Hello, everyone. Good morning or good afternoon, and welcome on today's call, during which we will present ČEZ Group financial results for nine months. After the presentation, we will answer your question. Today's speakers are Martin Novák, Chief Financial Officer, and Pavel Cyrani, Chief Sales and Strategy Officer. Now I am handing over to Martin to start with the presentation.
Good afternoon, good morning, everybody. Let us start with slide number 3, where we show overall financial results for first three quarters of 2026 compared to previous year. As you can see, our EBITDA dropped by 17% to CZK 86.1 billion. Our net income, on the other hand, has grown by 24% to CZK 26.6 billion. Our operating cash flow is actually higher by 41%, mainly due to the fact that there is no windfall tax applicable in 2026. Our net debt went up by 14% to the level of CZK 276 billion. On next slide, you can actually This is important slide actually showing changes in EBITDA year-on-year. The largest negative impact is obviously coming from generation facilities, and is driven by lower power prices compared to 2025. Average achieved power price for 2025, I think, was around EUR 120/MWh .
We expect this year to achieve EUR 108-EUR 111 per MWh . So out of CZK 13.5 billion decline, actually CZK 12.2 billion is attributable to prices. Trading activities are down by CZK 3.9 billion. CZK 2.1 billion is actually lower margin of prop trading activities, and CZK 1.8 billion is attributable to revaluation of derivative trades. Mining is actually contributing positively. It has CZK 1 billion higher EBITDA. It is mainly driven by the fact that our output on lignite plants is higher than last year, and it drives, of course, mining activity. So this is + CZK 1 billion. Distribution, power distribution and gas distribution. Power distribution is up by CZK 200 million, but it is pretty heavily affected by correction factors. Later in the presentation, you will see actually normalized EBITDA and correction factors, so you can actually see how the underlying business is doing.
Gas distribution + CZK 2.3 billion, CZK 700 million of which is attributable to our January 2026 acquisition of South Bohemian gas distributor called Gas Distribution from E.ON. So now we are actually covering entire country with the exception of capital city of Prague, when we talk about gas distribution. We also have a better regulatory environment, so another CZK 1.4 billion is actually attributable to higher allowed revenues of GasNet. Sales segment is down by CZK 3.4 billion, mainly in commodity sales business and ČEZ ESCO. There is actually also effect of correction factor from mandatory renewable energy offtake of CZK 600 million. Energy services abroad are down by CZK 800 million, and it is mainly slowdown on the green energy market in mainly in Germany. Next slide actually shows year-on-year change in net income. So starting with EBITDA, where we are actually down by 17%.
We have lower depreciation than last year. This is the effect of accelerated depreciation of lignite portfolio, where the highest level of depreciation was actually in 2025, and now it will be declining till 2030. The depreciation should basically mirror hours of utilization of our plants per year. However, the method of depreciation is sum-of-the-years' digits method. Then little asset impairments, CZK 300 million, basically in line with last year. We have also other income and expenses that are actually higher by CZK 2.3 billion. CZK 1 billion is attributable to divestment of our Polish assets in 2025, so we actually had an income from divestment in 2025, which we don't have now. Then a revaluation of Inven Capital, which is our venture capital fund.
We have also increase in interest from nuclear and other provisions due to higher interest rates, and the positive impact of exchange rate effects and revaluation. So relatively small variance of CZK 2.3 billion. By far the largest effect is coming from income tax line. You can see that in first quarter 2025, our income tax reached almost CZK 30 billion versus CZK 7.6 billion actually this year, and it is clearly attributable to first, lower EBITDA, and second, no windfall tax in 2026. So despite declining EBITDA, we can actually see relatively strong growth on net income level. Next slide, you have operating numbers, volumetric data, so we can probably skip it and go to our actually guidance for full year 2026. We maintain our EBITDA guidance at the level of CZK 109 billion-CZK 114 billion.
