CEZ Romania's 1H EBITDA Falls After Green Energy Aid Cut

08.12.2014 By Bogdan Neagu

Czech energy group CEZ Tuesday reported lower earnings before interest, tax, depreciation and amortization (EBITDA) in Romania for the first half, due to the authorities’ decision to postpone allocation of green certificates for renewable energy produced.

In January-June 2014, CEZ totaled EBITDA of 2.1 billion Czech koruna (EUR76.5 million) from its Romanian operations, down from CZK2.8 billion in the year-earlier period.

On the power production and trading segment, EBITDA was down 58% on the year to CZK0.8 billion (versus CZK1.9 billion in 1H 2013), due to the suspension of allocation of the certificates for Fântânele Vest since November 2013, but also do a lower production due to wind conditions.

“The price of green certificates in Romania remains at the statutory minimum of RON130.

The drop from around RON 200 in 1Q was caused by the Romanian government’s decision to decrease the certificate purchase quota for suppliers of electricity for end consumers, resulting in excess supply of the certificates in the market,” CEZ said in a presentation of its quarterly results.

Also, CEZ production of wind energy dropped 13% on the year in the first six months to almost 0.6 terawatts hour, due to worse wind conditions in January and February, the company said.

However, CEZ increased its earnings on the distribution and sale segment, where EBITDA amounted to CZK1.3 billion in the first half of the year, from CZK0.9 billion in the same period of 2013, as it booked extraordinary earnings related to payment of debts by Romanian state railways CFR.

CEZ noted that, starting from June 1, CFR is no longer a customer of CEZ Vanzare, as it switched suppliers (thus becoming an eligible customer) after paying its overdue debts.

“Considering the company’s past payment behavior, we believe this is a positive change,” CEZ said.

Groupwide, CEZ reported a net profit of CZK17.2 billion for the first half, down 40% from CZK28.6 billion in the same period of 2013.