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Companhia Paranaense de Energia (ELP - Analyst Report), also known as COPEL, reported its financial results for the second quarter 2013 on Aug 14, 2013. The company’s net income in the quarter increased 36.1% year over year to R$252.0 million (US$122.3 million).

Copel’s earnings per share came in at R$0.92 or 45 cents per ADR. The results represent an increase over 35 cents per ADR reported in the year-ago quarter and the Zacks Consensus Estimate of 34 cents per ADR.

Revenue

In the second quarter 2013, Copel reported a 3.7% year over year increase in its net operating revenues that came in at R$2,101.1 million (US$1,020.0 million).

Revenue improvement was witnessed in almost all the business categories of COPEL: Electricity sales to final customers grew 28.8%; construction revenue rose by 104.0%; telecommunications revenue grew 10.0%; distribution of piped gas spiked 15.7% and revenue from other sources increased 86.7%.

Exception to these were a 19.5% decline in electricity sales to distributors and 32.3% fall in revenues generated from use of the main distribution and transmission grid.

Expenses/Income

In the second quarter 2013, Copel’s operating costs and expenses soared 2.1% year over year and settled at R$1,820.2 million (US$883.6 million), due primarily to higher expenses in the following categories: 8.6% rise in pension and health plans, 81.6% in materials and supplies for power electricity, 17.5% in natural gas and supplies for the gas business, 388.0% in provisions and reversals and 96.5% rise in construction costs, among others.

Higher costs in the above-mentioned categories were partially offset by an 86.0% decline in costs related to use of main distribution and transmission grid, 14.6% in personnel and management, 5.7% in materials and supplies, among others.

EBITDA increased 10.5% to R$438.9 million (US$213.1 million) with an EBITDA margin of 20.9% versus 19.6% in the year-ago quarter.

Balance Sheet

Copel’s cash and cash equivalents grew 30.2% sequentially exiting the second quarter 2013 and came in at R$1,570.4 million (US$704.2 million). Loans and financing, on the other hand, were roughly stable at R$2,727.2 million (US$1,223.0 million).

Cash Flow

Copel in the quarter generated roughly R$972.4 million (US$472.0 million) cash flow from operating activities as against cash flow generation of R$386.2 million (US$197.0 million) in the year-ago quarter. Capital spending on the purchase of property, plant and equipment was R$118.5 million (US$57.5 million), reflecting a 47.4% decline from the year-ago quarter.

For the year 2013, Copel plans to spend approximately R$1,922.8 million, with roughly 45.1% on Generation and Transmission, 51.3% on Distribution and 3.6% on Telecommunications.

Companhia Paranaense de Energia is a fully integrated electric utility of Brazil engaged in the generation, transmission, and distribution of electricity to the State of Paraná. The provincial government of the State of Paraná controls about 58.6% of the shares of Copel. The stock currently bears a Zacks Rank #3 (Hold).

Other stocks to watch out for in the industry are Huaneng Power International, Inc. (HNP - Snapshot Report) with a Zacks Rank #1 (Strong Buy), while Alliant Energy Corporation (LNT - Snapshot Report) and UNS Energy Corporation , each with a Zacks Rank #2 (Buy).
 

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