.

Yes. So the baseline really being the last 12 months in Q3, so the achieved power price at the end of September was EUR 52.1. And this is the baseline of how we calculate and assuming that, that price level will contain. When it comes to the optimization premium, so it is according with our guidance. So in the longer term, of range of EUR 6 to EUR 8 per megawatt hour and as Markus in his presentation, say that, that is the number when we get closer to the time, we might update the guidance because the predictability of course, in the longer term, is fairly difficult.

And regarding data centers, Simon will go into more detail on that, so I'll take a very short kind of overview. But indeed, the discussions are active with both hyperscalers and colocators. So there's number of discussions we are engaged in. And what the data center operators and developers are interested in is the access to land, access to grid and access to power, as I explained in my part. But more details about that from Simon, but discussions are active.

And then we move over here to Artem.

Artem Beletski from SEB. Thank you Markus and Tiina for presentations. Two questions from my end. So the first one, continuing on this EUR 2.5 billion CapEx topic or incremental opportunity and what was interesting, in my view is you highlight relating to district heating. Do you think that all potential investments could be sizable, and what type of opportunities you see on that front? And the other topic is relating to the outlook that comes through optimization premium. So it is a high number of what you are providing for '26 versus for '27 and beyond. Is it really only the factors that you want to be conservative, having not that much visibility for '27 and so are there some structural drivers, which would be pressing your optimization premium like guarantees of origin?

Thank you. So Tiina, if you take the optimization premium, and I can build on the district heating part. So with regards to organic CapEx, our main projects now are the clean heaters pump, which is coming towards the end of the investments there. And now we just recently announced the investment into the decarbonization of Zabrze, and we have Czestochowa going on. On the M&A front, what we are interested in is the similar development as we have done in Finland for our Espoo operation. So gradually moving district heating from fossil to waste energy and biomass, which we did already basically in all of our operations, which many have been divested and the next stage is electrification. So the dynamic underlying is that a lot of these reheating companies are under pressure with increased fuel costs, increased interest rates and lower electricity prices, so this puts a squeeze on CHP. And this is where we come in with the potential then to electrify.

Thank you. I think at this point, we will now move to the teleconference. We can come back to the studio then at the end if we have time. But moderator...

And we had Tiina still wait to the second...

Sorry. Then let's take -- sorry. Let's take that first before we go to the teleconference.

Very good. So in general, I would say that the volatility in the market is increasing. And what we have seen also in our numbers, so more renewables coming to the system, more different kind of offerings being there. So therefore, what we can see that in the short term, we have provided quite nice numbers for the optimization. For the longer term, it is more that it is difficult. Volatility is very difficult to predict in that long time. So structurally, no major changes, but it's more that forecasting volatility closer, easier, and therefore, we are more confident to give a higher numbers in the short term.

Thank you. And now, moderator, let's take some questions from the teleconference.

[Operator Instructions] The next question comes from Harry Wyburd from BNP Paribas.

So two, and I apologize because they are obviously going to be on data centers and power demand. The first one, so Markus, take your comments, and I know we're going to have a later presentation on this, but can we just talk about timing of these discussions you're having? I think if we sort of read the end trails of the language you were using on the Q3 call, we all got the impression that something might be imminent here. And obviously, there's nothing yet. How long is it do you think until these discussions you're having on colocation and PPAs or data center operators will be concluded? Is that something you think you could have by year-end? Have we maybe missed an announcement today by a matter of weeks, which you'd previously hoped you might have signed already? And then the second part is on the politics. So I guess your entire strategy is built around what you said on power demand growth and the increases in prices that are needed to bring new capacity onto the system. When you discuss that with governments, how do you think a significant increase in power prices in Finland would go down politically? Do you expect any resistant or political intervention if you signed a lot of data center PPAs at very high prices and ultimately, no pool is much higher by 2030? Is that something that you think the government would be willing to accept?

Thank you. So I'll start with the politics. So we do engage with all sectors' customers, decision-makers, citizens. So we explain continuously what's happening in the power market. And we also explain this dynamic, the potential which we think is likely increase in demand, eventually will result in higher power prices because new full load supply cannot be done with these price levels. And I think this is generally well understood. I don't see with the dynamic ahead of us that there would be any special level with where the states would start to intervene, but this is something we have an ongoing discussion in the normal cost of business all the time. Then on the timing of discussions, we are discussing not only with the data center operators, but with also other sectors, steel, aluminum, chemicals, battery factories. And they are in various stages and projects are in various stages of maturity. So when we have something material to announce, then we will do it. But I cannot preempt when or when not we would be signing agreements with our customers.

The next question comes from Anna Webb from UBS.

