CEZ AS, the Czech Republic’s largest electricity company, said second-quarter earnings fell 16 percent as power prices dropped and production declined.
Net income slid to 10.8 billion koruna ($555 million) from 12.8 billion koruna a year earlier, the Prague-based company said today in a statement. That matched the median estimate of 13 analysts surveyed by Bloomberg.
The Czech Republic’s longest recession on record has eroded industrial demand for electricity, dragging down power prices. CEZ has also seen its expansion plans set back by the collapse of Prime Minister Petr Necas’s government in June, which prompted the utility to postpone a decision on a reactor supplier for its Temelin nuclear-plant extension.
Next-year electricity prices in Germany, where CEZ sells part of its output, have dropped 17 percent this year and sank to an all-time low of 36.20 euros a megawatt-hour last week.
“Wholesale power prices continue to decline and the political backdrop in the Czech Republic seems to have become less stable,” James Brand, an analyst at Deutsche Bank AG in London, said in a note before the results were published. “We continue to forecast a strong decline in medium-term earnings as lower wholesale prices feed through into reported numbers.”
Earnings before interest, taxes, depreciation and amortization fell 5 percent in the quarter to 20.9 billion koruna, CEZ said. Sales rose 2 percent to 53.1 billion koruna.
The utility reiterated its full-year outlook, forecasting net income of 37.5 billion koruna and Ebitda of 81 billion koruna. The company also said today that the European Commission had approved the sale of its Chvaletice coal-fired plant and it expects to close the transaction early next month.
CEZ rose 0.4 percent to 443.5 koruna in Prague trading at 9:19 a.m. local time, paring its slump this year to 35 percent.
CEZ delayed a decision on picking the supplier of two new reactors for Temelin after the government fell amid a scandal over spying and bribery allegations. Westinghouse Electric Co. and a Russian-Czech group led by Rosatom Corp. are vying for the contract valued at $10 billion.
CEZ completed a 600-megawatt wind park in Romania in November, boosting first-half Ebitda by about 600 million koruna. Romania’s contribution to profit may fall in the second half after the country slashed support for renewable energy last month. CEZ’s wind farms will receive only one green certificate for every megawatt-hour generated instead of two previously.
The company sells electricity output in advance to lock in prices. It presold 72 percent of its 2014 production, 53 percent of 2015 output and 22 percent of 2016 output, according to today’s statement.
To contact the reporter on this story: Ladka Bauerova in Prague at email@example.com