Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2029 bonds, CZK3.0bn of 2033 bonds and CZK4.0bn of 2035 bonds. Overall, MinFin has sold CZK99.7bn of CZGBs in primary auctions, with an additional CZK50.6bn of taps and CZK38.1bn of switches on the secondary market year to date. Meanwhile, the Czech government is proposing an amendment to national fiscal rules that could potentially allow a public finance deficit wider than 3% of GDP next year by extending the escape clause to encompass most infrastructure investment. The lower house of the Czech parliament will resume deliberations on the bill this week. On Thursday, the Ministry of Finance will also hold a press conference to present details on the issuance of new retail bonds. While these parameters may influence the amount sold, retail CZGBs play a relatively minor role overall, accounting for just 1.6% of state debt.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2029 bonds, CZK3.0bn of 2033 bonds and CZK4.0bn of 2035 bonds. Overall, MinFin has sold CZK99.7bn of CZGBs in primary auctions, with an additional CZK50.6bn of taps and CZK38.1bn of switches on the secondary market year to date. Meanwhile, the Czech government is proposing an amendment to national fiscal rules that could potentially allow a public finance deficit wider than 3% of GDP next year by extending the escape clause to encompass most infrastructure investment. The lower house of the Czech parliament will resume deliberations on the bill this week. On Thursday, the Ministry of Finance will also hold a press conference to present details on the issuance of new retail bonds. While these parameters may influence the amount sold, retail CZGBs play a relatively minor role overall, accounting for just 1.6% of state debt.

Market situation: While CZGB yields are close to their highest levels since the outbreak of conflict in the Middle East, ASWs are close to their tightest levels over the same period, indicating continued solid demand. Last Thursday, CNB left its key policy rate at 3.5%. According to Governor Michl, a rate hike was not on the agenda at the meeting, with favourable position enables the CNB to maintain its wait-and-see policy and assess incoming data. At Monday’s meeting with analysts, the Deputy Governor, Zamrazilova, also mentioned that there was no need for hasty rate moves. She added that the majority of the Board would prefer to keep rates at the lowest possible level without endangering price stability.  You can find details of the CNB May meeting here: https://bit.ly/CNB_Focus_May26_EN.

Rates outlook: Given that the CNB is relatively well positioned to navigate the oil price shock and credit tightening is delivered via an increase in market interest rates, we expect it to wait for more clarity rather than act pre-emptively at this stage. Rate hikes may only be on the table if there are significant second-round effects on other components of inflation. We continue to expect interest rates to remain on hold until the end of the year.

For the first quarter, we estimate a 20% yoy decline in EBITDA to CZK34.4bn. Realized electricity prices will be lower this year, and we also expect operating costs to rise. However, net profit will rise by +10.5% yoy and, according to our estimates, will reach CZK14bn. Since the windfall tax is no longer in effect this year, the effective tax rate will drop significantly, positively impacting net profit.

Announcement date: Thursday, May 14, 2026, at 7:00 a.m. CET

For the first quarter, we estimate a 20% yoy decline in EBITDA to CZK34.4bn. Realized electricity prices will be lower this year, and we also expect operating costs to rise. However, net profit will rise by +10.5% yoy and, according to our estimates, will reach CZK14bn. Since the windfall tax is no longer in effect this year, the effective tax rate will drop significantly, positively impacting net profit.

The price of electricity sold has fallen significantly this year. While CEZ sold electricity for approximately EUR124/MWh last year, our estimate is that it will be around EUR105 this year. However, since the start of the conflict in the Middle East, electricity prices have been nearly EUR10/MWh higher. We do not expect this to significantly impact the average price this year. It could, however, partially increase selling prices for future years. Revenues for 1Q26 are estimated at CZK89.9bn (-3.7% yoy). EBITDA is expected to decline by 20.1% yoy, reaching CZK34.4bn. The Generation sector is expected to account for slightly more than half of this, while the Distribution is expected to account for about 36%. We estimate an increase in operating costs (personnel, services). We also expect a slight decline in depreciation and amortization. We estimate net profit for the first quarter of this year to be CZK14bn. This corresponds to yoy growth of +10.5%. The difference in this line compared to the same period last year is primarily due to the tax rate. The special tax (WFT) no longer applies this year. In Q1 of 2025, the effective tax rate was 49.7%, whereas we estimate a standard rate of 21% this year. 

2026 Guidance: On March 12, CEZ published its current targets, which project EBITDA of CZK103–108bn and net profit of CZK27–31bn. Our estimates are more optimistic. According to our model, EBITDA should be CZK112.5bn, while net profit should be CZK37.4bn. We acknowledge that projections are usually conservative at the beginning of the year. We view the release of quarterly results as an opportunity for an update. Our estimates for 1Q26 are approximately 33% and 48% of CEZ’s EBITDA and net profit targets, respectively.