Cez As · PSECZ:CEZ
Cez As — FY2021 Earnings Presentation
55 slides from Cez As's earnings presentation, Mar 15, 2022
Slide 1: Report on CEZ Group Financial Results in 2021
REPORT ON CEZ GROUP FINANCIAL RESULTS IN 2021 AUDITED CONSOLIDATED RESULTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) MARCH 15, 2022
Slide 2: Report on CEZ Group Financial Results in 2021
REPORT ON CEZ GROUP FINANCIAL RESULTS IN 2021 Main Results and Key Ambitions for 2022 CEZ Group’s Financial Results Generation, Mining Distribution, Sales, and Trading 2
Slide 3: Financial Highlights of 2021
FINANCIAL HIGHLIGHTS OF 2021 Operating revenues increased by 7% year-on-year to CZK 227.8 bn. EBITDA decreased by 2% year-on-year to CZK 63.2 bn. Net income increased by 81% year-on-year to CZK 9.9 bn. Net income adjusted for extraordinary effects decreased by 3% year-on-year to CZK 22.3 bn.
Slide 4: We exceeded our 2021 EBITDA outlook by more than CZK 3 bn
WE EXCEEDED OUR 2021 EBITDA OUTLOOK BY MORE THAN CZK 3 BN, MAINLY DUE TO THE ADDITIONAL INCOME FROM TRADING ON FOREIGN MARKETS AT THE END OF THE YEAR EBITDA (CZK bn) 65 63.2 59–60 2.6 Selected factors for change in financial results 60 2.6 as compared to outlook from Nov 9, 2021: 55 Income from co
Slide 5: Board will propose a dividend of CZK 44 per share
THE BOARD OF DIRECTORS WILL PROPOSE A DIVIDEND OF CZK 44 PER SHARE AT THE SHAREHOLDERS’ MEETING 130% 122% 60 The dividend for 2021 is proposed to be 120% CZK 44 per share. 110% 106% 50 The proposal is based on the dividend 98% 97% 100% policy in force, defining the dividend 90% 85% payment in the
Slide 6: EC substantially increased 2030 climate targets—Fit for 55
EUROPEAN COMMISSION SUBSTANTIALLY INCREASED THE 2030 CLIMATE AND DECARBONIZATION TARGETS—”FIT FOR 55” PACKAGE 2030 targets (current values) 2030 targets (EC’s current proposal) Reduction of At least 40% At least 55% greenhouse gas • Binding EU-wide target • Binding EU-wide target emissions • to redu
Slide 7: Market prices for electricity, emission allowances and gas surpassed historical highs in 2021
MARKET PRICES FOR ELECTRICITY, EMISSION ALLOWANCES, AND GAS SURPASSED LONG-STANDING HISTORICAL HIGHS IN 2021 The evolution of electricity prices in Market prices for electricity, emission allowances, and natural gas H1 followed the rise of emission allowance prices due to the increase EEX Cal22 BL (
Slide 8: Accelerated CEZ Group strategy Vision 2030—Clean Energy for Tomorrow
IN RESPONSE TO ENERGY CHALLENGES, WE ACCELERATED THE CEZ GROUP STRATEGY “VISION 2030—CLEAN ENERGY FOR TOMORROW” The main objectives of the accelerated strategy—VISION 2030 • We will develop CEZ Group in a responsible and sustainable manner in accordance with ESG. • We will accelerate the implementat
Slide 9: Vision 2030 Pillar I: Transform generation portfolio to low-emission
WE MEET THE STRATEGIC GOALS OF VISION 2030—CLEAN ENERGY FOR TOMORROW—PILLAR I TRANSFORM THE GENERATION PORTFOLIO TO LOW-EMISSION AND ACHIEVE CARBON NEUTRALITY Key strategic ambitions of VISION 2030 • We will safely increase generation from existing nuclear sources to over 32 TWh per year and will ac
