Cez As · PSECZ:CEZ
Cez As — Q3 2020 Earnings Presentation
44 slides from Cez As's earnings presentation, Nov 10, 2020
Slide 1: Presentation on CEZ Group Financial Results in Q1–Q3 2020
PRESENTATION ON CEZ GROUP FINANCIAL RESULTS IN Q1–Q3 2020 NONAUDITED CONSOLIDATED RESULTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) November 10, 2020 CEZ GROUP
Slide 2: COVID: ČEZ protects operations and personnel and helps others
COVID: ČEZ PROTECTS OPERATIONS AND PERSONNEL AND HELPS OTHERS ČEZ took adequate measures in time to be able to supply electricity under any circumstances. A number of measures that have been taken in Czechia and abroad are coordinated with national crisis staff. WE PROTECT CEZ GROUP OPERATIONS AND P
Slide 3: Contents
CONTENTS Financial Highlights and Selected Events Financial Performance of Business Segments Annual Outlook 2 CEZ GROUP
Slide 4: CEZ Group Financial and Operating Results
CEZ GROUP FINANCIAL AND OPERATING RESULTS (CZK bn) Q1 - Q3 2019 Q1 - Q3 2020 Change % Revenues 148.1 155.5 +7.5 +5% EBITDA 44.7 50.9 +6.2 +14% EBIT 22.1 23.2 +1.1 +5% Net income 13.6 13.6 -0.0 -0% Net income adjusted * 14.7 18.7 +4.0 +27% Operating CF 40.5 52.0 +11.5 +28% CAPEX 18.6 18.9 +0.4 +2% Q1
Slide 5: Year-on-year change in EBITDA by segment
YEAR-ON-YEAR CHANGE IN EBITDA BY SEGMENT (INCL. STRATEGIC VS. OTHER ASSETS) Assets held for sale Strategic assets Main Causes of Year-on-Year Change in Q1–Q3 EBITDA Strategic assets (CEZ Group except for companies intended for sale under the valid strategy from 2019) ▪ Higher realization prices of g
Slide 6: Other income (expenses)
OTHER INCOME (EXPENSES) (CZK bn) Q1 - Q3 2019 Q1 - Q3 2020 Change % EBITDA 44.7 50.9 +6.2 +14% Depreciation, amortization and impairments* -22.6 -27.7 -5.2 -23% Other income (expenses) -5.4 -5.7 -0.3 -6% Interest income (expenses) -3.8 -3.7 +0.1 +2% Interest on nuclear and other provisions -1.4 -1.5
Slide 7: European Commission proposed increasing 2030 CO2 reduction target
THE EUROPEAN COMMISSION PROPOSED INCREASING THE 2030 TARGET FOR CO2 EMISSION REDUCTION TO 55% OF THE 1990 BASELINE AND PUBLISHED FURTHER AMBITIONS AND SCENARIOS FOR ATTAINING OBJECTIVES UNDER ITS “GREEN DEAL” 2020 2030 (current targets)* 2030 (new EC proposal) Reduction of 20% At least 40% ▪ Binding
Slide 8: Huge financial assistance for green investments in the EU
HUGE FINANCIAL ASSISTANCE FOR SPECIFIC GREEN INVESTMENTS PREPARED IN THE EU IN LINE WITH THE “GREEN DEAL” Fixed funds allocated at EU level * EU ETS funds, income from Sustainable Finance emission allowances ▪ EU budget for 2021–2027 totaling EUR ▪ Modernization fund of tens of bn ▪ Financial market
Slide 9: ČEZ accelerated the sale of the Počerady power plant
ČEZ ACCELERATED THE SALE OF THE POČERADY POWER PLANT BY 3 YEARS AND AGREED WITH THE BUYER TO TERMINATE A COAL SUPPLY CONTRACT Subject Matter of the Transaction ▪ ČEZ and Vršanská uhelná from the Sev.en group have agreed that the coal-fired Počerady power plant will be transferred to Vršanská uhelná
Slide 10: Earlier sale of Počerady helps reduce carbon footprint faster
THE EARLIER SALE OF THE POČERADY POWER PLANT HELPS CEZ GROUP FULFILL ITS AMBITION TO REDUCE ITS CARBON FOOTPRINT FASTER Impacts of the Sale ▪ Previous contracts made between the parties anticipated selling a 100% stake in Elektrárna Počerady for a purchase price of CZK 2.0 bn with a transaction date
Slide 11: Romanian assets sold to Macquarie Infrastructure and Real Assets
ROMANIAN ASSETS SOLD TO LONDON-BASED INFRASTRUCTURE INVESTOR MACQUARIE INFRASTRUCTURE AND REAL ASSETS Divestment Process ▪ The selling process officially started on Sep 9, 2019. The first stage was concluded with the receipt and evaluation of 19 indicative offers in December 2019. The second stage o
