Interim ReportJanuary - June 2004

28 July 2004

28 July 2004 2

Very strong first six months

• Financial performance improved significantly– Positive development throughout the Group

• Operating profit up by 32%, excluding non-recurring items up by 22%

• Earnings per share up by 55%

• Net debt down by 333 million (compared to year-end), gearing decreased to 76%

• Preparations to list the oil businesses continued.

Comparison: January - June 2003

328 July 2004

Strong variations in market prices

• Decrease of 29% in Nord Pool price of electricity– averaging EUR 29.1 (40.9) per MWh.

• Increase of 62% in the oil refining reference margin– averaging USD 4.7 (2.9) /bbl

• Increasing price of crude oil– averaging USD 35.3/bbl in Q2, USD 32.0 in Q1 2004

Comparison: January-June 2003

428 July 2004

Nord Pool Market Price of Electricity

0102030405060708090

100110

2003

EUR / MWh

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2004

528 July 2004

International oil refining reference margin

2003 2004

-2

0

2

4

6

8

10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

USD/bbl

Brent Complex refinery in NW Europe

6

Crude oil price

20

22

24

26

28

30

32

34

36

38

40

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42003 2004

USD/bbl

Brent dated

728 July 2004

Significant performance improvement

Operating profit EUR 1,005 (761) million

Earnings per share EUR 0.76 (0.49)

Net cash from operating activities EUR 1,043(1,060) million

Net debt EUR 5,293 (5,626 at the end of 2003) million

Return on capital employed 13.3% (LTM)Return on shareholders´ equity 14.7% (LTM)

Gearing 76% (85% at the end of 2003)

828 July 2004

Further strategic steps

• Agreement of the purchase of additional shares in Lenenergo

• Preparations to list the oil businesses continued

• Investment to add sulphur-free diesel production proceeded

• Divestments of non-core businesses- ETV-Eröterv and Fortum Teknik och Miljö- Partnership between Neste Engineering and Jacobs Engineering

24 July 2003

Focus on the Nordic area

928 July 2004

Water & snow reservoirs in Norway & Sweden week 29/2004

40

50

60

70

80

90

100

110

120

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

rese

rvoi

r con

tent

[TW

h]

1996 2001 20022003 2004 reference level

1028 July 2004

Nordic Power Market Prices (EUR)

0

20

40

60

80

100

120

1/19

95

1/19

96

1/19

97

1/19

98

53/1

998

52/1

999

52/2

000

52/2

001

52/2

002

52/2

003

52/2

004

51/2

005

51/2

006

51/2

007

EUR

/ M

Wh

Actual System Price Forward Prices 21 July 2004

1128 July 2004

Power GenerationFortum´s January - June 2004

Fortum´sNordic Power GenerationTWh

0

5

10

15

20

25

30

Q1-Q2 2004 Q1-Q2 2003

Hydro Nuclear Thermal

27.4 26.7

• Group´s Nordic power generation up by 3%, share 14% (14%) of Nordic consumption

• Increase of 2% in hydro power production, still under normal level

• Group´s Nordic sales of electricity unchanged, market share 15% (15%)

• Price of electricity sold by Fortum downby 6%, price of Q2 up by 4% compared to Q1 2004.

Comparison: January - June 2003

1228 July 2004

Power Generation

EUR million Q1-Q2 2004 Q1-Q2 2003

Net sales 1,052 1,533

Operating profit 366 328- excl. non-recurring items 344 329

Net assets 6,188 6,276

RONA, % 11.7 10.3

Business units:Generation, Portfolio Management and Trading, Service

+ flexible production portfolio, successful hedging, internalefficiency improvements

- lower market prices for electricity

1328 July 2004

HeatFortum´s January - June 2004

Fortum´sHeat sales by areaTWh

0

5

10

15

20

Q1-Q2 2004 Q1-Q2 2003

Sweden Finland Other countries

12.3 12.0

• Heat sales up by 3%, 12.3 (12.0) TWh

• Sales of electricity produced in CHP plants up by 4%, 2.7 (2.6) TWh

• A number of new heat contracts in Finland

• Investments in Sweden progressed as planned.

