CEZ yesterday confirmed that damages to the company from flooding will amount to more than CZK 1 bil.; the company will cover approx. CZK 50 mil. itself with the rest to be covered by insurance. Also, CEZ will not require payment for contracted but undelivered supplies to distributors damaged by flooding. CEZ reiterated its 2002 CAS unconsolidated net profit forecast from early 2002 at CZK 6.5 bil.-7 bil.; we forecast 2002 IAS consolidated net income at CZK 7.9 bil.
CEZ continues to offer its “rainbow” electricity package for 2003; the price of the first base-load electricity, “yellow electricity” (a constant supply 24 hours a day, 365 days a year), will rise by 3%, and other base-load-electricity prices will be increased as well. On the other hand, peak-load prices will decrease. While the 2002 weighted-average price is approx. CZK 880 per MWh, the offered 2003 prices indicate a possible increase (this may be reversed by the expected increased share of sold base-load electricity, though).
Our 2003 net profit forecast of CZK 4.6 bil. reflects zero growth of the weighted-average price (the expected net profit y-o-y decline of 42% is mostly attributable to higher depreciation and high 2002 FX gains).
Separately, the Czech Securities and Exchange Commission has decided that CEZ does not have to make a buyout offer to minority shareholders in the regional power distributors; CEZ is to buy the state’s stakes in all eight regional distributors. Expected.
Separately, the sector regulator should announce new retail electricity prices today; we expect an average decline of approx. 5% y-o-y.
(Jiri Soustruznik)