Slide 12: Sale of Romanian assets fulfills approved 2019 strategy
THE SALE OF THE ROMANIAN ASSETS FULFILLS OUR APPROVED STRATEGY FROM 2019 AND HELPS TO REINFORCE THE GROUP’S FINANCIAL STABILITY Impacts of the Sale ▪ The sale of the Romanian assets fulfills the strategy approved at the 2019 shareholders’ meeting, which aimed at divesting some assets in selected cou
Slide 13: Developments in divesting activities in other countries
DEVELOPMENTS IN CEZ GROUP’S DIVESTING ACTIVITIES OTHER COUNTRIES BULGARIA—Commission for Protection of Competition Approves the Sale of Assets to Eurohold ▪ The agreement for the purchase of Bulgarian assets made with Eurohold on Jun 20, 2019 remains in force. ▪ On Jul 22, 2020, the Administrative C
Slide 14: ČEZ increased capacity of Temelín Unit 2
ČEZ INCREASED THE CAPACITY OF TEMELÍN UNIT 2, FULFILLING A KEY PRIORITY—SAFE AND STABLE OPERATION OF NUCLEAR PLANTS Stable Nuclear Generation of 30 TWh Nuclear Generation (TWh) ▪ Safe and stable operation of both plants in 2018–2020 ▪ Projects for further availability optimization started at both nu
Slide 15: Selected events in the past quarter
SELECTED EVENTS IN THE PAST QUARTER Reacting to Developments in Wholesale Market, ČEZ Prodej and ČEZ ESCO Lower Electricity and Natural Gas Prices for Customers ▪ ČEZ Prodej reduces prices with effect from Oct 1, 2020. The basic indefinite-term product is reduced by 230 CZK/MWh for electricity and 1
Slide 16: Contents
CONTENTS Financial Highlights and Selected Events Financial Performance of Business Segments Annual Outlook 15 CEZ GROUP
Slide 17: Segment: Generation—Traditional Energy
SEGMENT: GENERATION—TRADITIONAL ENERGY EBITDA (CZK bn) Q1 - Q3 2019 Q1 - Q3 2020 Change % Czechia 18.9 23.5 +4.6 +24% Poland 0.5 0.5 -0.0 -3% Other states 0.0 0.0 +0.0 +14% Generation - traditional energy 19.4 24.0 +4.6 +24% Czechia (CZK +4.6 bn) ▪ Higher realization prices of generated electricity,
Slide 18: Electricity generation: Traditional Energy segment
ELECTRICITY GENERATION GENERATION—TRADITIONAL ENERGY SEGMENT Nuclear Power Plants (+2%) Nuclear Power Plants (-1%) + Shortened outages at the Dukovany power plant − Operating inspections, investment actions, and grid effects Coal-Fired Power Plants (-17%) Coal-Fired Power Plants (-14%) Czechia (-19%
Slide 19: ČEZ continues hedging generation revenues, 77% sold for 2021
ČEZ CONTINUES HEDGING ITS GENERATION REVENUES, 77% SOLD FOR 2021 AT 46 EUR/MWH Expected realization price for generation Share of Hedged Production of ČEZ* Facilities in Czechia as at Sep 30, 2020 in Czechia in 2020 ~ 77% (estimated at Sep 30, 2020): ~ 6% Hedged volume from Jul 1, 2020, to Sep 30, 2
Slide 20: Segment: Generation—New Energy
SEGMENT: GENERATION—NEW ENERGY EBITDA (CZK bn) Q1 - Q3 2019 Q1 - Q3 2020 Change % Czechia 1.7 1.8 +0.0 +2% Romania 1.2 1.8 +0.6 +45% Germany 0.3 0.4 +0.1 +23% Other states -0.0 -0.1 -0.1 >200% Generation - new energy 3.2 3.8 +0.6 +19% Romania (CZK +0.6 bn) ▪ Higher gross margin on electricity due to
Slide 21: Electricity generation: New Energy & Sales segments
ELECTRICITY GENERATION GENERATION—NEW ENERGY & SALES SEGMENTS Germany (+5%) Germany (+7%) + Worse-than-average weather conditions in 2019 + Worse-than-average weather conditions in 2019 Czechia (+5%) Czechia (+4%) + Higher generation at small hydropower plants due to + Higher generation at ČEZ Energ
Slide 22: Segment: Sales