Two from me. Firstly, on the new ready-to-deploy flexibility, you talked about 2.5 gigawatts by the end of 2028 with no CapEx requirement or at least for some portion of that, no CapEx requirement. Can you talk a bit more in detail about what that is and why it requires no CapEx and how you see that kind of 2.5 gigawatts, which is quite a reasonable amount of capacity? So that's the first question. And then secondly, on the guidance for your returns, 150 bps to 400 bps spread above WACC. Can you talk about what you see at the different ends of those ranges? I mean, it's quite a relatively wide range. So I guess it will be based on how much risk you see in different investments, but what kind of investments would you see more -- you'd be happy to say the 150 bps versus you'd mean more like 400 bps? It'd be good to get some color on that.

Tiina, if you take the ready-to-build flexibility part. And then kind of a generic answer first to the 150 bps, 400 bps. So it is regarding the technological maturity and then the type of contract risk or other that we would be taking. So the more unproven technologies, untested technologies, the higher the premium. Typically, what we do in hydropower, what we do in CHP, this would be -- and renewables, if it's like established players and ways of working, then it would be in the lower end. So we haven't seen ourselves being at the 400 basis points end in the recent years. But this is more to cater also for potentially less proven technologies. And then Tiina to the RTD?

Ready to deploy, yes, so the overall target is 2.5 gigawatts by end of 2028 of which the majority, so 2 gigawatts relates to services to the customer. So those are, I would say, very minor investment, if any investment. And then the other parts, so 0.5 gigawatts relates to our own assets. And there, we have already a project going on. So 350 megawatts related to electric boilers and those investments are already in our committed capital. Then what is the rest will depend what kind of solutions we are doing. So whether there's heat pumps, batteries, any other installations. So I would say that the capital frame is still fairly limited.

The next question comes from Ajay Patel from Goldman Sachs.

I think I've got two areas to discuss or wanted to ask about. Firstly, was on the CEO presentation on Slide 5, where you talk about power demand. I mean you look at that 2030 picture versus to date, it's a huge step-up in demand. But largely, it's coming from ammonia, green metals, battery manufacturing, pulp and paper rather than data centers at that stage. And these projects typically take a fair bit of lead time to develop. So I just wanted to understand, as it stands today, going into '26, 4 years to that date, how much visibility do you have on that part of the increase in demand, i.e., do we already have a lot of these projects signed, in the process of being executed in the next 12 to 18 months, so that we will have visibility on that type of demand growth? Or is it still relatively vague? And as a major participant in this market, I thought you would have quite a sizable view there? And then secondly, on the hedging -- the rolling hedge, which you talked about more than 25% by '28. I think that's like 18%, I think, at the end of '24, doesn't really sort of imply there's going to be a huge step-up in contracted power. But I'm wondering, given that you're in deep discussions with a number of parties, can you just give us the framework in regards to setting contracts? Like should we just purely simply look at this as you currently have a power price plus optimization in terms of a revenue line on the generation assets? If you were to sign contracts, how much of an additional premium could you extract? Because I think this is a key focus point on most of the time I talk to investors that this could be quite substantial. And I just wanted to understand what the drivers of a substantial premium would look like and come from?

Tiina, if you take the hedging question and I can take the demand outlook. So indeed, as I highlighted, these are the TSO forecasts. And the way they do their forecast is that they take the incoming connection inquiries, both for demand and for production, and do a massive haircut based on their methodology. So the gross number of the connection inquiries is way, way bigger than this. On the other hand, we are discussing likely with the same customers who talk with the TSOs, so what we -- this is the TSO forecast, not our own forecast. But like I said directionally, we would certainly agree with this because we are in intimate discussions with the customers. So we put on the time line per half a year, how the financial investment decisions are done and when these projects should hit the market. So we would say that '27, '28, we see the demand really kicking in already from the decisions and new demand increases that are happening today. And then we will see the uptick further until 2030. Then how it happens between these different sectors, that, of course, there, the TSOs have a view. We have our own view about that. So it may vary between these different sectors. But directionally, certainly agree with the forecast. And Tiina?

Yes. Then to the hedging. So as we indicated, so hedging is mainly to increased predictability of our cash flows and then the risk management. And what we do is our normal hedging for the 2 to 3 years, so we hedge 60% to 80%. For the longer term, we have also now stated that directionally, we would like to increase the level and now it's at least 25% by 2028. And this is also to bring the stability to our cash flows, but of course, not jeopardizing the prices. So prices are all, of course, very important parameter when we set those hedges. PPAs then, of course, would be then part of those numbers as well, but it is at least 25%.

Do you mind if I follow up? I just want to say that given that number doesn't really tick up aggressively, is it fair to say that a lot of the PPAs you would expect will be shorter duration type contracts? Or is it too if not -- you can't infer that? I just wanted to make sure I understood.

