CEZ says wholesale power prices probably reached bottom. CEZ is to reduce price of some of their products (tarif classes) of 15-20% next year to save customers at least 1.5 bln. CZK, CEO says. CEO added CEZ won’t change 2013 earnings outlook.
/ NEUTRAL; The statement about wholesale electicity prices is a bit more optimistic compare to the last comment during 2Q13 results when CEZ expected „a further limited decline“ of baseload prices. Nevertheless, a price reduction of selected products is moderately deeper than the expected decline in average achieved wholesale electricity prices of CEZ (94% in 2013 @ 51.5 EUR/MWh; 72% in 2014 @ 46.0 EUR – we expect a further mild decline to 44-45 EUR/MWh, i.e. -13.5% y/y). The decline in achieved electricity prices which left 2014 earnings from power production of about 10 bln. CZK lower y/y has been already priced-in in our view and an another 1.5 bln. CZK (mentioned customers’s savings) to be missing in 2014 earnings due to a company sales policy and a competition. Overall, NEUTRAL in our view.