CEZ, a. s. (OTCPK:CEZYY) Q1 2024 Earnings Conference Call May 14, 2024 10:00 AM ET
Company Participants
Martin Novak – Chief Financial Officer
Barbara Seidlova – Investor Relations
Conference Call Participants
Anna Webb – UBS
Arthur Sitbon – Morgan Stanley
Piotr Dzieciolowski – Citi
Robert Maj – Ipopema Securities
Andrzej Rembelski – PKO BP
Operator
Hello, everyone and welcome to CEZ Group Conference Call on First Quarter 2024 Results. Martin Novak, Chief Financial Officer, will go through the presentation and then, we will have room to ask questions for which we also have Mr. Ludak Horn, Head of Trading available for the answers.
Now, I’m handing over to Martin to go through the presentation.
Martin Novak
Thank you. Good afternoon and good morning to everybody. So, I’ll start with a brief presentation. On the first table, you can actually see our financial highlights and the full year outlook. Our EBITDA has grown by 24% to CZK40.3 billion. Our net income and at the same time adjusted net income has reached CZK13.6 billion or 25% improvement year-on-year. We confirm our guidance of CZK115 billion to CZK120 billion for 2024 and on EBITDA and adjusted net income, at a level of CZK25 billion to CZK30 billion. So, there is no change compared to our last presentation that was out on March 21.
On the next slide, you can actually see main variances between Q1 2023 and Q1 2024. As I already said, our EBITDA has grown by 24% and you can see the main factors actually on Slide #4 there, the biggest variances are basically two. The first one is in the segment of generation – on generation segment. Last year in first quarter, we had an additional cost of CZK10 billion related to price caps on various power plants as it was introduced by the government. And actually full year cost at the same time was as well, CZK10 billion. So basically, all those caps are drop payments above those caps have materialized in the first quarter. Clearly, this has been – this is not valid any longer, December 2023 and that’s why we don’t have this extraordinary cost. And therefore, we have CZK10 billion lower cost, meaning CZK10 billion better result in Q1 2024. At the same time, we also seen narrower margins, mainly on the lignite plants. So, about CZK5 billion, so, this is partially compensating those lack of those price caps.
On the Sales segment, we had a negative result of CZK3 billion in our retail business last year. Now, we are kind of back to normal. So, CZK800 million positive or a result, which makes total of difference with other little items of CZK4.2 billion positive. So, those are two main variances, actually now EBITDA. Going to net income. Main changes actually in net income are mainly in our interest income and expenses where we have a little bit higher interest expense or to the other way revenue on interest received due to declining interest – the interest rates. We have somewhat higher nuclear provisions, and there is also segment other income and expenses and there is a revaluation of financial derivatives of CZK2.2 billion negative, which helps – which show a clear function of weakening Czech crown. So, in total, we are going down to CZK13.6 billion, which is CZK2.7 billion better than last year, or 25% growth.
On next slide, you can see total operating results in our volumetric units, which we can probably skip and go to Slide #7 where we are actually confirming our guidance from March CZK115 billion to CZK120 billion on EBITDA and CZK25 billion to CZK30 billion net income. The main, a year-over-year effects on EBITDA are expected lower trading results. As the last year, we have the second best trading result in our history. The first, even the first the best result was actually in 2022 due to high volatility of prices, we don’t expect such a volatility and therefore we expect lower trading result. We have also lower sales of for ancillary services. We have higher cost due to inflation. And on the other hand, as a positive, we have still power prices that are little bit higher, the effect of our hedging in previous years and we don’t pay CZK10 billion in the – in caps so on power prices. So, there are also selective assumptions, so listed and the projects and risks. So, clearly opportunity is a better trading result than anticipated and the negative downside is always availability of generation facilities, mainly the nuclear.
