ENGIE BRASIL ENERGIA S.A. EARNINGS RELEASE 2Q23
Additional information:
Eduardo Sattamini
Chief Executive and Investor Relations Officer
Eduardo Takamori
Chief Financial Officer
Rafael Bósio
IR Manager rafael.bosio@engie.comTel.: +55 (48) 3221-7246
ri.BREnergia@engie.com
On Aug 9, 2023 at 11:00 a.m. (BRT), 10:00 a.m. (EDT) in Portuguese with simultaneous translation into English)
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Florianópolis, Brazil, August 8, 2023. ENGIE Brasil Energia S.A. ("ENGIE" or "Company") - B3: EGIE3, ADR: EGIEY - announces earnings for the Second Quarter and six months period ending on June 30, 2023 (2Q23, 6M23/1H23). The information in this release is shown on a consolidated basis and in accordance with Brazilian accounting principles and practices. The values are expressed in Brazilian Reais (R$), except where otherwise indicated. Rounding effects may cause differences in percentage changes, when comparing the comments on Economic-Financial Performance, presented in R$ million, with the Income Statement (Appendix III), presented in R$ thousand.
ENGIE Brasil Energia celebrates a quarter of historic milestones: it becomes the in the country and wins an
important .
Highlights
Gralha Azul Transmission System
Improvement in the net financial result contributed to a 56.8% increase in adjusted net income in 2Q23, compared to 2Q22.
Recognition of amounts associated with the right to extend the Estreito HPP concession related to liability waiver, at R$ 243 million.
Adjusted net income was R$ 806 million in the 2Q23, 56.8% (R$ 292 million) higher than posted in the 2Q22.
The Company posted adjusted Ebitda2 of R$ 1,798 million in the 2Q23, a decrease of 5.2% (R$ 99 million) compared to the 2Q22. The adjusted Ebitda margin was 68.9% in the 2Q23, a growth of 5.6 p.p. compared with the 2Q22.
Net operating revenue reached R$ 2,610 million in the 2Q23, 12.9% (R$ 386 million) lower than recorded in the 2Q22.
The average price of the energy sales agreements, net of taxes on revenues and trading operations, was R$ 219.80/MWh in the 2Q23, 1.5% higher than registered in the 2Q22.
Excluding trading operations, the energy sales volume in the 2Q23 was 9,289 GWh (4,253 average MW), 4.1% lower than sold in the 2Q22.
On May 31, after the fulfillment of certain conditions precedent, the disposal of the Pampa Sul Thermoelectric Power Plant was completed. This was the last coal-burning plant in the Company's portfolio.
The Company won Lot 5 at Aneel's 01/2023 Transmission Auction, with approximately 1,000 kilometers long, in the states of Bahia, Minas Gerais and Espírito Santo.
Commercial startup in 2Q23 of 10 more units of the Santo Agostinho Wind Complex, in the state of Rio Grande do Norte.
Consolidated acceleration of the Climate Journey, setting clear and measurable goals and commitments covering scopes 1, 2 and 3.
ENGIE Brasil Energia | 2 |
Earnings Release 2Q23
Summary of Financial
and Operational Indicators
Consolidated (in R$ million) | ||||||||||
Net Operating Revenue (NOR) | ||||||||||
Results from Operations (EBIT) | ||||||||||
Ebitda | 1 | |||||||||
Adjusted Ebitda | 2 | |||||||||
Non-recurrent effects adjusted Ebitda | 3 | |||||||||
Ebitda / NOR - (%) | 1 | |||||||||
Adjusted Ebitda / NOR - (%) | 2 | |||||||||
Net Income | ||||||||||
Adjusted Net Income | ||||||||||
Adjusted Return on Equity (ROE) | 4 | |||||||||
Adjusted Return on Invested Capital (ROIC) | 5 | |||||||||
Net Debt | 6 | |||||||||
Gross Power Production (avg MW) | 7 | |||||||||
Energy Sold (avg MW) | 8 | |||||||||
Average Net Sales Price (R$/MWh) | 9 | |||||||||
Number of Employees - Total | ||||||||||
EBE Employees | ||||||||||
Employees on Under Construction Plants |
1 Ebitda: net income + income tax and social contribution + financial result + depreciation and amortization.
2Adjusted Ebitda: net income + income tax and social contribution + financial result + depreciation and amortization + impairment + non-recurrent.
3 Adjusted EBITDA, less the effects of IFRS in the transmission segment.
4 ROE: adjusted net equity for the past 4 quarters /shareholders' equity.
5 ROIC: effective tax rate x adjusted EBIT / invested capital (invested capital: debt - cash and cash equivalents - deposits earmarked for debt servicing + SE).
