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CEZ managed the last year with a profit of 2.3 milliard Czech crowns

29. 2. 2000

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CEZ managed the last year with a profit of 2.3 milliard Czech crowns

In the last year the CEZ Company reached a net income after taxation in the height of 2,259 Kc mln, i.e. ca by 64.5 % less than in the previous year. We had presupposed a decrease of the profit, even more severe, in the beginning of this year. There are several reasons for it, but the key factors are three - decrease of the domestic demand for electricity, stop of the power plant Tusimice I Retrofit and fall of the Czech crown exchange rate.

 

Total revenue 59 629 (CZK millions)
Sales of electricity 50 996 (CZK millions)
Total expenses 56 668 (CZK millions)
Fuel 12 821 (CZK millions)
Income before income taxes 2 961 (CZK millions)
Net income 2 259 (CZK millions)
Note: These figures were calculated according to Czech accounting standards and have not been audited.

"In the last year the CEZ Company reached a net income after taxation in the height of 2,259 Kc mln, i.e. ca by 64.5 % less than in the previous year. We had presupposed a decrease of the profit, even more severe, in the beginning of this year. There are several reasons for it, but the key factors are three decrease of the domestic demand for electricity, stop of the power plant Tusimice I Retrofit and fall of the Czech crown exchange rate. In coincidence with the development of the Czech economy, the demand for electricity dropped, which resulted in decrease of the profit from electricity sales as well as in the decline of operation results. The decline of operation results was further intensified by incorporation of a correction item for Tusimice I in connection with the cancellation of Retrofit of this power plant. Another impact on the decline of profit can be found in the development of Czech crown exchange rate. While in 1998 the positive development of the exchange rate increased the net profit of our company by 1,6 Kc mln, the exchange rate decline in the past year decreased the height of net profit by 1,3 Kc mln. In a summary it means that the Czech crown exchange rate has worsened the height of net profit by nearly 3 Kc mld in the course of a inter-year period", stated the Executive Director for Economy of CEZ, a. s., Mr. Petr Voboril, adding that "we reacted to the decline in demand for electricity with higher electricity exports so that we ware able to minimize out losses and impacts on our suppliers, namely on the coal mining companies."

The income from electricity sales to distribution companies reached nearly 46,271 Kc mln, i.e. by 3.5 % less that in 1998, which was caused by lower electricity sales. Total sales to these companies dropped by 3,103 GWh (7.1 %) to the level of 40,488 GWh. The average transfer price within the tariff structure between CEZ and distribution utilities in the last year amounted to 1,143 Kc/MWh, which makes an inter-year increase by 3.9 per sent. This increase reflects the higher price of electricity for homes in 1998, which totally influenced the transfer prices not early but in the last year. The electricity price increase for homes, as valid from the beginning of this year, will influence the transfer price in the course of February 2000. This change shall bring the level of average electricity transfer price higher by roughly four per cent within an inter-year period.

In the inter-year period, the income from heat sales increased by 1.5 per cent to the height of 1,677 Kc mln. In this period, the total revenues of CEZ reached 59,629 Kc mln and in comparison with the last year decreased by 3.4 %, mainly due to lower result from reserves for exchange rate losses (by 1.6 Kc mld), and lower income from electricity sales (by 1 Kc mld).

The total expenses without income tax amounted to 56,668 Kc mln and in the comparison to the last year increased by 6.7 %. The increase of expenses is concentrated mainly into financial costs - namely into interest rates (by 0.4 Kc mld), and into higher creation of reserves for exchange rate losses (by 1.3 Kc mld). The stop of Retrofit of power plant Tusimice I resulted in an amount of 0.6 Kc mld incorporated in the item of extra costs, along with the amount of 0.2 Kc mld assigned to the item of expenses for repairs and maintenance. Depreciation costs rose by 3.6 %.

One of the key objections of our company management has been lowering of expenses. In the first place it was achieved in the sector of repairs and maintenance. Also the increase rate of personal costs (by 2.6 %) demonstrates the lowest rate ever happened during the existence of the Company. But the expense characteristics, while the increase is concentrated into financial costs, does not enable us to absolutely lower the expenses in comparison with previous period. In the course of the inter-year period, the number of employees dropped by 1,048 (10.2 %), that from the daughter company CEPS accepted 473 employees. By the end of the past year CEZ was employing 9,266 persons", Petr Voboril completed.

CEZ invested 15.8 Kc mld in the last year, i.e. by 2.3 Kc mld less than in 1988, while investments of CEPS had been incorporated in the investments flow till July of the year. Up to now the construction of Temelin nuclear power station, actually being the most significant investment project in CEZ has provided a good hope for completion of the construction within the announced time period. For this construction, CEZ consumed 79.3 Kc mld from the planned 98.6 Kc mld. A modernisation programme has been carried out in the Dukovany nuclear power plant, which shall enable the harmonisation of the station operation with the common operation practice in nuclear power plants within the European Union.

In the inter-year period, the electricity demand decreased by 2.6 % (by 1.359 GWh) to the level of 50,837 GWh. The drop of consumption happened mainly by large electricity consumers, who showed a decrease by 3.3 % in comparison with the previous year. The consumption by small electricity users decreased by 0.6 %. Within this group of consumers, the sub-group of small consumption in businesses showed an increase by 3.7 %, while consumption in homes, in comparison with the previous year, decreased by 2.7 %.The share of CEZ in covering the demand for electricity in the Czech republic, in comparison with 1998, dropped from 76.4 % down to 72.9 %. The main reason for this was the production of electricity by independent producers (increase by 15.7 %) and increase of electricity imports by distribution companies (boost by 26 %). CEZ was able, to a certain extent, to compensate this fall of domestic demand for electricity thanks to higher electricity exports, namely by 28.2 %.

In conclusion, Mr. Voboril mentioned: In this year we still expect a slight decrease of domestic demand for electricity. In contrary to this, we count with keeping our share in the domestic market as a minimum, and with increasing the electricity exports at least by one third in comparison with the past year so that our electricity sales do not show decline any more. Also our business results shall get better."