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CEZ Group plans to sell all Romanian assets in major strategy U-turn

posted onMay 28, 2019
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Czech multinational energy conglomerate CEZ Group intends to sell its assets in Romania in the coming years.

According to media reports , the Prague-based company's plans include the sale of assets in other countries as well, including Bulgaria, Turkey and Poland as part of its strategy to focus mainly on the Czech market. Business daily Hospodářské Noviny said questions remain over the future of assets in France and Germany. 

“Within the new strategy, we have the ambition to leave Bulgaria in the coming years. We also consider exiting Romania, Turkey and we are considering leaving Poland, where we have two power plants on coal, as part of the group’s intention to cut down the carbon dioxide emissions,” Daniel Benes, Chairman of the Board of Directors and Chief Executive Officer at CEZ Group, told Hospodarske Noviny in an interview.

Benes, who has been at the helm of the company since 2011, added that the sale of these assets could bring several billion Czech crowns to CEZ. He recalled that the conglomerate aims to increase EBITDA to crowns 75 billion (USD 3.26 billion) between 2024 and 2025 from 49.5 billion crowns in 2018. 

CEZ GROUP CEO
Daniel Benes, Chairman of the Board of Directors and CEO at CEZ Group

Presence on the Romanian market
CEZ Group has been present in Romania since 2005, when it acquired the national power distribution company - Electrica Oltenia SA.

It currently serves over 3.5 million customers locally, owning nine companies: Distributie Oltenia, CEZ Romania, CEZ Vanzare, CEZ Trade, CEZ ESCO Romania, Tomis Team, MW Invest, Ovidiu Development, and TMK Hydroenergy Power.

The Group also owns the largest on-shore wind farm in Europe, located in Fântânele-Cogealac-Grădina, in Constanta County, Dobrogea region, at 17 km from the Black Sea. The 1.1 billion euros wind farm has 240 wind turbines with a total installed capacity of 600 MW. The entire capacity of CEZ Wind Farm was commissioned at the end of 2012. 

International expansion and the new strategy

Throughout 2005 the Group has continued to expand internationally. In recent years, it has halted its expansion in the Balkan region. According to unverified sources, CEZ shareholders are dissatisfied with the group's strategy in Eastern Europe and claim that the management cannot ensure long-term profitability in some economies such as Romania, Bulgaria and Turkey.

In Bulgaria, CEZ is already in exclusive talks with financial and insurance group Eurohold, to sell its assets. after a failed sale attempt to another Bulgarian company last year. 

Asked by Agerpres news agency about the plans to leave Romania,  the Czech company said that its decision is not related to the local market and there is no rush to withdraw investments, specifying that the sale process will start after approval at the General Meeting of the shareholders scheduled for June 26, 2019. 

CEZ Group also announced that its new strategy will focus on nuclear and carbon-based projects, on modernising distribution and improving energy services in the Czech Republic and neighbouring countries.

CEZ GROUP map

A 27 year-old energy conglomerate 

CEZ Group is an established, integrated electricity conglomerate with operations in a number of countries in Central and Southeastern Europe and Turkey, headquartered in the Czech Republic. 
The parent company and core of CEZ Group is CEZ, a. s. the largest electricity producer in the Czech Republic, founded in 1992 by the National Property Fund. 

The largest shareholder of CEZ, a. s., is the Czech state with a nearly 70% stake in the Company's share capital (as at December 31, 2018). 

CEZ, a. s. shares are traded on the Prague and Warsaw stock exchanges and included in the PX and WIG-CEE exchange indices.

CEZ GROUP SHARE PRICES
CEZ Group Share price development (28.05.2018-28.05.2019)

Today, CEZ Group belongs among ten of the largest energy companies in Europe, both in terms of installed capacity and number of customers. It occupies a leading position on the electricity market in Central Europe. 

CEZ Group’s EBITDA reached CZK 19.3 billion in Q1 2019, up 10% year-over-year. Net income increased by 14% to CZK 8.3 billion; net income adjusted for extraordinary events not related to ordinary business operations reached CZK 8.8 billion, up CZK 1.5 billion year-over-year. The Board of Directors is going to propose a dividend of CZK 24 per share at the General Meeting in June.
The Group has 31,400 employees.