On the next slide, you can actually see new nuclear events. In Dukovany, we actually received the updated base for the construction of new nuclear power plants from two bidders, which is French EDF and Korean KHNP. It is also submitted on the 30th of April. And now we are actually analyzing the dates. We will hand it over to the government who will of, based on our recommendation, make a choice of the winner. And the final contract should be signed by March 31, 2025. There is no change in the – in the schedule, so the unit should start operating in 2036. EU has also approved actually state aid for our nuclear regulated Dukovany with the parameters listed. So, basically government provides interest free financing. We get the – that, there should be actually repaid within a few decades. We will receive CFD basically for 40 years and the of course we will be protected against the changes in the legislation and regulatory environment in the Czech Republic.
So, now let’s go to segment of generation mining. So, on the Slide 10, you have a lot of detail in this segment. I have covered the most important factors, which is basically no – a little bit on the nuclear plants or on our production portfolio. Mainly, it is actually seen in nuclear. You can see that on the second line item, actually, nuclear has improved its operations from CZK10.7 billion to CZK19.9 billion and the main reason is that nuclear was mainly subject to price curves as the price cap on nuclear unit was around €70 versus coal units were around €180. So, that’s the main variance. You can also see emission generating facilities, as I said, are impacted by higher carbon credits. So, CZK11 billion in 2023 and CZK5.9 billion EBITDA in 2024 declined 47%. More details actually in the text.
Then, when you look at the next slide, Slide 11, you can see our nuclear and renewable generation, so emission-free generation. We had a slight decline actually in the nuclear facilities, but this is a different on scheduled and cover planned outages. Overall year-on-year, the plan is to be 1% below last year again because of the outages. So, for renewables, we plan to be about 4% higher due to better than average hydrological conditions in the Czech Republic and we also have new installed capacity in Germany.
On the next slide, you can see Chilean electricity generation from coal and natural gas. Now, there is a quarterly, quarterly decline of 2% in total, 16% on gas, mainly due to market conditions, meaning gas price, electricity price and carbon credit price, 38% decline in Poland, the same effect and 5% increase actually in the Czech Republic, mainly due to shorter outages in two of our power plants. Year-on-year, we plan decline actually in the Czech Republic of 8% on coal, 8% in Poland and 9% increase in gas. So, in total, we plan a 6% decline actually in our electricity generation, that is coal and natural gas based. Risk prices, hedging, we are basically almost fully sold for this year, only 3% open position for this year and 0% basically sold – open position in the carbon credits.
On next slide, you can see the level of hedges for 2025 through 2028 and the same in carbon credit side. So, looking at the prices, you can clearly see that we are above current levels of market prices forward prices in actually for 2025 through 2028 due to our hedges in the past. The same applies to carbon credits that are somewhat more expensive, but at the same time, we were selling electricity at much higher prices, so always kind of locking up our margin when we sell coal-based electricity. Distribution and Sales Segment is actually on the next slide.
So on Slide #16, you can see our EBITDA distribution, which is 10% higher. So, mainly due to higher margin from distribution fees grows, there was a very significant growth in the fees. We have lower revenues from connection activities and providing balancing the grid and connecting and connecting new customers, so there’s less demand and we have also somewhat higher expenses due to inflation, wage inflation. So, well, electricity distribution is 1% lower after we actually climate and calendar adjusted, it is 1% higher quarter-on-quarter.
Sales segment EBITDA or incremental a bit on the retail segment. We had a negative impact in 2023 because sales, retail, retail customers are paying the same price per megawatt overall metrologies January or July or our April. We actually entered the year with somewhat open position. So, in the first quarter, our sales organization had to pay more for the power and it made the money back actually in the few in the out quarters, but compared first quarter to first quarter 2023, 2024 and power prices were much more stable, we are actually at a significant difference of CZK4.2 billion positive where just today, which is our retail organization is returning back to standard operations, I would say, seeing such a swings in profits. Other companies basically have incurred marginal changes in the performance. So, overall, the segment is made profit of CZK2.6 billion, which is variance of CZK4.2 billion.
