CEZ Distribution Q4 profitability improves on lower energy losses (POSITIVE)

CEZ Distribution booked Q4’19 unconsolidated revenues of BGN 101.1m, down by 3.1% YoY, due to the 6.3% decline of distributed electricity while distribution tariffs increased YoY. Total expenses dropped 14.1% YoY on lower provisions and lower energy losses (8.38% vs 9.60% in Q4’18). As a result, EBITDA surged 55.3% YoY to BGN 25.7m. Below the line, depreciation charges added 8.9% on increased value of the depreciable assets while net financial cost decreased by 22.1%. Bottom line came to BGN 3.5m net profit vs BGN 4.7m net loss in Q4’18. 2019 unconsolidated revenues added 2.7% YoY to BGN 362.3m while distributed electricity declined 1.2%. EBITDA surged 30.6% to BGN 103.5m mainly on the better regulatory pricing during H2’19. The 11.4% YoY growth of depreciation expense and the 33.8% increase of financial cost partly reduced the profitability. Still, net profit improved almost 5-fold to BGN 18.7m (EPS of BGN 9.72). IB debt added BGN 28.2m YoY on increasing balance of loans from CEZ a.s. while CAPEX for the period amounted to around BGN 110m.