CEZ says that it will have to shut down three coal-power plants if electricity sales drop next year. A drop in sales is likely if the domestic market is liberalized and if restrictions on exports prevail. By stressing the impact on a possible increase of unemployment in the mining industry, CEZ is lobbying for delayed liberalization and/or for political support for its negotiations related to export restrictions. Not strong enough to move the stock at present, but future developments will be crucial.
Separately, former CEZ CEO Miroslav Cerny has filed a legal complaint against current CEO Jaroslav Mil for signing an “unfavorable” contract with a coal supplier and intends to file a complaint related to the construction of a new company headquarters. This should not affect the stock.
Bloomberg informs today that RWE intends to terminate its contracts with CEZ. Should this happen, the effect would be approximately the same as in the case of E.ON (a loss of approx. 3% of revenues and approx. CZK 300 mil. net profit, we estimate).
(Jiří Soustružník)