Volume of electricity and gas sold, year-on-year change in electricity, natural gas supplies is 11%. This is mainly due to extremely warm winter. So, consumption of both gas and electricity went down. We had a slight change in customer base with 1% negative as but this is a reaction to the times when we gained about 300,000 customers from the collapse of a few operators in 2021 and 2022. Now, actually, we have 1% decline, mainly due to customers who are always seeking the best offer and it’s always part of our portfolio. So, that’s the main reason. And of course, we are always discussing the optimization of the number of customers, and the [indiscernible] margin. So it’s not necessary to keep all customers or to simply say.
Revenue from sales of energy services are growing in all our segments. Germany clearly the large jump due to acquisition or a few companies year-on-year, we expect mainly organic growth, but nevertheless in Germany we expect 13% growth. In Czech Republic, we expect the decline, but this is due to major contracts, one of contracts that as we actually had in our group and especially decrease in commodity prices where we had a significant profit on our corporate customers actually in the first quarter of 2023 compared to 2024. Overall, the segment will be growing by 4%, the full year numbers as to make complete numbers of sales for this CZK3.8 billion. And that’s basically you know lot of information premise. So, now I think we are open to questions and answers.
Question-and-Answer Session
Operator
Yes. So, if you have a question, just raise your hand. I will call your name and you can ask your questions. We have the first question from Anna Webb.
Anna Webb
Yes, hi. Anna Webb from UBS. Thank you for taking my question. Two from me, if I can. Firstly, on the nuclear, as you said on the slides, you’ve got the approval for the support framework from the European Commission in the last couple of weeks for the first units. And one thing I would like to understand is this it mentions to protect against changes in legislative or regulatory environment, but I wondered if you could help us understand more broadly how much risk CEZ has to bear for cost and time overruns. We’ve seen very significant overruns in recent nuclear projects in Europe, for example, Hinkley Point in the UK. So just wondering what kind of protection you have from potential additional costs and how they’re considered when calculating a fair return under the CFD framework? Any detail you could provide that would be really helpful.
And then, secondly, on the Polish assets that you’ve got up for sale, I think I saw some headlines this morning saying that you expect to make a decision this year, but can you give us a bit more detail on whether you’re seeing good interest in these assets at reasonable valuations and if you don’t receive satisfactory offers, what’s the next step for these assets, would you consider decommissioning those yourself? Thank you very much.
Martin Novak
Thank you. So I’ll answer the questions. First on nuclear, the structure is that we actually are now financing the first stage, which is up €180 million, basically getting it to the selection of the winner, then after actually we move to an interface and winner is selected and the work starts. It will be financed directly through the state budget with interest free loan. We will get the CFD at the end and in the middle or of course if things go wrong, we have a maximum, we have some exposure, but limited about €1.7 billion. This is maximum that is at risk if things go wrong on our side as our outflow, everything else will be covered by the state and this should be reflected in the agreement on the CFD anyway, so that the profitability for us is there. And we also have a system of cool and good options so that if things go terribly wrong, we will be able to put the project on the government or the government will be able to call the project.
So that’s – that’s what it is. Of course, the details have to be negotiated, then nailed down, but this is how the system should work. As we realized that there is a huge risk of budget overruns, so it can be seen basically on most of the projects. The biggest issue is also financing, up there few more years of construction means added cost on interest, and that’s why actually the government support and financing is interest free until the commissioning of the plant, let it start generating cash, only then actually interest kicks in. So that’s the model.
The second question was actually what we really do, the proposals that. We are now going through this stage of collecting on binding offers. We can see – we can see much stronger demand than when we’ve been trying to solely the assets a few years ago, after we actually analyzed the non-binding bids, we will proceed with the selected bidders to the next stage through due diligence stage and actually see what happens, but the decision, whether we sell or don’t sell, should definitely be made this year will be definitely made this year. If we don’t sell for whatever reasons, we don’t agree on price or the bidders will be able to pull together, financing, whatever it can happen. We will definitely not want to stay and generate power from coal assets in Poland. So, we will have to seek a different route of how to divest those assets and of course, decommissioning those assets could be one of the options and may be selling the selling actually the land, is a brownfield for another potential investment could be a choice.
