Bloomberg News

PGE Slumps as Asset Writedown Sparks Dividend Cut Talk

February 20, 2013

PGE SA, Poland’s largest utility, plunged to a record on speculation the state-controlled company will reduce dividend after an asset writedown.

The shares fell as much as 7.2 percent to 15.95 zloty, the lowest intraday level since its debut on the Warsaw Stock Exchange in November 2009, and traded 4 percent lower at 16.51 zloty as of 10:46 a.m., valuing the company at 30.9 billion zloty ($10 billion). The benchmark WIG20 Index fell 0.3 percent.

PGE, whose Polish power plants have total capacity of 13.1 gigawatt, wrote down the value of its 1,547-megawatt Dolna Odra facility by 1.49 billion zloty ($481 million), the Warsaw-based company said in a regulatory filing yesterday. That will cut its 2012 net income by 1.21 billion zloty and earnings before interest, taxes, depreciation and amortization by 1.52 billion zloty, it said.

Dolna Odra, a coal-fired power plant, “isn’t profitable at current electricity prices,” Robert Maj, an analyst at KBC Securities in Warsaw, said in a note today. “The write-offs can potentially threaten the dividend payout from 2012.”

Malgorzata Koziel, a spokeswoman for PGE, declined to comment on the dividend when reached by phone today.

Falling Prices

The average estimate in a Bloomberg survey of 21 analysts before the writedown announcement was for 2012 profit of 4.3 billion zloty, compared with 4.94 billion zloty in 2011. The company may pay a dividend of 1.37 zloty a share, compared with 1.83 zloty paid last year, according to a Bloomberg forecast.

“The writedowns show that current electricity prices may force other utilities to follow suit,” Tomasz Duda, a Warsaw- based analyst at Ipopema Securities SA, said by phone today. “A payout from PGE is still possible, but undoubtedly dividends from Polish utilities will shrink.”

State-controlled Tauron Polska Energia SA, PGE’s largest competitor, declined 2.2 percent to 4.43 zloty today, falling for a second day. Pawel Gniadek, a Tauron spokesman, declined to comment on possible writedowns when reached by phone today.

Polish baseload electricity for next year has dropped 16 percent in 2012, the most among any country in the European Union, and lost a further 7.7 percent this year as declining consumption eroded profit margins. At the same time, the nation’s 2012 power demand declined for the first time in three years, according to the country’s transmission grid.

To contact the reporter on this story: Maciej Martewicz in Warsaw at

To contact the editor responsible for this story: James M. Gomez at

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