Slide 10: Vision 2030 decarbonization and emission targets
WE MEET THE STRATEGIC GOALS OF VISION 2030—CLEAN ENERGY FOR TOMORROW DECARBONIZATION AND EMISSION TARGETS Key strategic ambitions of VISION 2030 • We will reduce CO2 emissions by 2030 in line with the Paris Agreement “Well Below 2 Degrees”. • We will reduce the emission intensity to 0.26 t CO2e/MWh
Slide 11: Vision 2030 Pillar II: Cost-effective energy solutions and best customer experience
WE MEET THE STRATEGIC GOALS OF VISION 2030—CLEAN ENERGY FOR TOMORROW—PILLAR II PROVIDE THE MOST COST-EFFECTIVE ENERGY SOLUTIONS AND THE BEST CUSTOMER EXPERIENCE IN THE MARKET Key strategic ambitions of VISION 2030 • We will invest in Smart grids and decentralization to further develop a stable and d
Slide 12: Vision 2030 progress appreciated by external ESG agencies
WE MEET THE STRATEGIC GOALS OF VISION 2030—CLEAN ENERGY FOR TOMORROW THE PROGRESSIVE IMPLEMENTATION OF VISION 2030 IS ALSO APPRECIATED BY EXTERNAL ESG AGENCIES Reinforcing motivation to ESG approach in 2021: • Board of Director’s remuneration linked to improvement of ESG rating, weight of ESG KPI’s
Slide 13: Updating the dividend policy: payout ratio of 60–80%
UPDATING THE DIVIDEND POLICY: PAYOUT RATIO OF 60–80% OF CEZ GROUP’S ADJUSTED NET INCOME Updating the pay-out ratio to 60–80% (from the current 80–100%): Setting a long-term sustainable dividend policy in line with the best practice approach in the utilities sector The policy update also reflects
Slide 14: Financial ambitions for 2022: EBITDA of CZK 85–89 bn
FINANCIAL AMBITIONS FOR 2022: EBITDA OF CZK 85–89 BN, NET INCOME OF CZK 38–42 BN, DIVIDEND OF CZK 56–62 EBITDA (CZK bn) Main year-on-year effects: 85–89 63.2 Significantly higher realization prices of electricity 2.6 Growth ambitions in ESCO services — Sale of Romanian and Bulgarian assets 60.
Slide 15: Report on CEZ Group Financial Results in 2021
REPORT ON CEZ GROUP FINANCIAL RESULTS IN 2021 Main Results and Key Ambitions for 2022 CEZ Group’s Financial Results Generation, Mining Distribution, Sales, and Trading 15
Slide 16: Financial performance in 2021: EBITDA CZK 63.2 bn
FINANCIAL PERFORMANCE IN 2021: EBITDA OF CZK 63.2 BN, ADJUSTED NET INCOME OF CZK 22.3 BN EBITDA (CZK bn) Selected year-on-year changes: 70 Higher realization prices of electricity 64.8 63.2 65 Higher income from commodity trading 6.9 2.6 60 Higher generation at nuclear power plants 55 Stabil
Slide 17: Main causes of year-on-year change in EBITDA
MAIN CAUSES OF YEAR-ON-YEAR CHANGE IN EBITDA CZK bn 70 64.8 63.2 65 +1.1 +0.5 +1.0 60 6.9 +0.1 2.6 Divested assets 55 50 57.9 60.6 EXISTING CZK +2.7 bn Existing 45 +5% ASSETS assets 40 2020 GENERATION MINING DISTRIBUTION SALES 2021 Existing assets (CZK +2.7 bn): GENERATION Segment (CZK +0.1 bn):
Slide 18: Main causes of year-on-year change in net income
MAIN CAUSES OF YEAR-ON-YEAR CHANGE IN NET INCOME (CZK bn) 2020 2021 Difference % EBITDA 64.8 63.2 -1.5 -2% Depreciation and amortization -28.3 -31.6 -3.3 -12% Net Income Adjustments Valuation impairments* -23.9 -15.5 +8.4 +35% In 2020 adjusted for the negative effect of fixed assets impairments**
Slide 19: Fossil-fuel generation share below 40%; EU taxonomy
