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Analyst Blog

On November 14, CEMIG reported third-quarter 2011 results with the company’s net income marginally down by 0.37% year over year to R$657 million (US$403.1 million). The decrease was primarily driven by the tendency of reduction in economic growth in Brazil, the effect of which was however balanced by the operational success of the company’s Long-term Strategic Plans.

Revenue

Net revenue of the company escalated 11% year over year to R$4,047 million (US$2,482.8 million), registering a 5.9% sequential increase, primarily driven by rising prices of electricity sold and as well as increase in tariff.

 

Electricity sold improved modestly by 5.38% year over year to 12,828 GWh in the third quarter of 2011. Revenue from supply of electricity in 3Q11 was up 11.43% compared with the year-ago period.

 

Among others, residential sales grew 6.45% year over year, industrial sales increased 2.75%, rural consumption went up 8.99% and commercial consumption grew 11.77%. Transactions on CCEE were down by 42.97% year over year.

Expenses/Income

Operational costs and expenses (excluding financial revenue/expenses) totaled R$ 2,785 (US$1,709 million) in 3Q11, up 4.76% compared with the year-ago quarter. This primarily reflects the variation in operational provisions over the year-ago period

EBITDA in the quarter soared 20.82% year over year to R$1,501 million (US$920.9 million), partially offset by Operational costs and expenses. Margin increased to 37.08% in 3Q11, from 33.99% in 3Q10.

Balance Sheet/Cash Flow

The company’s cash and cash equivalents were R$3,851 million (US$2,104.4 million) versus R$3,037 million (US$1,934.4 million) in the previous quarter.

Cash generated by operations increased significantly year over year (17%) to R$1,292 million (US$792.6 million) in the quarter. However, capital spending was down 27.8% year over year to R$719 million (US$441 million).           

Cemig is one of the largest integrated electric utilities in Brazil, which gives tough competition to its peers like Companhia Paranaense de Energia .

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