CEZ 4th-Quarter Profit Falls 52% on Albania, Power Prices
CEZ AS (CEZ), the largest Czech power producer, said fourth-quarter profit slumped 52 percent after its operations in Albania were seized and because of lower electricity production.
Net income fell to 6.9 billion koruna ($354 million) from 14.4 billion koruna a year earlier, the Prague-based utility said today in a statement. That missed the 7.7 billion-koruna median estimate of 11 analysts in a Bloomberg survey.
CEZ reduced earnings targets last November because of continued losses at its Albanian unit. Albania’s regulator has revoked the company’s license and CEZ estimates it lost 5.8 billion koruna in the country last year. Revenue was also hurt by maintenance halts that resulted in lower electricity production.
“All major energy businesses in Europe have a hard time coping with the unstable environment, the considerable drop of wholesale electricity prices and a future that is hard to predict,” Chief Executive Officer Daniel Benes said in the statement.
CEZ expects earnings before interest, tax, depreciation and amortization of 80 billion koruna and net income of 37 billion koruna this year, according to the statement. That’s below analysts’ expectations, according to Chris Rogers at Bloomberg Industries.
“It could be partly Albania and Bulgaria, but the outlook likely reflects a bearish view on the market, too,” Rogers said.
The company hedged its 2014 electricity prices at 49.50 euros to 50 euros per megawatt-hour, and presold power for 2015 and 2016 at 46 euros per megawatt-hour, Trading Director Alan Svoboda said.
Electricity for delivery next year in Germany, where CEZ exports part of its output, has declined 4.2 percent this year, and was up 0.8 percent at 42.20 euros a megawatt-hour today.
Ebitda fell 16 percent in the fourth quarter to 20.8 billion koruna, in line with the 20.3 billion-koruna median estimate in a Bloomberg survey. Operating revenue slid 11 percent to 52.6 billion koruna, the company said.
CEZ fell 0.8 percent to 592 koruna, the lowest price since Oct. 27, 2008, today in Prague. The stock has fallen 13 percent this year, compared with a 2.3 percent retreat for Prague’s benchmark index.
CEZ is also fighting an attempt by Bulgarian authorities to revoke its license. The country’s regulator moved last week to strip the Czech utility of the right to operate its power- distribution network after high electricity bills caused violent street protests, leading to the collapse of the Bulgarian government. CEZ denies any wrongdoing in Bulgaria.
“We believe we’ve made no mistakes and the situation in Bulgaria will be cleared,” Benes said at a press conference in Prague. “Bulgaria is an EU country and as such is bound by its laws.”
The company is “very close to agreement” with Czech Coal AS, the supplier of fuel for some of CEZ’s coal-fired plants, on a long-term supply contract, Benes said.
CEZ is also in the process of choosing a supplier for two new reactors for the Temelin nuclear power station. Westinghouse Electric Co LLC and a Russian-Czech group led by Rosatorm Corp are competing for the $10 billion contract, and CEZ plans to publish a preliminary assessment of the two bids in about two weeks, Benes said. The utility plans to announce the winner around the middle of the year and sign a contract by the end of 2013.
To contact the reporter on this story: Ladka Bauerova in Prague at email@example.com