Cez As · PSECZ:CEZ

Cez As — Q3 2011 Earnings Presentation

44 slides from Cez As's earnings presentation, Nov 9, 2011

  1. Slide 1: Financial Results of CEZ Group, Conference Call Q1-Q3 2011

    FINANCIAL RESULTS OF CEZ GROUP CONFERENCE CALL Q1 - Q3 2011 NON-AUDITED CONSOLIDATED RESULTS PREPARED IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) Prague, 9 November 2011

  2. Slide 2: Agenda

    AGENDA Financial highlights and key events in CEZ Group in Q1 – Q3 2011 Martin Novák, CFO Financial results Martin Novák, CFO Trading position of CEZ Group Alan Svoboda, Head of Sales Division 1

  3. Slide 3: Key Results for Q1-Q3 2011 and Expected Results for 2011

    KEY RESULTS FOR Q1 – Q3 2011 AND EXPECTED RESULTS FOR YEAR 2011  expected results for 2011 remain unchanged: EBITDA at CZK 84.8 bn., net income at CZK 40.6 bn.  EBITDA (earnings before interest, taxes, depreciation and amortization) decreased by 6.9% y-o-y (by CZK 4.6 bn.) to CZK 62.4 bn.  EBIT (

  4. Slide 4: Despite Negative Factors in Q3 We Reiterate 2011 Net Income Guidance

    DESPITE NEGATIVE FACTORS IN Q3 WE REITERATE 2011 NET INCOME GUIDANCE (CZK bn.) - 5% 100 80 Key positive factors EBITDA 60  optimisation of power plants´ dispatch at higher than 40 88.8 84.8 expected prices: 20 expected increase of production and gross margin from coal-fired plants 0 increased produ

  5. Slide 5: ČEZ Share Performance Outperforms Competitors and Czech Stock Market

    THE PERFORMANCE OF ČEZ, A. S. SHARES OUTPERFORMS COMPETITORS AND THE CZECH STOCK MARKET 120% 100% 80% 60% January-11 March-11 June-11 August-11 ČEZ, a. s. Bloomberg Utility Index PX Index Source: Bloomberg 4

  6. Slide 6: The Updated Strategy Aims at Stabilising the Value of CEZ Group

    THE UPDATED STRATEGY AIMS AT STABILISING THE VALUE OF CEZ GROUP Presentation of updated strategy  The updated strategy builds on the development of physical ds trategy Update assets, the know-how of Future growth people at CEZ Group, and on Stabilisation Consolidation the strengthening of the posit

  7. Slide 7: Strategic Priorities of CEZ Group Until 2025: Nuclear Construction

    STRATEGIC PRIORITIES OF CEZ GROUP UNTIL 2025: MAIN GOAL TO PREPARE THE COMPANY FOR THE CONSTRUCTION OF NUCLEAR POWER PLANTS Nuclear power plants  service life of Dukovany extended beyond 2025, installed capacity of both Dukovany and Temelín increased  new nuclear plant in Temelín (potentially in D

  8. Slide 8: Strategic Priorities of CEZ Group Until 2025: Key Competencies

    STRATEGIC PRIORITIES OF CEZ GROUP UNTIL 2025: KEY COMPETENCIES  flexible - a company capable of quickly evaluating advantages of technological trends and reacting to them quickly  company with high internal efficiency increasing the value of operated assets Risk ČEZ Others  less risky company - w

  9. Slide 9: Organisational Structure Adapted to Updated Strategy from January 2012

    THE ORGANISATIONAL STRUCTURE OF ČEZ, A. S. WILL BE ADAPTED TO THE UPDATED CEZ GROUP STRATEGY FROM JANUARY 1, 2012 CEO original structure COO Sales and Finance Generation International Distribution Investments Administration HR Trading Finance International and Purchasing Strategy and distribution ad

  10. Slide 10: Streamlining of Organisational Structure

    STREAMLINING OF ORGANISATIONAL STRUCTURE CEO Daniel Beneš Finance and International Sales and Purchasing Generation Strategy Investments administration and distribution Trading Martin Michaela Vladimír Tomáš Pavel Peter Alan Novák Chaloupková Hlavinka Pleskač Cyrani Bodnár Svoboda • As of October 20

