Poland's PGE Jumps to Two-Month High as Earnings Beat Estimates

  • Power group sees 2015 adjusted net income at 4.3 billion zloty
  • UBS says initial earnings are positive for future dividends

PGE SA advanced on Wednesday after Poland’s biggest utility reported preliminary 2015 earnings that topped analyst estimates, spurring expectations for a dividend payout.

The stock gained as much as 3.6 percent to 13.95 zloty, the highest since Nov. 23, and traded 2.2 percent higher as of 11:36 a.m. in Warsaw. PGE expects its earnings before interest, tax, depreciation and amortization, or Ebitda, reached 8.2 billion zloty ($2 billion) last year, boosted by termination of its long-term contracts and a reversal of some provisions, it said in a statement on Wednesday. That compares with the 7.6 billion-zloty average analyst estimate.

“PGE’s earnings are significantly higher than market expectations,” Michal Potyra, an analyst at UBS AG in Warsaw said by phone. “Even if they are results of one-time gains, investors may expect more cash available for dividend, which drives the stock up.”

The state-controlled PGE slumped to a record this year after comments from the new government on potential involvement of the biggest power utilities in rescuing unprofitable coal producers.

The unadjusted loss for 2015 amounted to 3 billion zloty, according to its statement, after taking a hit by a 8.8 billion-zloty impairment of its conventional assets announced in August, prompting the utility to change its dividend policy to allow to pay out 40 percent to 50 percent of net income excluding impairments. Net income adjusted for writedowns stood at 4.3 billion zloty, or 31 percent more than analysts predicted in a Bloomberg News survey.

The Warsaw-based power producer will publish its full annual earnings report on Feb. 16.

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