CEZ GROUP’S SHARE OF FOSSIL-FUEL GENERATION HAS DECREASED BELOW 40 %, THE FUTURE WILL BE FUNDAMENTALLY AFFECTED BY EU TAXONOMIC LEGISLATION Emission-free From fossil Emission-free From fossil 61 % fuels 86 % fuels 39 % 14 % Electricity EBITDA generation 2021 in 2021 The European Commission has publi
Slide 20: Operating and price assumptions for generation in Czechia
FINANCIAL AMBITIONS FOR 2022: EBITDA OF CZK 85–89 BN SELECTED OPERATING AND PRICE ASSUMPTIONS FOR GENERATION IN CZECHIA* EBITDA Electricity—share of secured supply (CZK bn) 85–89 from generation in Czechia* for 2022 63.2 2.6 Sold Divested assets Existing assets Volume Open Revenues (TWh) position (C
Slide 21: Targeting CZK 105–110 bn EBITDA in 2025
THE VISION’S AMBITION TO INCREASE EBITDA IS REINFORCED BY THE CURRENT INCREASE IN COMMODITY PRICES, WE ARE TARGETING CZK 105–110 BN IN 2025 CEZ Group EBITDA—outlook in May 2021 CEZ Group EBITDA—current outlook (CZK bn) (CZK bn) Impact of +12 to +90% commodity price increases +12 to +21% 105–110 65–7
Slide 22: Report on CEZ Group Financial Results in 2021
REPORT ON CEZ GROUP FINANCIAL RESULTS IN 2021 Main Results and Key Ambitions for 2022 CEZ Group’s Financial Results Generation, Mining Distribution, Sales, and Trading 22
Slide 23: Generation and Mining segments EBITDA
GENERATION AND MINING SEGMENTS EBITDA EBITDA (CZK bn) 2020 2021 Difference % GENERATION* Czechia 31.6 32.2 +0.6 +2% Germany 0.5 0.5 -0.1 -9% Poland 0.7 0.4 -0.3 -44% MINING Czechia 3.4 4.5 +1.1 +31% DIVESTED ASSETS Romania and Bulgaria 2.4 0.6 -1.7 -73% Main causes of year-on-year change in EBITDA G
Slide 24: Generation from renewable and nuclear fuels (TWh)
GENERATION FROM RENEWABLE* AND NUCLEAR FUELS (TWH) +1% -2% 34.0 34.5 34.5 33.9 4.0 3.8 3.8 3.4 -6% -10% Renewable fuels +2% 30.7 -1% 30.0 30.7 30.6 Nuclear Fuel 2020 2021 2021 2022 E Renewables (-6%) hydro, wind, solar, biomass, biogas Renewables (-10%) Czechia hydro (+4%) Czechia hydro (-6%) + Hi
Slide 25: Electricity generation from coal and natural gas (TWh)
ELECTRICITY GENERATION FROM COAL AND NATURAL GAS (TWH) -17% +8% 25.6 21.1 22.7* 3.9 21.1 3.9* -19% 3.2 +24% 2.0 2.2 3.2 Generation 1.8 1.8 from natural gas +19% -8% Generation from 19.7 16.1 16.7 16.1 coal in Poland +3% -18% Generation from coal in Czechia 2020 2021 2021 2022 E Natural gas–fired gen
Slide 26: Hedging cost of emission allowances and gas
SELECTED OPERATIONAL AND PRICE ASSUMPTIONS FOR GENERATION IN CZECHIA* HEDGING THE COST OF EMISSION ALLOWANCES AND GAS Hedging the cost of generation in Czechia* for 2022 Emission Allowances Natural Gas** Purchased Purchased EUA (t) Open position Open position (TWh) 84 % 16 % 69 % 31 % The average
Slide 27: Hedging market risks of generation in Czechia for 2023–2025
HEDGING THE MARKET RISKS OF GENERATION IN CZECHIA FOR 2023–2025 Electricity sold in TWh (as of Dec 31) Contracted emission allowances* in m tons (as of Dec 31) Hedged volume from Oct 1, 2021, to Dec 31, 2021 Hedged volume from Oct 1, 2021, to Dec 31, 2021 Hedged volume as of Sep 30, 2021 Hedged volu
Slide 28: Report on CEZ Group Financial Results in 2021