  11. Slide 11: Public Tender - Completion of Temelín Nuclear Power Plant

    PUBLIC TENDER - COMPLETION OF TEMELÍN NUCLEAR POWER PLANT October 31, 2011 – tender documentation submitted July 2, 2012 – deadline for presentation of offers August 2013 – selection of the winner by the end of 2013 – signature of contracts with winning supplier Bidder Westinghouse Electric AP Compa

  12. Slide 12: Agenda

    AGENDA Financial highlights and key events in CEZ Group in Q1 – Q3 2011 Martin Novák, CFO Financial results Martin Novák, CFO Trading position of CEZ Group Alan Svoboda, Head of Sales Division 11

  13. Slide 13: CEZ Group Financial Results

    CEZ GROUP FINANCIAL RESULTS (CZK bn.) Q1 - Q3 2010 Q1 - Q3 2011 Change % Revenues 144.4 150.6 +6.2 +4% EBITDA 67.0 62.4 -4.6 -7% Net income 40.1 26.4 -13.7 -34% Operating CF 56.0 40.3 -15.7 -28% CAPEX 40.9 31.1 -9.8 -24% Net debt 128.6 154.2 +25.6 +20% Q1 - Q3 2010 Q1 - Q3 2011 Change % Installed ca

  14. Slide 14: Key Drivers of Y-o-Y Change in Net Income

    KEY DRIVERS OF Y-O-Y CHANGE IN NET INCOME CZK bn. 41 36 4.6 31 1.7 35.5 0.8 40.1 26 33.8 -13.7 CZK bn. 8.2 21 25.6 25.6 26.4 -34.2% 16 Net income EBITDA Depreciation and Other income Income taxes Net income Q1 - Q3 2010 amortization (expenses) Q1 - Q3 2011 13

  15. Slide 15: Key Drivers of Y-o-Y Change in EBITDA

    KEY DRIVERS OF Y-O-Y CHANGE IN EBITDA CZK bn. 68 67 66 65 1.5 64 63 0.3 67.0 3.4 62 1.3 0.3 0.6 0.5 61 63.6 0.3 62.3 -4.6 CZK bn. 62.9 62.4 62.4 60 62.0 61.7 61.7 62.0 -6.9% 59 58 EBITDA Change in Change in Emission rights Other effects on Mining: sales of Photovoltaic Regulation in Others **) EBITD

  16. Slide 16: Change of EBITDA Y-o-Y by Segment

    CHANGE OF EBITDA Y-O-Y BY SEGMENT CZK bn. 66 0.6 0.3 0.1 0.7 67.0 0.6 61 5.7 61.3 61.3 62.0 -4.6 CZK bn. 62.3 62.4 62.4 62.4 -6.9% 56 EBITDA Power Distribution Mining CE Other CE Power Distribution EBITDA Q1 - Q3 2010 Production & Sale CE Production & Sale SEE Q1 - Q3 2011 & Trading CE*) & Trading S

  17. Slide 17: Power Production & Trading Central Europe

    CONTRIBUTION TO EBITDA BY SEGMENT: POWER PRODUCTION & TRADING CENTRAL EUROPE CZK bn. Q1 - Q3 2010 Q1 - Q3 2011 Change % Czech Republic 45.3 39.7 -5.6 -12% Poland 1.0 0.9 -0.1 -10% Total EBITDA*) 46.3 40.6 -5.7 -12% Czech Republic (CZK -5.6 bn.)  gross margin on electricity decreased by CZK -5.3 bn.

