CEZ - industrial minister is against payment of large dividend

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Investiční bankovnictví KB

      Industrial minister Milan Urban said in an interview with Reuters that CEZ should spend free cash flow on acquisitions and development. According to his view, CEZ should pay dividends equal to 20% of consolidated net profit for 2003. Industrial minister supports expansion plans of CEZ, which should be however carried out at reasonable price not to worsen the company’s rating but improve it in longer term. The minister also said that the possible reduction of government’s stake by 16% is not currently on the agenda and that CEZ would not be fully privatized until 2006.

       The interview did not bring any new information; the minister only repeated his opinions he presented before. The payout ration is lower than our expectation. We are looking for a payout of around 32%, which represent a dividend of CZK 8.6 per share. Final say on dividends will have the company’s AGM, which decision could be influenced for example by success in privatization of coal-mining companies and Unipetrol.

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