Copel(ELP) - 2025 Q1 - Quarterly Report

Financial Highlights This section presents key financial indicators for 1Q25 versus 1Q24, highlighting growth in EBITDA, net income, and improved leverage Key Financial Indicators 1Q25 vs 1Q24 | Highlight of Indicators | 1Q25 | 1Q24 | Δ% | | :--- | :--- | :--- | :--- | | EBITDA (R$ million) | 1,736.5 | 1,399.7 | 24.1 | | Recurring EBITDA (R$ million) | 1,503.2 | 1,330.8 | 13.0 | | Net Income (R$ million) | 664.7 | 533.5 | 24.6 | | Recurring Net Income (R$ million) | 576.9 | 542.0 | 6.4 | | Earnings per share (R$) | 0.22 | 0.18 | 24.6 | | Return on Shareholders' Equity | 2.6% | 2.2% | 17.6 | | EBITDA Margin | 29.5% | 25.8% | 14.1 | | Adjusted EBITDA margin | 25.5% | 24.6% | 3.8 | | Leverage | 2.3 | 2.0 | 18.0 | Consolidated Results Copel's 1Q25 consolidated results show significant growth in recurring EBITDA and net operating revenue, driven by improved segment performance and cost management EBITDA Recurring EBITDA increased by 13.0% in 1Q25, primarily due to growth in Distribution and Generation segments, alongside reduced personnel costs - Recurring EBITDA grew 13.0% YoY to R$1,503.2 million, with GenCo and TradeCo contributing 53.5% and DisCo contributing 46.1%[11] EBITDA Reconciliation (R$ million) | | 1Q25 | 1Q24 | | :--- | :--- | :--- | | EBITDA | 1,736.5 | 1,399.7 | | (-/+) Fair value in energy | (6.7) | 12.8 | | (-/+) Incentive Dismissal Program | 21.0 | - | | (-/+) Partial disposal of assets | (109.8) | - | | (-/+) Discontinued operations | - | 21.1 | | (-/+) Equity in earnings | (100.4) | (81.6) | | (-/+) NRV | (24.0) | (19.0) | | (-/+) Revenue Adjustment TRA IFRS/Regulatory | (13.4) | (2.2) | | Recurring EBITDA | 1,503.2 | 1,330.8 | - Key drivers for EBITDA growth include: DisCo's billed wire market growth (0.9%) and tariff readjustment; GenCo's higher volume of energy sold and higher average prices; and a 22.3% decrease in personnel costs due to a reduction of 1,382 employees, largely from the Voluntary Dismissal Program[17] Operating Revenue Net operating revenue increased by 8.8% in 1Q25, driven by higher electricity supply, grid availability, and construction revenues - Net operating revenue totaled R$5,892.1 million in 1Q25, an 8.8% increase compared to R$5,417.0 million in 1Q24[18] - Key revenue drivers included: - Electricity Supply Revenue: +R$234.7 million (+31.7%) due to higher prices and sales volume - Grid Availability Revenue: +R$122.7 million (+6.8%) from market growth and tariff readjustments - Construction Revenue: +R$66.0 million (+11.5%) from an increased volume of works[20] Operating Costs and Expenses Operating costs and expenses rose by 3.3% in 1Q25, primarily due to increased electricity purchased for resale, partially offset by reduced personnel costs - The cost of 'electricity purchased for resale' increased by R$278.9 million (+14.1%), mainly due to higher volume from distributed generation (+R$164.2 million) and higher costs from Itaipu (+R$29.9 million)[20] - Manageable costs (PMSO) remained relatively stable, increasing by only 0.8%, with a 15.2% reduction in personnel costs, driven by a workforce reduction of 1,382 employees, offset by higher costs for third-party services[21] Manageable Costs (R$ million) | Manageable Costs | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Personnel and management | 249.2 | 293.9 | | Private pension and healthcare plans | 60.9 | 69.0 | | Material | 23.0 | 18.5 | | Third-party services | 282.3 | 244.1 | | Other costs and expenses operating | 109.7 | 94.1 | | TOTAL | 725.2 | 719.5 | Equity Income Result Equity income from jointly controlled ventures and affiliates increased by 23.0% in 1Q25, driven by monetary updating of contract assets due to higher inflation - Equity income increased by 23.0% to R$100.4 million in 