Centrais Eletricas Brasileiras SA (EBR) Q2 2024 Earnings Call Highlights: Strategic Moves and ...

GuruFocus News
3 min read

In This Article:

  • PMSO Reduction: 16% year-on-year reduction, targeting BRL6.3 billion in recurring PMSO.

  • Investment in Transmission Auctions: BRL5.6 billion planned investment.

  • Furnas Incorporation: Accounting event of BRL1.1 billion with deferred fiscal credits.

  • Buyback Program: Almost BRL2 million worth of shares bought, targeting 10% of outstanding shares in 18 months.

  • Sale of CTEEP Preferred Shares: BRL2.2 billion from selling 93 million shares.

  • Thermal Power Plants Sale: BRL4.7 billion from selling 2 gigas of installed capacities.

  • Annual Allowed Revenue: BRL15.3 billion for the current cycle after tariff review.

  • Revenue Growth: 9% year-on-year increase in regulatory revenue.

  • EBITDA Growth: 10% year-on-year increase.

  • Net Debt to EBITDA Ratio: 2.5 in the regulatory market, 1.9 overall.

  • Cash Position: Cash covers almost three years of gross debt repayment.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Centrais Eletricas Brasileiras SA (NYSE:EBR) achieved a 16% reduction in PMSO year-on-year, with a target of BRL6.3 billion in recurring PMSO for the year.

  • The company has made significant progress in its ESG agenda, including the sale of thermal units and achieving a golden seal in the GHG protocol.

  • EBR successfully incorporated Furnas, simplifying its corporate structure and improving capital efficiency.

  • The company reported a strong financial performance with a 9% increase in revenue and a 10% growth in EBITDA year-on-year.

  • EBR has a robust cash position, with cash reserves covering almost three years of debt repayment, enhancing financial stability.

Negative Points

  • Despite improvements, EBR has not yet reached the profitability and efficiency levels of its peers.

  • The company experienced a 31% drop in IFRS-based profit due to adjustments, impacting dividend payments.

  • There are ongoing negotiations with unions and the higher court of labor, which could affect cost management.

  • EBR faces challenges in managing its liabilities, particularly with the Amazonas Energia provision impacting financial results.

  • The company is still in the process of optimizing its trade strategy and customer service structure, which may affect future growth.

Q & A Highlights

Q: Can you elaborate on the credit recognition with Furnas and the hiring strategy that led to a significant increase in volume? A: Eduardo Haiama, EVP of Finance, explained that the tax credit was not previously booked due to Eletrobras being non-operational. Post-incorporation, there's potential for future use. Ivan de Souza Monteiro, CEO, highlighted the trading strategy focusing on end customers, which led to an increase in customer portfolio and improved margins.

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