(Repeats story published late on Thursday)
*Wholesale prices to remain above 75 euros per MWh
*Coal prices increasingly more relevant than oil price
*May launch share buyback in December
By Jana Mlcochova
PRAGUE, Sept 11 (Reuters) - European wholesale power prices
are expected to stay above 75 euros per megawatt hour even
though oil prices have eased in recent weeks, said Martin Novak,
chief financial officer at Czech power firm CEZ <>.
Novak said the impact of oil on electricity prices was
becoming less significant and that hard coal prices are key. He
also said the company's stock was cheap relative to the firm's
profit outlook.
"A long-term prognosis currently shows that (power) prices
should keep above the level of 75 euro (per MWh)," Novak said.
"For the time being, it does not look like there should be a
dramatic drop in power prices."
Shares in the utility, central Europe's largest listed firm
with a market capitalisation of $34.8 billion, rose 3.3 percent
following the comments before closing up 2.92 percent at 1,057
crowns. Prague's main PX <> index closed down 2.25 percent.
Oil prices have fallen to levels just above $100 per barrel
after a surge to a record high of $147 in July, which has helped
squeeze the global prices of other commodities.
"The impact of oil and gas is less and less significant due
to rising demand (for power) and the influence of hard coal
(prices)," Novak said.
Power prices in the central European country have converged
with prices in Germany but lag levels in some other eastern
European countries where prices have soared following capacity
constraints after a sharp pick-up in demand.
German baseload 2009 power prices traded at 78.9 euros on
Thursday <BY1DEZ9>.
PROFITS TO KEEP RISING
Novak said cost cutting and increasing output from nuclear
plants should be the main drivers of CEZ's future profitability
gains, along with wholesale electricity prices.
"In the coming years we see profits rising not only based on
power price development but also rising efficiency," he said,
although he declined to give a specific earnings forecast.
CEZ reported a 67 percent rise in second-quarter net profit
and raised its outlook for full-year 2008 net profit to 48.6
billion crowns ($2.75 billion) including minorities, a 14
percent annual growth.
Novak said CEZ's own coal resources helped the company curb
costs and resist fluctuations in global commodity prices.
"We have a nuclear portfolio, which has low variable costs
with a fixed price, and we have lignite-fired power stations
which we supply from our own coal resources or through long-term
contracts," Novak said.
Novak said he believed CEZ could launch a share buyback of
up to 10 percent in December, pushing ahead earlier estimates
for it to kick-off in the beginning of next year.
The repurchase cannot start before shares bought in an
earlier buyback programme are officially cancelled.
The low-debt company, facing few acquisition opportunities,
aims to hike its debt levels to the sector average of around a
2.0 to 2.5 multiple of earnings before interest, tax,
depreciation and amortisation (EBITDA).
CEZ's stock has shed 16 percent since a previous share
buyback ended in May, and on Thursday at 12.15 GMT its shares
were trading down 0.49 percent at 1,022 crowns.
The stock trades at around a 13-month low and around 11
times 2008 forecast earnings, versus the European sector average
of 15.94, according to Reuters data.
Novak said the drop does not correspond to the company's
expected earnings.
"The current reaction of the stock markets to energy stocks,
including CEZ, in our case, does not correspond with the very
positive outlook for our results," he said.
(Editing by Simon Jessop)
