May 12, 2020 / 11:10 AM / 14 days ago

CEZ profit rise beats estimates in first quarter, but trims outlook on pandemic

PRAGUE (Reuters) - Central Europe’s biggest listed utility CEZ reported a jump in first-quarter net profit on Tuesday as realised prices on electricity sales rose, although the coronavirus outbreak pushed it to trim its full-year earnings outlook.

The company, 70% owned by the Czech state, estimated the pandemic would cause an up to 4 billion Czech crown ($157 million) hit to full-year 2020 earnings before interest, tax, depreciation and amortisation (EBITDA).

CEZ said the impact of the pandemic would come through lower commodity prices as well as falling consumption – with Czech needs dropping 11% just in April – and 20-30% weaker-than-planned EBITDA from the group’s energy service provider ESCO.

But it expected the hit to be contained by its hedging strategy of pre-selling future output, with a rise in wholesale power prices in recent years was now showing up in profits.

Output for 2020 was sold at an average 44.9 euros per MWh and 2021 output at 46.3 euros, above the market rate.

“We assume that the ... pandemic will affect CEZ Group only temporarily and to a limited extent,” Chief Executive Daniel Benes said.

CEZ said it expects EBITDA in a range of 61 billion to 64 billion crowns this year and adjusted net profit at 19 billion to 22 billion crowns, the latter down from a previous outlook of 21 billion-23 billion crowns but higher than the 18.9 billion crowns it posted in 2019.

Adjusted net profit climbed 34% to 13.9 billion crowns in the first quarter. Attributable net profit hit 13.81 billion crowns, above the average estimate of 10.62 billion crowns in a Reuters poll and up from 9.82 billion crowns a year ago.

CEZ confirmed plans to pay a 34 crown per share dividend from 2019 profit, amounting to 97% of its total earnings.

Shares were up 2.8% at 481 crowns by 0848 GMT, outperforming the Prague exchange.

Chief Financial Officer Martin Novak said the group was continuing in a divestment strategy to exit most of its foreign markets. He said it aimed to still close one such transaction in Romania by the end of the year even though a state of emergency during the virus outbreak there has caused a delay. The sale of Polish wind projects could also be completed soon.

Novak said that the group would decide on what to do with divestment proceeds once they were received. The company had said last year proceeds could go to cutting debt, investment in the Czech market or to an extra dividend for shareholders.

“This (extraordinary dividend) is one of the options, but we have many other options,” Novak said.

($1 = 25.4350 Czech crowns)

Reporting by Jason Hovet and Robert Muller; Editing by Louise Heavens and Alex Richardson

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