March 15, 2016 / 8:18 AM / 4 years ago

UPDATE 1-CEZ expects net profit to drop 35 percent this year

(Adds details, analyst)

PRAGUE, March 15 (Reuters) - Czech electricity producer CEZ expects its net profit to drop by 35 percent this year to 18 billion crowns ($739 million), mainly due to lower market prices and rising write-offs, the company said on Tuesday.

CEZ also forecast a decline in earnings before interest, taxes, depreciation and amortisation (EBITDA) to 60 billion crowns.

Like its European peers, CEZ has suffered from falling wholesale prices, somewhat offset by hedging. Prices have dropped with other commodities such as gas and coal, and due to rising production from renewable resources as well as a drop in the price of carbon emissions allowances.

Net profit this year will be hit by a decline in operating results as well as higher write-offs related to the launch of the firm’s new Ledvice plant and the refurbished Prunerov plant.

“The outlook for this year is a disappointment,” Komercni Banka analyst Miroslav Frayer said in a note. “We expect pressure on the stock price.”

CEZ has also been hit by an extended shutdown at its nuclear power plant Dukovany in the final months of 2015 due to faulty welding joints on piping.

The largest central European utility reported adjusted net profit fell to 27.7 billion crowns in 2015, slightly above its guidance of 27 billion.

EBITDA dropped to 65.1 billion crowns, a touch above CEZ’s forecast of 64 billion crowns.

The company will comment on the results and outlook at a news conference at 0900 GMT.

$1 = 24.3610 Czech crowns Reporting by Robert Muller and Jan Lopatka; Editing by Jason Hovet and Mark Potter

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