CEZ Reuters: CEZPsp.PR Bloomberg: CEZ CD
Electricity generation and distribution Current price CZK 201 Under review
Czech Republic Target price -
As in Q1 2004, the unconsolidated CAS results, which reflect the performance of the electricity generation business (the main component in CEZ’s total value), should show strong y-o-y improvement in terms of nominal sales, with higher average yield per MWh sold due to increasing wholesale prices and higher domestic volume sales offsetting lower export volumes. Domestic prices are increasing after several years of liberalization-driven cuts, enabled largely by regional supply/demand imbalances. We therefore expect similar developments for CEZ’s export prices. Domestic sales will be influenced by the strengthened position of CEZ on the distribution market after the acquisition of the regional distributors last year.Increases in the EBITDA margin, EBITDA and EBIT reflect the increased yield per MWh sold and higher operating efficiency (a higher proportion of electricity is generated in nuclear power plants since the full deployment of the Temelin NPP). The rises have been muted by higher depreciation following the opening of the second block of the Temelin nuclear power plant in April 2003. H1 2004 pre-tax income will be heavily influenced by the one-off loss of CZK 1.1bn booked in Q1 following a change in the accounting method for derivatives. A direct y-o-y comparison of the performance below the EBIT level is not meaningful, since 2003 figures for financial income and income taxes were distorted by the disposal of the 66% stake in the grid operator CEPS. The company is holding a press conference on Monday, August 2. CAS unconsolidated (CZK m)
H1 2004E H1 2003 change Sales 30,887 26,649 15.9%
EBITDA 12,628 10,319 ... EBIT 6,351 4,334 46.6%
Pre-tax income 3,791 16,803 -77.4% Net income 2,567 12,329 -79.2%
EPS (CZK) 4.3 20.8 -79.2%