RPT-Czech CEZ net profit beats forecast, operating lags

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By Jan Lopatka

Czech power firm CEZ a.s. posted a higher-than-expected 27 percent rise in first quarter net profit, but its operating result lagged forecasts due to warm weather this winter.

CEZ said on Thursday it made a net attributable profit of 12.68 billion crowns ($609.9 million) in January through March, beating market expectations of 12.09 billion and surpassing last year's 9.99 billion.

But operating profit or profit before interest, tax, depreciation and amortisation (EBITDA) rose by only 6.6 percent to 21.74 billion, below the 22.61 billion forecast in a Reuters poll.

"Warm weather together with growing output from renewable resources had a significant impact, especially in the distribution segment," CEZ said in a filing with the Prague Stock Exchange.

"Despite that, we are not changing our expectation of full-year profit of the group at the level of 35.1 billion crowns. We believe that we can compensate for this fallout mainly by cost savings," Chief Financial Officer Petr Voboril said in the statement.

The company, the largest Czech company with a market capitalisation of $30 billion, maintained its full-year guidance for EBITDA of 70.9 billion crowns.

Sales rose by 8 percent to 44.12 billion, below average expectations of 46.61 billion, in part because CEZ stopped including electricity purchased from third parties and sold on.

CEZ shares, which hit a record 1,095 crowns earlier this month, more than five times their level three years ago, recovered from an initial drop after the results were released to be up 0.3 percent at 1,045 crowns by 1416 GMT.

Komercni Banka analyst Lukas Dufek said power prices in Germany and a share buyback were driving the share price and the market was not concerned over the results.

"The (power price) jump can be quite big for the next year and that will support the share price," he said.

EXPANSION PLANS

CEZ said electricity output rose 12 percent year-on-year, but that was mainly due to the inclusion of two newly acquired power plants in Poland and one in Bulgaria. Domestic production rose by 2 percent, CEZ said.

CEZ, on the acquisition trail in eastern Europe and the Balkans, said it was in talks with the Polish government on buying its minority stakes in the Skawina and Elcho plants.

Chief Executive Martin Roman said the company would announce by the year's end the construction of a 1,000-1,500 megawatt gas-fired plant in the Czech Republic for peak power.

He said the firm would also create a new post of chief operating officer, to be filled by board member Daniel Benes, head of CEZ's administrative division.

This will mean Roman will concentrate less on the day-to-day business and devote more time to finance and acquisitions.

The government has agreed to sell a 7 percent stake in CEZ through the capital market with the help of bank Ceska Sporitelna. It gave no details on the form of the sale.

At the same time, CEZ is conducting a buyback of up to 10 percent of its stock, which will keep the state's stake in the company roughly unchanged at around 67 percent. (Additional reporting by Jan Korselt)

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Keywords: CEZ RESULTS/

[PRAGUE/Reuters/Finance.cz]