Analysts expect CEZ's first-quarter profit to fall and revenue to rise in Czechia

Analysts say the performance of energy group CEZ continues to be affected this year by the state windfall tax and, more recently, last year's acquisition of GasNet. They therefore expect CEZ's net profit to fall sharply year on year in the first quarter, while the company's revenue should rise slightly, according to their comments. The company will publish its first-quarter results on Thursday morning.

Komerční banka analyst Bohumil Trampota noted that the year-on-year comparison of financial results will be affected by the acquisition of gas company GasNet, which CEZ integrated into its group only in the second half of last year. He therefore expects a substantial increase in distribution revenue, but also higher costs for materials, personnel and services. Depreciation should also rise significantly, partly due to the company's coal assets, according to Trampota.

Overall, Trampota expects first-quarter net profit to reach 8.3 billion crowns, which would represent a year-on-year drop of up to 38 percent. By contrast, he expects revenue to be about six percent higher than in the first quarter of last year, at 92.7 billion crowns.

J&T Bank analyst Milan Lávička also expects a similar trend in CEZ's first-quarter performance. The group's net profit, he said, fell by about 26 percent year on year to 10.1 billion crowns, while he estimates revenue at 89.5 billion crowns, about two percent higher than last year.

"On the one hand, lower realized electricity prices will have a negative impact on the results; on the other, we should see a positive effect from consolidating gas distributor GasNet," he said.

The sale of CEZ's Polish assets, completed in March, will not yet have a significant impact on the company's figures, according to Lávička.

Analysts also recalled that in the past CEZ management often announced a proposed dividend from the previous year's profit alongside its first-quarter results. "Based on last year's results, a dividend proposal at the upper end of the official dividend policy would mean a dividend of 47 crowns per share," Lávička said.

Trampota also expects the dividend to be at the same level. CEZ's current dividend policy calls for paying out 60 to 80 percent of adjusted profit. Last year, the dividend was 52 crowns per share.

For this year, analysts do not currently expect any changes to the earnings outlook the company presented in March. They say the company should confirm its full-year net profit forecast of between 25 and 29 billion crowns.

CEZ is one of the largest energy companies in the Czech Republic. The state is its majority shareholder, holding roughly 70 percent of the shares through the Ministry of Finance.