REPORT ON CEZ GROUP FINANCIAL RESULTS IN 2021 Main Results and Key Ambitions for 2022 CEZ Group’s Financial Results Generation, Mining Distribution, Sales, and Trading 28
Slide 29: Distribution and Sales segments EBITDA
DISTRIBUTION AND SALES SEGMENTS EBITDA* EBITDA (CZK bn) 2020 2021 Difference % DISTRIBUTION Czechia 17.7 18.2 +0.5 +3% SALES* Segment total 4.1 5.0 +1.0 +24% DIVESTED ASSETS Romania and Bulgaria 4.5 2.0 -2.5 -56% Main causes of year-on-year change in EBITDA DISTRIBUTION Segment* in Czechia (CZK +0.5
Slide 30: Electricity consumption in ČEZ Distribuce area
ELECTRICITY CONSUMPTION IN THE DISTRIBUTION AREA OF ČEZ DISTRIBUCE INCREASED ABOVE THE 2019 LEVEL Electricity distribution Temperature- and calendar-adjusted (TWh) electricity consumption (TWh) -3% +5% 35.9 36.6 34.7 -3% +4% 4.8 4.7 Retail customers -3% 4.7 +0% (businesses) 9.8 10.3 11.3 +5% +10% Re
Slide 31: Volume of electricity and gas sold and number of customers
VOLUME OF ELECTRICITY AND GAS SOLD AND THE NUMBER OF CUSTOMERS CZECHIA—RETAIL The collapse of several suppliers in 2021 due Electricity and gas supply The number of customers to the sharp rise in commodity prices and the increased by 16% year-on-year increased by 11% year-on-year subsequent transi
Slide 32: Sales of energy services
SALES OF ENERGY SERVICES Revenues year-on-year Revenues outlook (CZK bn) (CZK bn) 31.5 Germany +27% +10% 24.8 (Elevion Group) 24.8 22.5 16.3 +15% +9% Czechia and 14.2 14.2 13.0 Slovakia +38% +11% (ČEZ ESCO group) 9.9 6.4 7.1 Other countries* 7.1 +55% +13% 3.1 3.5 (Elevion Group) 3.5 5.4 2020 2021 20
Slide 33: Commodity trading income reached record levels
IN 2021 COMMODITY TRADING INCOME SURPASSED THE HIGH STANDARD OF PREVIOUS YEARS AND REACHED RECORD LEVELS DUE TO INCREASED VOLATILITY IN FOREIGN MARKETS Total trading margin* for 2021 reached CZK +6.8 bn, the best result in history. In 2021 our trading activities included more than 326 thousand trans
Slide 34: Assessing the impact of conflict in Ukraine
CEZ GROUP IS ASSESSING THE IMPACT OF CONFLICT IN UKRAINE AND IS TAKING APPROPRIATE MEASURES CEZ Group has taken all security measures as a critical infrastructure entity and is cooperating with the Czech authorities. CEZ Group intensively evaluates the potential impacts of the conflict, incl. conseq
Slide 35: Annexes
ANNEXES Financial Results Financial and operating results Summary operating results Operating revenues by segment and country EBITDA by segment and country EBITDA of individual business segments—detail for the full year and for Q4 Net income for Q4 Expected year-on-year change in EBITD
Slide 36: Financial and operating results
FINANCIAL AND OPERATING RESULTS 2020 2021 Difference % Operating revenues CZK bn 213.7 227.8 +14.1 +7% EBITDA CZK bn 64.8 63.2 -1.5 -2% of which: Existing assets* CZK bn 57.9 60.6 +2.7 +5% EBIT CZK bn 12.6 16.1 +3.5 +28% Net income CZK bn 5.5 9.9 +4.4 +81% Adjusted net income** CZK bn 22.8 22.3 -0.6
Slide 37: Summary operating results
SUMMARY OPERATING RESULTS Gas sales to end-use Electricity generation (TWh) 2020 2021 Difference % customers (TWh) 2020 2021 Difference % Existing assets** 59.6 55.6 -4.0 -7% Existing assets 8.0 6.8 -1.2 -15% of which: Czechia** 56.8 53.2 -3.6 -6% of which: Czechia 6.1 6.7 +0.5 +8% Germany 0.3 0.2 -
