Bloomberg News

CEZ Quarterly Profit Declines 16% on Higher Albanian Tariffs

May 10, 2012

CEZ AS (CEZ), the Czech Republic’s largest power producer, said first-quarter profit fell 16 percent after it was forced to pay higher tariffs in Albania and currency gains weren’t repeated.

Net income dropped to 14.4 billion koruna ($738 million) from 17.3 billion koruna a year earlier, the Prague-based utility said today in a statement. That missed the 15.4 billion- koruna average estimate of 13 analysts surveyed by Bloomberg.

Profit was curtailed as the Albanian regulator ordered CEZ to pay the state-owned electricity producer higher tariffs without allowing the utility to pass on the extra costs to customers. CEZ reiterated a full-year target for net income of 41 billion koruna and said it will focus on the expansion of the Temelin nuclear power station, for which it may seek a partner.

“The quarterly results are slightly negative, but CEZ confirmed its full-year targets,” Josef Nemy, an analyst at Komercni Banka AS in Prague, said in an e-mailed note. “Its outlook indicates increased earnings in the following quarters.” Nemy has a hold recommendation on the shares.

Revenue gained 7 percent to 60.8 billion koruna, while earnings before interest, tax, depreciation and amortization fell 1 percent to 26.3 billion koruna. CEZ said in February it expects 2012 Ebitda of 87.9 billion koruna.

CEZ pre-sold 56 percent of its 2013 power output and 22 percent of its 2014 production as of May 1. The company confirmed plans to pay 45 koruna a share in dividends for 2011.

Winning Bid

CEZ rose 0.6 percent to 714.50 koruna as of 12:05 p.m. in Prague. The stock has lost 9.7 percent this year.

Westinghouse Electric Corp., Areva SA (AREVA) and a Russian-Czech group led by Rosatom Corp.’s Atomstroyexport unit are competing for the Temelin contract, estimated at $10 billion. CEZ plans to select the winning bid at the end of 2013 and is studying options to invite a strategic partner for the project.

Losses in Albania shaved 1.9 billion koruna off CEZ’s Ebitda, offsetting a 400 million-koruna gain in Bulgaria and a 600 million-koruna gain in Romania, the company said. CEZ’s Romanian wind parks in Fantanele and Cogealac produced 283 gigawatts during the first quarter, a 42 percent increase from year ago. Production capacity in the parks will exceed 1,000 gigawatt hours this year, CEZ said.

Last year, CEZ gained from a revaluation of its share options in Hungary’s Mol Nyrt.

To contact the reporter on this story: Ladka Bauerova in Prague at

To contact the editor responsible for this story: Will Kennedy at

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