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Business Results of the Czech Power Company CEZ, a. s., in the I. Quarter of 2001

2. 5. 2001

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Business Results of the Czech Power Company CEZ, a. s., in the I. Quarter of 2001

"In the first Quarter of this year our company achieved the net profit amounting to 3,294 CZK millions, i.e. by 357 millions CZK (by 12.2 percent) more in comparison with the previous year. According to international accounting standards (IAS) the net income made 4,741 CZK millions so that, in the inter-yearly period, an increase of 656 CZK millions (by 16 percent) was realized. This increase was achieved thanks to continuous decrease of our expenses and due to higher earnings..."

 

CEZ mastered to achieve net profit increase in spite of the unfavourable and vague conditions on the Czech electricity market.

Total revenue 17,727 (CZK millions)
Sales of electricity 14,304 (CZK millions)
Total expenses 13,734 (CZK millions)
Fuel 3,570 (CZK millions)
Income before income taxes 3,993 (CZK millions)
Net income 3,294 (CZK millions)
 

"In the first Quarter of this year our company achieved the net profit amounting to 3,294 CZK millions, i.e. by 357 millions CZK (by 12.2 percent) more in comparison with the previous year. According to international accounting standards (IAS) the net income made 4,741 CZK millions so that, in the inter-yearly period, an increase of 656 CZK millions (by 16 percent) was realized. This increase was achieved thanks to continuous decrease of our expenses and due to higher earnings. The earnings from electricity sales raised by 1.8 %, in spite of the fact that CEZ has not yet been successful in trying to close the selling contract with the distributor Vychodoceska energetika, and that those sales in the majority to the distributors Severomoravska energetika, Prazska energetika as well as to Zapadoceska energetika dropped remarkably. In the near future selling contracts shall be closed with Stredoceska energeticka and Jihomoravska energetika. The negative fast of the non-existence of contracts for electricity sales to distributing companies has been causing uncertain situation not only for CEZ and other electricity producers but also for all raw material and service providers. The existing temporary situation has caused a state when no long-term fuel deliveries, power plants' maintenance and shutdowns can be planned, etc. We succeeded in achieving the profit in spite of the bad development of CZK exchange rates," stated the executive director for finance and administration of CEZ, a. s., Petr Voboril.

The earnings from electricity sales to distribution companies reached the level of 10,550 CZK millions, i.e. by 2.8 % less in comparison with 2000, in the first place due to the structural change of this item (last January it incorporated also system service fee). This was also influenced by lower electricity deliveries to distributors, mainly to Severomoravska energetika (drop by ca. 9 %), Prazska energeticka (lower by ca. 7 percent) and Zapadoceska energetika (decrease by ca. 7 percent). The total electricity sales to distributors stepped upwards slightly by 33 GWh (by 0.3 %) and reached the level of 10,514 GWh. The electricity exports remained roughly on the last year's level (with an increase by 2.3 %) and amounted to 3,172 GWh. The earnings from provision of supporting services grew by 66 percent (again also as a result of the structural change). Therefore, the total earnings from electricity sales, including supporting services, increased by 0.3 CZK milliards (by 1.8 %). The heat sales generated 610 CZK millions and increased inter-yearly by 1.5 percent. The total earnings of CEZ in this period reached 17,727 CZK millions and increased inter-yearly by 1.8 percent, in the first place thanks to higher electricity sales and due to higher results from the balance of exchange rate reserves.

The total expenses without income taxes amounted to 13,734 CZK millions and, in comparison with the previous year, they dropped by nearly one percent. This favourable development of expenses resulted especially from saving measures in the field of operating costs that dropped by more than 6 percent (by 0.7 CZK milliards). On the contrary, the financial costs increased by 23.8 % (by 0.6 CZK milliards) mainly due to higher creation of the exchange rate reserve.

"With success we continue in our efforts to lower the costs and in this way to prepare CEZ for facing the market environment with the best outcome. If we take in account that our prices practically remain on the same level as it was the case in 1992 then, for keeping the existing rank of profit, there is no other way to choose. In the frame of costs reduction we continue achieving further reduction of personnel number and so we are, step by step, moving closer to western companies' features. In 1992 CEZ registered nearly 16.5 thousands of employees, in July last year it was more than 9,200 and by the end of March this year the figure made 8,545, i.e. a drop nearly by 50 %. By the end of this year we shall fall under the level of 7,800 employees", Petr Voboril said.

The creation of resources from operations increased inter-yearly by 1.9 CZK milliards (by 53 %). In investments the amount of 2.6 CZK milliards was spent, i.e. by 0.1 CZK milliards less than in the previous year. In the Temelin Nuclear power plant investments in the height of 1 CZK milliard were realized. The financing of the Company in the given period occurred without problems, and the Company fulfilled its financial obligations in time.

According to CEZ estimations, the demand for electricity, in comparison with the first quarter of the previous year, increased by 0.6 % (by 93 GWh) to the level of 15,060 GWh. The escalation of consume can be seen mainly in industry with an inter-yearly increase by ca. 1 %. The consume by retail sales has been estimated roughly on the last year's level (growth by 5 GWh, i.e. by 0.1 %), along with slight increase of retail sales to businesses and an unchanged consume of homes. The share of CEZ in covering the electricity demand of the Czech Republic has been estimated, in comparison with the same period of the last year, by a move upwards from 64.1 % to 64.4 %. The main reason for that can be seen in lower production by 318 GWh (by 4.7 %) realized by other producers, due to their re-orientation to the market with supporting services. But this part of the market also became covered by higher electricity imports realized by the rest of dealers with an increase by roughly 20 percent.

Petr Voboril finalized his explanations by stating: "We believe that the decreasing trend in our share in the domestic electric energy market, when five years ago we occupied 80 percent of the scene, has now changed. We hope that, by closing sales contracts with distribution companies, we will be able to confirm such a conclusion. This year individual regulations for future functioning of the Czech market are being formed and so we hope that all today's discriminating measures against CEZ shall be removed. In the first place it means that only upon CEZ regulated prices have been imposed and, concerning the volume as well as prices, it cannot "tailor" the delivery for its customers. In the times to come the problem is to find more just evaluation of prices for supporting services because the existing tariff composition remarkably differs from the structure applied westwards from our boarder. The existing state would lead to preferences for foreign competitors and to infringement of fair conditions on the electricity market. For CEZ as electricity producer the market becomes 100 percent opened already next year and, if we remained further captured in an unjust position against the competition, we would hardly reside in sound position on the electricity market in spite of the fact that in our power stations we produce cheaper electricity".

 

Ladislav Krizpress, spokesman of CEZ