1Q25, up from R$81.6 million in 1Q24, mainly due to inflation update (IPCA of 2.04% vs 1.41% in 1Q24) on contract assets of jointly owned transmission subsidiaries[26] Financial Results The company reported a significantly deteriorated negative financial result in 1Q25, primarily due to a 41.6% increase in debt-related expenses from higher debt levels and CDI rates Financial Results (R$ million) | Financial Results | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Financial Revenues | 297.6 | 251.7 | | Financial Expenses | (744.2) | (519.8) | | Total Financial Result | (446.5) | (268.2) | - The negative financial result worsened primarily due to a R$177.5 million (+41.6%) increase in expenses with monetary variations and debt charges, resulting from higher debt and CDI rates[35] Consolidated Net Profit Consolidated net income for 1Q25 increased by 24.6%, with recurring net income growing 6.4% year-over-year after adjusting for non-recurring items - Net income for 1Q25 was R$664.7 million, 24.6% higher than the R$533.5 million in 1Q24[30] - Recurring net income increased by 6.4%, from R$542.0 million in 1Q24 to R$576.9 million in 1Q25[32] Debt and Leverage Consolidated debt increased by 9.4% in 1Q25 due to a debenture issuance, but leverage improved to 2.3x from 2.6x, reflecting strong EBITDA growth - Total consolidated debt reached R$19,417.4 million, up 9.4% from Dec 31, 2024, mainly due to the issuance of R$2,000.0 million in debentures at GenCo[36] Net Debt per Subsidiary (R$ million) | R$ million | GenCo | DisCo | Others | | :--- | :--- | :--- | :--- | | Total Debt | 8,620.8 | 8,115.6 | 2,681.0 | | Availability | 2,296.3 | 2,121.5 | 2,089.0 | | Net Debt | 6,324.5 | 5,994.2 | 592.0 | - Leverage, measured by the net debt/recurring EBITDA ratio, improved to 2.3x in 1Q25 from 2.6x in 4Q24, due to lower net debt and growth in recurring EBITDA[40] Investment Copel invested R$679.2 million in 1Q25, with 88.0% allocated to Copel Distribuição for grid modernization and 11.9% to Generation & Transmission for asset improvements Investment by Subsidiary (R$ million) | Subsidiary / SPC | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Copel Distribuição | 596.6 | 534.6 | | Copel Geração e Transmissão | 80.8 | 33.9 | | Holding | 0.2 | 0.7 | | Copel Comercialização | 0.3 | 0.2 | | Copel Servicos and other | 0.3 | 22.6 | | Total | 678.2 | 592.0 | - DisCo's investments were primarily directed towards two major projects: - Paraná Three-Phase: A rural grid modernization program, with 21,784 km of grid completed by March 2025 - Smart Grid: An initiative to implement a private communication grid and advanced metering, with 1,228,082 smart meters installed by March 2025[45][47] - GenCo's investments were mainly aimed at reinforcements and improvements to transmission assets (56.7%) and the maintenance and modernization of generation assets (25.5%)[46] Copel Generation and Transmission (GenCo) GenCo's recurring EBITDA increased by 13.9% in 1Q25, driven by higher energy sales, better prices, and reduced personnel costs, with strong operational performance in hydro and wind generation Economic and Financial Performance GenCo's recurring EBITDA rose 13.9% in 1Q25 due to increased energy sales and prices, alongside lower personnel expenses, leading to a 17.2% increase in recurring net income - Recurring EBITDA grew 13.9% to R$783.1 million, driven by a 3.3% increase in energy sold (5,971 GWh) and a 0.9% increase in the average portfolio price (R$173.16/MWh)[48] GenCo Key Financial Indicators (R$ million) | Main Indicators | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Net Operating Revenue | 1,239.5 | 1,129.0 | | Net Income | 416.0 | 291.8 | | Recurring Net Income | 340.4 | 290.3 | | EBITDA | 998.2 | 787.8 | | Recurring EBITDA | 783.1 | 687.7 | | Investment Program | 80.8 | 33.9 | - Recurring net income reached R$340.4 million, a 17.2% increase from 1Q24, reflecting higher EBITDA and a R$36.6 million reduction in depreciation[53] IFRS effect on the Transmission segment This section reconciles the IFRS accounting effects on the transmission segment's revenue, detailing adjustments to align corporate and regulatory statements IFRS Effect in Transmission Segment (R$ million) | IFRS effect in the Transmission segment | 1Q25 | 1Q24 | | :--- | :--- | :--- | | (A) IFRS revenue | 280.3 | 263.4 | | (B) Regulatory revenue | 266.9 | 261.2 | | (B-A) Revenue Adjustment TRA IFRS/Regulatory | (13.4) | (2.2) | | (+/-) Effects on Equity in Earnings | (59.1) | (48.4) | | IFRS effect in Transmission business | (72.5) | (50.6) | Operational Performance GenCo operates a 100% renewable generation park, with hydro and wind generation increasing significantly in 1Q25 due to favorable conditions and higher energy sales Generation In 1Q25, GenCo's hydro generation rose by 5.1% and wind generation increased by 17.3% due to favorable hydrological conditions, despite some curtailment - Hydro generation was 5.1% higher in 1Q25 (6,303 GWh vs. 5,998 GWh in 1Q24) due to a more favorable hydrological scenario[58][60] - Wind farm generation was 17.3% higher in 1Q25 (752 GWh vs. 641 GWh in 1Q24), despite an increase in curtailment from 1.9% to 6.1%[60] Energy Sold The volume of energy sold from hydroelectric sources increased by 1.4% and from wind farms by 11.6% in 1Q25, primarily driven by higher bilateral contract sales - GenCo sold 4,720 GWh of electricity from hydroelectric sources, an increase of 1.4% YoY, mainly due to higher sales under bilateral contracts[61] - Total electricity sold from wind farms was 1,251 GWh, an increase of 11.6%, driven by more bilateral contracts and new supply from the Jandaíra Complex[62] Transmission Copel operates over 9,600 km of transmission lines across eight Brazilian states, with future revenue from the Basic Grid of the Existing System subject to regulatory tariff reviews - Copel's transmission grid spans over 9,600 km of lines and includes 53 basic grid substations, considering its holdings[57][67] - The company outlines the expected revenue flow from the Basic Grid of the Existing System (RBSE), which was recently updated by ANEEL's tariff review resolutions[68] Copel Distribution (DisCo) DisCo's recurring EBITDA grew 12.4% in 1Q25 due to market growth and tariff adjustments, though recurring net income remained flat due to higher depreciation and financial expenses Economic and Financial Performance DisCo's recurring EBITDA increased by 12.4% in 1Q25, driven by market growth and tariff adjustments, but recurring net income remained flat due to increased depreciation and financial expenses DisCo Recurring EBITDA (R$ million) | Recurring EBITDA | 1Q25 | 1Q24 | Δ% | | :--- | :--- | :--- | :--- | | EBITDA | 704.7 | 635.7 | 10.9 | | (-/+) Reversal/Provision for PDV | 12.2 | - | - | | (-/+) NRV | (24.0) | (19.0) | 26.3 | | RECURRING EBITDA ex NRV | 692.9 | 616.7 | 12.4 | - Recurring net income was R$216.5 million, flat compared to 1Q24, as better operating results were offset by a R$26.2 million (+18.5%) increase in depreciation and a R$117.5 million increase in financial expenses[74] DisCo Key Financial Indicators (R$ million) | Main Indicators | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Net Operating Revenue | 4,304.8 | 4,051.0 | | Net Income | 232.4 | 241.9 | | Recurring Net Income | 216.5 | 216.5 | | EBITDA | 704.7 | 635.7 | | recurring EBITDA without NRV | 692.9 | 616.7 | | Investment Program | 596.6 | 534.6 | Regulatory Efficiency DisCo achieved a significant regulatory efficiency gain of R$846.0 million, with its recurring EBITDA for the last 12 months