(Adds analyst comments, CFO comment, details of buyback)
By Jan Korselt
PRAGUE, Aug 14 (Reuters) - The net profit of Czech utility
CEZ <> jumped by two-thirds in the second quarter,
powering past analysts' expectations thanks to one-off financial
gains and lower reliance on outside electricity providers.
Shares in CEZ, central and eastern Europe's largest listed
company with a market valuation of $45.3 billion, jumped 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 rose 0.7 percent to 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.
Revenue 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 also raised its forecast for earnings before interest,
tax, depreciation and amortisation (EBITDA) for the full year
2008 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 Martin Novak said it would not
be able to move forward with a new buyback of 10 percent of its
shares before the end of 2008, when it completes the
cancellation of the 10 percent it already purchased on the
market.
The company previously expected to complete the legal
process in autumn to launch a fresh buyback by year-end.
"The second buyback will not be as intensive 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.
In the same time, Prague's PX index <> shed 21 percent.
The company's shareholders meeting approved the second
buyback as the low-debt company, facing few acquisition
opportunities, aims to hike its debt levels to the sector
average of around a 2.5 multiple of EBITDA.
(Additional reporting by Jana Mlcochova, editing by Chris
Borowski; Editing by Paul Bolding)