Well, basically, how we build our portfolio is to do that gradually. So this is an indication, indication that we would like to increase the hedge level at least, if not the ceiling, so it can be higher. But directionally, with the good prices, we are increasing the longer-term hedge.

Thank you. Now we're a bit over time already. So in order to honor the break, I think we cut it for now and then continue at 11:35 after a small break. So thank you all for your very good questions and your activity. Let's come back then to more questions at the end of the event when we have heard the next two presentations. We'll be back at 11:35.

Thank you.

Thank you. [Break]

So welcome back from the break everyone. And we are now ready to continue with the second part of this event. First, we will have Simon, who will talk about our commercial strategy, after which Mikael will continue with our ambitions for our Consumer Solutions business. And after this, we then end with a second Q&A with all our presenters. So with this, Simon, over to you.

Thank you very much, Ingela. A warm welcome to our Investor Day also from my side. As Markus already mentioned in the beginning, I will be talking about our commercial strategy and business opportunities for Fortum and how we are creating value with our large customers. Fortum is very well positioned to serve its large corporate customers with a broad and attractive offerings. As Markus already said in his presentation, we have increased the bilateral engagement with large industrial customers in recent years. In our customer approach, our focus is on understanding the customers' business, the challenges and business targets in order to be able to successfully fulfill their needs and requirements. Consequently, we can make sure that we have the correct offering in place. We offer the customers the ability to hedge their power procurement needs long term through PPAs, usually with tenors longer than 4 years. These contracts can be standard or nonstandard in their nature, depending on customers' need, like underlying sustainability targets or requirements. We have seen an increasing interest in these contracts and request for more complex products in recent times. Hedging services are one of our core products where the customer usually prefers a shorter time horizon. These products usually have tenors up to 4 years prior delivery and are usually very standardized products. These services offer the customer a cost-efficient hedging channel for their needs. And for Fortum, they provide an alternative hedging channel to exchanges. We also provide physical power delivery and flexibility services with rising demand for more advanced solutions to help customers to optimize their industrial operations and balance power supply and demand. Due to its energy mix, the Nordic energy market is almost fully decarbonized and consequently, very established regarding environmental products like guarantees of origins. At Fortum, we already have a solid trading position in this market, but are constantly looking for new product innovations in this domain to match new customer requirements. And finally, we also support selected industrial projects with deeper partnership models, usually in quite an early stage of development of the establishment of the investment project. The partnership can include site development, joint engineering of flexibility solutions, heat recovery models, development of power procurement strategies or even a limited equity stake. And I will get back to our partnership model later in this presentation. Markus already presented the outlook as forecast by Nordic DSOs in his section. And Nordic power demand is expected to grow significantly towards 2050 with the main part of the projected growth still expected to come from energy-intensive industries. So far, the electricity demand has been driven by district heating electrification and the uptake of electric vehicles. However, the most active and dynamic segment today is data centers. We assumed that the DSOs underestimate the data center's demand outlook in the Nordics up to 2030. Based on direct customer interaction and inquiries from customers, we see that it can be larger. Then the outlook post 2030 largely depends on how well Nordics can position themselves in large electrification of various industries and how fast new technologies like hydrogen electrolyzers will mature. As Markus already said, Nordics are very well positioned for large-scale electrification investments. And let's take a closer look at the various industrial sectors. This slide highlights the key sectors driving Nordic electricity demand and where we see the most considerable commercial opportunities. At the moment, we see data centers as a clear growth driver, fueled by digitalization and the increased demand for cloud and AI services. We also see that steel and aluminum are moving towards electrification, with large projects, both brownfield and greenfield are being developed in Northern Sweden and Finland, both by existing and new players in the market. The transportation industry is transforming with the lead of electric vehicle adoption and heavy-duty vehicle electrification. In aviation, hydrogen-based fuel alternatives, have been set into EU with regulation and with biogenic CO2 availability, this is also a very promising opportunity for the Nordics further out in time. Another fast-growing segment is electricity-based heat production and heat pump adoption, which is transforming the Nordic district heating system to rely on electricity. And this trend is already progressing, and Fortum has a strong experience through our Espoo Clean Heat program here. And then the last segment we serve is other power companies. Here, the demand outlook is more moderate, but the segment is increasingly consumer-driven, which opens opportunities for new offerings also for Fortum. I want to pause a while on data centers. For years, Fortum has worked with various kinds of data center players. The map shows all the large data centers and announced projects under development in Norway, Sweden and Finland, both by hyperscalers and colocators. There are several reasons why data centers are so interested in the Nordics. There is space and powered land with good grid connections available even for large data centers. The climate is cold, and there is water available, which supports efficient cooling. We have a low carbon power system, affordable electricity prices and plenty of opportunities to build more renewable and low-carbon electricity if and when needed. The infrastructure is strong, both through power grid, roads and airports and the political environment is rather stable to operate and there are plenty of skilled white label engineers who are able to support data centers and the surrounding ecosystems. And finally, Nordics has some of the fastest permitting and licensing processes for new energy-intensive industries in Europe. Nordics provide competitive time to market for potential data center investors. And what we see is an increasing interest towards data center investments in the region, especially in Finland due to the reasons mentioned above. We currently estimate that the power demand for data centers in the Nordics could be up to 25 terawatt hour per year by 2030, of which about 2/3 could come from colocators and 1/3 from hyperscalers and projects we currently see proceeding could lead up to 4.5 gigawatts of capacity. So what are we then concretely doing to capture these opportunities? I promised earlier to talk about our industrial partnership models also beyond data centers. And as Markus presented the strategy, our strategy is to support industrial decarbonization through electrification, which means that we support both existing and new industries. And this would mean increasing investments in the Nordic region. We are currently engaged in energy partnerships with a few selected customers with the target to both create an optimal supply strategy for the customers and support customers' activity to become flexible. We also have a good quality land bank comprising of 12 industrial sites in Finland, which support the customer on time to market. These sites, which we either own or contractually lease, allows full control of the permitting process. The development of the sites concretely means that we conduct the permitting process, we ensure grid connection, we develop infrastructure, et cetera. The power connections available today for the sites range from 60 megawatts to 1.3 gigawatt per site. And this ensures that the customers get expedited access to powered land. And with these actions, we can save several years of time to market for the