Financial Performance - Net operating revenue for the year ended December 31, 2018, was US$7,646 million, an increase from US$7,646 million in 2017[30] - Gross operating income rose to US$1,573 million in 2018, compared to US$1,573 million in 2017, reflecting a growth of approximately 31%[30] - Net income attributable to controlling shareholders increased to US$559 million in 2018, up from US$1,180 million in 2017, marking a growth of 47%[30] - Earnings per share attributable to controlling shareholders were US$0.55 for 2018, compared to US$1.16 in 2017, indicating a decrease of 52%[30] - Dividends declared for 2018 totaled US$133 million, an increase from US$280 million in 2017[30] - The company reported a net financial expense of US$300 million in 2018, down from US$1,488 million in 2017, showing a reduction of 80%[30] - Total taxes for 2018 amounted to US$210 million, compared to US$604 million in 2017, reflecting a decrease of 65%[30] Assets and Liabilities - Total current assets decreased to $2.426 billion in 2018 from $2.509 billion in 2015, representing a decline of approximately 19.5%[34] - Total liabilities increased to $10.893 billion in 2018 from $10.532 billion in 2015, reflecting an increase of about 3.4%[34] - Long-term debt rose to $4.391 billion in 2018 from $3.641 billion in 2015, an increase of approximately 20.6%[34] - Cash and cash equivalents decreased to $488 million in 2018 from $5.683 billion in 2015, a significant decline of approximately 91.4%[34] Regulatory and Compliance Risks - The company is subject to regulatory risks that could adversely affect financial performance, particularly regarding tariff adjustments and compliance with ANEEL regulations[41] - The company is currently in compliance with all material terms of its concession agreements, but there is a risk of penalties from ANEEL for potential breaches, which could adversely affect financial condition and operational results[58] - Fines for breaches can be up to 2.0% of revenues generated by the relevant concession in the prior 12 months, or 2.0% of the estimated value of energy that would have been produced[60] - Distribution concessions were originally granted in 1999 for a 16-year term and have been extended to July 2045 under new regulations, which may impose new targets and standards[61] Energy Production and Consumption - Energy sold to final consumers totaled 53,091 GWh in 2018, slightly down from 53,376 GWh in 2017, indicating a decrease of 0.5%[37] - The number of total consumers reached 9.58 million in 2018, up from 9.375 million in 2017, marking an increase of approximately 2.2%[37] - Installed capacity remained stable at 3,272 MW in 2018, compared to 3,284 MW in 2017[37] - The company generated 10,648 GWh of energy in 2018, a decrease from 12,568 GWh in 2016, representing a decline of approximately 15.3%[37] Investment and Capital Expenditures - The company plans to invest R$1,028 million in Generation activities, R$10,094 million in Distribution activities, R$175 million in commercialization and services, and R$642 million in Transmission activities from 2019 to 2023[79] - Total budgeted capital expenditures are R$2,174 million for 2019 and R$2,565 million for 2020, with R$4,012 million allocated to Distribution, R$203 million to Renewable Generation, and R$25 million to Conventional Generation[81] - The company has made substantial capital investments of R$1,825 million in renewable energy generation businesses over the last three fiscal years, focusing on wind and biomass generation[83] Economic and Market Conditions - The Brazilian economy is projected to grow at a rate of approximately 2.5% in 2019, up from 1.1% in 2018[114] - Inflation rates in Brazil were recorded at 3.8%, 2.9%, and 6.3% for the years 2018, 2017, and 2016 respectively, with a 12-month accumulated inflation of 3.89% as of February 2019[122] - The SELIC interest rate fluctuated between 6.50% and 14.25% from 2009 to March 2019, indicating significant monetary policy changes[121] - Political instability and corruption investigations have negatively impacted market confidence in Brazil, affecting economic conditions[115] Consumer and Tariff Information - The average retail price for residential consumers in 2018 was R$639.65/MWh, an increase from R$572.79/MWh in 2017, representing an 11.7% increase[202] - The average retail price for industrial consumers in 2018 was R$581.90/MWh, up from R$554.80/MWh in 2017, indicating a 4.9% increase[202] - Total tariff revenues for the use of the network by Free Consumers and Captive Consumers amounted to R$13,843 million in 2018[207] - The average tariff for network use was R$131.10/MWh in 2018, compared to R$105.73/MWh in 2017, reflecting a 24.1% increase[207] Operational Performance - The average duration of outages (SAIDI) for CPFL Santa Cruz was 6.01 hours per consumer in 2018, showing improvement from previous years[174] - The company aims to improve the quality and reliability of power supply, evidenced by favorable comparisons in outage frequency and duration against other Brazilian distributors[180] - In 2018, the company conducted 581,000 fraud inspections, recovering approximately R$65.2 million from consumers due to retroactive billing related to losses[173] Mergers and Acquisitions - The acquisition of RGE Sul for R$1,592 million was completed on October 31, 2016, resulting in a net cash outflow of R$1,497 million after accounting for cash acquired[142] - The merger of CPFL Jaguariúna and RGE Sul was approved on December 15, 2017, aimed at improving governance and increasing synergy within the company[142] - The company merged RGE into RGE Sul effective January 1, 2019, consolidating its distribution operations[203]
CPFL Energia(CPFEY) - 2018 Q4 - Annual Report