* 2013 profits fall to 1.308 billion zlotys
* Expects further profit fall 2014 due to low energy prices
* May raise more via bond issue for Jaworzno power project
(Adds CEO comments)
By Pawel Bernat
WARSAW, Mar 18 Poland's No.2 energy producer
Tauron warned on Tuesday that weak energy prices would
mean lower earnings this year after the company reported an 11
percent drop in 2013 net profit.
The state-controlled utility, like larger state rival PGE
, is struggling with falling energy prices and weak
demand in Poland because of a sluggish economy.
"It will be worse," Chief Executive Dariusz Lubera said when
asked if Tauron's profits would fall this year. "Lower energy
prices will influence the production segment."
"We hope that 2014 will see the lowest level of energy
prices and that they will slowly start to rebound," he added.
Tauron's warning sent its shares down 1.0 percent.
The company has been cutting costs to combat the difficult
market conditions and aims to save 900 million zlotys between
2013 and 2015. Savings last year totalled 320 million zlotys, it
The savings helped Tauron's 2013 profits fall less than
expected. Net profit came in at 1.308 billion zlotys ($431.1
million), above market forecasts for 1.227 billion.
Tauron has put on hold a 3.5-billion zloty project with
Polish copper miner KGHM to build a gas-fired plant at
Blachownia in southern Poland because of the adverse market
conditions and problems with reliable gas deliveries.
But the company still hopes to begin construction of a
5.4-billion zloty coal-fired Jaworzno plant also in the south of
Poland, where Tauron has most of its assets.
Tauron plans to sell bonds in the first half of this year to
finance the project, already delayed due to some financing
difficulties. The group does not rule out
increasing a planned 1.5-billion zloty bond issue if necessary
to finance the flagship project.
Tauron's investment in Jaworzno also has implications for
the company's dividend policy because of its size, the CEO said.
But he said he did not envisage a dividend lower than one fifth
of consolidated net profit.
"We would never want to hand out a dividend below 20 percent
of our group net profit," Lubera said. He said in the longer
term, when Tauron's investment programme was finalised, he hoped
the company could become one with high dividends, handing out as
much as 60 percent of its net profit.
($1 = 3.0344 Polish Zlotys)
(Writing by Adrian Krajewski. Editing by Jane Merriman)