We actually increase our adjusted net income guidance from CZK 31 billion to CZK 35 billion to CZK 34 billion-CZK 37 billion. There are a few more effects with exception of the by far largest one, and it is actually sale or disposal of 49% stake in Slovak company called JESS, where we generated CZK 2.2 billion profit, actually net income from this divestment. This is something that is going into net income, not into EBITDA. So that's one of the main reasons why we actually increased our net income. You can also see selected assumptions. As I said, power prices EUR 108-EUR 111 per MWh . Carbon allowance is EUR 76-EUR 78 per ton, and total electricity generation around EUR 45 to EUR 46 TWh. On next slide, you can see a few selected events.
I already mentioned the first bullet point, which is sale of our stake in Slovak, actually a company that was supposed or is a project company for a Slovak nuclear project. We sold the stake to Slovak government or to Slovak state-owned company actually. So now the entire project is in the hands of Slovak state. Agreed price was EUR 189 million, and net income actually generated this CZK 2.2 billion. Strengthening energy security for the change of nuclear fuel suppliers. We are switching from Russian supplies to Westinghouse and also Framatome. We also, as you know, switched actually to 16-month fuel cycles at Dukovany, which is the older plant, and 18-month fuel cycles actually in Temelín, which is the newer plant. Škoda Nuclear Engineering, which is our engineering company, actually became key supplier of technology to Rolls-Royce SMR, where we hold 20% stake.
It will provide control rod drive mechanisms for Rolls-Royce SMR reactors. You can see the details in the text. Our bond issue, green bond issue, received European Green Bond Award, Sustainable Corporate Bond Deal of the Year category. Generation and mining segment. Generation and mining, you can see the impact of lower power prices, as I said, on the generation segment. In overall, generation and mining segment made CZK 48.4 billion, which is CZK 16.4 billion less than last year, or 25% reduction. You can see those effects on mainly nuclear power plants, of course, that are with no carbon credits. The decline in power prices is most visible. So CZK 11.8 billion is coming from nuclear.
Despite the fact that we are generating more coal power, and we will generate about 9% more than originally, than in 2025, our EBITDA from emission generation facilities or fossil fuels is down by 40%. So EBITDA has reached CZK 2.2 billion on fossil fuel plants versus CZK 3.8 billion during last year. Trading activities, - CZK 2.3 billion, mainly revaluation of the derivatives. Mining segment, as I already commented, is CZK 1 billion higher, CZK 6.7 billion. On next slide, you can see a slide on or charts about generation. On the left side is first nine months, actual numbers. We are down on nuclear by 1%, mainly due to longer scheduled outages at Dukovany nuclear power plant, and 6% higher on renewables, mainly higher utilization of pumped storage plants. Overall, the number is basically identical to 2025.
For full year 2026, we will be, however, 3% down, and this relates to 5% decline in nuclear generation, which is a function of different scheduling of plant outages at Temelín nuclear power plant due to the fuel cycle extension. So in some years, we are running without refueling. In some years, we have to refuel. We have 8% increase on hydropower in Czech Republic, mainly in, of course, in spring. On fossil fuels front, which is slide 12, you can see relatively significant increase on coal assets, where we generated 7% more over the first nine months, and we plan in remaining quarter generate, accelerate generation, and we will get to 9% higher output or 15.1 TWh compared to 2025.
The main reason is that after March events relate to Iran situation, the commodities went significantly up, including gas and power on spot market, not necessarily followed by carbon credits. So window of opportunity opened up for lignite plants, and we are running them at a higher utilization than originally anticipated. The same is the situation or the fact for natural gas plants, CCGT, where we are 47% up compared to 2025 for first nine months, and almost 70% estimated increase in power generation in 2026 compared to 2025 for full year. However, as you saw, EBITDA is lower than last year for first nine months. Important slide on hedging. You can see that our average achieved price by the end of September is EUR 91 for next year, with about 80% power being hedged by that time.
2028, 2029, and 2030, you can also see average achieved prices. Since then, the prices have moved fairly significantly, although the trend is there, so the trend has not changed. 2027 is higher than 2028, and it is higher than 2029, and it is higher than 2030. So, we will definitely see higher achieved price than EUR 91, because at least those 20% will be sold at significantly higher prices than originally achieved by September 30, 2026. Carbon credits on the right side, very similar situation. Now I hand over to Pavel to guide us through distribution and sales segment.