Anna Webb
Great. Very helpful. Thank you very much.
Operator
We can take the next question from Arthur Sitbon.
Arthur Sitbon
Hello. Thank you for taking my questions. The first one is on the 2024 financial targets, pro forma EBITDA and on the – on net income. I’ve noticed that the divisional breakdown that you provide on EBITDA is actually slightly better than it was at the full year results. And so, I was wondering if basically that means that you are tracking ahead of your initial guidance mid-point at the moment or if there are any negatives in the second part of the year that we should that we should have in mind that should offset the trend of your EBITDA in Q1.
The second question is a follow-up on the state aid approval on the new nuclear unit, especially on the CFD. So, you talked a bit about the financing. I was wondering, what are – what would be the potential implications for the current CEZ Group structure, does it mean that the current group structure is adequate for to implement this agreement that has been approved or will any change be needed? Thank you very much.
Martin Novak
So, first question, actually, I think we still Arthur – although, we are kind of you could think ahead of our target, our business is very seasonal. And although, look at for the past many years, first quarter is it, by far the strongest and this question comes of course, every time towards the end of the year, it is more and more difficult than we had quarters when we were close to zero, actually, not net income, mainly due to various asset write-offs and so on, which we don’t expect. If we expected them, we would have done it already, but we don’t know how the situation will develop, of course. So, now actually we feel very comfortable with the range that we provided that we should be definitely getting there. And but should we be sure that the guidance could be approved, we would have done it.
So, basically another review will come before the 10th of August when we are presenting or 8th of August and you remember the date exactly when we present our numbers for first half of this year. So, that’s where we are actually in our guidance. And state aid approval structure, the deal is structured in such a way that actually it is the financing will be provided to our subsidiary, so not to us, but subsidiary, SPV that is holding actually land and the employees who are working on the project and therefore any time it can be response into state hands if things don’t go according to expectation and basically nothing touches our structure. So we don’t accept the debt on the corporate level and push it down to the nuclear unit project, but it is direct financing actually for SPV.
Arthur Sitbon
Thank you very much.
Operator
We can take the next question from Michael Kozak.
Unidentified Analyst
Yes, thank you. I have two questions. The first one on the seasonality on the nuclear area in the first quarter. Could you give us more details on the reasons for such a high seasonality because, I don’t think it’s on the volumes and it appears that we should see strong decline in nuclear EBITDA in the next quarter regarding your segment guidance. And the second question, can you say something more about your today guidance or target on the net debt to EBITDA grow from 1 to 3, what is the time horizon, what are the largest CapEx positions, you mentioned earlier that you want to focus on distribution, renewables, gas and nuclear plants. Thank you.
Martin Novak
So thank you for the question. So nuclear EBITDA, as I commented, CZK19 billion show impacted or more than CZK19 billion. It’s impacted by the fact that actually last year we had a levy of CZK10 billion, which was mainly related to nuclear assets. There were price caps on the assets. And of course, coal plants really were not impacted, but nuclear plants were impacted in first quarter of last year. So we actually had now CZK10 billion lower cost. And if you actually take the same the same amount or if you would actually add those CZK10 billion, you would be basically on the even numbers for first quarter of 2023 and before nuclear plants also with outages planned usually done during summer, summer months. So, it’s really if it kind of really is in accordance with our expectation. So, that’s the nuclear EBITDA for three months. The net debt to EBITDA target or limit, I would better call it three, net debt to EBITDA both have EBITDA would be in the future and our CapEx plans are mainly directed to the development of renewables in the Czech Republic.