Slide 38: Operating revenues by segment and country
OPERATING REVENUES BY SEGMENT AND COUNTRY GENERATION (CZK bn) 2020 2021 Difference % SALES (CZK bn) 2020 2021 Difference % Czechia 100.4 130.7 +30.3 +30% Czechia 54.7 63.0 +8.3 +15% Germany 0.7 0.7 -0.0 -6% Germany 13.3 14.4 +1.1 +9% Poland 6.6 5.7 -1.0 -14% Romania 8.7 2.7 -6.1 -69% Romania 4.0 1.2
Slide 39: EBITDA by segment and country
EBITDA BY SEGMENT AND COUNTRY GENERATION (CZK bn) 2020 2021 Difference % DISTRIBUTION (CZK bn) 2020 2021 Difference % Czechia 31.6 32.2 +0.6 +2% Czechia 17.7 18.2 +0.5 +3% Germany 0.5 0.5 -0.1 -9% Romania 2.0 0.5 -1.4 -72% Poland 0.7 0.4 -0.3 -44% Bulgaria 1.9 1.1 -0.8 -40% Romania 2.3 0.6 -1.7 -73%
Slide 40: Generation segment EBITDA
GENERATION SEGMENT EBITDA* EBITDA (CZK bn) 2020 2021 Difference % 10-12/2020 10-12/2021 Difference % Zero-emission Generating Facilities 24.1 28.3 +4.2 +17% 4.7 7.8 +3.1 +68% of which: nuclear 19.6 22.5 +2.8 +15% 3.8 6.0 +2.2 +58% of which: renewables 4.5 5.9 +1.3 +29% 0.9 1.8 +0.9 +110% Fossil-Fuel
Slide 41: Mining segment EBITDA
THE MINING SEGMENT EBITDA EBITDA (CZK bn) 2020 2021 Difference % 10-12/2020 10-12/2021 Difference % Czechia 3.4 4.5 +1.1 +31% 1.0 1.3 +0.3 +28% Year-on-year effects for the whole year: Year-on-year effects in Q4: Czechia (CZK +1.1 bn) Czechia (CZK +0.3 bn) Higher revenues related to higher coal su
Slide 42: Distribution segment EBITDA
DISTRIBUTION SEGMENT EBITDA* EBITDA (CZK bn) 2020 2021 Difference % 10-12/2020 10-12/2021 Difference % Czechia 17.7 18.2 +0.5 +3% 4.8 4.6 -0.2 -4% Year-on-year effects for the whole year: Year-on-year effects in Q4: Czechia (CZK +0.5 bn) Czechia (CZK -0.2 bn) Higher gross margin on electricity dis
Slide 43: Sales segment EBITDA
SALES SEGMENT EBITDA* EBITDA (CZK bn) 2020 2021 Difference % 10-12/2020 10-12/2021 Difference % Retail segment–ČEZ Prodej 3.4 3.2 -0.1 -4% 1.0 -0.0 -1.0 - B2B segment—of which ESCO companies: 0.7 1.6 +0.9 +120% 0.2 0.5 +0.4 >200% Energy Services—Czechia and Slovakia 0.5 0.6 +0.1 +17% 0.1 0.2 +0.1 +1
Slide 44: Net income for Q4 CEZ Group
NET INCOME FOR Q4 CEZ GROUP (CZK bn) 10-12/2020 10-12/2021 Difference % EBITDA 13.9 15.7 +1.8 +13% Net Income Adjustments Depreciation and amortization -6.2 -9.8 -3.6 -58% In Q4 2020 adjusted for the negative effect of impairment of fixed assets** in Romania Asset impairments* -18.3 -3.6 +14.6 +80
Slide 45: Expected year-on-year change in EBITDA by business segment
EXPECTED YEAR-ON-YEAR CHANGE IN EBITDA BY BUSINESS SEGMENT* (CZK bn) GENERATION Nuclear EBITDA 2021 • Higher realization prices of electricity incl. hedging + Renewables +15 to +20 • Higher realization prices of electricity incl. hedging + Fossil-Fuel plants +1.5 to +2.5 • Effect of realized prices
Slide 46: Investments in fixed assets (CAPEX)
INVESTMENTS IN FIXED ASSETS (CAPEX) CAPEX (CZK bn) 2020 2021 10-12/2020 10-12/2021 GENERATION Segment* 11.2 13.4 4.9 6.4 Of which: Nuclear fuel procurement 3.0 3.1 1.6 1.0 MINING Segment 3.3 2.7 1.8 1.3 DISTRIBUTION Segment* 12.4 13.3 4.3 4.6 SALES Segment* 1.4 2.0 0.5 1.0 Total existing assets 28.3