Thank you, Martin. Hello, everyone. Let us start with distribution. Distribution had very strong quarter and combined first three quarters of 2026 with a 9% growth. If you would take out the correction factors and you would look only at the normalized EBITDAs, you will see even higher growth of about 17% combined electricity and gas. The factors are because we are already in the new regulatory period, so these are the conditions for the new regulatory period, which are quite pro-investment. Also we have Gas Distribution, the Southern Bohemia gas network already included in the years 2026. So this is driving the growth. In terms of volumes on page 16, we see growth both of electricity and gas. On the electricity side, there is the effect of electrification and somewhat of weather, so the climate-adjusted distribution would increase only 1.6%. The 1.6% is kind of driven by electrification.
We are seeing more and more heat pumps and other use of electricity. In terms of gas is much more influenced by weather, so there the growth is driven more by the cold weather, and also we see the addition of Gas Distribution also in the volume. So 4.8% comes from the acquisition. In terms of sales segment, we have already discussed this in the previous quarters. Sales segment has a little slower year than 2025. What makes sense is to do the comparison 2024 to 2026 with the 2025 kind of standing out, where the fast drop in the price of deviations in the market, which was driven by ancillary services, led to higher margins than I would say average. But still with 2026, you see in just per day a drop of CZK 1.6 billion.
If you would compare it with 2024, you would see growth, and this is basically showing the 2025 being more of an outlier, and we expect the kind of stable outlook for the future years. In terms of ESCO, a similar story on the commodity side, also a drop of CZK 1.1 billion. But again, if you convert 2024, it is more of a stable development with the 2025 being the outlier. In the energy services abroad, we see stable development for the buildings and industrial energy sector, and somewhat slower for the green energy market. But again, we see this as temporary, and both organically and through the acquisitions we have made recently of Techem and BTS, we expect to return to growth, a quite significant growth for next year. In terms of the volumes, electricity and natural gas volume grew by 4%.
8% of that was on the gas side, 1 percentage point on electricity. Natural gas being more influenced by lower temperatures, and we see stable customer portfolio, kind of small movements between gas and electricity. In terms of revenues of the ESCO companies, 3% growth for the first three quarters. We still expect a pretty strong Q4, so the overall growth would be 10% expected year-on-year. Then obviously, more growth to come after 2026. I think this concludes the presentation. Thank you. Back to you, Bara.
Yes. Now we are ready to take question. I can see the first raised hand from Arthur Sitbon. Arthur, you can unmute yourself and ask your question.
Hello. Yes, thank you very much for taking my question. The first one would be on potential government intervention in the Czech Republic. I think there was a proposal to basically reinstate some sort of power generation revenue cap, a bit similar to what happened a few years ago during the energy crisis. I was wondering first, if my understanding is correct that this mechanism wouldn't just be valid for one year, but would be basically an option that the government would have on the table anytime in the future to trigger. If you think this would be triggered for 2027, and under which terms? Together with that, I guess the follow-up question is there a chance that with this, we would also have the corporate tax surcharge coming back on the table?
I know that was the next step after the revenue cap in the last energy crisis. That's the first big question. The second one is just on trading. I think you had another negative EBITDA contribution in this quarter. I was wondering, and I think some of it is linked to the revaluation of some contracts. I was wondering if this negative effect stops from here, and if we should have more normal quarters from here onwards. Thank you very much.
Okay. I will start with the questions about the caps. Look, we have basically the same information as you do from the press, from what the government announced. The part of the announcement was a clear statement that this is just a tool, and that there was no intention announced to use it now, or it was just like addition to the law, number one. Number two, it was only passed by the government and still needs to be passed by the parliament. It is not really It could not even be used now. It was just the government's proposal of a legislative change. This is it. On this front, I would also mention that we just recently announced prices, the retail prices for next year.
The retail prices for next year, the commodity price for next year is, I think, roughly 30% below what the cap was back in 2023.
2023.
Because that was the link, right? Like collecting money from the generation and using it to cap the retail prices. So I am just kind of putting it into perspective where we are today with the, quote, unquote, "high prices of electricity." Obviously, there was no word in the announcement of the government of any corporate tax surcharge. On this one, there is nothing we can say. We have not heard anything about this one.