Then replacement of coal plants with gas fleet, as profitability of coal plants is declining fairly quickly and we need something to replace temporary place, so on those plants until the moment we have enough renewables and nuclear plants and this is all subject to introduction of capacity payment system without, which it will be difficult to take a risk of building CCGPs that may just electricity and not gas and not heat. And of course, we start first – first, actually plants will be conversions in heat business. And third one is actually is, as I said, distribution. We still invest quite a lot of money into our distribution assets, improving our grid, connecting new customers, connecting new renewables, all, this requires relatively high CapEx. So those are the main areas of CapEx and of course, then development in ESCO. There it is mainly both financial investments and of course, the largest, the largest amount that will increase our debt [indiscernible] actually consolidated gasoline, that would mean that it will be consolidated in their debt and their EBITDA as well and I think they have net debt to EBITDA something like €5 as the regulated assets. In such a case, if we receive all the regulatory improvements approvals and we believe we will, we will – we will be able to increase our net debt target ratio to above €3 to something like €3.3, €3.5 maximum.
Unidentified Analyst
Thank you very much.
Operator
Just one question, you can find our 5-year CapEx outlook in the annual report where you can see the segmental breakdown and the figures for the years of 2023 until 2028. We can take the next question from Piotr Dzieciolowski.
Piotr Dzieciolowski
Hi, good afternoon. It’s Piotri Dziecilowski from Citi. So I have two questions. Let me start with the first one. So, is the current structure for the new nuclear really excluding the option for the breakup of the company and the buyout of the minorities? And second, in this structure, how much equity will have to put into the subsidiary?
Martin Novak
Okay. So, maximum, it could be, if things go wrong over the 11-year project construction that we would be – we would have to put would be something like €1.7 billion, which is so-called contingent liquidity. And that’s it. There is a cap, no more. If things don’t go wrong, we wouldn’t. And they only have to go wrong because of us. For example, because of a supplier of the nuclear unit. The rest is funded by state, whatever it is. Buyout of minorities, I think for us it’s a question to Ministry of Finance, rather to us, but we don’t see any signals from the market that this will be an issue because those they just received actually notification approval from EU Commission based on this model. So, I don’t think they really see a need to buy minorities to be able to carry on this project. And for us when we take care of all the risks budget overruns and other productions or to be able to for the project on state, then the risk is fairly minimum for us as well. And so that’s basically there’s been good scheme that is in place today.
Piotr Dzieciolowski
Okay. And can I please ask you the next three reactors, how do you see the structure for them, will that be done in the similar way for you or that would be another third party involved in it there.
Martin Novak
So, this is only structure from one reactor. If it is more in the one reactor, it will be it has to be different approach, different structure and new notification.
Piotr Dzieciolowski
Okay. But is that possible that let’s say for the second reactor, you do the same way, so you provide a kind of into SPV, another CZK1.7 billion, and you do the same structure and then…
Martin Novak
I don’t think we would be able to afford it actually. So, there would have to be a different structure. I think CZK1.7 billion is the maximum that we could do, but we couldn’t do 2x CZK1.7 billion, I think. So, we would have to really, this is a structure for one reactor. If it’s more than one, we have to find a different more and probably different annual notification. So, far we have one reactor enough and we received kind of notification for one reactor only. So, we cannot really multiply it by two, three or four.
Piotr Dzieciolowski
Okay. Can I please ask you the last question, how do you think about the dividend policy in the context of your CapEx plans and getting to that 3x leverage plus new nuclear development. What – how do you think, what’s the right payout and when this could be really reached?
Martin Novak
So, our officially announced dividend policy, when we actually were proposing dividend for 2022, is 60% to 80% of adjusted net income. However, shareholders may decide differently a little bit last year on the shareholder meeting. The Ministry of Finance brought the proposal that the dividend higher, but so far we are thinking of 60% to 80%, that’s sufficient range for dividend, which doesn’t mean…
Piotr Dzieciolowski
I am asking not about the 2022 payout because this, but more like a ‘27 to 2030 when you start all of the investments on your balance sheet, let’s call. Do you think that company can sustain 60% to 80% payout or the long-term ultimate payout needs to be lower?
