ČEZ’s income down by 40 percent in half year report

Czech energy giant ČEZ announced its operating revenues in the first half of 2014 year-on-year in an online press release earlier today. According to ČEZ, the group’s net income was 17.2 billion crowns, 40 percent lower than last year. ČEZ blames the warm and dry winter along with low electricity prices and plans to raise earnings by cuts in fixed costs and expanding its business into new areas.

Photo: Czech Television

Operating revenues overall went down by ten percent from 113 billion crowns in H1 of 2013 to 101.7 billion in this half year. Total energy production in the same period is 7 percent lower. However, the situation has improved slightly to this year’s first quarter when net income was down 44 percent compared to the first quarter in 2013. The conglomerate still expects annual net profits to reach the previously predicted amount of 29 billion crowns. More than 6 billion crowns lower than last year.

According to ČEZ, whose half year loss is another continuation of an uninterrupted five year long slump in annual revenues since the conglomerate peaked in 2009, lower profits are mainly the result of worsening conditions in the energy business - the sinking of wholesale energy prices being one of the causes behind this.

Analysts see further reasons responsible for ČEZ’s low profits this year. Namely the sale of one of the conglomerate’s power stations in Chvaletice towards the end of last year and the smaller allocation of green certificates in Romania, which was part of the country’s austerity cuts on renewable energy sources.

Photo: Filip Jandourek

The sale of the Chvaletice power plant and complications abroad are not the only reasons for ČEZ’s seven percent lower energy production compared to the same period last year. Production in water power stations was particularly low as a result of the dry winter. According to experts there was such a low amount of snow that the power stations did not have enough water to use. While the warmth and dryness of the winter negatively affected water power it helped raise energy production in ČEZ’s solar parks. But this increase was not enough to even out the loss in water power.

The energy giant plans to slash up to 16 percent of utility costs in the next two years and has announced in the past that these cuts will include letting go some of its staff. Another area which ČEZ wants to focus on aside from cuts in fixed costs is expanding its business opportunities. According to a press release earlier on Tuesday by the conglomerate’s spokesman Ladislav Kříž, this includes improving the performance of ČEZ facilities, strengthening its position in alternative gas supply and venturing into services such as telecommunications. The group’s recent project in the area, ČEZ Mobil – a mobile network provider founded in October 2013, targets clients and family households. So far it has attracted 74,000 customers in the Czech Republic.