Yeah. I can confirm it. So this is really only changing the law so that if there is any crisis, government will be authorized to act quickly. Otherwise, it cannot be done. You cannot impose any taxes or surcharges without this to be approved by the parliament. So that is kind of something that would probably stay in the law and could be used only in crisis situations. Trading, I can comment on numbers. Actually, we have negative variance of CZK 3.9 billion, and the contribution is -CZK 2.3 billion , out of which actually vast majority is a revaluation of derivatives, which is temporary revaluation, should clear out the following year. The trading itself, prop trading, has a loss of CZK 200 million, or CZK 0.2 billion.
Sometimes, it's prop trading, so sometimes there is a positive income, sometimes there is a, I would say, red zero, which is actually the case this year. So, that's where it is.
Okay. Thank you very much.
We can take the next question from Piotr Dzieciolowski from Citi.
Hi, yes, good afternoon, everybody. I wanted to ask you if you can provide an update on the restructuring process. When do you think you will completely carve out this new entity and will be able to kind of initiate the transaction or the timing of the transaction? How do you see this evolving? Secondly, I wanted to ask you about this ESCO slowdown. I would have thought that rising power prices structure should actually really lead to a strong acceleration than what we've seen in post-2022. Just wanted to understand a little bit details what was happening there. Yeah, I think let's stick with these two questions then.
Okay. Two things. One is the restructuring, as you put it, or the spin-off. We are still working on the preparation of this subsidiary with the customer segment companies, as we have approved and announced at the shareholder meeting in June. We still stick to the deadline that this should be finished, the preparation, by end of Q1 next year, 2027. At this moment, we have no more updates, and we will give them to you as soon as we have them. This is right now what is going on there. In terms of the ESCO slowdown, I think you are right. In general, this is the situation. Obviously, what it does, it takes a little bit time. For somebody to realize, "Look, we have high prices, we better should install a new technology, save energy," it has some lead time.
Germany-specific was and is waiting for some. A number of these investments is co-driven together with the high energy prices with legislative kind of support schemes or all kinds of things. There are some delays with these in Germany. They are still waiting for the final decision on the gas, small CHPs support schemes, and some other things. This is what is slowing it down. I think that we should see a pretty good year next year, where, number one, some of the legislation should be put in place. Number two, we have also expanded the business. Number three, the lead time from the high energy prices turning it into projects should be completed, and then we should already see some growth in new projects.
Okay. Can I please ask one quick follow-up? I just wanted to ask you about the impact of the volatility products on your P&L. You have some pumped storage and you have some gas power plant. How much contribution this year from this kind of spot market arbitrage or optimization is in the numbers versus last year, and how do you think this can evolve in the future periods?
We do not have these numbers ready. We do not, in this presentation, to be able to give them to you. I think you see growth in the gas, which I am not sure is driven by volatility, but simply driven by the higher demand. I think you can also revert to Bara later after this call for example.
What I could comment on, as I said, although we are running our gas plant, we will be running it at estimated 70% higher output, it is not necessarily that profitable. It is profitable, otherwise we would not have done it, but fossil fuels in general are not the most profitable part of our business, clearly, you know. We are leaving about, I would say, 5%, maximum 10% of electricity unsold or unproduced or unplanned, whatever, just to use the peaks as we were using them this year pretty heavily, I would say. But the impact is limited. It might be, you know, single billions of CZK rather than anything else.
Okay. Thank you very much.
Next question from Oleg Galbur.
Yes. Good afternoon. I have one question left on my list, and actually it is a sort of follow-up on what has been discussed previously about the coal-fired power plants utilization. Assuming that the gas prices could remain at elevated levels also next year, how do you think about the planned reduction of coal-fired power plants utilization? How much flexibility do you have in increasing the utilization in 2027 versus the initial plans of phasing them down? Would, for example, an annual utilization of roughly 50% next year, I mean, for coal generation capacities, be an unrealistic assumption from today's point of view? Thank you.