  18. Slide 18: Power Production & Trading South-Eastern Europe

    CONTRIBUTION TO EBITDA BY SEGMENT: POWER PRODUCTION & TRADING SOUTH-EASTERN EUROPE CZK bn. Q1 - Q3 2010 Q1 - Q3 2011 Change % Bulgaria 0.3 0.2 -0.1 -39% Romania 0.0 0.7 +0.7 >200% Total EBITDA*) 0.3 0.9 +0.6 >200% Bulgaria (CZK -0.1 bn.)  y-o-y increase in electricity generation by 13% (to 2 TWh) i

  19. Slide 19: Distribution and Sale Central Europe

    CONTRIBUTION TO EBITDA BY SEGMENT: DISTRIBUTION AND SALE CENTRAL EUROPE CZK bn. Q1 - Q3 2010 Q1 - Q3 2011 Change % Distribution 8.6 8.4 -0.2 -2% Sale 1.1 2.0 +0.9 +79% Total EBITDA 9.7 10.4 +0.7 +7% Distribution (CZK -0.2 bn.)  CZK +0.7 bn. increase in gross margin: increase of revenues allowed by

  20. Slide 20: Distribution and Sale South-Eastern Europe

    CONTRIBUTION TO EBITDA BY SEGMENT: DISTRIBUTION AND SALE SOUTH-EASTERN EUROPE CZK bn. Q1 - Q3 2010 Q1 - Q3 2011 Change % Romania 1.6 1.2 -0.4 -26% Bulgaria 1.2 0.7 -0.5 -43% Albania 0.2 0.5 +0.3 +163% Total EBITDA 3.0 2.4 -0.6 -20% Romania (CZK -0.4 bn.)  lower revenues of distribution y-o-y (CZK -

  21. Slide 21: Mining Central Europe, Other Central and South-Eastern Europe

    CONTRIBUTION TO EBITDA BY SEGMENT: MINING CENTRAL EUROPE, OTHER CENTRAL AND SOUTH-EASTERN EUROPE EBITDA (CZK bn.) Q1 - Q3 2010 Q1 - Q3 2011 Change % Mining CE 3.5 3.8 +0.3 +8% Other CE 4.1 4.2 +0.1 +2% Other SEE 0.1 0.1 0.0 0% Mining Central Europe (CZK +0.3 bn.)  general increase of volume of coal

  22. Slide 22: Other Income (Expenses)

    OTHER INCOME (EXPENSES) (CZK bn.) Q1 - Q3 2010 Q1 - Q3 2011 Change % EBITDA 67.0 62.4 -4.6 -7% Depreciation and amortization -17.2 -18.9 -1.7 -10% Other income (expenses) -1.2 -9.4 -8.2 >200% Interest balance -2.6 -3.6 -1.0 -38% Foreign exchange rate gains (losses) and financial derivates 1.0 -0.8 -

  23. Slide 23: Profit on the JTSD/MIBRAG Deal

    CEZ GROUP MADE EUR 46 MILLION PROFIT ON THE JTSD/MIBRAG DEAL; IN LINE WITH THE NEW STRATEGY, CEZ GROUP ALSO MITIGATED THE RISKS OF MINING AND COAL-BASED ELECTRICITY PRODUCTION IN GERMANY  German market perceived as more risky mainly due to the declared plans to support renewable and gas sources in

  24. Slide 24: Accounting Treatment of JTSD/MIBRAG Transaction Impact on Q3

    THE ACCOUNTING TREATMENT OF THE JTSD/MIBRAG TRANSACTION, HOWEVER, HAD A NEGATIVE IMPACT ON Q3 2011 RESULTS (CZK -2.7 BN.), CORRESPONDING TO THE NEGATIVE GOODWILL WRITE-OFF IN 2009 (CZK +3.3 BN.)  in 2009, CEZ Group and EPH bought the company MIBRAG (via JTSD/MIBRAG) in an open tender  the purchase

  25. Slide 25: Developments in Q3

    DEVELOPMENTS IN Q3 CZK bn. 20 0.0 0.1 19 0.5 18 19.9 0.2 1.8 18.5 18.6 18.5 18.5 17 18.1 18.1 -1.4 CZK bn. -7.1% 16 EBITDA Power Production Distribution Mining CE Power Production Distribution EBITDA Q3 2010 & Trading CE*) & Sale CE & Trading SEE & Sale SEE Q3 2011 EBITDA - CEZ GROUP (CZK -1.4 bn.):

  26. Slide 26: Developments in Q3 - Continued

    DEVELOPMENTS IN Q3 - CONTINUED (CZK bn.) Q3 2010 Q3 2011 Change % Revenues 45.7 47.0 +1.3 +3% Operating expenses less depreciation and amortization -25.8 -28.5 -2.7 -10% EBITDA 19.9 18.5 -1.4 -7% Depreciation and amortization -5.7 -6.7 -1.0 -17% Other income (expenses) -0.3 -7.2 -6.9 >200% Income ta

