Czech power company CEZ AS (BAACEZ.PR) Thursday said it is nearing
agreement on a long-term coal supply contract that if signed would boost
expected earnings this year, and also said that later in the day it may
reach a settlement with the European Commission over competition
concerns.
"We're negotiating with [supplier] Czech Coal, talks are
working toward an agreement and if we reach a deal we'll near last
year's [coal-fired] production levels," Alan Svoboda, the company's
sales head, said.
CEZ's coal-fired production in 2012 was down 5% on year at
31.1 terawatt hours, and barring a new supply deal the company expects
generation at those plants this year to fall by an additional 18% to
25.5 terawatt hours.
Chairman Daniel Benes said that if the supply deal goes
through, "we'll alter [production targets] for our coal power plants and
it'll have a positive impact on our results."
Both Messrs Svoboda and Benes declined to say when the company
may close the contract and by what degree the deal would alter 2013
guidance.
Earlier in the day CEZ said its earnings before interest, tax,
depreciation and amortization, or Ebitda, for this year should reach
CZK80 billion and it expects net profit of CZK37 billion. The company
posted Ebitda of CZK85.5 billion and net profit was CZK40.2 billion last
year.
Separately, a final settlement agreement with the European
Commission over competition issues would clarify exactly which power
plants CEZ would be obliged to sell to quell commission concerns the
Czech utility has abused its dominant position on the local market.
The company last year proposed a settlement to the commission
in which it would sell 800 megawatts of installed coal-fired generation
capacity.
Regarding the company's troubled business in Bulgaria,
Mr. Benes said he expects a resolution in which CEZ continues operating
there and such a deal would prevent any negative impact to CEZ's
earnings outlook.
In Bulgaria,
the outgoing government, which has recently resigned amid public
protests over high power prices, earlier said country's power regulator
would revoke CEZ's business license and would force power distributors
there to cut power prices by 8% from early March.