November 12, 2019 / 10:32 AM / 2 months ago

UPDATE 1-CEZ trims forecast after Q3 profit misses estimates

* Accounting changes help buoy outlook

* Pre-sale prices show rising profit in years ahead

* Says evaluating next steps in Bulgaria

* Romania asset sale seen moving ahead

* Interactive graph on quarterly profit: (Adds foreign asset sales, future sales, shares)

PRAGUE, Nov 12 (Reuters) - Czech electricity producer CEZ reported a surprisingly sharp drop in third-quarter attributable net profit after paying a refund in a court case, although accounting revisions padded year-to-date earnings and buoyed its full-year outlook.

Central Europe’s biggest listed utility, which is 70% owned by the Czech state, is looking to reverse a decade-long profit slide as wholesale electricity prices rise. It is exiting most foreign markets to refocus domestically.

But the group has hit some snags this year.

A court ruling for it to refund a payment from railway company SZDC along with nuclear power plant shutdowns this year has dragged on profits, while Bulgarian regulators blocked the sale of its assets there last month.

The court case cut 1.3 billion crowns ($56.22 million)from earnings before interest, tax, depreciation and amortisation (EBITDA) in the third quarter, CEZ said on Tuesday.

It reported quarterly profit of 88 million crowns ($3.81 million), some 96% below the average estimate of 2.21 billion crowns in a Reuters poll, with higher costs and lower production also weighing.

However, accounting changes for derivatives led to an upward revision of first-half earnings, helping compensate for the disappointing third quarter and meaning CEZ only trimmed its full-year profit outlook away from the upper end of the previous range.

It forecast adjusted net profit, which excludes extraordinary effects, at 17 billion to 18 billion crowns in 2019, down from a previous upper target of 19 billion, but still rising from 13.1 billion in 2018.

EBITDA was seen at 58 billion crowns, in the middle of its previous range and rising from 49.5 billion in 2018.

Shares of CEZ, which has seen yearly profits drop more than 80% in the last decade, were 0.9% lower at 517.50 crowns at 1027 GMT.

CEZ said it had pre-sold 78% of its 2020 production at an average price of 43.2 euros per megawatt hour, up from a price of 42.3 euros reported at the end of June. Output for 2021 was so far sold at an average price of 45.4 euros per MWh.

“Rising prices of pre-sold electricity in the coming years should lead to a gradual improvement of profitability,” J&T analysts said.

CEZ said it was evaluating its next steps in Bulgaria after its asset sale was blocked a second time.

In Romania, it said more than 30 buyers had shown interest in assets there and it expects indicative offers by the end of the year. It also said it was starting steps to launch a sale of assets in Poland.

($1 = 23.1240 Czech crowns)

Reporting by Jason Hovet, editing by Louise Heavens and Kirsten Donovan

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