SEGMENT: SALES EBITDA (CZK bn) Q1 - Q3 2019 Q1 - Q3 2020 Change % Czechia 1.0 2.6 +1.6 +164% Germany 0.4 0.2 -0.2 -57% Romania 0.1 0.4 +0.3 >200% Bulgaria 0.3 0.4 +0.1 +20% Other states 0.0 0.1 +0.1 >200% Sales 1.8 3.6 +1.8 +101% Czechia (CZK +1.6 bn) ▪ Effect of a 2019 court ruling under which the
Slide 23: ESCO services: Q1–Q3 sales increased by 8%
ESCO SERVICES Q1–Q3 SALES INCREASED BY 8% Y-O-Y CZK bn CZK bn Effect of COVID-19 on initial sales estimates Germany (+6%) Germany (+4%) + Effect of the acquisition of Hermos (consolidated May 15, 2019) and + Effect of the acquisition of Hermos and Moser & Partner Moser & Partner (consolidated Apr 9,
Slide 24: Segment: Distribution
SEGMENT: DISTRIBUTION EBITDA (CZK bn) Q1 - Q3 2019 Q1 - Q3 2020 Change % Czechia 12.9 12.9 -0.1 -0% Romania 1.2 1.6 +0.3 +28% Bulgaria 1.1 1.5 +0.4 +36% Distribution 15.3 16.0 +0.7 +5% Czechia (CZK -0.1 bn) ▪ Lower gross margin on electricity distribution (CZK -0.3 bn) due to COVID-19 ▪ Higher fixed
Slide 25: Mining segment, Support services segment
MINING SEGMENT, SUPPORT SERVICES SEGMENT EBITDA (CZK bn) Q1 - Q3 2019 Q1 - Q3 2020 Change % Czechia 3.8 2.4 -1.4 -37% Mining 3.8 2.4 -1.4 -37% Czechia (CZK -1.4 bn) ▪ Decrease in revenues from coal sales to CEZ Group (CZK -0.9 bn), primarily due to an extended outage of Ledvice 4 (new facility) and
Slide 26: Contents
CONTENTS Financial Highlights and Selected Events Financial Performance of Business Segments Annual Outlook 25 CEZ GROUP
Slide 27: Refining financial outlook for 2020
REFINING FINANCIAL OUTLOOK FOR 2020: EBITDA ESTIMATED AT CZK 64 BN, ADJUSTED NET INCOME AT CZK 23 BN CZK bn EBITDA Selected reasons for refining the financial outlook as 62-64 64 compared to the outlook from Aug 11, 2020: 60.2 50.9 ▪ Lower negative impact of COVID-19 on the Distribution segment ▪ Hi
Slide 28: Estimated year-on-year change in EBITDA by business segment
ESTIMATED YEAR-ON-YEAR CHANGE IN EBITDA BY BUSINESS SEGMENT Mining (CZK -1.5 to -1.7 bn) EBITDA 2019 60.2 ▪ Lower sales of coal for ČEZ power plants (as a result of increased prices of emission allowances and lower electricity prices due to COVID-19 and outages) and due to lower customer demand outs
Slide 29: COVID-19 effect of about CZK 3 bn on 2020 performance
THANKS TO HEDGING AGAINST PRICE RISKS IN GENERATION, COVID-19 HAS A NEGATIVE EFFECT OF JUST ABOUT CZK 3 BN ON CEZ GROUP’S FINANCIAL PERFORMANCE THIS YEAR We estimate the total negative effect of COVID-19 on CEZ Group’s 2020 EBITDA at approx. CZK 3 bn, including CZK 2 bn in Sales and Distribution seg
Slide 30: Annexes
ANNEXES ▪ Debt Position and Structure ▪ Cash Flows ▪ EBITDA—Q3 Year-on-Year Comparison ▪ Net Income—Q3 Year-on-Year Comparison ▪ Capital Expenditures ▪ Balance Sheet Overview ▪ Electricity Consumption ▪ Hedging against Commodity Risks in Generation ▪ Market Developments ▪ Electricity Procured and So
Slide 31: Debt position and structure
DEBT POSITION AND STRUCTURE CEZ GROUP MAINTAINS A STRONG LIQUIDITY POSITION Debt Level* Bond Maturity Profile (as at Sep 30, 2020) As at As at CZK bn mld. Kč Sep 30, 2019 Sep 30, 2020 25 Debt and loans CZK bn 166.8 171.6 20 Cash and fin. assets** CZK bn 11.1 10.1 Net debt CZK bn 155.7 161.5 15 Net d
Slide 32: Cash flows
CASH FLOWS Cash Flows from Operating Activities (CZK +52.0 bn) ▪ Income after adjustments incl. income taxes (CZK +42.3 bn): income before tax (CZK +17.5 bn); income tax paid (CZK -2.7 bn); interest paid, other than capitalized interest, and interest received (CZK -3.5 bn); adjustments to income bef
Slide 33: EBITDA—Q3 year-on-year comparison