being 46.4% above the regulatory target - DisCo's recurring EBITDA for the last 12 months was 46.4% above the regulatory EBITDA, representing an efficiency gain of R$846.0 million[77] Operational Performance DisCo's wire market consumption grew 3.3% in 1Q25, but the billed market only increased by 0.9% due to distributed generation, while the captive market declined Market-Wire (TUSD) Electricity consumption in the wire market increased by 3.3% in 1Q25, but the billed wire market grew only 0.9% due to the impact of distributed generation - Electricity consumption in the wire market increased by 3.3%, while the billed wire market grew by 0.9% due to the impact of MMGD[80] Captive Market The captive market experienced a 2.5% decrease in electricity consumption in 1Q25, with the billed captive market falling 7.3% when factoring in distributed generation - Captive market electricity consumption decreased by 2.5% YoY, with the billed captive market, factoring in MMGD, falling by 7.3%[81] Operational Data DisCo maintained quality-of-service indicators within regulatory limits in 1Q25, though total distribution losses were slightly above the regulatory threshold due to increased injected energy - Quality of service indicators DEC (7.52 hours) and FEC (5.02 interruptions) for the last 12 months were within regulatory limits[84] Total Distribution Losses (GWh - 12 Months) | GWh - 12 Months | mar/23 | mar/24 | mar/25 | | :--- | :--- | :--- | :--- | | Injected Energy | 35,285 | 37,519 | 39,729 | | Distribution Losses | 2,794 | 2,706 | 3,068 | | Technical Losses | 2,042 | 2,171 | 2,299 | | Non-Technical Losses | 752 | 773 | 769 | - In March 2025, total losses were 0.2 percentage points above the regulatory limit, influenced by a significant increase in injected energy[89] Copel Commercialization (TradeCo) TradeCo's recurring EBITDA decreased in 1Q25 due to a lower commercialization margin from higher energy purchase prices, despite an 8.8% increase in energy sold volume Economic and Financial Performance TradeCo's recurring EBITDA and net income declined in 1Q25, primarily due to a lower commercialization margin caused by a 4.2% increase in the average energy purchase price - Recurring EBITDA was R$21.2 million in 1Q25, down from R$30.6 million in 1Q24, mainly due to a lower commercialization margin from a 4.2% increase in the average energy purchase price[91] TradeCo Key Financial Indicators (R$ million) | Main Indicators | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Net Operating Revenue | 956.2 | 859.7 | | Net Income | 25.1 | 17.6 | | Recurring Net Income | 20.7 | 26.0 | | EBITDA | 27.9 | 17.8 | | Recurring EBITDA | 21.2 | 30.6 | Operational Performance TradeCo increased its total energy sold volume by 8.8% in 1Q25, driven by a 23.2% rise in bilateral contract sales and a 69.0% increase in forward sales for a 5-year horizon - The volume of energy sold for a 5-year horizon increased by 69.0% compared to 1Q24, as the company capitalized on market opportunities[98] - The total volume of energy sold increased by 8.8% in 1Q25, driven by a 23.2% increase in sales via bilateral contracts, which offset a 13.0% decrease in sales to free consumers[100] ESG Performance Copel demonstrates strong ESG commitment through its Net Zero Ambition, social programs, and fully independent Board, earning multiple sustainability recognitions and high ratings Copel, a Pioneer in the ESG Sector Copel leads in ESG, being the first in its sector to sign the UN Global Compact, with a Net Zero Ambition by 2030, and a governance structure featuring a fully independent Board - Environmental: Copel participates in the Net Zero Ambition Movement and has a plan to neutralize Scope 1 GHG emissions by 2030[108] - Social: The company runs numerous social programs, such as 