Release Date: March 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Centrais Eletricas Brasileiras SA (EBR, Financial) has successfully reduced its operational costs, reaching BRL6.784 billion in 2024, with a trend for further reduction.
- The company has implemented a new policy that has allowed a continuous reduction of liabilities, with a 50% reduction in the provision for compulsory loan inventory since privatization.
- EBR has achieved a record payout of dividends, reflecting the company's improved financial performance and commitment to shareholder returns.
- The company has made significant investments in technology and innovation, including the use of artificial intelligence and IoT to enhance operational efficiency and predictability.
- EBR has expanded its customer base in the free energy market, reaching 700 free energy customers, thanks to a centralized trading structure and robust risk management processes.
Negative Points
- The company faces challenges with the volatility of energy prices, which impacts financial projections and requires a conservative approach to leverage in the generation segment.
- There is a significant backlog of investments needed for reinforcement and improvement of transmission assets, which could pose execution risks if not managed carefully.
- EBR's financial performance is affected by the seasonality of costs, which remains a challenge despite efforts to mitigate it.
- The company is still dealing with complex negotiations related to compulsory loans and other liabilities, which could impact financial stability.
- There is uncertainty regarding the approval of investment plans by regulators, which could affect the company's ability to execute its growth strategy.
Q & A Highlights
Q: Can you provide details on the agreement with the federal government and the steps to reach a final agreement? Also, how is the energy trading liquidity and pricing?
A: (Marcello Disequera Freas, VP of Legal Affairs) We are finalizing the wording of the conciliation term and aim to conclude it within a fortnight. An extraordinary assembly will be convened for shareholder approval, followed by submission to the Supreme Court. Regarding energy trading, liquidity was good last quarter, with contract renewals and a regulated market auction selling 350 megawatts. The market's volatility is due to demand variations and increased use of intermittent sources.
Q: What are the expectations for future investments in reinforcement and improvement, and how will this be received by regulators? Also, what can we expect regarding PMSO costs?
A: (Eduardo Hayama, VP of Finance and Investor Relations) We have a significant investment backlog, and while it's difficult to predict exact figures, investments will grow over time. We aim to do this correctly without excessive risks. Regarding PMSO, there is a trend for reduction, with a recurrent PMSO below 6 million for 2025, aided by new processes and collective bargaining agreements.
Q: How is the company managing price volatility in the energy market, and what is the strategy for hedging against mismatches?
A: (Rodrigo Lim, VP of Strategy and Business Development) We manage resources across all supermarkets, allowing efficient portfolio management and minimizing mismatch risks. We assess scenarios for price mismatches, especially with expected volatility in 2025 and 2026, to maximize results.
Q: What is the company's strategy regarding the recovery of transmission revenue and potential M&A opportunities?
A: (Elio Wolf, VP of Strategy and Business Development) Our focus is on simplifying assets and participating in auctions for greenfield investments. M&A in transmission is not currently attractive, so we prioritize auctions and reinforcements for growth.
Q: Can you elaborate on the company's dividend strategy and any numerical references for future payouts?
A: (Ivandi Sosa Montero, CEO) We aim for quarterly remuneration based on predictability and company capacity. While we can't provide specific numbers due to market sensitivities, we focus on maintaining a balance between shareholder remuneration and future investments. Transmission is predictable, but generation requires a conservative approach due to price volatility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
