Analysts: ČEZ's profit fell by tens of billions of crowns last year, but remained above average

The extreme profits recorded by energy company ČEZ the year before last will not be repeated, but last year's results were still significantly above the average of recent years. Analysts estimate that the company's net profit fell to around CZK 35 billion last year, down CZK 43 billion year on year. The main reason for the decline was special taxes and levies. Despite the year-on-year drop, the company's profit last year was higher than before the energy crisis. This is the view of analysts contacted by the Czech News Agency (ČTK). They say ČEZ could achieve similar results this year. The company will announce its 2023 financial results next Thursday.

ČEZ's performance last year met the company's targets, experts noted. For most of last year, the company forecast an adjusted net profit of CZK 33 billion to CZK 37 billion for the full year.

J&T Bank analyst Milan Lávička said that the year-on-year comparison of the company's financial results was affected mainly by the high comparison base, as the 2022 results reflected a sharp rise in energy prices on the market. Komerční banka analyst Bohumil Trampota said that high trading profits were not repeated last year, and that the windfall tax and the levy on excess revenues also had a major impact on the company's performance.

For this year, Trampota expects adjusted profit of around CZK 34.4 billion, while EBITDA is estimated to be around CZK 119.1 million. Lávička also expects the company to forecast net profit of CZK 30 billion to CZK 35 billion for this year.

Next week, the company's management could also outline its own proposal for the dividend from last year's profit. Analysts point out that the company's policy calls for a dividend payout of between 60 and 80 percent of profit. Last year, the group's board proposed a payout of 80 percent. However, the state, as the main shareholder, subsequently proposed paying out the entire adjusted profit, a proposal that was later approved by the company's general meeting.

Most analysts expect the company's management to propose a payout of 80 percent again this year. „However, our projections assume that, as last year, the finance minister will propose paying out the entire net profit. That would mean CZK 69 per share, equivalent to a gross dividend yield of around 7.7 percent,“ Trampota noted. The company paid a record dividend of CZK 145 per share from its profit the year before last.

However, Lávička said investors should not expect a major catalyst for trading in ČEZ shares on the stock exchange. „Investors will continue to focus primarily on electricity price trends, the future of the windfall tax, and the government's still highly inconsistent communication about strengthening the state's role in the ownership of key energy assets,“ he added.

ČEZ earned CZK 29.8 billion in the first three quarters of last year, with the company's net profit down 43 percent year on year. The group is one of the largest energy companies in Czechia. The state is its majority shareholder, holding around 70 percent of its shares through the Ministry of Finance.