CEZ Profit Boost Lifts Shares From Seven-Year Low: Prague Mover

CEZ AS rose from its lowest level in more than seven years after the biggest Czech power utility said it will probably exceed its profit estimate this year and as the price of electricity increased from a record low.

The stock rose as much as 1.3 percent and ended the day up 0.1 percent at 564.50 koruna with share turnover at 145 percent of the three-month daily average. CEZ tumbled 17 percent this month through yesterday to the weakest since August 2005.

CEZ said yesterday it signed a deal with Czech Coal to fuel its Pocerady power plant, which will boost 2013 operating profit by 1.5 billion koruna ($76 million) to 2 billion koruna and may help the utility top its earnings targets. The company also said it agreed to sell its Chvaletice plant to Litvinovska Uhelna AS for 4.1 billion koruna, a transaction that will add about 2 billion koruna to its net income.

“This one-time profit could have a positive impact on the dividend to be paid next year,” Josef Nemy, an analyst at Komercni Banka AS in Prague, wrote in a report to clients today.

CEZ will probably pay 45 koruna a share this year, the same amount as in 2012, according to analyst forecasts compiled by Bloomberg. The Prague-based company cut the payout from 50 koruna in 2011 and 53 koruna in 2010 as falling electricity prices dented profits.

Relative Strength

Power for next-year delivery in Germany, where CEZ exports part of its output, bounced from a record low today, rising 0.4 percent to 40.40 euros per megawatt-hour. Low electricity prices may hurt the company’s earnings in 2014, Chief Executive Officer Martin Novak said in a Feb. 1 interview with Bloomberg News.

CEZ shares’ previous decline sent their 14-day relative strength index, or RSI, down to 27 yesterday, below the 30 level suggesting in technical analysis that the asset may be oversold and set to rebound. The RSI increased to 28 today.

The yield on CEZ’s euro-denominated bonds maturing in April 2025 retreated 4 basis point, or 0.04 percentage point, to a record low of 2.67 percent.

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