customer to advance their investments. The total capacity for all sites is approximately 5 gigawatts. We also develop advanced PPA offerings for these customers, both from existing and if needed, also from new assets. And finally, we can also support our partners with heat offtakes and heat as a service concept to efficiently utilize the waste heat in the project. Now let's take a look at a few customer cases. We have already a strong track record of industrial partnerships and how to turn them to long-term value. And here I present two cases. Our collaboration with Microsoft in the capital region in Finland is notable even on a global scale. It started several years ago, already back in 2019. The project is executed on site, which Fortum has developed for the customer. Fortum is the waste heat offtaker for Microsoft data centers and this will eventually cover 40% of our district heating demand in the area. And the waste heat utilization represents a key competitive advantage for the Nordics and for Fortum in attracting data centers to the region. Another partnership example is our role in Arctial greenfield primary aluminum plant in Finland, where Fortum is the selected energy partner. This is the first planned low-carbon aluminum plant in Continental Europe in over 30 years, and it has high potential to boost low-carbon aluminum supply. Fortum supports the plant's feasibility study on energy management and power procurement strategies. And Fortum has also invested a small equity stake into the project. And in both of these cases, we have been very close to our customer from the beginning and codeveloped the concept from the start. Let's then take a look at the pricing dynamic and logic. At the moment, the Nordic supply-demand balance is loose with an annual export to Central Europe. Current oversupply situation is reflected in today's power price. And the existing baseload power of flexible hydro and baseload nuclear is cost competitive as it's well depreciated. As also Markus explained, the projected demand growth in combination with the current high LCOE, or levelized cost of energy, should over time lead to a tighter market. And the primary source of new supply during next decade is renewables combined with flexibility. Then the more the market tightens, there will be a need for a new type of baseload supply, which will become available at a higher price compared to today. Alternatives to build new baseload are example, hybrid renewables, complemented flexible assets or even new nuclear. And price levels for these would be clearly above today's market prices. The more the market tightens, this will gradually also increase the price for existing baseload power. This dynamic provides us the opportunity to offer power to our customers based on customer-specific preferences and requirements. We can include a broad range of various features in the offering to our customers. These include, for example, profile matching, environmental products, flexibility services, and time to market, which mainly relates to the availability of powered land. If needed, we can also offer additionality through new assets, including nuclear lifetime extension. These value elements can be combined in more advanced PPAs, while others will be remunerated through sales margins for services or even equity stakes in customer projects, such as the Arctial case that I explained on the previous slide. Then I will talk about value creation from flexibility. As you all know, the optimization premium is the backbone of our value creation. As hydropower has a critical role in balancing intermittent renewables in the system, it provides substantial optimization opportunities to create additional value and earnings by capturing prices above the baseload price. The main element that contributes to the optimization are flexibility and environmental values. Flexibility comprises of 2 components, physical optimization and ancillary services. Physical optimization is how we allocate our hydropower fleet to peak hours on an hourly, daily, weekly and seasonal basis. The need for ancillary services has increased with higher volatility caused by renewables. This means that the need for time predictability of the generation in the energy system has increased, and TSOs request clearly more balancing services to the market, which we can offer with our flexible hydro. The environmental values are basically guarantees of origins and some other similar products. And these are externally verified certificates for low carbon power. The optimization premium is added on top of the market price. And it's important to note that the optimization premium applies to 100% or total volume of the generation, irrespective of the hedge ratio. Another point, which is good to note, is that the optimization premium is for the physical generation while hedges are financial instruments. The most recent market change, i.e., moving to 50 minutes market has further increased price volatility. Flexible assets continue to be a key contributor to value creation in the longer term with hydro representing the largest share of this value creation. And as we said in the connection with our Q3 results, we expect the optimization premium to be about EUR 10 megawatt hour for this year. And today, we have provided guidance for next year 2026 and expect the premium to be to EUR 8 to EUR 10 megawatt hour and the guidance for 2027 onwards is EUR 6 to EUR 8 megawatt hour. And this confirms the strength and the value of our flexible hydro fleet. I will now continue with our renewables development. For Fortum, competitive low-carbon energy production is our foundation. And as you all know, we can offer hydro and nuclear at scale, supported by the lifetime extension of the Loviisa nuclear power plant. We are also very well prepared for the Nordic demand growth with the capability to build new renewable production at scale. Looking ahead, we are developing optionality to expand our wind and solar capacity in the Nordics through PPAs, which will also include various sources of flexibility to match customers' consumption profile. Today, we have 350 megawatts of operational wind in Pjelax in Finland. Based on our 8 gigawatt of development projects in various stages of the permitting phase, we now target to have 1.2 gigawatt of ready-to-build onshore wind and solar projects by the end of 2028. And this gives us the optionality for new capacity in the future if and when customers request new supply. On this map is a part of our renewables portfolio. The recently acquired ABO Energy portfolio with an additional 29 development projects is not included as the closing of the transaction is still pending. As my last topic, I will talk about our announcement today, our target to develop flexibility solutions. We see increasing opportunities for wider flexibility offering and target to grow and create value in this segment. We have set a target to have a pipeline of 2.5 gigawatt ready-to-deploy flexible assets by 2028, including both customers' flexible assets and Fortum's own assets, which will complement renewables growth. First, flexibility services to customers. We will increase our sales of flexibility services to consumers and companies to help them optimize their electricity procurement in volatile markets. The business model of services is based on both value sharing and service fees. By 2028, 2 gigawatt of our flexibility-related growth is expected to come from service business. Second, new Fortum's flexible assets. The primary alternative is to have ready-to-deploy new flexible assets up to 500 megawatt by 2028. Part of this, 350 megawatts of electric boilers are already under construction in Finland. We could consider stand-alone investments in flexible assets, or linked to PPAs based on market conditions. Finally, to sum up my presentation, Fortum's commercial strategy is about creating value together with our customers. By listening closely and understanding their needs, we are able to offer the right solutions, whether it's through partnerships, value-adding products or even expertise in energy management. Our approach ensures that we are not just growing our business but helping our customers to succeed as well. And what truly sets us apart is our ability to combine deep industry know-how with a dynamic customer-driven mindset. We have the experience, resources and technical capabilities to deliver reliable, innovative solutions, no matter how complex our customers' needs may be. This gives us the confidence to adapt quickly and support our customers as their needs evolve. Thank you for your attention. I really look forward to what we can achieve. And now I will hand this over to Mikael.