  27. Slide 27: Cash Flow

    CASH FLOW CZK bn. operating operating investing financing 90 2.5 80 52.6 70 60 21.4 14.8 50 40 74.8 30 62.5 31.1 1.4 20 +2.1 CZK bn. 0.5 31.4 30.1 30.1 26.6 10 22.2 22.2 +9.5% 24.9 24.3 24.3 0 Cash and cash Income after Purchase of highly Changes in working Investments in Financial investments Finan

  28. Slide 28: CEZ Group Maintains Strong Liquidity

    CEZ GROUP MAINTAINS STRONG LIQUIDITY Short-term credit lines (as of Sept. 30, 2011, CZK bn.)  y-o-y increase of net debt/ EBITDA ratio from 40 1.48 to 1.83 35 Un-committed  CZK 30 bn. in committed short-term credit lines 30  primarily, non-committed credit lines were drawn 25 BoE programme  comm

  29. Slide 29: Agenda

    AGENDA Financial highlights and key events in CEZ Group in Q1 – Q3 2011 Martin Novák, CFO Financial results Martin Novák, CFO Trading position of CEZ Group Alan Svoboda, Head of Sales Division 28

  30. Slide 30: Electricity Consumption in the Czech Republic Continues to Moderately Grow

    ELECTRICITY CONSUMPTION TEMPERATURE ADJUSTED IN THE CZECH REPUBLIC CONTINUES TO MODERATELY GROW YEAR-ON-YEAR Consumption in the Czech Consumption in the Czech Rep. Rep. (temperature adjusted)** TWh 43.30 43.15* 42.91 43.28* TWh -0.4 % +0.9% During Q1 - Q3, net consumption in the Czech Rep. grew by 0

  31. Slide 31: Electricity Production of CEZ Group from Own Sources Dropped 2%

    ELECTRICITY PRODUCTION OF CEZ GROUP FROM OWN SOURCES IN Q1 - Q3 2011 DROPPED BY 2% Y-O-Y; WE STILL PREDICT 1% GROWTH FOR 2011 TWh 46.9 -2% 50 45.9 TWh 63.3 +1% 64.0 1.7 1.3 45 -19% Renewables 70 40 2.1 -20% 1.7 60 35 20.9 -2% 20.6 Nuclear 50 +1% 28.2 30 28.0 25 40 0.4 +8% 0.5 Hydro-pump 0.6 20 0.6 +

  32. Slide 32: Electricity Production from Own Sources Abroad Grew by 20%

    ELECTRICITY PRODUCTION OF CEZ GROUP FROM OWN SOURCES ABROAD GREW BY 20% DURING Q1 - Q3 Y-O-Y, WE EXPECT OVERALL GROWTH 9% IN 2011 TWh TWh 4.0 5.7 4.5 +20% 5.2 +9% 3.4 6 4 Romania 0.5 0.3 +164% 0.7 3.5 (Renewable 0.1 >200% 5 sources) 3 1.5 4 2.1 +5% 2.2 2.5 1.5 +2% Poland (ELCHO and Skawina coal powe

  33. Slide 33: Coal Mining by Severočeské doly Increased Y-o-Y

    COAL MINING BY SEVEROČESKÉ DOLY INCREASED Y-O-Y Coal mining in million tons 24.5 +12.8% 18.1 21.8 +15.5% 15.7 +4.7% +17.5% External customers +14.7% +15.9% Q1- Q3 Q1- Q3 2010 2011 E 2010 2011  increased demand for electricity and coal contributed to the y-o-y increase of coal mining in Q1 - Q3 2011

  34. Slide 34: Hedging Production Revenues in the Medium Term

    ČEZ, A. S. CONTINUES TO PURSUE ITS STRATEGY OF HEDGING PRODUCTION REVENUES IN THE MEDIUM TERM Share of hedged production from ČEZ, a. s. sources (as of October 31, 2011, 100 % corresponds to 55 – 60 TWh) ~6 %  ČEZ, a. s. applies a standard approach to hedging its open positions resulting from its e

