CEZ Falls Most in Five Months on Guidance ‘Disappointment’

CEZ AS (CEZ) fell the most in five months after the biggest Czech power utility published a profit outlook for this year that missed analysts’ estimates, overshadowing better-than-expected fourth-quarter earnings.

The stock slid 3.6 percent, the biggest decline since Sept. 23, to 799 koruna in Prague today. It was the worst performer in the 14-member PX (PX) equity index, which fell 1.1 percent.

Net income in the fourth quarter more than doubled to 14.4 billion koruna ($774 million), the company said today, exceeding the 13.5 billion-koruna median estimate of 15 analysts polled by Bloomberg. CEZ said it expects a 41 billion-koruna profit this year, missing the 43.7 billion-koruna estimate by 24 analysts.

“We see the earnings guidance for this year as the weakest point of the data published today, and it should cause disappointment in the market,” Marek Hatlapatka, an analyst at Cyrrus AS brokerage in Brno, Czech Republic, wrote in a report to clients today. “CEZ did everything to meet its guidance even at the expense of a negative impact on this year’s results.”

Fourth-quarter profit was boosted by a 1.2 billion-koruna gain on its option in Hungary’s oil company Mol Nyrt. CEZ owns a 7.3 percent stake in Mol. CEZ said it expects 2012 earnings before interest, tax, depreciation and amortization of 87.9 billion koruna, less than the median analyst estimates of 89.4 billion koruna.

Improved Margins

Ebitda rose 14 percent to 24.9 billion koruna during the period, exceeding analysts’ expectations. Full-year net income fell 13 percent to 40.8 billion euros and full-year Ebitda dropped 2 percent to 87.3 billion euros.

Improved margins in distribution and sales of electricity to Czech clients contributed 1.9 billion koruna to net income in the fourth quarter, the company said. CEZ lost 800 million koruna on a special tax on carbon credits it receives free of charge from the government.

The utility will continue to focus on developing two new reactors at the Temelin nuclear power plant and extend the output and lifespan of the older reactors at the Dukovany plant, according to the statement. The company also plans to develop renewable energy projects, particularly wind farms, in Romania and Poland.

Westinghouse Electric Corp., Areva SA and a Russian-Czech consortium led by Rosatom Corp.’s unit Atomstroyexport are competing for the Temelin contract, estimated at $10 billion. CEZ plans to chose the winning bid at the end of 2013.

“Until 2015 we are primarily going to concentrate on flawlessly and thoroughly preparing the entire project,” Chief Executive Officer Daniel Benes said in the statement.

The company will limit its acquisitions to acquiring wind power plants in Poland and Romania, Chief Financial Officer Martin Novak said after a press conference in Prague. It may also invest in heat utilities and cogeneration plants in the Czech Republic, he said.

To contact the reporters on this story: Ladka Bauerova in Paris at lbauerova@bloomberg.net; Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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