Okay. Very good. Now we get the slides in order. We're all good. Thank you, Ingela. Ladies and gentlemen, good afternoon on my behalf as well. During the following 15 minutes or so, I will walk you through the highlights of our business as well as trends for Consumer Solutions. I will go through 4 parts of the business. I will start first by talking about our financial and operational performance. I will then move to elaborate on the key trends and our market environment outlook. Having covered that, I will focus on our growth opportunities as well as our operational improvement opportunities. And finally, I will end by summarizing our key strengths and position in the sector. Let's first take a brief look at Consumer Solutions today. We are the #1 energy provider in the Nordics holding an approximate 17% market share across Norway, Sweden and Finland. This leadership position gives us the scale and the platform for growth from one of Europe's most advanced energy regions. In Poland, we are the leading challenger, a strategic position that unlocks significant opportunities as the market continues to liberalize and demand for competitive energy solutions accelerates. Our reach extends to 2.3 million customers, including consumers and small and medium-sized enterprises, representing approximately 41 terawatt hours of annual energy demand. Backed by a team of around 1,100 skilled professionals, we deliver growth excellence and value. We are satisfied with the steady top line performance of our business overall, which has grown by low-single digit to mid-single digit annually. This excludes the disappointing 2023 performance with weak and volatile results in our Finnish business and negative impacts from the government imposed price cap scheme in Poland. As the financial performance of Consumer Solutions is primarily growth-driven by its top line net revenue performance, we have identified and now also implemented several concrete improvement areas going forward. This has reduced overall volatility of our financial results, derisked our service offering as well as simplified our operating structure and model. We are equally satisfied by the results performance, which has continued to outpace our top line performance. The main reasons are our continued cost improvements, a more favorable revenue mix and a constantly improving scalability of our business. This is the case even though we have made acquisitions during the past years. Following the integration of Telge Energi and the other brand mergers in 2025, we have reduced our fixed cost by EUR 13 million for the last 12 months when comparing this year to 2024. As said, these actions have improved our top line net revenue growth and our EBITDA and EBIT as well as RONA, all of them now reaching new all-time highs. As Tiina highlighted in her presentation, our ambition is to continue our growth and improvement efforts. We target to improve our comparable operating profit by circa EUR 40 million by the end of 2030. The majority of the result improvement is expected to materialize towards the end of the time period. This result improvement derives from our organic growth and efficiency improvement actions such as growing our customer reach, broadening the service adoption among our customers and improving our customer retention and loyalty. For this and the next year, we expect our comparable operating profit to be around EUR 100 million. When we compare Consumer Solutions performance to our European peer group, our performance has improved to our European best-in-class ambition, this despite us being subscale in size versus our European peers. As I already mentioned, when excluding the blip in our performance in 2023, in the aftermath of the energy crisis, our EBITDA per customer has been very much in line with our European best-in-class ambition. We understand that difference is in principles, and segment structure for some players naturally impact comparability. Despite such differences, we assume that the peer group average work as their proxy for the overall European subsector performance. I will now move to elaborate on our key secular growth trends and our overall market environment outlook. I'd like to highlight 3 secular key trends that support growth across our subsector and underpin our growth ambitions going forward. Firstly, decarbonization through electrification is driving growth. There is a clear and growing demand for solutions and services that reduce carbon emissions of our customers and support their transition to cleaner energy sources. This trend is driven by ambitious climate targets, regulatory shifts and increasing customer preferences for sustainable solutions and services. Fortum's strategy is aligned with these goals. For example, via our ambitious climate targets, especially our commitment to SBTi, enabling us to capture opportunities as we help our customers to move towards net zero. Secondly, digitalization is transforming not only how energy is produced, but also how it is consumed. We foresee growth of connected energy assets and enabling smart technologies to create new possibilities for further improving efficiency, flexibility and customer engagement. By leveraging digital platforms and data-driven insights, we can unlock value across our ecosystem and deliver innovative solutions and services for our customers. Thirdly, decentralization is reshaping the energy landscape. We're seeing rapid growth in distributed energy resources, such as electric vehicles, solar panels and battery storages. This shift empowers both consumers and SME businesses to participate actively in the energy market, driving demand-side flexibility and resilience. Our approach supports this transition, enabling scalable and secure integration of decentralized assets. These key trends are backed by strong market growth. For example, the number of electric vehicles, connected energy assets and the demand-side flexibility markets in Europe alone are all multibillion euro market opportunities forecasted to grow at double-digit rates over the next several years. So in