CEZ Group surpasses outlook with strong 2023 financials By Investing.com

CEZ Group (CEZP.PR), the Czech energy conglomerate, has reported robust financial results for the full year of 2023, surpassing its previously stated outlook. The company’s EBITDA reached CZK 124.8 billion, with adjusted net income at CZK 34.8 billion. A significant portion of the income—74%—was generated from emission-free activities. CEZ Group also announced an expected dividend payout of CZK 39 to CZK 50 per share, translating to a total of CZK 21 billion to CZK 28 billion.

Despite a challenging environment marked by decreasing power prices and a negative impairment in their coal mining business, the company has secured supplies of non-Russian gas and is actively developing renewable energy sources within the Czech Republic. CEZ Group is on track to achieve its 2030 vision, aiming for an EBITDA increase to CZK 80 billion to CZK 90 billion.

Key Takeaways

• CEZ Group’s EBITDA exceeded the November 9 outlook, reaching CZK 124.8 billion.
• Adjusted net income was reported at CZK 34.8 billion, with a significant contribution from emission-free activities.
• Dividend payout is expected to be between CZK 39 to CZK 50 per share.
• The company is transitioning away from coal assets, which are to be discontinued by the end of the decade.
• CEZ Group has secured non-Russian gas supplies and is expanding its renewable energy portfolio.
• A new nuclear unit tender is in progress, with a contract expected in Q1 2025.
• The company acquired a 55% stake in Czech distribution company GasNet.

Company Outlook

• CEZ Group anticipates lower income from generation in 2024 due to falling power prices.
• The company has sold most of its energy hedge power for 2024.
• Electricity consumption is expected to grow in the future, with a current drop attributed to savings, warmer weather, and rooftop solar installations.
• Strategic priorities include reducing emissions, increasing capacity, and digitalizing activities.
• CEZ Group targets an EBITDA of CZK 115 billion to CZK 120 billion and CZK 25 billion to CZK 30 billion in adjusted net income.

Bearish Highlights

• A negative impairment of CZK 5 billion was reported in the coal mining business.
• Coal and electricity generation decreased, with further declines expected.
• Income taxes increased by CZK 13.5 billion due to a new profit tax.

Bullish Highlights

• CEZ Group is in the top 20% of ESG companies and continues to focus on emission-free activities.
• The trading segment performed well, and the company is stabilizing its customer portfolio.
• Renewable generation is expected to increase by 10% in 2024.

Misses

• The coal mining business faced a total variance of CZK 8 billion in amortization.
• Generation in the nuclear and renewable segments slightly decreased by 1% and 2%, respectively.

Q&A Highlights

• Lignite operations may close between 2027 and 2030 due to significant pressure.
• GasNet financial results will be published in the spring.
• CapEx guidance for the coming years was provided.
• Dividend payout ratio, nuclear plans, and potential support for gas and biomass units were discussed.
• Financing options for nuclear and small modular reactor projects are being considered.

The company’s commitment to transitioning from coal assets to more sustainable energy sources reflects a broader trend in the energy industry towards cleaner and more renewable forms of power generation. CEZ Group’s strategic initiatives, including the development of new photovoltaic projects and the expansion of e-mobility charging stations, demonstrate its dedication to innovation and sustainability. With the continued digitalization of its activities and a focus on ESG compliance, CEZ Group is positioning itself to meet the challenges of a dynamic energy market while delivering value to its shareholders.

Full transcript – None (CEZYY) Q4 2023:

Operator: Hello everyone. This is CEZ Group Full Year 2023 Conference Call. It’s my pleasure to welcome today’s speakers, Martin Novak, Chief Financial Officer, and Pavel Cyrani, Chief Strategy Officer. I will now hand over to Martin.

Martin Novak: Good afternoon, good morning, everybody. Let me cover first two sections and then I hand over to Pavel. Looking at the slide number three, you can actually see our financial highlights. Our EBITDA reached CZK124.8 billion. We exceeded actually our November 9 outlook, which was CZK115 billion to CZK220 billion positive impacts or positive changes between our outlook from November 9. And the real numbers for 2023 include trading segments, CZK3.5 billion better results, CZK2 billion are better results from brook trading, CZK1.5 billion is actually reevaluation of derivatives that the HR for 2024 and later. We also had better mining segment numbers by CZK700 million compared to our estimate and revenues from ancillary services and sales of heat in Czech Republic of 1…