管理層發言
Good morning, everyone. I am Carolina Senna, Cemig's Investor Relations Superintendent. Welcome to Cemig's Third Quarter 2024 Earnings Video Conference Call. We inform you that this video conference is being recorded and will be available on the company's IR website where you also find the company's presentation. Should you need simultaneous interpreting, the feature is available by clicking on the Globe icon located on the bottom of the screen. Upon choosing Interpretation, select the language of your choice, Portuguese or English. Should you choose to follow the call in English, you may also select Mute Original Audio. We are now starting Cemig's Video Conference with Reynaldo Passanezi Filho, CEO; Dimas Costa, Chief Commercial Officer; Leonardo George de Magalhaes, CFO and IR Officer; and Marney Tadeu Antunes, Chief Distribution Officer. For the initial remarks, I turn the floor to our CEO, Reynaldo Passanezi Filho.
Good morning, everyone. Welcome to the earnings video conference call for the third quarter of 2024. We are pleased to report very consistent results that demonstrate the significant turnaround of the company and its financial strength. Some highlights stand out that have already been announced, and they are quite positive. We currently hold the best rating in our history, AAA, which is the highest possible rating. We have experienced over six notches of growth within a five-year period, which Fitch has recognized. This is due to our consistent performance, cash generation, and strong EBITDA over net debt, which is one of the best ratios we’ve ever achieved. In this quarter, we also completed the sale of Alianca Energia, which we announced 45 days ago, and we received BRL2.7 billion, resulting in a capital gain of BRL1.6 billion for this quarter. Additionally, we had favorable outcomes from our transmission tariff revision, contributing a gain of BRL1.5 billion in the IFRS and adjustments of ARTT for transmission.
Thus, we have reached an unprecedented EBITDA of BRL5 billion in this quarter. These results are remarkable. In addition to these achievements, we have demonstrated substantial growth in investments, nearly 20% compared to the same quarter last year. Overall, we have invested five times more than Cemig did in 2018, and in these nine months, we've already invested over BRL4 billion, surpassing last year's total of BRL4.8 billion. This shows our ongoing commitment to the future of the company, with many of these investments aimed at strengthening our base and improving future profitability. I would like to discuss an important change in our leadership, specifically related to our Investor Relations and CFO position. Andrea Almeida will replace Leonardo as CFO. I would like to express my gratitude to Leonardo for his dedicated service at Cemig over the past 30 years. He has been a remarkable leader, and his contributions were vital in helping us achieve the AAA rating and reducing leverage to the lowest levels in our history.
We are also in the process of appointing Leonardo to take over as CEO, pending approval from the controlling parties. I warmly welcome Andrea Almeida, who has an impressive background from her time at Vale, where she worked for 25 years, including experience in Canada, as well as serving as CFO for Petrobras and Santander. We are excited to have her with us as we continue our transformation. Furthermore, I would like to address the material fact we shared last Friday. We received notice from our controlling shareholder about the submission of a bill to the legislative assembly aimed at changing Cemig into a corporation, which marks a significant development. Carolina, these are my initial remarks, and we are prepared to address your questions after the company's presentation. To summarize, we have achieved consistent results, our investment plan remains on track, and we are proud of our historic numbers, including the AAA rating, record EBITDA, and the proposed transformation of Cemig into a corporation. Now, I would like to hand it over to our CFO and IR officer, Leonardo Magalhaes.
Good morning, everyone. Thank you for joining this video conference. I want to start by expressing my gratitude, particularly to Reynaldo, for his trust during our time on the Board together and for his leadership in the company’s transformation process. The results speak for themselves, showcasing the foundation he built for sustainable growth in the coming years. I also want to welcome Andrea, a highly regarded professional who will play a significant role in continuing our strategy and creating value for our shareholders. I appreciate our investors for their ongoing relationship over the years. The foundation remains a key focus for the company. I assure you we are committed to our responsibilities. We achieved several positive results, including the sale of our company and Alianca, along with the recent tariff review, which has nearly doubled our remuneration base. We anticipate BRL3.5 billion in investments for transmission lines in Minas Gerais—essential investments that are vital for both the company and the country, enhancing shareholder value compared to returns in transmission auctions.
