* CEZ proposes CZK 33/share dividend vs previous CZK 40
* Net profit falls 29 percent on weak power prices, outages
* Finance minister says dividend 'not pleasing'
* Company says dividend healthy, supportive for development
(Adds finance minister, CFO comments)
By Robert Muller
PRAGUE, March 21 Czech electricity producer CEZ
cut its dividend on Tuesday after reporting a 29
percent drop in annual profits, raising the prospect of a
dispute with the finance ministry, its main shareholder, which
criticised the decision.
The company proposed lowering its 2016 dividend to 33 crowns
a share, or 17.8 billion Czech crowns ($713 million) in total,
down from 40 crowns in the previous four years.
Like many rivals, CEZ has struggled with weak power prices,
and has also been hit by extended nuclear plant outages in
recent years. Adjusted profit, stripping out one-offs, fell to
19.6 billion crowns last year.
Finance Minister Andrej Babis, whose ministry controls the
state's 70 percent stake in CEZ, said he was not happy with the
planned dividend and that weaker earnings were partly due to
"neglect" at the company's most profitable plants.
"This is not caused only by the low electricity price, as it
is often stated," he told Reuters in a text message. "CEZ has
undergone massive nuclear power plant shutdowns in past years
due to neglected welding controls, which caused losses worth
billions (of crowns).
"The dividend proposal is not pleasing. I won't comment now
whether I will submit a counterproposal."
CEZ, which expects nuclear output to rise by a fifth this
year, typically holds shareholder meetings to vote on the
dividend in June.
Chief Financial Officer Martin Novak defended the proposed
cut in the payout. "We believe (it) is a healthy level of
dividend which we are able to offer and at the same time it does
not tie up our development," he said.
CEZ also proposed temporarily changing its dividend payout
ratio to 60-100 percent of adjusted net income for the next two
years - from 60-80 percent previously - while it grapples with
industry changes, such as the rise of renewable energy.
The company has slowly started relying more on renewable
power and is developing an energy service provider that works
with businesses and cities on energy savings and investing into
startups like energy storage company Sonnen in Germany to help
transform its business.
It sees a further fall in profits this year, with adjusted
net profit targeted at 12-17 billion crowns.
The higher estimate includes potential income of 4.8 billion
crowns if holders of CEZ convertible bonds redeem the paper in
exchange for shares the company has in Hungarian oil group MOL
instead of cash this year, it said.
($1 = 25.0440 Czech crowns)
(Additional reporting and writing by Jason Hovet; Editing by