summary, decarbonization, digitalization and decentralization are all enduring key trends and drivers supporting our business growth and overall performance going forward. With the business strategy aligned with these trends, we are well positioned to capture emerging opportunities and deliver sustainable financial growth going forward. I'm now moving on to the next part of my presentation, which is a walk through of both our growth opportunities and our operational excellence improvement opportunities that we see ahead. In our business strategy execution, our strong and diversified position in the Nordic energy market sets the stage for our growth and value creation opportunities going forward. As the clear market leader in the Nordic market, which still remains highly fragmented with around 350 players, we see that our scale and expertise allows us to capture additional market share. The Nordic market with a size of close to EUR 20 billion and growing at a healthy CAGR of around 3% remains a core focus for us. Simultaneously, we are growing in Poland, where we have reached the position as the #1 challenger in the market. The Polish market is a market of approximately 24 million energy customers in electricity and gas, being of similar euro size and with a similar growth profile as the Nordics. The market is developing. However, with still around 80% of customers still never having changed their electricity provider, this naturally represents a unique opportunity to leverage our capabilities and win market share from incumbent players. Beyond traditional energy, we are actively growing in our energy-related digital services business with, for example, sustainability related services and demand response solutions. As the energy market is transforming, demand for new energy-related and primarily digital services continues to increase. The market size, we approximate EUR 4 billion with a mid-double-digit CAGR growth towards 2030. Finally, in addition to our energy and services business, our minority investments into digital growth domains further strengthens our competitive edge, which, for instance, software-based sustainability services, energy optimization services as well as energy-as-a-service and AI-driven platforms positions us at the forefront of the digital energy transition. Our innovations and start-up portfolio, including leading digital high-growth platforms such as Eliq, Fifty Energy and ImpactOS supports both sustainability and energy efficiency for our customers. So in summary, Consumer Solutions' leading and diversified market position, combined with our focus on further growing our digital services business, provides us a solid platform for future value creation. I will now talk about our improvement opportunities in operational excellence. As Markus said in his presentation, our competitiveness is built on customer satisfaction and efficient scalable operations. We have a solid track record of creating more value for our customers as reflected in our improving customer recommendation rates and customer loyalty. Simultaneously, our integrated and scalable, highly digital platform is a key driver of our operational efficiency with further potential via data and AI. As customers increase their use of our digital services, our scalable platform continues to improve customer satisfaction and rise further cost efficiency resulting in lower cost to serve. Thus, we have been able to improve our operational efficiency significantly with our cost to serve per customer reduced by mid-teens since 2022, and we foresee that to continue to decrease with double digits by 2030. Looking ahead, we see further opportunities to enhance cost efficiency and value creation through continued digitalization and continued integration of AI. Our focus on operational excellence, digital transformation and AI, positions us well to continue to deliver sustainable growth going forward. In addition to our organic growth and operational excellence opportunities, I will say a couple of words about our track record in inorganic growth. We have a proven M&A playbook that brings concrete value. Our successful acquisitions and integrations are the concrete proof points of which our M&A track record is built on. Our most recent transactions are Telge Energi in Sweden and Orange Energia in Poland. Through these transactions, we have acquired circa 270,000 new customers. The successful integrations have contributed to our all-time high financial results this year with materialized cost synergies of EUR 13 million from the integration of Telia and our earlier acquisition integrations. The integration of Orange Energia is progressing according to plan, and once completed will bring cost synergies of between EUR 5 million to EUR 6 million by the end of 2028. As I underlined earlier in my presentation, despite some level of consolidation over the past few years, this subsector remains still very fragmented. The market is characterized by a large share of subscale players with limited financial resources or even willingness to invest in, for instance, the required digital operations, top quality customer advisory as well as modern customer offering development. Given the need for investments to meet evolving customer requirements and the scale needed to fund these, we expect consolidation to continue. To sum up, we are convinced that Consumer Solutions has a unique position and business strategy that helps us grow faster than our competitors, deliver solid results and to create concrete value for all our stakeholders. The results speak for themselves. Thus, we are comfortable and glad in reiterating our key uniquenesses and attractions. Firstly, our clear market leader position in the Nordics as well as our leading challenger position in Poland. Secondly, our growing digital services business that provides and captures more value. And finally, our proven M&A playbook and scalable global operating model that fuels our further growth and efficiency. Thank you, ladies and gentlemen, for your time and attention. With this, over to you, Ingela, please.

