CEZ: Results well above estimates, 2025 projections up

CEZ reported 4Q24 results well ahead of estimates. 4Q24 EBITDA of CZK37.4bn is above consensus by a strong +17.7%. Margin increased by 5.5 pps yoy. Net profit of CZK6.8bn beats estimates by a strong +20%. FY results beat both CEZ's guidance and analyst consensus. The outlook for the year is also ahead of market expectations. The common denominator for the better numbers should be the higher availability of nuclear resources and the contribution of the acquired GasNet. The dividend from last year's profit could reach up to CZK47 (yield +4.5%).

Total revenues in 4Q24 increased by +6.8% yoy to CZK100.6bn. EBITDA amounted to CZK37.4bn (+25% yoy). The margin increased to 37.2% vs. 31.7% in 4Q23. The Production segment was clearly driven by nuclear power plants, which achieved a +31% yoy improvement. This was driven by the absence of excess sales levies and better pricing. Coal-fired power plants recorded a decline in production. Trading declined and returned to normal levels after very successful years. Overall, the Production segment was 10% weaker than a year earlier. Unsurprisingly, Mining was also lower (-27% yoy) due to lower deliveries to the Group.  Distribution was much stronger (+55% yoy). 4Q24 was the first quarter in which GasNet was fully consolidated. The sales segment realized higher electricity and gas volumes. Adjusted net income reached CZK6.8bn in 4Q24. This represents a yoy increase of +125%. This is due to higher EBITDA, but D&A is higher than our estimates (CZK 11.9 vs. CZK 14.9bn). Profits from 2024 are still subject to a special windfall tax. The effective tax rate for 4Q24 is 64.1%.

For 2024, EBITDA is CZK 137.5bn (+10% yoy) and adjusted net profit CZK 31.8bn (-9% yoy). EBITDA exceeded the full-year guidance (CZK 126-130bn) by 7.4%. Net profit of CZK 31.8bn is higher than the projection (CZK 26-30bn) by 14%.

Last year (2024), CEZ paid a special windfall profits tax (WFT) totaling CZK32.1bn.

Leverage: The net debt/EBITDA ratio is 1.5x (1.5x in 9M24, 1.2x in 2023). This is a comfortable level. It has increased slightly compared to 2023, mainly due to the acquisition of GasNet.

Dividend: CEZ typically publishes the dividend proposal at least one month before the AGM,usually by the end of June. Based on the current dividend policy (60-80% of net profit), the dividend could reach up to CZK47 per share (according to CEZ presentation CZK35-47), considering the upper end of the payout ratio. This represents a gross yield of 4.5%.

Outlook for 2025: For this year, CEZ targets EBITDA in the range of CZK125-130bn and net profit in the range of CZK25-29bn. This represents a decrease of about 7% and 15% yoy, respectively. This is due to lower expected realized electricity prices. On the other hand, there will be better availability of nuclear power plants (fewer outages). In recent years, expectations have tended to be conservative at the beginning of the year and are usually updated (increased) during the year. The net profit estimate also implies a dividend of up to CZK43 from 2025 earnings (yield +4%). CEZ's targets are above our estimates, where we expect EBITDA of CZK120 bn and net profit of CZK24.4 bn, and the market consensus (CZK120.5bn and CZK25.2bn).

Author: Bohumil Trampota