CEZ Group ESCO, a subsidiary of the CEZ Group, is making significant strides in the energy sector through strategic acquisitions and ambitious projects. The company supplies electricity and gas to major corporate clients, holding a substantial 30% market share. CEZ ESCO also specializes in building and operating photovoltaic and cogeneration sources, along with electromobility and energy savings projects, capturing 50% of the market in projects financed by achieved savings, known as EPC.

Growth Through Acquisitions

A key driver of CEZ ESCO’s expansion is its acquisition strategy. The company currently has 22 subsidiaries, contributing to billions in sales and profits. However,the financial performance of these subsidiaries varies.

Economic Results and Future Projections

Over the past decade, CEZ ESCO’s annual sales in ESCO services have surged from less than CZK 2 billion in 2015 to CZK 50 billion. looking ahead, the company anticipates a 10% annual growth in both sales and earnings before interest, taxes, depreciation, and amortization (EBITDA).

Key Economic Highlights for 2024:

• Sales for non-modern products and services: CZK 10.6 billion

Subsidiary Performance: A Mixed Bag

While CEZ ESCO boasts impressive overall results,some of its subsidiaries face financial challenges. Here’s a closer look at the performance of a few key companies:

• AZ Klima: This company, wich supplies air conditioning, cooling systems, and technical building equipment, reported a loss of CZK 90 million a year ago.
• Hormen: A supplier of luminaires fully acquired by CEZ ESCO in 2022, Hormen was profitable until the acquisition. However, in 2023, it experienced a loss of CZK 9.4 million.
• Etesa: Specializing in energy-saving projects, Etesa had been operating at a loss sence 2018, following its acquisition by CEZ. However, in 2023, it rebounded, achieving a profit of CZK 58.7 million.

Challenges and perspectives

Some sources suggest that the integration of acquired companies into CEZ ESCO has led to personnel changes, client losses, and shifts in management and corporate culture.Though, Čermák offers a different outlook:

I do not think that this was related to the fact that they were taken over by CEZ. That some companies are sometimes a bit sick in such a large holding, it was more related to the Covida period, inflation and delay of public procurement.
Čermák

Čermák suggests that external factors like the COVID-19 pandemic, inflation, and delays in public procurement have played a significant role in the financial difficulties of some subsidiaries.

Strategic Compensation and Future Acquisitions

To stabilize EBITDA, CEZ ESCO relies on profitable divisions like ČEZ Heating. According to Čermák,

That is why we compensate for EBITDA to be stabilized by a fuse. That is why we are glad that today we have ČEZ heating, which makes a large EBITDA and it is still stable business.
Čermák

Looking ahead, CEZ ESCO plans to continue its acquisition strategy, focusing on businesses involved in performance balance services. Though, the company intends to target smaller acquisitions than in the past.

elevion Group and Overall Financial Health

CEZ ESCO’s foreign branch, Elevion Group, operates in 15 countries. Together, CEZ ESCO and Elevion Group reported an EBITDA profit of CZK 5.2 billion and revenues of CZK 47.8 billion.

According to CEZ Vice-Chairman Pavel Cyrani,

today we are one of the largest providers of ECCO services in Europe, working in fifteen countries and we want to continue to develop. We assume that our economic results in ESCO will grow at about 10 percent a year in the coming years.
Pavel Cyrani

Decarbonization and Investment

The company is focused on decarbonization efforts,including transitioning from coal to natural gas and biomass in its heating plants. Čermák stated,

We are ready to invest CZK 50 to 70 billion in resources.
Čermák

CEZ ESCO is also interested in certified collection of emission-free electricity, emission allowances, long-term power purchase agreements (PPAs), and purchasing electricity from decentralized sources and production resources.