CEZ AS (CZAVF) Q2 2025 Earnings Call Highlights: Navigating Challenges with Strategic Growth
Adjusted Net Income: CZK16.7 billion, down 21% year-on-year.
Net Income: CZK16.5 billion, down 22% year-on-year.
CapEx: CZK22.8 billion, up 11% year-on-year.
Power Prices Impact: Negative effect of CZK6.4 billion year-on-year.
Trading Profit: CZK1.9 billion, down from CZK3.9 billion in the previous year.
Distribution Segment: Up by CZK3 billion due to higher allowed revenues and increased investments.
GasNet Contribution: CZK6.4 billion to EBITDA for the first half of 2025.
EBITDA Target: Increased by CZK5 billion to a range of CZK132 billion to CZK137 billion.
Adjusted Net Income Target: Increased to a range of CZK26 billion to CZK30 billion.
Depreciation: CZK55 billion, with CZK9 billion from GasNet.
Windfall Tax: CZK29 billion to CZK33 billion.
Nuclear Generation: Increased by 6% year-on-year.
Renewable Generation: Down 17% year-on-year.
Fossil Fuels Generation: Up 12% for the first half, expected to be down 4% for the full year.
Distribution Segment Revenue: CZK9.4 billion, with CZK6.4 billion from GasNet.
Sales Segment EBITDA: CEZ Prodej at CZK4.5 billion, up CZK3.2 billion year-on-year.
ESCO Activities Revenue: 8% decline year-on-year, expected 7% increase for the full year.
Warning! GuruFocus has detected 9 Warning Sign with CZAVF.
Release Date: August 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
CEZ AS (CZAVF) reported a 7% increase in EBITDA, reaching almost CZK74 billion.
The acquisition of GasNet significantly boosted EBITDA by CZK6.4 billion in the first half of 2025.
The distribution segment saw a CZK3 billion increase due to higher allowed revenues and increased investments.
CEZ AS (CZAVF) increased its EBITDA target by CZK5 billion, with a new range of CZK132 billion to CZK137 billion.
The company reported a 6% increase in nuclear generation year-on-year, targeting 32 terawatt hours for the full year.
Negative Points
Adjusted net income decreased by 21% year-on-year, impacted by depreciation and accelerated depreciation on coal assets.
The trading segment experienced a decline, with profits down by CZK2.1 billion due to lower market volatility.
Renewable energy generation decreased by 17% due to less favorable natural conditions compared to the previous year.
The sales segment's profitability is expected to decline in the second half of the year due to one-off payments and settlements.
CEZ AS (CZAVF) faces pressure from declining power prices and a narrower spread between power prices and carbon credits.
Q & A Highlights
Q: Would CEZ be interested in M&A opportunities in the gas grid sector, particularly with E.ON potentially selling their gas grid in Czechia? A: Martin Novak, CFO, stated that CEZ does not comment on ongoing transactions or speculations regarding E.ON's sale. However, he noted that CEZ has room for M&A activities, especially in the ESCO sector, but did not provide specifics on gas grid acquisitions.
Q: What is CEZ's outlook on long-term power prices, given the current hedging for 2029 at EUR70 per megawatt hour? A: Martin Novak, CFO, explained that the hedging is straightforward and not speculative. Ludek Horn, Head of Trading, added that long-term power prices are expected to slightly decrease unless extraordinary events occur, as they are linked to natural gas and EUA prices.
Q: Can you elaborate on the drivers behind the EBITDA guidance increase and whether these will impact 2026? A: Martin Novak, CFO, clarified that the drivers for the EBITDA guidance increase are specific to the period between May and August 2025. While some factors like higher power prices and cost savings might persist, the windfall tax is expected to only affect 2025, not 2026.
Q: What is the expected EBITDA contribution from GasNet for 2025, and how does it compare to previous guidance? A: Martin Novak, CFO, indicated that GasNet's target is around CZK11 billion for 2025, not CZK13 billion. The guidance for GasNet's contribution has been adjusted to CZK7 billion to CZK8 billion, with the main driver for increased guidance in the distribution segment coming from electricity improvements.
Q: Could you provide more details on the potential CapEx for the SMR project in the Czech Republic? A: Martin Novak, CFO, mentioned that the first SMR project in the Czech Republic would be at Temelin, but no specific CapEx numbers were disclosed. The financing scheme is expected to be similar to current state-financed projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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