Companhia Paranaense de Energia – COPEL (ELP - Free Report) reported weak results in the first quarter of 2018. The Brazilian utility’s net income decreased 18.6% year over year to R$339.6 ($104.5 million).
The company’s earnings per share were R$1.21, down 19% from the year-ago tally of R$1.50. The American Depository Receipt (ADR) equivalent for the reported quarter was 37 cents while earnings in the year-ago quarter were 48 cents.
Revenues Improve Y/Y
In the quarter under review, COPEL’s net operating revenues were R$3,348.7 million ($1,030.4 million), increasing 1.6% year over year.
The top-line improvement was primarily driven by growth of 16.3% in electricity sales to final customers and 23.8% in revenues from telecommunications. However, these positives were partially offset by a decline of 14.7% in electricity sales to distributors, 32.6% in sales derived from the use of main distribution and transmission grid, 9.5% in construction revenues, 3.8% in sales derived from the distribution of piped gas and 7.7% in other operating revenues.
Electricity Sales Improve Y/Y
The company sells electricity to its final customers in the captive market through Copel Distribuicao and in the free market through Copel Geracao e Transmissao.
In the first quarter, COPEL’s electricity sales to final customers increased 1.2% year over year to 6,399 gigawatt hours. The improvement was driven by 9.6% rise in Industrial and 0.3% growth in Rural consumption segments. However, this was partially offset by 2.6% fall in Residential, 3.4% in Commercial and 1% in Other consumption segments.
Margin Profile Weak on Rise in Costs and Expenses
In the quarter under review, COPEL’s operating costs and expenses increased 11.1% year over year to R$2,786.6 million ($857.4 million). It represented 83.2% of net operating revenues versus 76.1% in the year-ago quarter.
Increase in operating costs and expenses was due to the rise of 10.6% in costs related to electricity purchased for resale, 86.1% in charge related to the main distribution and transmission grid, 27.5% in personnel and management costs, 3.2% in costs related to pension and healthcare plans, 71.8% in costs related to materials and supplies for power electricity, 10.2% in third-party services costs and 17.6% in provision and reversals.
However, the impact of higher costs and expenses was partially offset by a decline of 1.9% in costs related to materials and supplies, 6% in costs for natural gas and supplies in the gas business, 3.2% in depreciation and amortization, 23.6% in construction costs, and 21.2% in other costs and expenses.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were R$863.1 million ($265.6 million), inching up 0.3% year over year. Adjusted EBITDA margin was 25.8% in the quarter under review versus 26.1% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, COPEL’s cash and cash equivalents were R$1,697.5 million ($514.4 million), increasing 63.2% from R$1,040.1 million ($314.2 million) at the prior-quarter end. Loans, financing and debentures grew 5.5% sequentially to R$7,822.2 million ($2,370.4 million).
In the reported quarter, the company generated net cash of R$641.4 million ($197.4 million) from its operating activities, reflecting year-over-year growth of 50.1%. Capital used for the addition of property, plant and equipment surged 154.7% year over year to R$503.3 million ($154.9 million).
During the quarter under review, COPEL distributed approximately R$2 million ($0.6 million) as dividends and interest on equity.
Outlook
For 2018, COPEL plans to use R$2,928.6 million in capital expenditures. Of the total, roughly R$743.6 million will be used for the Generation and Transmission business, R$790 million will be used for the Distribution business and R$340.2 million for the Telecommunications business. The rest will be utilized for improving other businesses.
Companhia Paranaense de Energia (COPEL) Price
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Companhia Paranaense de Energia – COPEL (ELP - Free Report) reported weak results in the first quarter of 2018. The Brazilian utility’s net income decreased 18.6% year over year to R$339.6 ($104.5 million).
The company’s earnings per share were R$1.21, down 19% from the year-ago tally of R$1.50. The American Depository Receipt (ADR) equivalent for the reported quarter was 37 cents while earnings in the year-ago quarter were 48 cents.
Revenues Improve Y/Y
In the quarter under review, COPEL’s net operating revenues were R$3,348.7 million ($1,030.4 million), increasing 1.6% year over year.
The top-line improvement was primarily driven by growth of 16.3% in electricity sales to final customers and 23.8% in revenues from telecommunications. However, these positives were partially offset by a decline of 14.7% in electricity sales to distributors, 32.6% in sales derived from the use of main distribution and transmission grid, 9.5% in construction revenues, 3.8% in sales derived from the distribution of piped gas and 7.7% in other operating revenues.
Electricity Sales Improve Y/Y
The company sells electricity to its final customers in the captive market through Copel Distribuicao and in the free market through Copel Geracao e Transmissao.
In the first quarter, COPEL’s electricity sales to final customers increased 1.2% year over year to 6,399 gigawatt hours. The improvement was driven by 9.6% rise in Industrial and 0.3% growth in Rural consumption segments. However, this was partially offset by 2.6% fall in Residential, 3.4% in Commercial and 1% in Other consumption segments.
Margin Profile Weak on Rise in Costs and Expenses
In the quarter under review, COPEL’s operating costs and expenses increased 11.1% year over year to R$2,786.6 million ($857.4 million). It represented 83.2% of net operating revenues versus 76.1% in the year-ago quarter.
Increase in operating costs and expenses was due to the rise of 10.6% in costs related to electricity purchased for resale, 86.1% in charge related to the main distribution and transmission grid, 27.5% in personnel and management costs, 3.2% in costs related to pension and healthcare plans, 71.8% in costs related to materials and supplies for power electricity, 10.2% in third-party services costs and 17.6% in provision and reversals.
However, the impact of higher costs and expenses was partially offset by a decline of 1.9% in costs related to materials and supplies, 6% in costs for natural gas and supplies in the gas business, 3.2% in depreciation and amortization, 23.6% in construction costs, and 21.2% in other costs and expenses.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were R$863.1 million ($265.6 million), inching up 0.3% year over year. Adjusted EBITDA margin was 25.8% in the quarter under review versus 26.1% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, COPEL’s cash and cash equivalents were R$1,697.5 million ($514.4 million), increasing 63.2% from R$1,040.1 million ($314.2 million) at the prior-quarter end. Loans, financing and debentures grew 5.5% sequentially to R$7,822.2 million ($2,370.4 million).
In the reported quarter, the company generated net cash of R$641.4 million ($197.4 million) from its operating activities, reflecting year-over-year growth of 50.1%. Capital used for the addition of property, plant and equipment surged 154.7% year over year to R$503.3 million ($154.9 million).
During the quarter under review, COPEL distributed approximately R$2 million ($0.6 million) as dividends and interest on equity.
Outlook
For 2018, COPEL plans to use R$2,928.6 million in capital expenditures. Of the total, roughly R$743.6 million will be used for the Generation and Transmission business, R$790 million will be used for the Distribution business and R$340.2 million for the Telecommunications business. The rest will be utilized for improving other businesses.
Companhia Paranaense de Energia (COPEL) Price
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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