EARNINGS PREVIEW: Power Prices Key Risk For Europe's Utilities
2011年4月28日 - 8:46PM
Dow Jones News
TAKING THE PULSE: A highly uncertain outlook for electricity
prices in Europe has piqued investor interest in impending
first-quarter earnings statements by Europe's utilities.
Power prices stagnated early this year, but Germany's shutdown
of nuclear reactors later created a minor power shortage and drove
the prices higher. The duration of that shutdown is unknown, and
market participants are keen to hear any news on just how far into
the future power companies will sell electricity to lock in some
gains from current pricing levels.
Mergers and acquisitions, changes to regulated pricing rules and
new taxes on utilities in several European countries further muddle
the outlook.
What's more, analysts are now saying that Europe's economic
growth may slow faster than was previously expected as disasters in
Japan, unrest in the Middle East and fiscal woes in Europe and the
United States weigh on confidence. Slower economic growth likely
means slack power demand and slow growth in electricity prices.
COMPANIES TO WATCH:
E.ON AG (EOAN.XE)--May 11, likely at 0600 GMT
MARKET EXPECTATIONS: E.ON, Germany's largest utility by market
value, is expected to report lower profits for the January to March
quarter compared with the same period in 2010. Poor margins in its
wholesale gas and power generation businesses as well as a new
nuclear fuel tax in its home market are expected to have hit
results.
MAIN FOCUS: Investors are interested in comments by E.ON about
its profit targets for 2011 and beyond, amid a drastic shift in
nuclear energy policy in Germany following Japan's Fukushima
Daiichi reactor accidents. E.ON previously forecast that 2011
operating earnings will decline by up to 16% on the year, but more
recently said the forced outages of some of its nuclear power
plants during a three-month review of safety at German reactors
triggered by the Japan incidents will further hit earnings. So far,
however, it has stuck to its guidance, contrasting with competitors
EnBW Energie Badenwuerttemberg AG (EBK.XE) and RWE AG (RWE.XE),
which lowered 2011 guidance and indicated a review of medium-term
profit targets respectively. Comments on the progress of
renegotiating long-term gas supply deals with producers such as
Gazprom OAO (GAZP.RS) to help improve margins in the wholesale gas
business will also be in focus. E.ON may comment on these issues as
early as May 5, when it hosts its annual general meeting.
GDF Suez SA (GSZ.FR)--May 2, around 1200 GMT
MARKET EXPECTATIONS: Investors expect GDF Suez to post a low
double-digit growth rate in revenue and in earnings before
interest, taxation, depreciation and amortization, or Ebitda,
driven by power price increases but partially offset by favorable
weather conditions that limited natural gas demand. The
consolidation of International Power took place in February, so the
first-quarter figures are expected to be lower than their
anticipated levels for the rest of the year. Nomura expects the
additional revenue from International Power to be around EUR1.6
billion for the full year.
MAIN FOCUS: GDF Suez releases only limited first-quarter
figures, as the company's annual meeting is taking place the same
day. Yet any comment about increased competition in the oil and gas
sector and the development of profitability in the global gas
business will be welcome. Analysts also want to know GDF Suez's
plans for electricity distribution in France, following the
government's recent decision to grant EDF an Arenh/NOME wholesale
regulated electricity price of EUR40.00 per megawatt hour from July
1 and then of EUR42.00/MWh from January 1 next year. The NOME
reform forces state-controlled power operator EDF (EDF.FR) to sell
a quarter of its nuclear power output to other distributors as part
of a greater liberalisation of the French power market. GDF Suez
called for a maximum price of EUR35.00/MWh, claiming distributing
power in France wouldn't be profitable above that price.
Iberdrola SA (IBE.MC)--May 5, before 0800 GMT
MARKET EXPECTATIONS: Iberdrola's net profit is likely to be
driven by higher power prices in Spain, amid rising natural gas
prices and a larger contribution from more expensive wind power
generation, as well as solid demand in fast-growing Latin American
economies.
MAIN FOCUS: Iberdrola is expected to discuss the rationale of
recent deals including the purchase of Brazil's Elektro and a
capital increase to turn Qatar Holding into a significant
shareholder, as analysts fear earnings-per-share dilution may be a
recurrent theme in coming quarters. Iberdrola's management is
trying to fend off moves by top shareholder ACS to increase its
stake and take control, but ACS has recently sounded a more
cautious note--coinciding with Iberdrola's decision to drop one of
three lawsuits it had filed against ACS. Any sign of better
relations with ACS could be a share price positive.
Enel SpA (ENEL.MI)--May 12, time not yet announced
MARKET EXPECTATIONS: Analysts expect Enel's net profit to rise
1% to EUR1.06 billion due to lower financial charges on a lighter
net debt. Ebitda for the period is estimated to drop 3.1% to
EUR4.34 billion after 2010 asset disposals.
MAIN FOCUS: With net debt reduction targets reached, investors
will focus on the nuclear energy prospects after the Italian
government decided on a one-year moratorium following the Japanese
atomic crisis. Observers will look for statements on the outlook
for Italian electricity prices and forward sales.
CEZ AS (BAACEZ.PR)--May 10, 0600 GMT
MARKET EXPECTATIONS: CEZ is expected to post flat revenue and a
2.5% decrease in operating income as weak electricity prices early
in the quarter were offset by increases in both power production
and distribution revenues. CEZ is ramping up production at its two
nuclear power stations, while the first quarter marks the first
significant contribution of wind-generated power production in
Romania and the initial generation season at CEZ's newly built
photovoltaic power installations in the Czech Republic. But new
Czech taxes--valid from January on carbon emission credits and
revenue from solar power installations--as well as higher foreign
exchange losses, depreciation and financial costs, are expected to
lead to net profit declining 18% on the year.
MAIN FOCUS: Analysts are looking for an indication of how much
the recent spike in European power prices to nearly EUR60 per
megawatt hour for baseload power, caused by Germany's nuclear
shutdowns, should lift CEZ's bottom line. The company already said
the boost will come only from next year and onward, as the company
sells forward almost all of its power production. The company is
selling power as far into the future as 2020 to lock in profits
from current high prices. Rising global natural gas and crude oil
prices won't impact CEZ's profitability, but rather will be a boost
as the trend lifts market electricity prices. CEZ enjoys stable,
low production costs because domestic coal accounts for about half
of fuel costs while nuclear and renewables make up the remainder.
Analysts expect CEZ to reiterate its full-year 2011 guidance for
net profit of CZK40.1 billion and operating income, or Ebitda, of
CZK84.8 billion.
-By Sean Carney, Dow Jones Newswires; +420 222 315 290,
sean.carney@dowjones.com
(David Roman in Madrid, Geraldine Amiel in Paris, Jan Hromadko
in Frankfurt and Liam Moloney in Rome contributed to this
article.)