CEZ Third-Quarter Profit Falls 49 Percent on Writedowns

CEZ AS, the largest Czech power producer, cut its full-year income target after third-quarter profit fell 49 percent on asset depreciation and falling power prices due to weaker demand.

Net income in the three months though September declined to 3.1 billion koruna ($154 million) from 6.1 billion koruna a year earlier, the Prague-based company said today in a statement on its website. That missed the 6.3 billion koruna average estimate from 10 analysts in a Bloomberg survey.

Profit was cut by 8 billion koruna in writedowns, which offset a 2.9 billion-koruna gain from the sale of the Chvaletice coal-fired plant announced earlier this year. CEZ has struggled with low electricity prices and weak demand for power from manufacturers, compounded by with lower distribution tariffs in Bulgaria.

“The main causes of the decline are asset writedowns caused by regulatory and legislative measures in the European energy sector, as well as a drop in wholesale power prices,” the company said in an e-mailed statement.

Third-quarter earnings before interest, tax, depreciation and amortization fell 7 percent to 15 billion koruna. That missed the average analyst estimate of 16.1 billion koruna. Net income attributable to shareholders was 3.8 billion koruna, compared with 6.5 billion koruna a year earlier. Revenue for the period fell 1 percent to 48.8 billion koruna.

The company cut its full-year net income target to 35 billion koruna, from 37.5 billion previously. It maintained its full-year Ebitda target of 81 billion koruna.

Electricity Sales

The company said Czech electricity consumption from January to September remained virtually unchanged from a year earlier at 43.2 terawatt hours.

CEZ postponed its deadline for choosing the supplier of two new reactors for the Temelin nuclear station until a new Czech government completes its long-term energy strategy and provides guarantees that the project will be profitable.

The company originally set the deadline for signing the Temelin contract at the end of 2013. Westinghouse Electric Co. and a Russian-Czech group led by Rosatom Corp. are vying for the contract, valued at $10 billion.

To contact the reporter on this story: Ladka Bauerova in Prague at lbauerova@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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