CEZ 2Q 20 - Better EBITDA and a more confident FY outlook
CEZ's 2Q 2020 EBITDA came in slightly ahead of our and consensus expectations, though it declined yoy on the back of almost zero gains from commodity derivative trading (was CZK 1.1 bn in 2Q 19) and a weaker mining result, with higher prices making up for pandemic-related 10.9% demand declines in the Czech Republic in 2Q 20 and lower output (weak lignite economics, Temelin maintenance). Both generation segments outperformed our forecast and the same applies to Distribution and Sales. Only mining disappointed as lignite-fired power generation declined. Thanks to CZK 2.2 bn worth of impairments of Romanian wind assets, Bulgarian distribution and the Chorzow CHP plant, EBIT and net income undershot forecasts, but EBIT adj. for these one-offs amounted to CZK 5,310 mn, well ahead of RCBe and consensus. CEZ also performed impairment tests related to the influence of the COVID-19 pandemic on its assets and the results show now impact on asset valuations.CEZ Group is a dynamic, integrated electricity conglomerate based in the Czech Republic and with operations in a number of countries of Central and Southeastern Europe and Turkey. Co. is an international group consisting of nearly 120 companies, Czech and foreign. Co.'s primary activities involve the production and transmission of electricity through nuclear, coal-fired and hydro power stations; production and distribution of heat and processing of secondary products generated during the production of electricity and heat as well as coal mining. Co. has operating companies in Poland, Bulgaria, Romania, the Netherlands, Ireland, Germany, Hungary, Albania, Turkey, Serbia, and Slovakia.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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