Martin Novak
We are very far from ‘27 to ‘28. It depends on the power prices, depends on the cost of investment, depends on the profitability of the projects, may happen that they will not be in the money. And that’s why we would not do them and we make sure it makes your situation. It changes your situation as well. So, we understand that all shareholders are buying our shares because of the dividend, is a dividend stock mature company. So, we have to balance those things go very well, but 2027 and 2028 is far from now.
Piotr Dzieciolowski
Okay. Thank you very much for the answers.
Operator
We have a question from Robert Maj.
Robert Maj
Yes. Hi. It’s Robert Maj from Ipopema Securities. On the CapEx front, I am trying to get my head around the numbers that you plan for 2024 versus this year, are you on track of reaching the CapEx from your – from your guidance? And on the new nuclear, I mean is this €1.7 billion included in those numbers you mentioned, you provided in the last financial, 2023 report or is it outside of this? And the second question on the sales segment performance in the first quarter, I mean the result was quite good. And I just wonder if this is something that would be repeatable in the following quarters. So, last year we had a loss in the first quarter and in the fourth quarter and there was like in the middle there was like a positive result. So, how the margin over there would evolve in following quarters in 2024? Thank you.
Martin Novak
I think in our CapEx plans, we have only €118 million, so invested into nuclear projects, nothing else, because those €1.7 billion will really be grown during the construction phase, which is years from now if things go wrong and it’s our fault. So, we really it is definitely beyond our 5-year budget that we do. And regarding sales segment, sales segment was extremely volatile in 2022 and ‘23 as you could see on the results. In the past when prices were more stable, their result was also more stable, always generating positive EBITDA and if nothing really significant changes, you would expect that they would be back into normal base of profit generation.
Robert Maj
And so, what will be the CapEx for 2024, if you can just remind us?
Martin Novak
I think it is Barbara.
Barbara Seidlova
Yes, we announced CZK57 billion expectation for ‘24.
Robert Maj
That’s more than CZK45 billion last year, right, so the difference and this is without GasNet, right.
Barbara Seidlova
This is without GasNet, yes.
Martin Novak
This is without GasNet, yes.
Robert Maj
Okay. So, the majority would go were in the ESCO business, the difference between this year CZK57 billion your guidance in the last year, where the money will go?
Barbara Seidlova
It is across various segments. One is increased spending in nuclear, both into the nuclear fuel and some increased maintenance. We are starting working on the first gas projects and we expect basically a ramp up in the CapEx, in the renewables.
Robert Maj
Okay. And when the GasNet would be consolidated, I reckon it could be in the third quarter, so I guess that on the second quarter result publication, you would increase your guidance, right, because simply of adding this CZK10 billion of EBITDA for GasNet, am I right.
Martin Novak
The frequency, we are going to spend, we would – we will put them into numbers, of course…
Robert Maj
And this we should think about third quarter is the first time, when you will consolidate if you consolidate, right?
Martin Novak
Right. Globally and if we – it depends really when we will be able to acquire it in the second quarter, which we are done below or probably third quarter depending on regulatory approvals.
Barbara Seidlova
Yes. As we mentioned, we are waiting for the approval from the European Commission and we don’t know the timing, so we don’t know when we will consolidate it.
Operator
We have a follow-up question from Arthur Sitbon.
Arthur Sitbon
Yes. Thank you very much. Apologies for the third question, it was just – I was just wondering if you could provide an update on the evolution of the windfall tax in the Czech Republic, specifically thinking of 2025. Thank you very much.
Martin Novak
Okay. So, we have heard from public resources comments from Minister of Finance and Minister of Finance, the government is strongly thinking of basically discontinuing this tax for 2025. We also heard that they might be thinking again about ‘24, but some political parties in the coalition are against it, some support it, so let’s see. So, hopefully ‘25 will be almost certain. But on the other hand, no legal initiative has been taken. On the other hand, it’s very simple. It’s just changing one sentence and do all. You don’t have to do any complicated change to the law. So, basically, you raise 2025 or even 2024, which would be probably too optimistic, but let’s see. So, this is where the public debate is actually heading today.