We had ambitious investment plans for this year amounting to BRL6.2 billion, and we are optimistic about investing over 90% of the forecasted amount. To date, we have already realized more than 65% of that investment, and we plan to accelerate in the fourth quarter. The breakdown shows we have completed BRL4.4 billion in investments, aligning well with our forecasts. A few years ago, the company invested around BRL800 million to BRL900 million in distribution, and now we are investing almost four times that amount. We believe these represent profitable investments and affirm the sound capital allocation in recent years. Moving on to some highlights, I will pass it over to Carolina after mentioning a few points. We received the Transparency Award as one of the most transparent companies in Brazil due to the quality of our financial statements. This allows us to provide timely and accurate information to our investors to help them evaluate our results and operations correctly.
In this quarter, we generated robust cash flow, achieving BRL1.8 billion in EBITDA. However, trading results were slightly impacted by load restrictions between Northeast and Southeast regions, affecting prices in grocery stores. We faced challenges in October, but we anticipate a better outcome in November and December due to favorable weather conditions. Cemig Distribution continues to maintain high-quality indicators within regulatory limits, with an average tariff adjustment of 7.32% and a market growth of 4.5%. We expect a favorable year-end result for Cemig Distribution, as it remains focused on disciplined cost management and improving service quality for our customers in Minas Gerais. On Cemig GT, we reported BRL1.6 billion in capital gains from the sale of Alianca Energia, in addition to positive results from the tariff review. Now, I'll turn the floor over to Carolina to share the details of our third-quarter results.
Thank you very much, Leonardo. Moving forward, this is the slide we regularly present that outlines our results, specifically the IFRS and recurring outcomes. As Reynaldo mentioned, we achieved the highest EBITDA in our history, attributed to the tariff review and the sale of Alianca, demonstrating the success of our divestment strategy. Excluding the recurring impacts from the tariff review and Alianca, there was a 10% decline, largely influenced by the commercialization or trading activity that Leonardo highlighted, which was affected by a price difference in the submarket. With the rain effect now, this price difference should no longer be an issue. Regarding PMSO, we noted a 2.9% growth, particularly in outsourced services, and right-of-way clearing tree pruning when comparing the quarters. For context, we cleared 40,000 kilometers of right-of-way to reduce power interruptions caused by weather events.
We are currently experiencing rainfall, which does affect us. This effort also helps ensure we can maintain high-quality services for our clients while minimizing energy interruption hours due to various events. Additionally, when comparing the same quarters of '23 and '24, other expenses have increased due to asset deactivation as part of our significant divestment program in the distribution sector, resulting in higher asset deactivations over the years as we implement this program. In terms of cash flow, as Leonardo noted, our company has strong cash generation. Year-to-date, our operating cash stands at BRL5 billion. We executed two successful funding rounds for Cemig D to support our investment agenda, which will see over BRL4 billion invested this year in its concession distribution. We also had interest on equities and dividends paid, with these payments occurring in two installments, one at the end of the year and another in June.
Consequently, our investment activities resulted in cash outflows. With the Alianca divestments, we concluded the quarter with BRL6.7 billion, which will also be allocated for dividends and investments in the upcoming quarters. Additionally, we must consider our final Eurobond share of $380 million, which is scheduled for payment in December. Now I will hand it over to Leonardo to discuss our successful 11th debenture issuance.
Yes, once again, a successful issuance of debentures. This is already a AAA company. But in the last issuance, we know clearly that we already being considered a AAA company. These issuances, when compared to our basis to the market, the market really trusted the company. Thanks to our low leverage, our good financial structure. So we had an issuance of BRL2.5 billion, all of them placed in the market banks. It had a huge demand. It was higher than our offer. We issued a CDI of BRL1 billion and a second series of BRL1.5 billion. With IPCA, we have a natural hedge. And our revenue from distribution also is attached to IPCA. And we have good terms here, seven years and 12 years. Cemig has an average maturity up to last quarter of 2.7 years. And so after December next year, so it's going to be 5.4 years our debt profile. So we adjusted our debt profile, we extended the debt profile. And right now, we have very high rates. But considering our market situation, we have been able to pay off our investments and to finance that in the market so that they can be feasible using third-party or capital. Now turning the floor to Carol. She will go back to the profile and additional information.
Now moving on. As Leonardo mentioned, we had a recent issuance for Cemig D of BRL2.5 billion with an extension of our debt profile. We still have low leverage, especially thanks to Alianca's funds incoming. But this leverage is going to be used because of our investment program which is the best in history as well as in December, as I mentioned, we will be paying Eurobonds, we will no longer have debts in dollars after 2025 and also we'll be paying dividends. So this leverage will naturally increase because of the events that I just mentioned. Moving on to Cemig D. We had no non-recurring event in this quarter. We have significant results over each quarter. In EBITDA, there was a drop when compared to '23 and that was because of a higher increase in outsourced services expenses. As I mentioned, over 40,000 kilometers that we had to clear the right-of-way to mitigate possible adverse events stemming from climate events.
