According to daily MF Dnes, net income of coal mines Seceroceske Doly (SD), 100% owned by CEZ reached in 9M06 CZK1.6bn (EUR 56.4m), which is 7.5% y/y lower compared to CZK1.73bn in the 9M05 period.
Our view: SD supply c80% of its production to CEZ while SD's supplies for c60% of CEZ coal supplies. We believe that the drop in net income primarily stems from higher operating costs already shown in the 1H06 therefore we do not see the news to have any significantly negative implications for CEZ's consolidated 9M06 and FY06 net income.