  35. Slide 35: National Investment Plan for Free Allocation of CO2 Emission Allowances

    THE GOVERNMENT APPROVED THE NATIONAL INVESTMENT PLAN FOR FREE ALLOCATION OF CO2 EMISSION ALLOWANCES, NOW EVALUATED BY THE EC National investment plan of the Czech Republic  aimed at maximising investments into modernisation of technology and infrastructure using allocated permits in the energy and

  36. Slide 36: Acquisition of New Natural Gas Clients in the Czech Republic

    WE SUCCESSFULLY CONTINUE WITH ACQUISITION OF NEW CLIENTS FOR NATURAL GAS IN THE CZECH REPUBLIC; WE HAVE ALMOST 190 THOUSAND CUSTOMERS Number of contracts as of October 31, 2011: 188,843 Numbers of new contracts, cumulative 188,843 169,268 148,802 134,900 123,789 111,489 99,693 89,560 79,514 70,235 6

  37. Slide 37: Entry to the Slovak Market Was Successful

    OUR ENTRY TO THE SLOVAK MARKET WAS SUCCESSFUL - SINCE LAUNCH OF SALES WE HAVE ACQUIRED MORE THAN 66 THOUSAND CONTRACTS IN TOTAL FOR BOTH COMMODITIES Number of contracts as of October 31, 2011: 66,142 Numbers of new contracts, cumulative 66,142 60,436 53,319 44,334 34,453 23,593 16,945 12,199 4,758 1

  38. Slide 38: Appendices

    APPENDICES  Market trends  Investments into fixed assets  Balance sheet overview  Electricity balance 37

  39. Slide 39: Market Trends

    MARKET TRENDS Development of ČEZ share price compared to PX index and Bloomberg Utilities, % EUR / t CO2 allowances / emission rights m. tonnes of CO2 20.00 max. 13 May 120% CZK 961 100% 15.00 80% min. 23 Sept CZK 679 10.00 60% 0 1 0 1 0 0 1 10 11 0 1 I -1 I -1 -1 -1 -1 -1 -1 I-1 I-1 0 1 0 1 V- V- 0

  40. Slide 40: Investments into Fixed Assets

    INVESTMENTS INTO FIXED ASSETS*) Investments into fixed assets Q1 - Q3 2011: CZK 31.1 bn. Power plant renewal CZK 10.4 bn. Tušimice: units 23 and 24 – trial operations; units 21, 22 – brought into commission gradually Prunéřov II: zoning permit procedure in progress, decision expected in 11/2011, bui

  41. Slide 41: Balance Sheet Overview

    BALANCE SHEET OVERVIEW Fixed assets Long-term liabilities and equity  increase of fixed tangible assets due to higher investments  decrease of equity: net profit has increased equity by CZK +26.4 bn., dividends approved reduce CZK +9.5 bn. equity by CZK -26.7 bn.; other operations affecting equity

  42. Slide 42: Electricity balance Q1-Q3 2010 vs 2011

    Q1 - Q3 2010 Q1 - Q3 2011 +/- Electricity procured 45,465 45,091 -1% Generated in-house (gross) 50,230 49,885 -1% In-house and other consumption, including pumping in pumped-storage plants -4,765 -4,794 +1% Sold to end customers -32,611 -31,397 -4% Sold in the wholesale market (net) -7,480 -8,388 +1

  43. Slide 43: Electricity Balance Q1-Q3 2011 by Country

    Electricity balance (GWh) Q1 - Q3 2011 Czech Republic Poland Other Central Europe Bulgaria Romania Albania Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 41,491 -2% 1,319 +3% 0 - 1,819 +14% 462 >200% 0 - 0 - 45,091 -1% Generated in-house (

  44. Slide 44: Electricity Balance Q1-Q3 2011 by Segment

    Electricity balance (GWh) Q1 - Q3 2011 Power Production & Trading CE Distribution & Sale CE Power Production & Trading SEE Distribution & Sale SEE Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 42,810 -2% 0 - 2,281 +37% 0 - 0 - 45,091 -1% Generated in-hou

ČEZ Group — Q3 2011 Earnings Presentation on 6ix