Arthur Sitbon
Okay. Thank you very much.
Operator
Andrzej Rembelski.
Andrzej Rembelski
Hi. Andrzej, PKO BP Securities. Thank you for the presentation. Just one question from my side. So, what’s your opinion from the point of view of key market player, do you think that four nuclear reactors in the Czech Republic are essential for the system in the upcoming years or do you think that, I don’t know, maybe one or two more units would be more reasonable. Thank you.
Martin Novak
So, I think from energy point of view or an overly point of view, we can clearly see future trend into more and more using electricity versus other kinds of fuel. And our fleet will be discontinued within few decades, coal plants fairly quickly, older Dukovany plant, it does not have indefinite lifetime either. So, clearly just replacing currently real problems in Dukovany is 2,000 megawatt replacing capacity in coal plants is even more so and gas pumps will be kind of transitional – transition technology, which still generate some CO2 and we are not there fully talking about building them all at once. So, this is a project for decades and that’s – so we can from energy point of view, we can see a need. It depends on what will be the pace of such a construction.
Operator
We have another question from Piotr Dzieciolowski.
Piotr Dzieciolowski
Hi. Thank you for letting me ask the follow-up question. So, I have a question on the CFD structure for the new nuclear. How should we think about the level of it given that debt funding is provided by the government, but what is the basically the return you possibly could get on your 1.7 billion equity injection into the company? And second question, I wanted to ask you about your kind of higher CapEx for the nuclear reinvestments. What is the CapEx you need to spend to refurbish the existing nuclear plant, how much per plant or for all of that Dukovany and Temelin, how much and when you to spend to keep them running?
Martin Novak
So, I will answer the equity question. Of course, we would expect through CFD to receive return on equity that we will provide that relates to standard, let’s say generation projects, whatever level of return on equity it is. So, standard return on standard generation project that’s what we would expect and this should be actually built into CFD in the future. So, that’s the answer. And the detail on the CapEx will be provided by Barbara.
Barbara Seidlova
Yes. Okay. So, on the maintenance of the nuclear fleet, historically we were spending typically between CZK4 billion and CZK5 billion a year. Now, as the plants are getting older and we have inflation going forward into 2024 to ‘27, we expect maintenance CapEx of around CZK8 billion per year for two units together.
Piotr Dzieciolowski
But do you have to go into it like for example, we take the other reactors across Europe, they have to go through the normal 10-year revisions. And at that point, EDF has a program whereby they spend like, almost a CZK1 billion per plant in retrofitting them to give them another 10 years or you take Fortum Loviisa, they also spend a CZK1 billion for extension. Do you have to do the same, because there is quite a – that would be quite substantial CapEx in your case, given your capacity in nuclear?
Martin Novak
No, we don’t have it this way. We actually use the tenure, so now, we change to indefinite tenor. But you have to fulfill certain criteria. So, that’s how – now actually licensing is done in past few years. And also, until you are able to fulfill criteria and it’s economic to do that, you cannot – you can go for it and make sure thing is to make the lifetime of Dukovany we are looking at extending the lifetime up to 60 years if I am not mistaken. And so, that’s what we are aiming at. And of course, past 10 years would be probably most expensive in terms of CapEx, on the other hand, still very profitable. So, it’s…
Piotr Dzieciolowski
Thank you very much.
Martin Novak
Much better to maintain current nuclear plant than to build a new one, simply said.
Piotr Dzieciolowski
No, that’s clear. Thank you very much.
Barbara Seidlova
Okay. It seems that we don’t have any further questions, so let’s finish this call. As always, Investor Relations department is available for any follow-ups on one-on-one basis. Thank you very much and goodbye.
Martin Novak
Goodbye.
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