Subsequent Events
2Q23 | 2Q22 | Chg. | 6M23 | 6M22 | Chg. |
2,610 | 2,996 | -12.9% | 5,523 | 6,059 | -8.8% |
1,478 | 1,456 | 1.5% | 3,315 | 3,098 | 7.0% |
1,710 | 1,717 | -0.4% | 3,774 | 3,607 | 4.6% |
1,798 | 1,897 | -5.2% | 3,862 | 3,774 | 2.3% |
1,907 | 1,720 | 10.9% | 3,799 | 3,380 | 12.4% |
65.5 | 57.3 | 8.2 p.p. | 68.3 | 59.5 | 8.8 p.p. |
68.9 | 63.3 | 5.6 p.p. | 69.9 | 62.3 | 7.6 p.p. |
733 | 395 | 85.6% | 1,615 | 1,040 | 55.3% |
806 | 514 | 56.8% | 1,688 | 1,150 | 46.8% |
35.1 | 32.3 | 2.7 p.p. | 35.1 | 32.3 | 2.7 p.p. |
20.7 | 22.7 | -2.0 p.p. | 20.7 | 22.7 | -2.0 p.p. |
13,890 | 16,342 | -15.0% | 13,890 | 16,342 | -15.0% |
3,396 | 4,718 | -28.0% | 3,852 | 4,010 | -3.9% |
4,253 | 4,435 | -4.1% | 4,268 | 4,326 | -1.3% |
219.80 | 216.60 | 1.5% | 226.19 | 221.59 | 2.1% |
1,133 | 1,218 | -7.0% | 1,133 | 1,218 | -7.0% |
1,123 | 1,148 | -2.2% | 1,123 | 1,148 | -2.2% |
10 | 70 | -85.7% | 10 | 70 | -85.7% |
6 Adjusted amount, net of gains from hedge operations.
7 Total gross electricity output from the plants operated by ENGIE Brasil Energia. 8 Disregarding sales for quota regime (Jaguara and Miranda HPPs).
9 Net of taxes and trading operations.
A contract was signed for the modernization of 1 to 4 generating units and common systems of the Jaguara Hydroelectric Power Plant, in the amount of R$ 516 million.
Five more wind turbines at the Santo Agostinho Wind Complex were authorized for test operations and one for commercial operations.
On July 28, Fitch Ratings raised the Company's IDR rating (Issuer Default Ratings) on a long-term global scale in foreign currency from BB to BB+, with a stable outlook as a result of the improvement in the sovereign rating, still remaining one level above sovereign.
The Board of Directors approved the distribution of R$ 767.2 million as intermediate dividends (R$ 0.94027879765/share) representing 55% of the distributable net income reported in the first half of 2023. Shares will become ex-dividend as from August 22, 2023 and will be paid on a date to be determined later by the Management Board.
This release contains information and opinions on future events subject to risks and uncertainties, which are based on current forecasts, projections, and tendencies in relation to the Company´s businesses. Innumerous factors can affect the estimates and assumptions on which these opinions are based. For this reason, the estimates and forward- looking statements in this release may not become a reality. In the light of these restrictions, shareholders and investors should not adopt any decisions based on estimates, projections and forward-looking statements contained in this release.
Trairi Wind Complex
ENGIE Brasil Energia | 3 |
Earnings Release 2Q23
Message from the Management
This is a quarter to celebrate! Having completed the disposal of the Pampa Sul Thermal Power Plant, ENGIE Brasil Energia became the largest 100%-renewable electric energy generation company in Brazil. This is a milestone for the meticulously drawn strategy launched in 2015. In the past six years, the Company allocated over R$ 20 billion to the energy transition, including investments in clean energy and the implementation of transmission lines. The year 2023 has been one of significant progress.
In the last day of June, we also celebrated placing the winning bid for Lot 5 in Aneel's Transmission Auction 01/2023, concerning a concession to implement and operate over one thousand kilometers of transmission lines that will traverse the states of Bahia, Minas Gerais and Espírito Santo, meeting the demand for paths for the energy generated in the Northeast to flow to the Southeast. Over the course of the tender, we took part in fierce bidding where we displayed disciplined competitiveness, keeping a focus on delivery capacity, quality, safety and diligence as concerns investment timing and return.
This will be our fourth electric energy transmission asset. The Gralha Azul and Novo Estado transmission lines and substations continue to deliver high levels of uptime and we are evolving along the implementation of the Gavião Real Project, which concerns upgrading the Itacaiúnas Substation to serve the state of Pará's electric energy distribution grid and will integrate Novo Estado.
We are also moving forward in renewable generation expansion, with the implementation of three projects in the Northeast region of Brazil. The Santo Agostinho Wind Complex, in Lajes and Pedro Avelino, state of Rio Grande do Norte, reached 73% overall completion, and all ancillary works (access ways, grids and substation) are done. A total 12 generator units are commercially operational and another 15 are authorized for testing.