And also we were affected by market losses from captive market to DG. Now talking about the market, we had a significant increase of 4.5% mainly affected by transported energy showing how the Minas Gerais state is growing in terms of energy demand, new clients that are coming to the state and also a demand the Cemig D's concession services. And the captive market is kind of sideways. We had a significant improvement in the residential clients because of high temperatures. But distributed generation is still affecting our captive client which is migrating from that segment. And if we were not to have the adverse event of distributed generation, we would have grown 6.6%. Now for regulatory losses, we always say that, in 2021, we committed ourselves to be within the regulatory limits. So we had a slight mismatch here because of those three days in May, and Cemig's Distribution anniversary is May 28.
So there were differences in just three days that affected that a significant indicator of regulatory losses. We have already had a reduction and we are optimistic about our commitment to end the year within the regulatory losses. We need to keep on investing in the inspection of consuming units to continue our program to replace the conventional meters by smart ones, to increase the shielding, the protection for the meters and also to convert illegal connections into legal ones so that we can provide the best service to our consumers and also to maintain to keep ourselves within the regulatory limits. For operating efficiency, when I compare the realized OpEx and regulatory OpEx the ones that I have the coverage in the tariff. And remember, in the second quarter, we had a non-recurring positive effect which was the reversal of tax provisions of INSS on the Voluntary Dismissal Program. And even with that, we are within OpEx with a performance of 6.8%.
Within EBITDA, we are at 5.6% lower than the regulatory EBITDA. But we are very optimistic. We are still working so that we can end over the year within the regulatory EBITDA just like the OpEx. For Cemig GT, the sale of Alianca and the periodic tariff review are under Cemig GT. We had an EBITDA for IFRS higher and 380%. Removing those effects, we are down 19% that is affected by the trading activity. And we are starting to bring all the trading contracts to Cemig Holding. But this process is not 100% concluded yet. Therefore part of that activity is under Cemig GT, therefore, affecting the recurring results. Now, to show you the breakdown per business, per area of the company, we have the slides for distribution. We are ready now. We have increase in expenses with outsourced services and that is to bring best quality of service for people. So generation is more or less in line so trading.
We already mentioned that the margin for 2024 would be lower than 2023, but also we had the effect of the submarket difference, the reduction in the gas consumption and I will show you ahead. And we already talked about this, the industrial activity had a reduction in cubic meters for gas in addition to 2023. There was a compensatory parcel that was improving the results for 2023. So when I compared that to '24, there is a difference in the results. And the transmission improved in 11%, showing that one of the strengths of the company is to have a footprint in different segments in a way that as a whole we are able to deliver a recurring robust result. For Gasmig, then as I mentioned, there was this cubic meter reduction in gas volume from industrial clients of 6.6% affecting our EBITDA in 1.7%. Remember that Gasmig has an investment program. They are building a gas pipeline up to the Midwest.
So after seven years without investing in the state, we're now investing again. So this is the largest investment program in the group, as we are saying. And now I'll turn the floor to our CFO and IR Officer, Leonardo so that he can talk about our commitments.
Well, this is a slide that we always like to bring you every quarter because this is the commitment from the company to be transparent. And these commitments are in line with our strategy. And we usually say that if we go back and what we said that we were going to do in 2021, 2020, during the pandemic and look at what we had talked about, our strategic planning and what we had for the future, we can clearly see that the company is delivering exactly its strategic plan. Here we have some of the objectives that have already been met, such as the bonds and the Cemig's in the regulatory OpEx, quality index also in the regulatory limits. Also, we divested from more complex holdings, also Cemig Distribution investment program. So it's BRL23 million from '23 up to '28. So the ongoing projects that in progress, a number of them are at full speed and we are already market leaders in energy here in Brazil.
We are meeting that commitment of this leadership that we already have in the pre-market and now also in retail trading showing Cemig's competence and Cemig's team competence in generating value. Also digital transformation. We are investing a lot in technology to prepare Cemig for the future. And also we are implementing initiatives to comply with non-technical losses within regulatory levels. So here we are talking about assets where we would like to reallocate capital and thinking about the future, other projects. Also we have renewals of generation concessions. We are just paying attention to the topic and also technologies for energy transition. That's something else that the company is very much aware of so that we can have a relevant position in the future so that we can have a good position on how to deal with energy transition topics. Now I'll turn the floor to Carolina. We will have a Q&A session and I would like to thank you all very much.