Okay. Two things. One is, in terms of coal production, we do not have any limitations for next year. So from this perspective, the changes between the generation this year and next year will be driven purely by prices. Mainly basically spot prices, right? One is the hedging forward, but the second thing is the actual generation is driven by the spot prices. So we will see how that goes. Obviously, if the spot prices would be comparable to this year, then you should see generation comparable to this year.
Okay. Thank you.
That is it.
That is it.
Have we answered everything? We are just kind of now thinking whether we may have missed some part of your question.
No, no. That was it. I am trying to understand where could the coal generation stand next year if the pricing environment is more or less comparable.
It is comparable. It will be comparable.
to the second half of this year, and I guess you answered it. Thank you.
Okay. Then we can take the next question from Bram Buring. Bram, you can go ahead.
On mute.
Yes. Okay.
We can hear you.
I was looking at CapEx, and if I am not mistaken, it is running at the end of the nine months about 60% of your full year target. Will you be able to spend the rest of that money in the fourth quarter, or is this just going to roll out into future years?
You know, I think that usually fourth quarter is pretty strong because many CapEx projects are being finished at that quarter. We cannot rule out that there would be something to be carried into next year. But I would say that we would not be that far from what we originally expect to be spent.
Okay. One question, kind of local-flavored . I think it has been a couple of weeks since the news of this Human Diag seizure notice on the distribution assets was announced. Has there been any movement with that? At the time, you seemed confident that you would prevail in court overturning it.
We are still confident. There is no definite movement we could announce, because the court stuff takes time.
Sure.
Yeah.
Can you offer any sort of guess to a timeline, how quickly this can run through the court? Or is this something that could potentially drag on?
Look, not at this moment. We will be specifying this as we see, because the court thing can take various routes, and we are still kind of figuring out which one it will be.
All right. Thank you very much.
Okay. Petr Bártek could be next.
Yeah. Good afternoon. Several questions. First, in terms of hedging, it seems that we are running at a standard rate, not accelerating in this current environment. So the question would be if you are considering to accelerate hedging in this high-price environment. Maybe also what is your view on the prices in the winter in Europe with the low natural gas inventories? Then, in terms of distribution, I wonder if there is some potential to increase the investments in the distribution in the midterm. I saw several utilities in Europe announcing higher and higher CAPEXes in distribution, so if we can expect something similar. Also if you can provide some update on the data centers investments, if you see some new projects or something what we could talk about. Thank you.
What was the last, the third question? On what kind of investments, if we see any projects? What was it?
If there is possibility to increase investments in the distribution segment in the midterm.
Okay. That we got.
And if you see any new projects in terms of data centers in, I don't know, in Czechia, if you see something.
Okay.
Hedging. Hedging acceleration, you know, we do hedge our nuclear portfolio in a standard manner because you really never know what is the high price, right? EUR 100 seem to be peak, and suddenly within a few weeks we got to EUR 150, actually, for next year. So, we are hedging at a standard pace. We somewhat accelerated hedging of our coal exposure for 2027, 2028 when the opportunity opened up. So, that's it. We do not hedge, actually, CCGT, and obviously, we do not hedge renewables either.
Okay. And then in terms of the CAPEX investments, I think we will have more to announce on this one. We are also looking into this, but nothing to announce today. And the—
Data centers.
—data centers. Look, we do have sites which are suitable for data center build-out. Obviously, our historical lignite sites, and we are trying to offer those to potential developers of data centers. If there would be a match, then we would definitely want to use some of our sites for data center build-out.
Yes.
There would be a possibility to sell, I don't know, SMRs with that, or?
Like, in the long term, yes.
But lead time to build data centers.
Right now
Urgency is much, much, much.
Yeah. When you talk to data center people now, they basically have something like 24 months outlook, and everything beyond 24 months is not really—
It is too long.
—of interest. With the SMRs, we are looking at the first SMRs only coming in mid-next decade, right? 2035 or 2036 next, so.
Sure. This was not a philosophical question. Thank you.
Yeah. Philosophically, yes.
Okay. It seems we have no further questions. Thank you, everyone, for your participation. As always, investor relations is available for any follow-ups that come to your mind. Thank you very much, and goodbye.
Goodbye.
Bye.