Q2 2026 Energy of Minas Gerais Co Earnings Call Transcript
Key Points
- Cia Energetica DE Minas Gerais - Cemig (CIG) delivered consistent and sound results in Q2 2026, with recurring EBITDA of BRL2.5 billion and a 9.3% increase year-over-year.
- The company is executing a robust investment program, with BRL3.3 billion invested in the first half of 2026, in line with its annual plan of BRL6.7 billion, focusing on distribution network improvements.
- Cia Energetica DE Minas Gerais - Cemig (CIG) maintains a strong credit profile with AAA ratings from two agencies and AA+ from S&P, and has a manageable leverage of 2.58x, expected to decrease after the 2028 tariff review.
- The company's distribution segment shows improved quality indicators, with DEC and FEC below regulatory limits, reflecting the positive impact of past investments.
- Cia Energetica DE Minas Gerais - Cemig (CIG) has a strong shareholder remuneration policy, with a minimum dividend payout of 50% of net income, and recently declared BRL631 million in interest on capital.
- The company is optimistic about the renewal of three concessions (including Sa Carvalho) and expects a positive outcome from the Ministry of Mines and Energy.
- Cia Energetica DE Minas Gerais - Cemig (CIG) is well-prepared for El Nino impacts, with robust contingency plans and no expected budget impact.
- The trading segment is expected to improve in the second half of 2026, with a more favorable environment and settled positions, and the company anticipates significant results for 2028.
- The company is disciplined in capital allocation, considering transmission and battery auctions only when returns are attractive, and is cautiously exploring data center opportunities.
- Cia Energetica DE Minas Gerais - Cemig (CIG) has a strong cash generation, with operating cash flow of nearly BRL4 billion in the first half of 2026, supporting its investment program.
- Cia Energetica DE Minas Gerais - Cemig (CIG) experienced a 15.5% increase in consolidated costs and expenses in Q2 2026, partly due to seasonal effects and investments, though the company expects this to normalize over 12 months.
- The trading segment posted a negative recurring EBITDA of BRL180 million in Q2 2026, impacted by a BRL191 million provision related to a major industrial client arbitration and higher energy purchase prices.
- Net income was affected by higher financial expenses due to increased debt for investments, leading to a 15.6% growth but with a noted impact on profitability.
- The captive market in distribution saw a 3.8% decline in energy sales due to large clients leaving the network, and the rural class consumption dropped 11% due to higher rainfall.
- Gasmig's results declined due to client migration to the free market and a 17% reduction in distributed volume, impacting EBITDA and net income.
- The company's leverage is expected to increase up to 2027 before the 2028 tariff review, which may pressure financial results in the near term.
- There is uncertainty regarding the outcome of the free-market client arbitration, which could lead to further provisions or cash outflows.
- The company faces challenges from the full opening of the Brazilian electric power market in 2028, requiring significant investments and strategic adjustments.
- Cia Energetica DE Minas Gerais - Cemig (CIG) is exposed to El Nino risks, which could affect operations and require additional contingency measures.
- The trading segment's negative results were concentrated in the first half of 2026, and the company acknowledges a difficult market environment with structural issues.
Good morning, everyone. I'm Carolina Senna, Cemig's Investor Relations Superintendent. Welcome to Cemig's second-quarter 2026 earnings video conference call. Please note that this video conference is being recorded, and it will be available on the company's IR website at ri.cemig.com.br, where you will also find the company's presentation. (Operator Instructions)
We now start Cemig's video conference with Alexandre Ramos Peixoto, CEO; Leonardo George de Magalhaes, CFO and IR Officer; Luis Claudio Correa Villani, Chief Information Technology Officer; Demetrio Alexandre Ferreira, Chief Generation and Transmission Officer; Ernando Antunes Braga, Chief Distribution Officer; Sergio Lopes Cabral, Chief Trading Officer; Sergio Pessoa de Paula Castro, Chief Legal Officer; Iuri Araujo de Mendonca, Cemig SIM CEO; and Ronalde Xavier Moreira Junior, Gasmig, CFO and IR Officer.
For the initial remarks, I now turn the floor to Alexandre Ramos Peixoto, our CEO, who will start the presentation. Please, Alexandre, the floor is
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