* CEZ sees double-digit profit growth continuing
* Sees demand rise continuing, albeit at slower pace
* Does not see impact from credit crisis; debt market
situation difficult but CEZ can wait
(For other news from the Reuters Central European Investment
Summit, click on
http://www.reuters.com/summit/CentralEuropeanInvestment08?pid=500) (Adds quotes, background)
By Jan Lopatka
VIENNA, Oct 21 (Reuters) - Czech power firm CEZ <>
expects its profits to continue rising at a double-digit pace
next year and in 2010 on the back of higher electricity prices
and still strong demand, sales chief Alan Svoboda said on
Tuesday.
Svoboda told the Reuters Central European Investment Summit
that wholesale prices for the next year were being locked in
above this year's levels, which would largely be reflected in
the company's bottom line.
"If you look at analysts' models... they all forecast our
profitability will continue climbing up steeply over the next
two years and from what I say about the market situation and our
cost structure, it can be confirmed."
He said he expected CEZ to maintain double-digit profit
growth in 2009 and 2010: "Unless there is a combination of
several negative factors at once. You'd need to see collapse of
the coal market, collapse of the CO2 market, a major operational
problem with one of our nuclear plants."
CEZ has forecast net profit rising 14 percent this year to
48.6 billion crowns before minorities.
"The results of this year are basically locked in at power
price of around 52 euros (per megawatt-hour)," Svoboda said at
the event, being held at the Reuters office in Vienna.
"Sales for next year are gradually being locked in, and
power prices today are around 70-75 euros. We have sold some
power before at lower prices but generally there will be a very
significant increase year-on-year in the wholesale margins
achieved."
Svoboda said he expected power prices to stabilise around
the current levels.
Ha said he did not see any impact of the credit crisis on
CEZ, central Europe's largest company with market capitalisation
of $24.4 billion. He thought demand the region would still keep
rising next year, although possibly at about half of the 4-5
percent pace seen in the past years.
Svoboda said the company still planned to go ahead with a
share buyback plan, which can start in December.
"The share price, from the fundamental perspective, is very
undervalued. This is one of the best investments we can make in
this moment in terms of return to shareholders.
"Unless the debt markets are in huge flux, when it is not a
matter of price but matter of getting the cash, financing should
not be a problem. What we see rather is the tradeoff between
buying back shares and ... undertaking some other investments
which are now also becoming much more attractive."
The stock price has dropped by over 40 percent this year to
798 crowns on Tuesday.
Svoboda said conditions on the debt markets were difficult
at the moment -- it would be tough if at all possible to sell
bonds today -- but CEZ could wait for the situation to settle
down before raising new debt. He added CEZ needed to refinance
about 500 million euros ($659.5 million) worth of debt in the
next six months.
CEZ will maintain its dividend payout ratio of 50-60 percent
of profit excluding one-off items, which means a growing
dividend in nominal terms as profits rise.
"We're definitely not lowering it. We've heard questions
from investors 'Are you putting dividends at risk'. That is
definitely not the case," Svoboda said.
CEZ paid a 40 crown dividend on 2007 profits.
(For more on the Reuters Central European Investment Summit,
click on []
(Reporting by Jan Lopatka; editing by Elaine Hardcastle and
Hans Peters)