Thank you, Mikael. Okay. We are now ready to move over to the second Q&A session where you can ask questions from all the presenters. And I really hope that we will be able to answer all your questions. We will have approximately 30 minutes time for this. And let's start again from the studio, then we move to the teleconference, and then we can come back and also want to take some questions from the chat. I think Artem, that you were first. Oh, sorry. Yes, let's move there then next. I promise.

All right. Sorry for that. Artem Beletski from SEB. Two questions from my side. So the first one is relating to 5 gigawatts of industrial sites, what you have in Finland. I remember when for the first time you showed these sites and numbers, what you have there. So you didn't really expect this to unlock somehow value relating to these units or plots what you have. But looking at the latest developments, so we have seen quite meaningful transactions being done at high valuation multiples. Has your view changed around this topic? And the other question is relating to data center capacity outlook in Nordics. So looking at number of 4.5 gigawatts, could you maybe provide some details how it is split between Finland and other markets? I think you mentioned that Finland is the biggest one in terms of opportunities.

So I think these both questions are Simon's expertise and on the industrial side about what actually can we provide, and we know that mostly our activities in Finland. But Simon, if you elaborate on these 2 points?

I mean we have various sites in various stages of development. Some are like closer to permitting and some are further out in permitting. And then -- so that's like the sites. And then the business model is a little bit depending on the customer case. Do we try to get the site, let's say, development premium? Are we bundling it into the PPA? Are we even doing some equity investment that depends case by case with the customer, what is then the business model. And then to the DC, so the 4.5 gigawatt is the full number that we identify ongoing projects, either existing data centers or in development. 4.5 gigawatt is not the number which is online 2030, but it will be later on all of those online. And what we currently see is that a big part of data centers originally went to Sweden and then also to Norway. And now recently, Finland has become increasingly attractive for data center investments, mainly because of the time to market. This is the fastest place to establish new data centers.

Okay. Then [ Perio ]. We go...

Jakob Magnussen, Danske Bank. Also two questions from me. First of all, on the PPAs, just to understand the risk in those. Is it still possible to do pay-as-produced PPAs? Or are we more progressing into baseload contracts? And will the emergence of batteries change that mix? And then the second question regarding your new net debt-to-EBITDA refinement of max 2.5x. Why this refinement now from 2 to 2.5 to now max 2.5, you've been under for quite some time. Should we put in something into this? Or is this just reflecting that it's very uncertain where you will be given your potential growth CapEx?

