CEMIG(US:CIG)2020-05-19 01:11Financial Data and Key Metrics Changes - The company reported a drop of 2% in the volume of electricity sold due to social isolation measures starting in March, which significantly impacted market performance [34] - The EBITDA for the first quarter of 2020 showed a growth of 31%, while the net profit increased by almost 36% compared to the previous year [47] - The company experienced a foreign exchange variation impact of BRL 438 million on cash flow, affecting consolidated results [37] Business Line Data and Key Metrics Changes - For Cemig D distribution, there was a reduction of 2% in EBITDA, with net profit increasing from BRL 188 million to BRL 197 million, reflecting a 5% increase [49] - Cemig GT's adjusted EBITDA was reported at BRL 685 million, with a 38% improvement, while net profit increased by 25% [48] Market Data and Key Metrics Changes - The total drop in payments was reported at 13%, with 8% attributed to the pandemic's effects, indicating a significant impact on revenue collection [25] - The load for Cemig D distribution saw an average reduction of 12.4% in April, while captive consumers experienced an 11.4% drop at the onset of social isolation [26] Company Strategy and Development Direction - The company is focusing on maintaining service continuity and employee safety during the pandemic, with a commitment to improving digital channels and operational efficiency [9][10] - A reduction of 13% in the CapEx program was announced, maintaining a robust investment program close to BRL 1.5 billion [18] - The management is committed to reducing leverage without the immediate need for asset sales, emphasizing liquidity and operational efficiency [64] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as lower volumes and increased delinquency due to the pandemic but also highlighted opportunities for digital channel improvements [8][11] - The company expects a gradual recovery in consumption as economic activities resume, with positive trends observed in early May [79] Other Important Information - The company donated BRL 5 million to public and charity hospitals to support pandemic efforts and established special repayment rules for public hospitals [17] - A voluntary redundancy program was announced, with expectations of a payback within eight months [52] Q&A Session Summary Question: Cost reduction measures and asset divestment plans - Management confirmed ongoing cost reduction efforts and stated that while asset sales are not a priority now, non-core assets remain available for future divestment [60][63] Question: Covenant calculations and bondholder negotiations - Management clarified that covenant calculations are included in bond contracts and that there is no controversy regarding the treatment of hedges in these calculations [66][68] Question: Profit sharing program and ABA expectations - Management explained that the profit sharing program is now set at 4% without additional non-recurring adjustments, and ABA performance is expected to be influenced by overdue bills due to COVID [71][74] Question: Delinquency trends and low-income consumer revenue - Management indicated that low-income consumers represent approximately BRL 25 million per month, and early May showed improved collection trends compared to April [78] Question: Free client contracts and pricing pressures - Management discussed the complexities of negotiating with free clients and acknowledged that pricing pressures have increased due to the pandemic [81][87] Question: Changes in top management - Management stated that recent changes in top management were due to mutual agreements and not indicative of a strategic shift [88] Question: COVID account and financial economic rebalance - Management is awaiting the final decree regarding the COVID account and anticipates discussions with regulatory agencies about financial rebalancing due to pandemic impacts [90][92]