CEZ net profits more than halve in 2023 to CZK29.6bn

CEZ net profits more than halve in 2023 to CZK29.6bn
Net profits were affected by the imposition of CZK30bn in windfall taxes and a CZK10bn levy on excess revenues from generation. / CEZ
By Robert Anderson in Prague March 21, 2024

CEZ, the majority state-owned Czech power group, reported net profit of CZK29.6bn (€1.17bn) in 2023 on revenue up 18% to CZK340.6bn.  

Net profit fell back sharply from the record CZK80.7bn made in 2022, when the group benefited from bumper trading profits and soaring energy prices after the Russian invasion of Ukraine. Electricity prices have now fallen back to the 2021 price level.

Net profits were also affected by the imposition of CZK30bn in windfall taxes and the CZK10bn levy on excess revenues from generation. The group also took a CZK5bn charge for the “significant deterioration in market conditions for future coal-fired power generation” at its Severočeské doly mine. Adjusted net profits were CZK34.8bn.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) reached CZK124.8 bn, down 5% year on year. This exceeded the group’s forecasts of CZK115bn to CZK120bn “mainly thanks to additional gains from commodity trading and reliable nuclear power plant [NPP] production”.

The power group, which is 70% state-owned, said for this year it anticipated Ebitda of CZK115bn to CZK120bn and adjusted net profit at CZK25bn to CZ30bn, assuming that it pays CZK20bn to CZK30bn in windfall tax again in 2024.

“Despite the significant decline in electricity prices, we were able to meet our initial financial targets. This was mainly due to the safe and reliable generation at our nuclear power plants, which were able to generate more than 30 TWh for the fifth consecutive year. Another key factor was the excellent trading performance of our trading business, which achieved the second-best result ever and generated a trading margin of CZK9.4bn. Despite the extraordinary levy on excess revenues from generation, in 2023 we achieved the highest profit in the last 10 years, with the exception of the extraordinary year 2022,” said Daniel Beneš, chairman and CEO.

CEZ said it would propose a dividend of CZK39 to CZK52 per share, which would translate into a payment to shareholders of CZK21bn to CZK28bn. The government is likely to set the dividend based on its financing needs.

CEZ is in the middle of a process to make an estimated CZK160bn (€6.4bn)  investment in new nuclear reactors. Onetime favourite bidder, the US's Westinghouse, was thrown out of the next round of the tender at the end of January, leaving French EDF and South Korean KHNP to submit binding offers for up to four new units at the Dukovany and Temelin NPPs. The deadline for submitting bids is April 15, with a decision on the winning bidder expected in the summer.

CEZ also confirmed that it signed an agreement to buy 55.2% of Gasnet, the largest Czech gas distribution company, for €846.5mn from Macquarie Asset Management. The completion of the transaction is subject to approval by the European Commission and the Czech Ministry of Industry and Trade.

“We’ve already acquired a significant capacity in two liquefied gas terminals in Germany and the Netherlands, and this acquisition of the country’s largest gas distribution system operator will further strengthen our position within the gas market.  We are acquiring assets important for the transition of the Czech heat and power generation sector to hydrogen; while increasing the proportion of regulated business within our portfolio for the benefit of our shareholders,” said Beneš.

GasNet manages a network of 65,000 km of gas pipelines and holds an approximately 80% share in the distribution of natural gas in the Czech Republic, serving approximately 2.3 million points of consumption, distributing 66 TWh of gas every year. 

CEZ and private equity group CVC Capital Partners were the final two bidders for the stake, sources told Reuters in January. The deal is expected to close in the third quarter, Macquarie said.

The Czech government has pushed for greater control of energy infrastructure amid the energy crisis following the Russian invasion of Ukraine.