* Net profit CZK 9.91 bln vs CZK 10.93 bln in poll
* Confirms outlook, says risk of impairments not included
* CEZ feeling strain of weaker power prices
* Cuts domestic electricity production outlook
(Adds CFO, plant upgrade delay, shares)
By Jason Hovet and Robert Muller
PRAGUE, May 13 Central Europe's largest listed
utility CEZ reported a 44 percent drop in
first-quarter net profit, blaming lower electricity prices and
sales in a milder winter, and flagged risks to its outlook in
The Czech utility producer, like European peers, is feeling
the strain of wholesale electricity prices that have fallen by
more than half in the five years since the global economic
It said on Tuesday that profit fell to 9.91 billion crowns
($497.43 million) in the first quarter from 17.81 billion a year
earlier when one-off items had also lifted results.
That was below a Reuters poll forecast for attributable net
profit of 10.93 billion crowns.
CEZ shares were down 2.3 percent at midday but have gained 2
percent over the past year.
The majority state-owned company confirmed it expected net
profit before adjusting for minority interests to fall for a
fifth straight year to 27.5 billion in 2014, just above half of
the record 51.9 billion crown profit it posted in 2009.
But the company said in a presentation accompanying results
that the outlook did not take into account impairments of assets
whose impact "cannot be quantified at the moment".
"The likelihood of domestic impairments is much, much lower
than abroad. We are mainly talking about the Bulgarian, Romanian
regulatory framework," Chief Financial Officer Martin Novak told
reporters. "It is a risk of an impairment."
CEZ took 8.4 billion crowns in impairment charges in the
second half of 2013.
The company, which earns the bulk of its revenue in its home
Czech market, is fighting in Bulgaria to keep its power
distribution license because of a dispute with state power
provider NEK over payments.
Chief Executive Daniel Benes reiterated the company expected
to keep its license.
Bulgaria's competition watchdog on Tuesday also accused CEZ
and two other foreign-owned power distributors of abusing their
dominant market position by setting unreasonably high prices for
access to their power network to Internet, TV and telephone
In Romania, the state has cut support for renewable energy,
affecting CEZ's wind farms there.
The Bulgarian and Romanian markets made up 15 percent of
CEZ's total revenue in 2013.
CEZ said another risk was a delay in the completion of
renewals of coal-fired plants. CEZ's sales and strategy
director, Pavel Cyrani, said the completion of an upgrade at its
Prunerov coal power plant may be delayed by several months from
a deadline toward the end of the year.
CEZ cut its domestic electricity output forecast to 60.9
TWh from 62.2 TWh but production at its nuclear and coal power
plants should stay stable.
The company said it had pre-sold 77 percent of its planned
2015 output at an average price of 40.5 euros per MWh.
First-quarter revenue fell 11 percent to 53.16 billion
($1 = 19.9225 Czech crowns)
(Editing by Erica Billingham and Susan Fenton)