CEZ Sees Profit Fall 62% In 2020

ČEZ energy group’s profit declined 62 percent last year from CZK 14.5 billion to CZK 5.5 billion. The company announced today that the decline was due to higher provisions due to Romanian assets’ sale, deteriorating conditions for coal energy, and higher emission allowances. However, after adjusting for extraordinary non-monetary effects, net profit increased by 21 percent to 22.8 billion crowns. The group’s revenues increased by four percent year-on-year to 213.7 billion crowns, which is the highest since 2013.

CEZ’s operating profit before depreciation (EBITDA) for 2020 rose by eight percent year on year to 64.8 billion crowns. According to the company, the main reason was the increase in electricity prices due to multi-year pre-sales on the wholesale market. The adverse effects of the covid-19 pandemic were estimated at around three billion crowns. CEZ’s revenues in comprehensive energy services (ESCO) stagnated at 22 billion crowns last year. The trade margin from commodity trading, so-called trading, was 3.8 billion crowns.

According to analysts, CEZ’s results last year did not surprise. The markets reacted lukewarmly to the announcement. This year’s outlook is perceived by most analysts rather negatively, partly due to the expected decline in operating profit EBITDA. “It is favorable that ČEZ, thanks to the timing of pre-sales, can well capture the current wave of growth in the price of wholesale electricity supplied for 2022 and 2023,” said Lukáš Kovanda, chief economist at Trinity Bank.

CEZ expects a net profit of 17 to 20 billion crowns this year. “On the one hand, there will be a year-on-year increase in sales prices of electricity produced due to higher prices on the wholesale market. “The resulting profit of 2021 will be affected by the settlement dates of asset sales in Romania, Bulgaria, and Poland,” he added.

CEZ CEO Daniel Benes said the company would end the sale of Romanian assets on March 31. According to him, the date of settlement of the transaction, including payment of the purchase price, was set in agreement with the buyer, MIRA. According to him, CEZ also expects to settle the transaction associated with the sale of assets in Bulgaria by the end of June. CEZ has signed an agreement on the sale of assets with the Bulgarian insurance and financial group Eurohold.

According to Beneš, four bidders advanced to the next phase in the sale of ČEZ’s Polish assets. “The second phase will end with the submission of binding bids in the second quarter of 2021,” he said. CEZ announced last year that it had started looking for candidates for its five Polish companies. Among them are the Skawina and Chorzów coal-fired power plants, which are also heating plants.

Today, Beneš also commented on the planned termination of the operation of the Mělník III lignite power plant. He stated that ČEZ intends to shut it down in the summer. The initial date is mid-August. According to him, this spring, the company will also decide on the fate of the Dětmarovice coal-fired power plant, which primarily uses coal from the ending OKD.