Also in Rio Grande do Norte, we have made progress implementing the Assú Sol Photovoltaic Complex, which in 2Q23 secured implementation licenses for the photovoltaic complex, collector substation and connection bay. This enabled starting the project's activities, such as trials, core samplings and preliminary studies. The Serra do Assuruá Wind Complex, made up of 24 wind farms to be implemented in a single phase in the municipality of Gentio do Ouro, state of Bahia, was granted installation licenses for the second half of the project and for the restricted-use transmission line, enabling construction works to proceed in line with the implementation schedule.
We continue to prosper along our
Journey for Climate, setting
drive by three action pillars -
- that cover the entire value chain.
Jaguara Hydroelectric Power Plant
In 2Q23, ENGIE Brasil Energia posted a net operating revenues of R$ 2.6 billion, a decrease of 12.9% YoY, due mainly to the completion of the implementation of the Gralha Azul and Novo Estado Transmission Systems. Adjusted Ebitda recorded a decrease of 5.2%, reaching R$ 1.8 billion in 2Q23, with a 68.9% adjusted Ebitda margin (+5.6 p.p.). Adjusted Ebitda for transmission effects (excluding non-cash effects) increased by 10.9% compared to the same period of the previous year, from R$ 1.7 billion to R$ 1.9 billion. This indicator was negatively impacted by the reduction in sales volumes, to lower revenue from the remuneration of contract assets and the periodic tariff review of transmission assets. These effects were mitigated by the recognition of amounts related to the extension of the concession of Estreito HPP, to reduction in energy purchases and the increase in the net average energy sales price.
On the other hand, adjusted net income increased 56.8% compared to the same quarter in 2022, reaching R$ 806 million in 2Q23, due to the effects mentioned above in addition to the combination of a decrease in net financial expenses and an increase in income tax and social contribution.
In line with the context of the Free Energy Market's liberalization, the Company continues to strengthen its presence alongside with companies of various sizes in every region of Brazil, offering from simple migration solutions to sophisticated energy management products for large volumes contracted. In 2Q23, the number of free consumers increased by 23.1% compared with the same period of the previous year. Energy sales were made for delivery from 2024 to 2028 - average of 64 average MW in the period -, maintaining the average net selling price level above R$ 217/average MW.
ENGIE Brasil Energia | 4 |
Earnings Release 2Q23
In addition to offering our customers operations de-carbonization solutions, we continue to prosper along our Journey for Climate, setting clear and measurable goals and commitments drive by three action pillars - Management, Mitigation and Adaptation - that cover the entire value chain and aim to guide the Company's concrete actions towards reducing its greenhouse gas emissions and mitigating the effects of climate change.
With the total exit of coal operations, the Company's Greenhouse Effect Gases emissions originated in Scope 1 (operations) and 2 (energy consumption) were significantly reduced and, therefore, our climate strategy entered a new phase. Now the focus of the Journey for Climate program is on our indirect activities - Scope 3 - which involves purchases of materials, transport, and other services, and now are responsible for more than 90% of greenhouse gas emissions. This work requires broad understanding and engagement of the supply chain - and we are focused on making that happen responsibly.
In 2Q23, the Board of Directors approved the Company's weather-related goals and commitments, including the engagement of 100% of the main Scope 3 suppliers to set science-based targets by 2030. The Company also committed to reducing the intensity of greenhouse gas emissions by 30% by 2025 and 56% by 2030 (measured in tCO2e/MWh). In addition, it plans to prepare climate adaptation plans for 100% of the assets by 2030 and to conduct regular training to employees, executive managers and board members twice annually.
Because we believe that innovation is a key element for the road ahead, we also executed our first investment contract with a startup company under the venture capital model. This is Descarbonize, a digital platform for accounting greenhouse gas emission and carbon tracking and compensation, intended for small and medium-sized companies active in the voluntary carbon market. It has potential for growth and return in line with the scenario's risk vs. opportunity balance rationale.
It is the systemic view that this message's various paragraphs reflect that enables us to ensure creating long-term value for our stakeholders, a central aspect of our management, and one that several organizations have been recognizing. In 2Q23, for the first time, ENGIE Brasil Energia joined the list of the 10 publicly traded companies posting the best shareholder returns, placing 4th in the Broadcast Empresas 2022 awards, hosted by Agência Estado. The Company was also in the top- 3 of the Caliber ranking of how society perceives the ESG practices of the 32 companies listed in B3's Corporate Sustainability Index (ISE). For the second consecutive time, we were the highlight of the Energy category in the 2023 Melhores do ESG Awards given by Exame magazine.
Together, we continue to strengthen a positive strategy for business and for the world.
Good reading!
Eduardo Antonio Gori Sattamini | Eduardo Takamori Guiyotoku |
Chief Executive and Investor Relations Officer | Chief Financial Officer |
ENGIE Brasil Energia | 5 |
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ENGIE Brasil Energia SA published this content on 08 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 August 2023 23:01:42 UTC.
