CEZ Group, a power producer and distributor in the Czech Republic, has posted CZK 29.6 billion ($1.3 billion) in net income for 2023, its highest over the last 10 years excluding an extraordinary 2022.
For 2022, when oil and gas prices across the globe soared following Russia’s invasion of Ukraine, the state-owned company had reported net earnings of CZK 80.7 billion ($3.5 billion).
Last year, sustained production and gains from commodity trading offset lower electricity prices and lower domestic demand for electricity, as well as higher taxes, CEZ said in a news release.
Earnings before interest, taxes, depreciation and amortization fell five percent to CZK 124.8 billion ($5.3 billion). “The year-on-year comparison was impacted by the newly introduced levy on excess revenues from generation, which added CZK 10 bn [$428.4 million] to 2023 costs”, CEZ said.
Net profit adjusted for extraordinary or nonrecurring items stood at CZK 34.8 billion ($1.5 billion), mainly impacted by “the creation of provisions for the assets of Severoceske doly due to a significant deterioration in market conditions for future coal-fired power generation”, CEZ said referring to its coal mining unit in the Severoceska brown coal basin.
Operating revenues climbed 18 percent to CZK 340.6 billion ($14.6 billion).
“Despite the significant decline in electricity prices, we were able to meet our initial financial targets”, Daniel Benes, chairman of the board of directors and chief executive of CEZ, said in a statement. “This was mainly due to the safe and reliable generation at our nuclear power plants, which were able to generate more than 30 TWh [terawatt hours] for the fifth consecutive year”.
However, that represented a decline of two percent due to downtimes at CEZ’s two nuclear plants in the towns of Dukovany and Temelin. “The capital projects and measures implemented during these downtimes will contribute to the efficient generation of more emission-free energy”, CEZ said.
CEZ highlighted that generation from renewable sources rose nine percent.
Meanwhile coal and gas-fired generation decreased 13 percent “as a result of lower source deployment in view of the deterioration in market operating conditions”, the announcement stated.
“In the Czech Republic, the share of coal-fired generation has reached 27 percent, whereas in the early 1990s the share of coal was still over 70 percent”, it said.
In a strategy launched May 20, 2021, CEZ pledged to cut the share of coal-fired electricity from 39 percent in 2019 to 25 percent by 2025 and 12.5 percent by 2030.
“The future of the Czech energy sector will be based on renewable sources and safe nuclear power”, Benes added. “Already now 74 percent of our profits are generated by emission-free activities. We are changing rapidly; twenty years ago coal was still the main source of profit”.
Besides stable generation CEZ’s 2023 results got help from “the excellent trading performance of our trading business, which achieved the second-best result ever and generated a trading margin of CZK 9.4 billion [$402.7 million]”, the chief executive said.
Power consumption in CEZ’s distribution territory fell four percent to 33.6 tWh. “The decrease is mainly due to reduced customer consumption as a result of high commodity prices and weather conditions”, CEZ said. “The fall in consumption was also influenced by the boom in rooftop photovoltaic installations by customers”.
CEZ spent nearly CZK 46 billion ($2 billion) in capital for fixed assets last year, up CZK 11 billion ($471.3 million). “The largest amount, more than CZK 22 bn [$942.6 million], was expended in the Generation segment, of which nearly CZK 9 bn [$385.6 million] was spent on the acquisition of nuclear fuel”, CEZ said.
For shareholder returns, it said, “[T]he dividend policy in place indicates a dividend of CZK 39 to 52 [$1.7–2.2] per share”.
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