Thank you, Leonardo. We will now begin the Q&A session. Please ask all your questions at once and hold for the company's response. Our first question is from Marcelo Sa, an analyst at Banco Itau. Please go ahead, Marcelo.
分析師問答
Hello, everyone. Thank you very much for your call. I have two questions. The first one is that I would like to understand this bill of law authorizing Cemig to become a corporation. But I believe it would have to have the approval of another bill that was sent a while ago. So why sending this bill now before that prior project approval? And second, I would like to know if there is anything new in terms of Taesa's stakeholding.
Good morning, Marcelo. It is obvious that the best entity to answer this question would be Minas Gerais administration, the controlling shareholder. It is a strategy that is coming from the controlling shareholder. Yeah, we know that there are two things there. We have this bill of law now and now we have the constitution amendment proposal. If just the bill of law is approved, our understanding, and it's just an initial understanding, is that we will need a referendum. So if this bill of law is approved regardless of this constitution amendment proposal, according to the constitution, we would have to have a referendum. About Taesa, we do not have anything new about it. And if anything comes up, we will then publish a notice and you will know about it.
Thank you, Marcelo. Next question from Daniel Travitzky, sell-side analyst from Safra Bank. Please, Daniel.
Hello, everyone. Thank you for this opportunity. I have two questions. They are related to the results. I would like to better understand the purchase and sale of energy in this quarter. There was an increase in that line. I would like to understand how was the quarter on that topic. And second question has to do with leverage. You mentioned that you were expecting leverage to increase after payments of dividends and the Eurobonds. So where do you project this leverage at, and what is your mindset for additional dividends distribution up to the end of the year? Thank you.
Good morning, everyone. Thank you for your question, Daniel. To clarify, you were inquiring about our energy purchases for the quarter. This year, there were instances where we had open positions, but we were not in that situation, so we didn't need to buy energy. However, we did experience a price difference. Currently, we have energy that we purchased, with one-fourth of it coming from the Northeast. Typically, during September and October, this energy faces stress due to transmission restrictions, resulting in price disparities in the markets. The prices this year reached BRL300 and BRL400 in September and October, which detaches from the usual range of BRL200 to BRL600. From the 1,100 megawatts acquired from the Northeast, we managed to hedge about 300 megawatts, leaving the remaining 800 megawatts exposed to risk, which we need to manage. Additionally, we weren't in an open position, but we faced those price differences and had to buy energy in the Southeast to settle in the Northeast.
This is the regular process for those with energy in one submarket needing to sell in another. Some large trading companies failed to deliver what they had promised in September and October, leading us to cancel contracts without losses for Cemig and a couple of smaller companies, which will be reused in 2025. We also negotiated with the largest trading company that did not deliver, resulting in a reduction in the contract price for 2025 based on the millions of Reals not supplied. Ultimately, the results reflected not only the price difference but also the deferral related to that trading company. This deferral was necessary to avoid legal disputes, especially considering the significant amounts involved, and has now been moved to 2025.
Thank you, Dimas. Now moving on. On the question of leverage, I'll turn the floor to Leonardo.
Hello, Daniel. Thank you for your question. The topic of dividends and leverage reflects Cemig's situation. This company has very low leverage and a significant investment program with access to the capital market for future financing. We typically inform the market that due to this large investment program, we expect our leverage to increase. With dividends at 50% of the IFRS results, we anticipate reaching 2027 with a leverage between 2 and 2.5 based on our current investment levels. This leverage should decrease in 2028 following Cemig's distribution tariff review. We believe that even without extraordinary dividends beyond the current 50% payout, the dividends offered are still very attractive. In the past year and previous years, we have already paid the highest dividends in the electric sector. Based on our current results, we can confidently say that the upcoming dividends will also be substantial. We consider this a sustainable strategy because we can provide excellent dividends while also investing and gradually increasing leverage without compromising the company's credit quality. This strategy is unique in the market and is expected to create value for shareholders in the coming years. By 2028, we will see increased cash generation as a result of the tariff review for the distribution and transmission companies, supported by all the investments we are executing now.
Thank you, Leonardo. If there are no further questions, we now end the Q&A session. Now I would like to turn the floor to Reynaldo Passanezi, our CEO, for his final remarks. Please, Mr. Reynaldo.
I would like to thank you all very much for being with us in this video conference. Have a great week, and we will continue working on consistent results on our investment program and meeting our targets. Have a nice day and a great week.
Thank you. Our video conference for the earnings call of the third quarter of 2024 has ended. IR Superintendents are available to take any further questions you might have. Thank you very much to all of you and have a great day.