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CEZ eyeing more divestments in southern Europe after Bulgarian exit

Czech utility CEZ a. s. is looking at selling its generation and distribution assets in Romania, Poland and Turkey by the end of 2022 as part of a wider southern European exit that recently saw it divest its Bulgarian business.

"It's our strategic decision that we don't want to be ... active in southern Europe any longer," Vice Chairman and CFO Martin Novák said on an Aug. 13 earnings call. "From the reactions that we get, it looks like selling Romania will be ... easier than selling our Bulgarian assets."

Bulgarian holding company Eurohold is buying CEZ's Bulgarian assets for €335 million, plus the repayment of shareholder loans, after a previous sale to local energy company Inercom was rejected by the country's competition authority.

CEZ said its assets in the four markets it plans to exit contributed 5.5 billion Czech koruny to the company's EBITDA for 2018.

The company has long been engaged in negotiations with potential parties over its assets in Turkey, where political and economic factors have made it a difficult market to operate. "Clearly, the situation in Turkey is not easy. The currency has devaluated strongly, and the assets are not in the best shape," Chief Sales and Strategy Officer Pavel Cyrani said.

For Poland, while CEZ intends to sell its generation and distribution assets, it will remain active in the country via its energy services business, or ESCO. The utility's updated strategy focuses on ensuring future growth based on the ESCO's activities, particularly in the region around Czech Republic.

"Now the ESCO portfolio [is] growing. We are also achieving higher synergies across the markets, both on the procurement side as well as on the client side," Cyrani said. "So now if there is a request from the multinational companies to serve them multinational, we are able to do that unlike many of the competitors."

According to the utility, its growth in its ESCO division is amplified by the EU countries' commitment to major energy savings by 2030.

CEZ reported net income attributable to equity holders of the parent of 11.13 billion Czech koruny, or 20.8 koruny per share, in the first half of 2019, compared with 7.51 billion koruny, or 14 koruny per share, in the previous year.

As of Aug. 13, US$1 was equivalent to 23.08 Czech koruny.