ČEZ's net profit falls by 1.5% to CZK 40.2bn in 2012

Prague, Feb 28 (CTK) - Net profit of power utility CEZ fell by 1.5 percent year-on-year to Kc40.2bn last year while its revenues increased by 3 percent to Kc215.1bn, the company said on its website yesterday.

For this year, the CEZ group expects its net profit to fall to Kc37bn.

"The expected decrease in profit reflects the unfavourable development on European Energy Markets, a significant fall of baseload electricity prices, lower allocation of carbon credits for production and a decline of production in the Czech Republic," CEZ said.

The EBITDA figure fell by 2.1 percent to Kc85.5bn. For this year, the company expects EBITDA at about Kc80bn.

The 2012 results reflect the development concerning CEZ's distribution unit in Albania.

Last year, CEZ posted a loss of Kc5.8bn in Albania, but it expects no further losses connected with Albania in the future as it has wound up its operation in the country after Albanian authorities revoked its distribution licence in January.

"Now we expect only a positive influence to come from future effects of our arbitration steps," CEZ CFO Martin Novak said at a press conference yesterday.

CEZ has made the first step to launch international arbitration over its marred investment in Albania. Now, a period is running during which both sides can still make a settlement agreement.

According to board chairman and CEO Daniel Benes, CEZ is calculating the sum over which it wants to sue Albania in the arbitration proceedings. It is, however, premature to publish the figure at this moment as it may harm CEZ at this stage of the dispute, Benes said.

CEZ is grappling with difficult conditions at present as electricity prices on European markets are falling, Benes said.

"All large power companies in Europe are struggling with unstable environment, a notable decrease in wholesale electricity prices and a hardly predictable future. They are selling extensive assets and reducing staff numbers significantly," CEZ board chairman and CEO Daniel Benes said.

According to CEZ sales director Alan Svoboda, CEZ is trying to secure itself against a fall of electricity prices by selling electricity for a long period ahead. It has already sold its capacity for this year and 54 percent of capacity for 2014. The average price of electricity sold for this year was EUR51 per MWh and between EUR49 and EUR50 for next year, Svoboda said.

The current price of an annual electricity contract on the exchange market is around EUR41 per MWh.

CEZ made investments worth Kc53.1bn last year. Over Kc50bn were invested in long-term assets. Of this, Kc18bn went to modernisation and construction of power plants, over Kc11bn in development and modernisation of distribution networks and about Kc8bn in enhancing the effectiveness and safety of nuclear sources.

As regards strategies, the preparation of conditions for the planned construction of two new units at the Temelin nuclear power plant is a priority for CEZ.

"We will disclose preliminary assessment of bids to bidders and start to discuss possibilities improvement of the bids with them in a couple of days," Benes said.

CEZ is the biggest power producer in the Czech Republic. It is majority owned by the state, which holds about 70 percent of its shares via the Finance Ministry.