Eletrobras(US:EBR)2024-08-10 01:07Financial Data and Key Metrics Changes - The company reported a 16% year-on-year reduction in PMSO, targeting BRL 7 billion for annual PMSO, with a recurring PMSO of BRL 6.3 billion [4][6] - Revenue grew by 9% year-on-year, while EBITDA increased by 10% year-on-year [13] - There was a 31% drop in profit due to adjustments translating regulatory numbers to IFRS, which may generate distortions [13] Business Line Data and Key Metrics Changes - The incorporation of Furnas simplified corporate structure and improved capital structure, resulting in an accounting event of BRL 1.1 billion with deferred fiscal credits [9] - The company plans to dispose of thermal power plants, which will transfer credit risk to the acquirer, amounting to BRL 4.7 billion [10] Market Data and Key Metrics Changes - The annual allowed revenue from the previous cycle was BRL 17 billion, adjusted to BRL 15.3 billion for the current cycle due to tariff adjustments [11] - The company has seen significant progress in the free market, reaching over 600 customers and over 500 clients in the regulated market [12] Company Strategy and Development Direction - The company is focused on restructuring for efficiency and aims to achieve profitability levels similar to peers [4] - The ESG agenda includes the sale of thermal units and the establishment of a Sustainability Committee [5][6] - The investment program includes BRL 5.6 billion for transmission auctions, indicating a commitment to modernizing units and enhancing operational efficiency [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about capturing future gains and benefits from the investment program [7] - The company is actively negotiating with the government regarding agreements and is preparing for upcoming capacity auctions [21][23] Other Important Information - The company has made significant progress in reducing compulsory loans from BRL 22 billion to BRL 15 billion year-on-year [15] - The net debt over EBITDA ratio is at 1.9, indicating a comfortable financial position [16] Q&A Session Summary Question: Clarification on tax credit recognition and hiring strategy - Management explained that the tax credit difference is due to Eletrobrás being non-operational before the incorporation of Furnas, which now allows for effective use of credits [17][18] - The trading strategy focuses on end customers, with an increase in the customer portfolio and development of new products [19] Question: Update on government agreements and capacity auctions - Management confirmed ongoing negotiations with the government and participation in consultations for capacity auctions, awaiting final decisions [21][23] Question: Investment plans and cash flow conversion - Management emphasized the importance of maintaining assets for long-term operational efficiency and the need for continuous investment in transmission [26][27] Question: Asset disposal and Amazonas impact - Management confirmed that Amazonas Energia is still provisioned, with risks transferred to the buyer, and clarified that the impact on EBITDA will be neutral in the third quarter [35][37] Question: Union negotiations and cost implications - Management is negotiating with unions and has agreements with some, expecting to finalize discussions soon [40][41] Question: Trade strategy and contract management - The company has established a customer-centric structure to manage contracts effectively, focusing on extending contract terms and reducing churn [43][46]