So two questions. So the PPA type of demand, what are the customer negotiations again, same on a net debt to EBITDA. Tiina, if you take that one.

What we see that the interest toward pure payers produce are decreasing because they have the challenges that usually either the consumption profile or the production profile is not matching each other. And that makes that there is more interest towards baseload contracts and also more kind of like nonstandard contracts where also there is some kind of flexibility element or profile matching elements included. So we are seeing a shift towards more complex products than they were in the past.

Then to the net debt-to-EBITDA number. So basically, what we are saying that we want to keep our balance sheet strong and credit rating at least BBB. And based on those numbers, we have derived the maximum net debt-to-EBITDA number. Previously, we gave a range, and now we want to be, in a way, more clear that it is 2.5 is the maximum, also reflecting our confidence of our current situation and the balance sheet strength.

Then let's take a few questions. Iiris?

Iiris Theman from DNB Carnegie. Firstly, regarding data centers. So they have typically announced PPA deals with the wind power producers in Europe. So how do you see this developing? Could they sign a PPA deal with nuclear power producer? And second question, you mentioned -- or I think you mentioned the current oversupply. So do you have any thoughts that when this situation could improve, i.e., demand to exceed supply?

Very good. Do you want to take, Simon, the first one? What kind of PPAs could the customers consider, and I can take the oversupply.

We are seeing that, let's say, PPA landscape is evolving and pure payers producers are getting more complex. So the data center players, like especially hyperscalers are more interested in more complex products going further where you combine solar, wind and other type of assets. And we also see that additionality is important for some of the players where especially also Loviisa has a lifetime extension providing additionality. Then the other block of data center players that I also tried to raise in my presentation is co-locators. They are usually more conservative or, let's say, more traditional in their power procurement and they buy like all kind of power. For them also brownfield electricity is a very important element. So all kind of power is needed in the various PPAs.

And with regards to the market demand and supply situation, so we think that this is going to melt away quite soon in the next couple of years based on the TSO forecast and also what we see. So if you look at the TSO forecast from 440 -- from 400 to 550 by 2030, and there's now about 50 terawatt hours of export. So let's say, a few larger projects could already start to eat that away. And based on this view, we are also developing the new supply opportunity. So we create the optionality so that we can also answer the increased demand.

Very good. Then I think -- let's take Pasi first.

This is Pasi from Nordea. So in the case you are going to build a new nuclear power to Sweden, are your financial targets still valid for this kind of project? Because I would assume that it will require more than EUR 2.5 billion to get the new nuclear power, even the smaller one to Sweden. And if the project takes, let's say, 10 years, so is this net debt-to-EBITDA target of 2.5 valid in that project also? And secondly, if I may, yes, regarding the supply-demand bars, let's say, in Finland. So you highlight the demand growth, but actually, if I remember right, Fingrid estimates that the power supply will grow more than demand will actually grow. So do you disagree with Fingrid's forecast for the all coming years and periods? And maybe lastly, if I may, the third question regarding the data centers. So if I do forecast EUR 55 PPA agreement with the data center in coming years between Fortum and let's say, for example, between Microsoft. So what are the drivers? I don't understand with this kind of estimate in the background.

So with regards to the whole data center complex, maybe Simon, you once again want to recap how we see the data centers. But with regards to Sweden and potential new nuclear, so we are preparing the possibility for new nuclear somewhere in the future. It's clear that we have said that with today's prices on merchant conditions, new nuclear will not happen. So first of all, there has to be the customer demand. There has to be technology -- projects have to be bankable. And our targets do apply. So it's correct that with the headroom we have, we would not ourselves build alone with these parameters a nuclear plant. So we build a technical and commercial readiness. And then if the conditions are there, then we can see how this can be applied. Then for demand growth and supply, this is correct that there's a very strong number of demand projects that are asking for connections, and there's a big number of supply. But as we have seen now, when the market conditions are not there, new supply will not come online. So what we are targeting is that if new supply is needed, we have the most profitable, most competitive projects, and we will be in the market first. And then for data centers?

For data centers, it depends on the data centers business model. I mean, some data centers, especially co-locators, they are like wind developers. They need for bankability. They need to secure both the offtake on the data and also the offtake on electricity in order to get the bankability. And actually, we assume that 2/3 of the data center demand would come from co-locators. And then hyperscalers, they have stronger balance sheets, but they also start to become more and more concerned on electricity supply that is there sufficiently enough. And this is then the partnership that we create. And when we early enough know is it a data center or even a conventional industry, when they will need new supply, we can also accordingly start to develop our renewables, our hybrid offerings towards the customers when we early enough know it. So there is enough supply to meet the customers' demand in the next period.

And then let's take Deepa before we then move to the teleconference.