CEZ Declines to Eight-Year Low on Curbed Dividend: Prague Mover

CEZ AS declined to its lowest in almost eight years after the biggest Czech utility reduced its dividend and power prices near record lows threaten earnings.

The stock slid 1.5 percent to 558.2 koruna, the lowest level since August 2005, by the close in Prague. It was the second-biggest drop in the PX index. More than 499,000 shares changed hands, or 93 percent of the three-month daily average, according to data compiled by Bloomberg.

Majority state-owned CEZ will pay 40 koruna a share, or 54 percent of its 2012 profit, the company said yesterday after the stock market closed. That’s down from last year’s dividend of 45 koruna and less than the median estimate of 26 analysts surveyed by Bloomberg for a 44 koruna payout.

“The dividend reduction reflects the worsening outlook,” said Josef Nemy, an analyst at Komercni Banka AS in Prague, by phone today. “They are trying to save money for investments because falling electricity prices will impact their profitability in the next several years.”

CEZ’s net income will probably decline to the lowest since 2006, dropping to 39.4 billion koruna ($2 billion) in 2013 and 35.8 billion koruna the following year, according to the median estimates of 26 analysts surveyed by Bloomberg. That compares with 40.2 billion koruna reported for 2012.

Europe’s benchmark power contract for next-year delivery in Germany, where CEZ exports part of its output, rose 0.3 percent today to 39.30 euros a megawatt-hour. The price touched its lowest intraday level on record last week at 38.80 euros.

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