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Economic results of the CEZ Power Company for the first three quarters of 2002

30. 10. 2002

Others

Economic results of the CEZ Power Company for the first three quarters of 2002

The gross profit of the company increased by 2 per cent and reached the amount of 7.7 billion CZK, but its net profit dropped by 16%, to 5.4 billion CZK, which was due to the higher income tax deposits the company had been paying.

 

In the first three quarters of this year, the CEZ Power Company generated a gross profit of 7.7 billion CZK, which translates into an increase by 150 million CZK, i.e. by 2% in comparison with the same period last. However, the net profit of the company dropped by 16 %, i.e. by 5.4 billion CZK, in comparison with last year. This is due to the fact that the company had been paying higher income tax deposits, because it had as yet not been possible to calculate the depreciation of the first block of the Temelin Nuclear Power Plant. There was a predictable drop in revenue from selling electricity, resulting from the fact that the market had been fully opened to all producers (which is particularly painful for CEZ, because, unlike its competitors, it does not have the advantage of a compulsory purchase of certain amount of electricity for regulated prices). However, the company managed to compensate this drop by a growing volume of financial revenues.

"So far we have been able to cope with the snags of the unevenly liberalised market with electricity which was opened at the beginning of this year. We anticipated the lower revenues for sold electricity, which were caused primarily by the cheaper electricity we have been offering within the framework of our Rainbow Electricity scheme. The overall output of the plants was affected by the floods and by the launch of the first block of the Temelin NPP, which was not put into trial operation until the end of the second quarter. The overall economic results were positively influenced by the strong Czech currency," said Mr Petr Voboril, the company Executive Officer for Strategic Development.

The total volume of sold electricity increased by 2.6 % up to 38.5 TWh, mainly due to the performance in the third quarter, when CEZ managed to upturn the trend in sales. However, the revenues for selling electricity  (including the after sales) decreased, which was caused by numerous factors. One of them was the more customer friendly offer of electricity, sold within the framework of the Rainbow Electricity scheme. Another reason was the fact that the first block of the Temelin NPP had not been put into trial operation until the beginning of June, and the revenues for electricity produced before this launch were deducted from the balance sheet as an investment included in the budget of the construction of Temelin. The overall volume of electricity sold in the Czech Republic dropped by 5.9 % (This means that the company managed to stop the trend from the beginning of the year, when the drop rate was 6.4 %) but, on the other hand, the volume of exported electricity rose by 28.4 %.

The total costs, without income tax, amounted to 39.5 billion CZK, which translates into an increase by 4.2 billion CZK in comparison with the last year. The most significant element was the increase of financial costs by 3.4 billion CZK, in proportion to the growth of losses caused by the exchange rate (however, the related financial revenues increased much more, by 6.8 billion CZK). The operational costs increased by 0.8 billion CZK, mainly due to higher depreciations connected with the trial launch of the Temelin NPP. 440 employees of the company were made redundant this year, so that the CEZ staff now totals 7 286 people; this helped the company reduce its personnel-related costs by 2.5 per cent. 

"CEZ is successfully maintaining the trend of continuous cost-cutting, thus getting ready for the forthcoming years, when the company will already be fully burdened by the depreciations of Temelin facilities and machinery. Taking into consideration the fact that our prices are approximately on the same level as in 1992, it is clear that if the company is to remain profitable, it must keep reducing its costs. Cost-cutting will remain the focus of the CEZ management, so that the company remains in the black, in spite of the upcoming depreciations of the Temelin plant. However, the most important thing for the company shareholders should be the fact that the cash-flow CEZ is going to generate will be strong enough for the company to pay higher dividends," said Mr David Svojitka, the company Director for Finances and Administration.

The volume of sources generated by the operation of the company increased by 2.4 billion CZK in comparison with the last year, and now totals 13.4 billion CZK. The overall investment of the company totalled 3.8 billion CZK, which is 2.9 billion CZK less than in last year. This fully reinforces the long-term trend which started in 2000, when CEZ started to generate free financial resources i.e. the company generates more finances than it spends on investment. This enables CEZ to keep redeeming its debts and pay off dividends to its shareholders.

The demand for electricity in the Czech Republic dropped by 0.5 % in comparison with the same period last year, and now totals 38.9 TWh. CEZ-operated sources covered 57.2 % of domestic electricity consumption, which translates into a 2.4 % increase in comparison with the mid-term market share of 54.8 %.

"The growing market share of our company in the third quarter clearly shows that we have already managed to cope with the marketing issues resulting from the newly opened market.  Moreover, the currently sold volume of electricity to be supplied next year makes us believe that this trend will continue in the future as well. I would also like to mention one of many organisational changes that are currently underway in CEZ, and that is the establishment of a new section for nuclear industry, which is to start its operation at the beginning of next year. This structural change is aimed at reducing the number of management levels and consequently also the number of managers in the nuclear industry section, which is due to take effect from the beginning of the next year on. The same pruning procedure was carried out in our traditional power plants in 2000. We do all this with the aim of succeeding in the market and becoming a leader on the Central European electricity market," concluded Mr Jaroslav Mil, the Chairman of the CEZ Board of Directors and the company CEO.

(mil. CZK)
Total revenues 47 200
Total costs 39 497
Gross profit before taxation 7 703
Net profit after taxation 5 409

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Ladislav Kriz, CEZ Press Officer.