* CEZ keeps full-year 2010 earnings outlook
* Pre-sold 90 pct of 2011 power, expects better prices later
* Shares drop 0.8 percent, underperform Prague index
(Adds company, analyst comments, shares)
By Jan Korselt and Jana Mlcochova
PRAGUE, Aug 10 (Reuters) - Czech power group CEZ <>
raised its production outlook on Tuesday and kept its guidance
in place due to a pickup in demand after lower prices on
pre-sold electricity cut into second-quarter net profit
The group, central Europe's largest listed company with a
market capitalisation of $25.26 billion, is counting on a
recovery in consumption after last year's economic crisis to
boost power prices and help it lock in higher profits in the
coming years.
CEZ confirmed an outlook for a 10 percent annual drop in
profit before minorities in 2010 to 46.7 billion crowns, along
with a 2.6 percent fall in core profit measured by earnings
before interest, tax, depreciation and amortisation (EBITDA).
The company said it raised this year's production target to
64.5 terawatt hours from 62.6 seen in May. A pickup in exports
for Czech manufacturers has revived domestic power consumption,
which makes up most of CEZ's base.
In the second quarter, net profit fell to 11.2 billion
crowns ($599.9 million) from last year's restated 15.8 billion,
and just beat the average estimate of 11.12 billion crowns in a
Reuters poll of analysts.
Revenue rose to 44.8 billion crowns from 43.1 billion, but
was a touch below the 45.2 billion estimated by analysts.
CEZ said it restated last year's second-quarter results
after fair value adjustments in some equity holdings, including
a 3.1 billion crown gain coming from goodwill revaluation at its
German lignite mine MIBRAG acquisition.
CEZ shares fell 0.8 percent, underperforming a 0.5 percent
loss for Prague's index <>. The shares are up 1.5 percent so
far this year, lagging a 6.9 percent rise in the index.
"Overall, we consider the results neutral and slightly
positive with respect to the maintained outlook. We do not
expect any major market reaction," said Milan Vanicek, head of
research at Atlantik FT.
BETTER PRICES AHEAD
The company, 69.7 percent owned by the Czech state, uses the
strategy of pre-selling power one to three years ahead to lock
in prices. It said on Tuesday it expected forward prices to rise
and so it would go slow on pre-selling expected 2012-13 output.
Head of Sales and Trading Alan Svoboda said the group has
hedged 90 percent of 2011 production at over 52 euros per
megawatt hour, down from 54 euros this year and 62 euros last
year.
Around a third of 2012 power had been hedged at a slightly
lower price and 2013 output at prices a bit higher.
Cal '11 baseload power traded at 48.90 euros per megawatt
hour in over-the-counter trade on Monday, down from a month ago.
"Forward prices of electricity for the longer period are
rising," Svoboda said. "We assume that the growth will likely be
even stronger than today and that's why we are in no hurry with
forward sales for the next years."
($1=18.67 Czech Crown)
($1=.7531 Euro)
(Writing by Jason Hovet; Editing by Hans Peters)
