Analysts: Czech utility ČEZ met targets last year, this year's outlook below expectations

The performance of energy group ČEZ met expectations last year, confirming the company's stable financial health. This follows from comments by analysts to ČTK. However, the company's outlook for this year is below expectations, they said, mainly due to lower revenues resulting from a decline in prices for electricity generated. According to analysts, this year's financial results could also be affected by developments in the Middle East.

ČEZ earned CZK 27.4 billion last year. The company's net profit thus fell year-on-year by CZK 1.7 billion, or 5.8%. The main reason for the decline was higher depreciation and amortisation. EBITDA, operating revenues and adjusted net profit, which is decisive for the dividend, also fell slightly.

According to the company's forecasts, this year's EBITDA should fall from last year's CZK 137 billion to between CZK 103 billion and CZK 108 billion. The company expects adjusted net profit, which stood at CZK 28.1 billion last year, to range between CZK 27 billion and CZK 31 billion.

Despite the decline, ČEZ's performance met the company's current expectations, according to analysts. "EBITDA at the upper end of the expected range, together with exceeding management's net profit outlook, confirmed the company's sound condition," said XTB analyst Tomáš Cverna. Jan Raška, an analyst at Fio banka, assessed the results similarly. "They were almost in line with both our expectations and the market consensus," he noted.

However, analysts said the company's outlook for this year, presented today, is below expectations. For example, Milan Lávička, an analyst at J&T Banka, had expected operating profit of around CZK 115 billion and adjusted net profit of around CZK 40 billion. In addition to the anticipated decline in generation due to lower realised electricity prices, he was also surprised by lower expected profits from distribution and sales. According to Cverna, the group's outlook could also be affected by factors related to developments in the Middle East.

Overall, analysts view ČEZ's financial report published today rather negatively, precisely because of the weaker outlook. "We expect a negative market reaction," Lávička added.

Analysts expect the dividend for shareholders to be at the upper end of the company's current dividend policy, which envisages paying out 60% to 80% of adjusted net profit. In that case, it would amount to CZK 42 per share. However, the board of directors will probably present its proposal later, while the company's general meeting will ultimately have the final say. Last year, the company paid a dividend of CZK 47 per share, totalling CZK 25.3 billion.