Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Completion of significant asset sales in Peru, resulting in a positive impact of USD4.4 billion in cash and USD1.8 billion in net income.
- Reinforced commitment to operations in Brazil with investments of BRL14.5 billion for the 2024-2026 period.
- Solid operational indicators with a 7% increase in energy distributed and a 700 MW increase in renewable capacity.
- EBITDA for the second quarter reached USD1 billion, a 4% increase compared to the same period in 2023.
- Net debt decreased by 65%, mainly due to cash received from the sale of Peruvian assets.
Negative Points
- CapEx decreased by 32% compared to the same period last year, reaching USD512 million.
- Negative FX impact of USD52 million on EBITDA for the quarter.
- Operational challenges in Colombia due to difficult weather conditions affecting distribution companies.
- Concerns about delays in permitting and licensing for renewable projects in Colombia.
- Higher financial expenses in Colombia related to a higher stock of debt and FX effects.
Q & A Highlights
Q: What changes have been made to the distribution segment in Brazil relative to the latest strategic plan, and what caused the negative effect on the RAB in Brazil?
A: (Aurelio Bustilho de Oliveira, CEO) We have redirected more CapEx towards maintenance and reinforcing equipment to improve grid quality and resilience. Additionally, we are internalizing some activities for better management. The negative effect on the RAB is primarily due to exchange rate variations.
A: (Rafael de la Haza, CFO) The negative impact on the RAB is solely due to FX effects, with no operational degradation.
Q: What is the status of the company's divestment plan, particularly after the sale of Peruvian assets?
A: (Aurelio Bustilho de Oliveira, CEO) The divestment process is currently on hold as we focus on the concession renewals in Brazil. We are confident that the renewal process is progressing well.
Q: Could you clarify the amount of debt payments already made and the future plans for debt reduction, particularly regarding the Sao Paulo pension fund?
A: (Rafael de la Haza, CFO) We have completed significant liability management actions, focusing on reducing the most expensive debt in Brazil. The Sao Paulo pension fund debt reduction is ongoing and expected to be substantially completed by 2026.
Q: When do you plan to completely exit from Piura in Peru?
A: (Aurelio Bustilho de Oliveira, CEO) We are working on restructuring our gas supply for the thermal plant and expect to complete the exit by the end of 2025.
Q: Have there been significant changes in Argentina's sector, and what are the government's future plans?
A: (Aurelio Bustilho de Oliveira, CEO) We have seen progress, including a 320% recognition of inflation in VAT for distribution. The government is open to discussions and is working towards stabilizing the sector.
Q: Could you comment on the operating environment in Colombia, particularly regarding ongoing projects and potential divestments?
A: (Aurelio Bustilho de Oliveira, CEO) There are no plans for divestments in Colombia. We are confident in the country's regulatory environment but see a need for improvements in permitting processes. The hydrological conditions are improving, but Colombia will need more capacity in the medium term.
Q: Do you have any updates on the dividend payout for the first three quarters?
A: (Rafael de la Haza, CFO) The payout for next year is based on a projected net income close to USD3 billion, including the extraordinary effect of the Peruvian asset sales. The provisional dividend for the first three quarters will be calculated as 15% of this total amount.
Q: Will the use of the remaining cash from the Peruvian asset sales be defined in the next strategic plan, or could it be decided earlier?
A: (Aurelio Bustilho de Oliveira, CEO) The use of the remaining cash will likely be announced in the next strategic plan update in November. We are currently analyzing various factors, including cost of capital and energy prices, to make informed decisions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