EBITDA—Q3 YEAR-ON-YEAR COMPARISON CEZ Group EBITDA (CZK +2.4 bn) ▪ Mining (CZK -0.6 bn): lower revenues from coal sales, mainly due to lower demand from CEZ Group ▪ Generation—Traditional Energy (CZK +1.7 bn): higher realization prices of generated electricity, incl. the effect of hedges and commodi
Slide 34: Net income—Q3 year-on-year comparison
NET INCOME—Q3 YEAR-ON-YEAR COMPARISON (CZK bn) Q3 2019 Q3 2020 Change % EBITDA 9.8 12.2 +2.4 +24% Depreciation, amortization and impairments* -7.6 -11.0 -3.4 -45% Other income (expenses) -1.9 -2.0 -0.1 -5% Income taxes -0.2 -0.3 -0.1 -81% Net income 0.2 -1.1 -1.3 - Net income adjusted 0.5 2.3 +1.8 >
Slide 35: Capital expenditure broken down by segment
CAPITAL EXPENDITURE BROKEN DOWN BY SEGMENT CZK bn Q1–Q3 2019 Q1–Q3 2020 Generation—Traditional Energy 6.0 6.0 Of which: Nuclear fuel acquisition 1.9 1.3 Generation—New Energy 0.6 0.3 Mining 1.6 1.5 Distribution 9.2 10.0 Czechia 7.2 8.1 Romania 0.9 1.1 Bulgaria 1.1 0.8 Sales 0.8 0.7 Support Services*
Slide 36: Balance sheet overview
BALANCE SHEET OVERVIEW Property, plant, and equipment, nuclear fuel, and construction work in progress decreased Equity decreased by CZK 5.4 bn by CZK 6.7 bn ▪ Approved dividends for shareholders CZK -18.3 bn ▪ Property, plant, and equipment, gross, and construction work in progress CZK +16.6 bn; ▪
Slide 37: Electricity consumption in ČEZ Distribuce area
ELECTRICITY CONSUMPTION IN THE DISTRIBUTION AREA OF ČEZ DISTRIBUCE Consumption in the Distribution Temperature- and Calendar-Adjusted Area of ČEZ Distribuce Consumption* TWh 26.48 TWh 26.85 25.26 25.62 Changes in consumption (-4.6%) by segment: -4.6% -4.6% ▪ -8.9% large end-use customers ▪ +4.3% res
Slide 38: Hedging against commodity risks in generation
HEDGING AGAINST COMMODITY RISKS IN GENERATION AS AT OCT 22, 2020 REFLECTING THE SALE OF THE POČERADY POWER PLANT Share of Hedged Production of ČEZ* Facilities in Czechia as at Oct 22, 2020 ~ 83% 100% of deliveries volume in 2021–2024 corresponds to 47–50 TWh. ~ 53% Hedged volume as at Oct 22, 2020 ~
Slide 39: Market developments
MARKET DEVELOPMENTS 38 CEZ GROUP
Slide 40: Electricity balance (GWh)
Electricity balance (GWh) Index Q1 - Q3 2019 Q1 - Q3 2020 2020/2019 Electricity procured 42,178 39,658 -6% Generated in-house (gross) 46,697 44,075 -6% In-house and other consumption, including pumping in pumped-storage plants -4,519 -4,417 -2% Sold to end customers -25,965 -24,324 -6% Sold in the w
Slide 41: Electricity balance (GWh) by segment
Electricity balance (GWh) by segment Generation - traditional Generation - new Q1 - Q3 2020 energy energy Distribution Sale Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 37,956 -6% 1,479 +7% 0 - 223 +7% 0 - 39,658 -6% Generated in-house (gross) 42,351 -6
Slide 42: Electricity balance (GWh) by country
Electricity balance (GWh) by country Q1 - Q3 2020 Czechia Poland Romania Bulgaria Germany Others Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 36,917 -7% 1,557 -1% 972 +8% 5 +1% 207 +5% 0 - 0 - 39,658 -6% Generated in-house (gross) 41,090
Slide 43: Methods used to calculate indicators unspecified in IFRS
Methods Used to Calculate Indicators Unspecified in IFRS In accordance with ESMA guidelines, ČEZ provides detailed information on indicators that are not reported as standard in IFRS financial reporting framework or the components of which are not directly available from standardized statements (fro
Slide 44: Components of calculated indicators
Most of the components used in the calculation of individual indicators are directly shown in financial statements. The components of calculations that are not included in the financial statements are usually shown directly in a company’s books and are defined as follows: Highly Liquid Financial Ass