Slide 47: Credit lines and debt structure as of Dec 31, 2021
CREDIT LINES AND DEBT STRUCTURE AS OF DEC 31, 2021 Utilization of Short-Term Lines and Available Committed Credit Facilities (as of Dec 31, 2021) Bond Maturity Profile (as of Dec 31, 2021) CZK bn Drawn 25 uncommitted 20 CZK 3.2 bn 15 Available credit Undrawn 10 facilities* committed CZK 25.2 bn 5 Dr
Slide 48: Net debt decreased by almost CZK 33 bn in 2021
NET DEBT DECREASED BY ALMOST CZK 33 BN IN 2021 Net debt Other Net debt as of December Interest, operating Acquisition of Divestments/ as of December 31, 2020 EBITDA income tax effects fixed assets acquisitions Dividends Other 31, 2021 Decrease in net debt by CZK 32.8 bn 110.7 143.5 +63.2 -7.6 +3.6 -
Slide 49: Currency and commodity hedging of electricity generation in 2023–2025
CURRENCY AND COMMODITY HEDGING OF ELECTRICITY GENERATION IN 2023–2025 Currency Hedges for Estimated Revenues from Electricity Generation in Czechia (as of Dec 31, 2021) 2023 2024 2025 Total currency hedges (natural & transactional) as of Dec 31, 2021 97% 90% 85% Natural currency hedging (debt in EUR
Slide 50: Vision 2030: Social relations and governance
WE MEET THE STRATEGIC GOALS OF VISION 2030—CLEAN ENERGY FOR TOMORROW SOCIAL RELATIONS AND GOVERNANCE Social relations Governance • ČEZ Prodej dominated the Most • Board remuneration was linked to improvement of ESG rating and weight of ESG KPI’s Trusted Brand in the Energy was increased 2021: Comple
Slide 51: Market developments from Jan 1, 2020 to Dec 31, 2021
MARKET DEVELOPMENTS FROM JAN 1, 2020 TO DEC 31, 2021 CO2 emissions allowances ČEZ shares CZK EUR/t (12/2023 delivery) 900 110 90 700 70 50 500 30 300 10 Electricity EUR/MWh (2022 and 2023 baseload) USD/t Coal and Gas EUR/MWh 360 260 240 250 200 180 140 120 140 80 60 30 20 0 Forward 2022 Forward 2023
Slide 52: Electricity balance (GWh)
Electricity balance (GWh) Index 2020 2021 2021/2020 Electricity procured 54,902 50,353 -8% Generated in-house (gross) 60,946 55,989 -8% In-house and other consumption, including pumping in pumped-storage plants -6,044 -5,636 -7% Sold to end customers -33,265 -26,834 -19% Sold in the wholesale market
Slide 53: Electricity balance (GWh) by segment
Electricity balance (GWh) by segment 2021 Generation Distribution Sale Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 49,974 -8% 0 - 379 +17% 0 - 50,353 -8% Generated in-house (gross) 55,594 -8% 0 - 395 +17% 0 - 55,989 -8% In-house and other consumption, includin
Slide 54: Electricity balance (GWh) by country
Electricity balance (GWh) by country 2021 Czechia Poland Romania Bulgaria Germany Others Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 47,893 -6% 1,841 -17% 388 -71% 3 -49% 228 -22% 0 - 0 - 50,353 -8% Generated in-house (gross) 53,218 -6%
Slide 55: Definitions and Calculations of Indicators Unspecified in IFRS
Definitions and Calculations of Indicators Unspecified in IFRS In accordance with ESMA guidelines, ČEZ provides detailed information on indicators that are not reported as standard in IFRS reports or the components of which are not directly available from standardized reports and notes to the financ