REUTERS SUMMIT-CEZ in wait-and-see mode on new investments
PRAGUE, Sept 25
PRAGUE, Sept 25 (Reuters) - CEZ is taking a wait-and-see approach to spending on new investments, the Czech utility's chief strategy officer said on Wednesday, highlighting the difficult climate for power companies in Europe where the sluggish economy has hit prices.
CEZ, like utilities across Europe, has had to navigate the low demand for electricity and weak wholesale prices. It is facing a fourth year of declining profit.
Pavel Cyrani told the Reuters Eastern Europe Investment Summit he would not yet attribute a recent upswing in wholesale power prices to an economic recovery and that central Europe's biggest utility would take a cautious approach to investment in the next few years.
"For any kind of further growth either in the Czech republic or abroad we are in the wait and see mode," Cyrani said at the summit. "We are consolidating positions where it makes sense and not growing much beyond that."
CEZ surprised analysts last quarter when it did not raise its 2013 guidance despite proceeds from the sale of a power plant. The company is instead making an assessment of the value of its assets, and Cyrani said gas assets were most at risk of writedowns.
"We are still working on it. Obviously the assets under a bigger risk are gas assets," he said, but added that he did not see any other extraordinary items appearing in 2013 results.
Analysts have predicted a writedown could come from CEZ's gas-fired Pocerady plant but CEZ officials said last month they did not expect one this year.
The majority state-owned company is also looking to enlarge its Temelin nuclear power plant, a multi-billion dollar investment that would be the country's largest ever energy deal.
However, it has delayed picking a builder until the end of next year or 2015 as it negotiates a deal with the Czech state to guarantee future electricity prices.
Analysts and shareholders have said that to go ahead with Temelin without a price guarantee would be a major risk for CEZ. The project could also hit CEZ's dividend in the future.
Cyrani said the company would look at its dividend policy, which aims to pay out 50-60 percent of net profit, in the final seven to eight years before the new Temelin units go online, which is seen not before 2025 currently.
"It is clear that the last seven to eight years before finally going online with the (Temelin) project, that is where most of the investment is being paid," he said.
"Going through this period we would definitely need to tighten all the money leaving the company ... so OPEX, CAPEX and dividend policy."
(For other news from Reuters Russia and East Europe Investment Summit click here) Follow Reuters Summits on Twitter @Reuters_Summits
(Additonal reporting by Jan Korselt and Jan Lopatka. Editing by Jane Merriman)
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