(Adds analyst comments, CFO comment, details of buyback)
By Jan Korselt
PRAGUE, Aug 14 (Reuters) - Net profit at Czech utility CEZ
<> jumped by two thirds in the second quarter, powering
past analysts expectations thanks to one-off financial gains and
reduced reliance on outside electricity providers.
Shares in central and eastern Europe's largest listed
company, with a market valuation of $45.3 billion, rose as much
as 4.2 percent in early trade, but lost most of their momentum
as some investors took the opportunity to cash in.
By 1145 GMT, the stock was up 0.7 percent at 1,247 crowns.
"The numbers are in line with expectations on the operating
level, as for net profit, results exceeded both my and market
expectations," said Petr Novak, an analyst at Atlantik FT.
"Operating expenses fell mainly due to lower costs for
purchasing electricity as CEZ produced more at its own plants."
Net profit rose 67 percent to 13.07 billion crowns ($822.9
million), beating 10.53 billion expected in a Reuters poll.
Revenues rose 7 percent to 41.82 billion crowns, missing the
forecast of 42.82 billion.
The bottom line was cushioned by gains from hedging against
rising price of carbon permits and currency changes, he said.
Operating expenses fell 8 percent thanks to a cut in costs
for purchasing electricity. The company said it also was helped
by higher wholesale electricity prices and its foreign
operations.
CEZ raised its full-year forecast for earnings before
interest, tax, depreciation and amortisation (EBITDA) to 87
billion crowns from an earlier 85.5 billion, and net profit
before minorities to 48.6 from 46.6 billion.
BUYBACK DELAY
CEZ chief financial officer said it would likely not be able
to move forward with a a new buyback of 10 percent of its shares
before the end of 2008, when it completed the cancellation of
the 10 percent it already purchased off the market.
The company previously expected to complete the legal
process in May to launch a fresh buyback by year-end.
"The second buyback will not be as intensitive as the first
one so (the delay) should not be such an important factor for
the share price," said Josef Nemy, an analyst at Komercni Banka.
The original repurchase programme, along with rising power
prices, helped CEZ shares rise 15 percent over the last 12
months driven by rising power prices and the buyback,
withstanding most of the losses on regional markets.
Over the same period, Prague's PX index <> shed 21
percent.
The company's shareholders' meeting approved repeating a
buyback as the low-indebted company, facing few acquistion
opportunities, aims to hike its debt levels to sector average of
around 2.5 multiple of EBITDA.
(Additional reproting by Jana Mlcochova, editing by Chris
Borowski and David Cowell)
