UPDATE 1-Czech CEZ raises profit forecast, dividend

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Czech power company CEZ said on Thursday it had raised its 2007 net profit forecast to 42.6 billion crowns ($2.33 billion) before minorities from a previous estimate of 41.4 billion.

The company said it would raise its dividends to 50-60 percent of net profit, raising the payout ratio from 40-50 percent.

It said this would apply to dividends paid next year, and would be related to profit before one-off influences, which the company forecast at 37.3 billion crowns in 2007.

CEZ, the biggest central European company with market capitalisation of $44.9 billion, added it expected 2008 net profit to rise to 46.6 billion crowns.

It forecast earnings before interest, tax, depreciation and amortisation (EBITDA) to reach 85.5 billion crowns, just above market consensus of 84.94 billion, according to Reuters data.

"The further improvement in CEZ's performance will be affected mainly by planned growth of output in nuclear power stations and related higher electricity sales, growth in wholesale electricity prices, cost controls... and lower tax burden," the company said.

It added it has been in talks to take over privately-owned lignite miner Mostecka Uhelna, but the negotiations have so far yielded no result. No offer was currently on the table but Mostecka owners were expected to submit one, CEZ said.

CEZ said it would potentially acquire the mines, valued by Czech media at 28 billion crowns, together with investment group J&T, because CEZ was only interested in one of the firm's mines, at Vrsany.

The company needs to secure coal supplies for its planned renovation of power stations in the northwestern part of the country.

CEZ shares briefly rose after the news but soon returned to their previous level of 1,379 crowns, up 0.95 percent, slightly outpacing the Prague PX index which rose 0.6 percent. (Reporting by Jan Lopatka, Editing by Alan Crosby, Paul Bolding)

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Keywords: CEZ/OUTLOOK

[PRAGUE/Reuters/Finance.cz]