Comparison: January - June 2003

1428 July 2004

Heat

EUR million Q1-Q2 2004 Q1-Q2 2003

Net sales 556 540

Operating profit 134 99- excl. non-recurring items 134 99

Net assets 2,393 2,302

RONA, % 11.0 8.5

Business units: Heat, Värme

+ positive development of Fortum Värme

1528 July 2004

• 1,375 (1,360) thousand customers

• Electricity transmitted in distribution networks up by 2%

• Electricity transmitted in regional networks down by 14%, 9.6 (11.1) TWh

• Unchanged tariffs

• Major project to reduce the risks for outages in western Sweden

DistributionFortum´s January - June 2004

Comparison: January - June 2003

Fortum´sElectricity Transmission inDistribution NetworksTWh

0

5

10

15

Q1-Q2 2004 Q1-Q2 2003

Sweden Finland Norway Others

11.6 11.4

1628 July 2004

EUR million Q1-Q2 2004 Q1-Q2 2003

Net sales 363 359

Operating profit 141 142- excl. non-recurring items 141 121

Net assets 3,103 3,046

RONA, % 9.1 9.0

Business unit: Distribution

Distribution

+ internal efficiency measures

1728 July 2004

SwedenFinlandNorway

1.1 millionelectricitycustomers• private• business• electricity

companies

MarketsFortum´s January - June 2004

• Sales of electricity volumes down by 9%, 22.4 (24.5) TWh

• Reduction of retail prices in the spring

• New products based on specific customer expectations

Comparison: January - June 2003

1828 July 2004

EUR million Q1-Q2 2004 Q1-Q2 2003

Net sales 722 890

Operating profit 15 5- excl. non-recurring items 15 5

Net assets 177 124

RONA, % 25.2 12.7

Business Unit: Markets

+ better risk management, improved business processesand cost reductions

- lower margins

Markets

1928 July 2004

Refining margins in North West Europemonthly averages

-2.0

0.0

2.0

4.0

6.0

8.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

USD/barrel

Average refinery in North West Europe

Product prices: cargoes NWE FOB

2028 July 2004

Oil Refining Fortum´s January-June 2004

• International reference marginUSD 4.7 (2.9)/bbl, up by 62%

• Strong own premium margin

• 5% increase in sales volumes

• Production of a bio component for gasoline started in Porvoo

• Porvoo investments progressed as planned to add

- sulphur-free diesel production- synthetic type of EHVI lube oil

component

Comparison: January - June 2003

FortumBrent complex

USD/bbl

0

1

2

3

4

5

6

19951996199719981999 2000 20012002 2003

Refining Margins

2128 July 2004

+ strong refining margin, favourable product slate, excellent availability at the refineries, inventory gains

- a weaker US dollar

Oil Refining

EUR million Q1-Q2 2004 Q1-Q2 2003

Net sales 2,938 2,962

Operating profit 280 135- excl. non-recurring items 215 149

Net assets 1,111 1,075

RONA, % 52.2 24.5

Business units: Oil Refining, Components

2228 July 2004

Oil RetailFortum´s January - June 2004

Retail Outlets30 June 2004

• Total retail sales of main products 1,897 (1,908) thousand cubic metres

• Sales of traffic fuels up by 5%1,245 (1,183) thousand cubic metres

• Launching sulphur-free gasoline and diesel in Finland

• Number of outlets 887 (895) in Finland, 160 (147) in other countries in the Baltic Rim

887Finland

Russia30

Estonia30

Latvia31

Lithuania28

Poland41

Comparison: January - June 2003

2328 July 2004

Oil Retail+ increased volumes of traffic fuels- lower margins

EUR million Q1-Q2 2004 Q1-Q2 2003

Net sales 1,097 1,107

Operating profit 26 25- excl. non-recurring items 20 24

Net assets 281 285

RONA, % 17.5 16.0

Business unit: Oil Retail

2428 July 2004

Shipping and other OilFortum´s January - June 2004

• Good shipping freight rates, very strong for crude oil during the first quarter

