Matt Atlas

CEZ Sees Profit Plummet By 89% In First Half

The net profit of the ČEZ energy group in the first half of this year fell by 89 percent year on year to 1.6 billion crowns. Operating income rose 2 percent to 108.2 billion and operating profit before depreciation (EBITDA) fell 18 percent to 31.6 billion.

According to ČEZ, the decline in net profit was due to the deterioration of market conditions for coal energy in connection with the increase in the European Union’s climate goals and the recommendation of the Czech Coal Commission to stop burning coal by 2038.

“For these reasons, the market value of Severočeské doly decreased and CEZ Group created a provision for long-term assets of the mining company of CZK 8.7 billion in accordance with accounting standards, reflecting lower expected demand for coal and earlier cessation of coal mining,” said CEZ spokesman Ladislav Cross. Adjusted for extraordinary effects, such as provisions, CEZ’s net profit fell by 31 percent to 11.3 billion.

According to the latest climate proposals, presented in July, the European Union wants to increase the share of renewables in energy consumption, among other things, in the fight against global warming. In the first half of the year, CEZ Group’s energy production from emission-free renewable sources increased by nine percent year-on-year and production from nuclear sources by four percent. On the contrary, according to ČEZ, production from coal sources fell by 23 percent, mainly due to the sale of the Počerady power plant and the shutdown of the Prunéřov I power plant. Overall, the share of ČEZ’s coal production is already below 30 percent.

“We continue to implement our accelerated Clean Energy of Tomorrow strategy aimed at growing the share of zero-emission sources and the Czech Republic and Central Europe. CEZ Group’s CO2 emissions from electricity generation fell by 19 percent year-on-year in the first half of the year billion crowns, “commented CEZ CEO Daniel Beneš on the group’s results.

Energy consumption has increased

According to ČEZ, the sale of Bulgarian assets affected the economic results in the first half of the year and will also affect the full-year result. “Overall, CEZ Group is leaving Bulgaria with a positive cash balance in excess of one billion crowns and is continuing international arbitration against the Bulgarian state, where we are claiming potential additional income for CEZ shareholders,” said Martin Novak, CEZ Board Member and Chief Financial Officer.

In the first half of the year, according to ČEZ, energy sales to end customers in the Czech Republic increased significantly – by 11 percent for electricity and by 20 percent for gas. Electricity consumption in ČEZ Distribuce’s distribution area increased by nine percent year-on-year. It grew by eight percent for large companies and by two percent for households. Consumption thus reached a higher level than in 2019, ie before the start of the covid-19 pandemic.

Therefore, CEZ Group is raising estimates of this year’s full-year financial results. “We are raising the full-year EBITDA outlook to 58 to 60 billion crowns and extraordinary adjusted net profit to 18 to 20 billion crowns due to positive developments across all segments. CEZ Group’s net debt fell by 43 billion crowns in the first half of the year,” Novak said. However, according to data on the ČEZ website, electricity production fell by seven percent year-on-year to 27.7 terawatt hours (TWh) in the first half of the year. Compared to last year, the number of employees in the group also decreased, by seven percent to around 30,300 at the end of the first half of the year.

CEZ wants to invest over half a trillion crowns by 2030

CEZ plans to invest over half a trillion crowns together by 2030, specifically 500 to 550 billion crowns. This was said in today’s interview by the company’s CFO Martin Novák. According to him, the so-called maintenance investments in CEZ’s current resources and assets are to account for about half and the other half for expenditures on the company’s growth. According to Novák, these are not unrealistic plans, because the company currently invests 40 billion crowns a year, which makes about 400 billion crowns in ten years.

The CFO stated that in addition to expenditures on distribution networks or further development of modern energy services (ESCO), the planned cumulative amount also includes, for example, ČEZ expenditures related to the preparation of a new nuclear unit in Dukovany, company acquisitions, and expenditures on new renewable energy sources.

CEZ is the largest Czech energy company. Its majority shareholder is the state, which holds about 70 percent of the shares through the Ministry of Finance.