'Cultivar Energia' (community gardens) and 'Iluminando Gerações'[105][109] - Governance: Copel is a company with dispersed capital and no controlling shareholder, with its Board of Directors composed entirely of independent members[109] Recent Highlights Copel achieved significant ESG recognitions, including inclusion in the S&P Global Sustainability Yearbook 2025 and the Carbon Clean 200 ranking, while maintaining ISO 37.301 certification - Copel was included for the first time in the prestigious Sustainability Yearbook 2025 by S&P Global[115] - The company is listed in the Carbon Clean 200, an international ranking of the 200 publicly traded companies most prominent in the global energy transition[115] - For the second consecutive year, the independent audit of the 20-F report identified no significant deficiencies in internal controls[115] Indicators Key ESG metrics show 94.07% of Copel's installed capacity and 99.97% of generated energy are from renewable sources, with women comprising 21.9% of employees Key ESG Indicators | Indicator | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | Environmental | | | | | Renewable sources (% Installed capacity) | 93.8 | 94.1 | 94.07 | | Renewable sources (% Energy generated) | 99.2 | 99.9 | 99.97 | | GHG Emission scope 1 (tCO2) | 50,834.4 | 81,690.3 | 17,242.0 | | Social | | | | | Women at Copel (% Copel employees) | 21.7 | 21.6 | 21.9 | | Frequency of occupational accidents - TF (% Contractors) | 4.9 | 6.6 | 3.9 | Ratings, Rankings and Indexes Copel's ESG performance is reflected in strong ratings from major agencies, including a CSA Score of 70 from S&P Global and an 'A' rating from MSCI ESG Ratings Summary | Index/Agency | Ranking/Score | Reference Year | | :--- | :--- | :--- | | S&P Global | CSA Score 70 | 2024 | | CDP | B | 2024 | | Sustainalytics | Medium Risk | 2023 | | MSCI | A | 2024 | Other Highlights from the Period Significant events include the approval of R$1,250.0 million in supplementary dividends, election of a fully independent Board, inclusion in the B3 Dividend Index, and partial closure of asset divestment - The Annual General Meeting approved the payment of R$1,250.0 million in supplementary dividends for the 2024 financial year[118] - A new Board of Directors was elected for a two-year term, with all elected members being independent[119] - As of May 2025, Copel's common (CPLE3) and preferred (CPLE6) shares were included in the B3 Dividend Index (IDIV B3), reflecting the company's strong dividend returns[121] - On March 31, 2025, the company partially closed the divestment of small assets, receiving R$219.5 million, which represents 49.0% of the total transaction value[123] Exhibits This section provides comprehensive financial statements, detailed subsidiary results, energy market data, and operational statistics to support the report's findings Exhibit I - Consolidated Financial Statements This exhibit details the consolidated financial statements for 1Q25, including the Income Statement, Balance Sheet, Cash Flow Statement, Adjusted EBITDA reconciliation, and equity income details Exhibit II - Results by Subsidiary This section provides granular financial performance data by individual company and subsidiary, including detailed income statements for Copel GeT, Copel Dis, Copel Com, and a comprehensive income statement matrix Exhibit III - Energy Market This exhibit offers a detailed overview of Copel's energy market operations, including total and distribution markets, tariffs, purchase costs, energy balance forecasts, and a consolidated energy flow diagram Exhibit IV - Operational Data This exhibit presents key operational data across Copel's business segments, including staffing, generation assets, transmission lines, substations, and distribution network statistics