• High utilisation rate of fleet

• Total deliveries 20.1 (20.4) million tonnes

• Share of oil production in Russia (SeverTEK) about 13,000 bbl/d

Shipping Freights for Crude Oil

Actual 2003 Actual 2004

North sea/Cont Aframax 80 000t

80

130

180

230

280

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

WS

Source: Brokers' consensus

Comparison: January - June 2003

2528 July 2004

Shipping and other Oil + high freight rates, good utilisation rate of fleet- a weaker US dollar

EUR million Q1-Q2 2004 Q1-Q2 2003

Net sales 179 181

Operating profit 67 46- excl. non-recurring items 63 49

Net assets 168 139

RONA, % 88.7 66.7

Business unit: Shipping

2628 July 2004

Income statement

MEUR Q1-Q2/04 Q1-Q2/03 2003

Net sales 5 653 6 028 11 392

Expenses -4 648 -5 267 -9 972

Operating profit 1 005 761 1 420

Financial expenses, net -142 -135 -236

Profit before taxes 863 626 1 184

Income taxes total -194 -167 -325

Minority interests -20 -47 -90

Net profit for the period 649 412 769

EPS (EUR) 0.76 0.49 0.91Return on capital employed,(%) 16.1 12.1 11.4Return on shareholders equity,(%) 19.4 11.9 12.3

2728 July 2004

Operating profit

MEUR Q1-Q2/04 Q1-Q2/03 2003Power Generation 366 328 603Heat 134 99 173Distribution 141 142 247Markets 15 5 35Oil Refining 280 135 281Oil Retail 26 25 44Shipping and other Oil 67 46 79Other -24 -19 -42Fortum Group 1,005 761 1,420

2828 July 2004

Balance sheetMEUR June 30 June 30 Dec 31

2004 2003 2003

Fixed assets and otherlong-term investments 14,235 13,908 14,172Current assets 2,005 2,586 2,390ASSETS 16,240 16,494 16,562

Shareholders' equity 6,709 6,027 6,406Minority interests 250 1,434 232Interest-bearing liabilities 5,489 5,168 6,065Interest-free liabilities 3,792 3,865 3,859EQUITY AND LIABILITIES 16,240 16,494 16,562

Gearing (%) 76 60 85Equity per share (EUR) 7.89 7.13 7.55

2928 July 2004

Cash flow statementMEUR June 30 June 30 Dec 31

2004 2003 2003Net cash from operating activities 1,043 1,060 1,577Capital expenditures -248 -244 -550Acquisition of shares -30 -503 -570Proceeds from sales of fixed assets 29 80 142Proceeds from sales of shares 16 1,219 1,227Change in other investments -136 -32 -67

Cash flow before financing activities 674 1,580 1,759Net change in loans -562 -1,204 -399Dividends paid -359 -264 -264Other financing items 2 -40 -1,245

Net cash from financing activities -919 -1,508 -1,908

Net increase (+)/decrease (-)in cash and marketable securities -245 72 -149

3028 July 2004

Outlook for power and heat businesses

• Annual Nordic electricity consumption predicted to increase by about 1% over the next years.

• Improved operational efficiency

• In July, Nordic electricity forwards for the rest of 2004 have been EUR 32 - 35 per MWh. Fortum´s hedging for the next 12 months is approximately 60%

• Good position considering possible impacts of emissions trading

3128 July 2004

• The July average oil refining reference margin has been at the level of USD 7 /bbl.

• Fortum´s premium margin in 2004 is expected to remain at the strong levels of previous years.

• No major maintenance shutdowns planned atthe refineries during 2004.

• Hedging mitigates the negative impact of weakened US dollar

Outlook for oil businesses

3228 July 2004

Potential to excel

• Very strong first six months

• Structures in place

• Well performing businesses

• Strong cash flow

• Fair market outlook

• New opportunities by listing the oil businesses

Further strengthened confidence in 2004 as a good year