CEZ shares jump as 2022 earnings and dividend outlook brighten

PRAGUE (Reuters) – Shares of CEZ rose to their highest level since 2008 after the Czech energy group sharply raised its profit outlook on Tuesday, with rising electricity prices and commodity trading earnings boosting expectations. prospects for a record dividend this year.

The company, Central Europe’s largest publicly listed utility, said its first-quarter adjusted net profit more than tripled to 26.7 billion crowns ($1.13 billion), well above above an average estimate from a Reuters poll of 16.2 billion crowns.

Earnings before interest, tax, depreciation and amortization (EBITDA) jumped 119% year-on-year to 43.7 billion crowns.

CEZ said its results were largely impacted by record commodity trading profits in Western European markets and “enormous” growth in commodity prices as markets surged following the invasion of Ukraine by Russia.

CEZ shares, which have jumped nearly 70% over the past year, were up 2% in early trading, hitting 1,035 crowns in Prague for the first time since October 2008, as markets took advantage of more favorable prospects.

Quarterly profits were also boosted by temporary effects of nearly 8 billion crowns which will fade this year.

The most important was the income from the sale of emission allowances for the production of electricity due to a decision to strengthen liquidity to cover the margin risks on the exchanges. That revenue will be eliminated as part of higher provisioning for production shows, CEZ said.

The group, which is 70% owned by the Czech state, expects adjusted net profit to at least double year-on-year in 2022 to a range of 45-49 billion kroner – above. above the March forecast of 38 to 42 billion in profits.

EBITDA should amount to 95 billion to 99 billion crowns this year, against a previous forecast of 85 billion to 89 billion crowns.

CEZ said its outlook implied a dividend under its current payout policy of 67 to 73 crowns per share, above a record dividend of 53 crowns paid out of 2009 profits.

Further, CEZ said it pre-sold 26.3 terawatt hours of 2023 generation at an average price of 70.9 euros per megawatt hour, compared to a price of 61.5 euros reported in March. The pre-sold 2024 production was recorded at 69.2 euros per MWh.

Debt also declined during the quarter to a ratio of 0.9 to EBITDA, CEZ said.

“In the long term, such low debt is not efficient and we expect that in the longer term, the group could approach the optimization of debt by means of an extraordinary dividend or a share buyback” , said J&T Banka.

($1 = 23.6630 Czech crowns)

(Reporting by Jason Hovet; Editing by Kim Coghill and Susan Fenton)

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