* Finmin wants CEZ to pay out entire 2013 profit
* Shares jump to highest since early November
* Payout would cause problems for investment plan - analyst
* CEZ due to make proposal before AGM, around June
(Adds PM comment, updates shares)
By Robert Muller
PRAGUE, March 24 Czech state-controlled energy
company CEZ should pay out all of last year's 35.2
billion crown ($1.8 billion) profit in dividends, the country's
finance minister said on Monday, sending CEZ shares to their
highest in four months.
Finance Minister Andrej Babis said CEZ, in which the state
holds a 70 percent stake and whose dividend and tax payments are
a major source of state revenue, should abandon its long-held
dividend policy of paying out 50-60 percent of net profit.
Investors in central Europe's largest utility welcomed the
prospect of a short-term windfall and CEZ shares jumped to 577.7
crowns, their highest since November.
But analysts said such a payout could be hard to maintain
and mean delays to expanding its Temelin nuclear power plant,
already on shaky ground because weak electricity prices make the
Prime Minister Bohuslav Sobotka said the government should
discuss the payout idea together with information on CEZ's
investment plans, of which Temelin is the most important.
"Regarding the dividend or dividend policy in one year, that
is not anything that could complicate or make it impossible to
build new blocks at the Temelin nuclear plant," Sobotka said.
Raising the dividend would need approval of the three-party
government. Babis's ANO centre-right movement is the
second-strongest partner behind the centre-left Social
Babis told Reuters the proposal "is my opinion", confirming
comments he made in daily financial paper Hospodarske Noviny on
Monday. He added: "The proposal is not yet prepared."
Since the ruling coalition took power in January, Babis, the
billionaire owner of the country's largest food and agricultural
group, has said the state and state companies must be run more
effectively in order to help the government manage its budget.
The Czech government's central budget deficit is expected at
112 billion crowns in 2014 or just below the 3 percent of the
gross domestic product ceiling prescribed by the European Union.
Speaking to Hospodarske Noviny, Babis disagreed with CEZ's
policy of needing to keep profit for investment: "I don't see
that the past investments have significantly raised the value of
CEZ and that its investment policy has paid off."
CEZ management is due to propose the company's dividend
payment one month ahead of the annual shareholders meeting, said
CEZ spokesman Ladislav Kriz, adding the meeting normally takes
place in June, but that the exact date has not yet been set.
Kriz declined to comment directly on Babis' comments.
"Such a high profit distribution is not sustainable in the
long term and it would mean postponing the planned construction
of new nuclear blocks in Temelin," Komercni Banka analyst
Miroslav Frayer said in a note.
CEZ's net profit fell 12 percent to 35.2 billion crowns in
2013. European wholesale electricity prices have fallen by
around half since the global financial and economic crisis.
It has forecast a fifth straight year of declining earnings
this year, expecting 2014 profit to decrease to 27.5 billion
crowns, about half of the record 51.9 billion posted in 2009.
Speculation is growing that CEZ may end its multi-billion
dollar tender for Temelin's enlargement in the coming months
without picking a winner. CEZ has sought government support to
ensure an expanded Temelin plant is profitable but the new
government has balked at guaranteeing electricity prices.
CEZ paid a 40 crowns per share dividend from 2012 profit,
providing state coffers with about 15 billion crowns.
Paying out its entire 2013 net profit would raise the
company's dividend yield to 12 percent, or three times that of
other utilities in the central European region, said Frayer at
($1 = 19.9278 Czech crowns)
(Writing by Jason Hovet; Editing by Sophie Walker and Mark