Companhia Energetica de Minas Gerais (CIG - Free Report) , also known as CEMIG, reported a loss of R$84 million ($26.6 million) in third-quarter 2017. This compares unfavorably with the year-ago quarter’s net income of R$434 million ($133.5 million).
The results suffered from rise in operating expenses and equity method losses in non-consolidated investees, more than offsetting revenue growth in the quarter.
Revenues Grow Y/Y
The quarter’s net revenues were R$5,135.8 million ($1,625.3 million), reflecting an increase of 4.9% from the year-ago quarter.
The company sold 14,046 Gigawatt hours of electricity in the quarter, increasing 1.5% year over year. Units solid to residential customers grew 2.8% while that to commercial and rural customers increased 16.6% and 0.1%, respectively. Electricity supplied for public lighting grew 4.6% and that for public services jumped 6.2%. Own consumption of electricity increased 4.3% and wholesale supply grew 14%.
High Operating Expenses Hurt Margin
CEMIG’s margin profile weakened in the third quarter as the gain from revenue growth was more-than-offset by rise in operating expenses. As noted, operating expenses in the quarter soared 31.1% year over year to R$5,160.4 million ($1,633 million). The increase was largely due to 13.8% rise in post-retirement obligations, 16.3% in outsourced services, 35.6% electricity purchased for resale, 79.6% in charges for use of the national grid and 55.1% in gas bought for resale. Also, operating expenses represented 100.5% of net revenues versus 80.4% in the year-ago quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 91.6% year over year to R$100.6 million ($31.8 million). The quarter’s EBITDA margin of 2% was way below 24.4% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the third quarter, CEMIG had cash and cash equivalents of R$582 million ($184.2 million), down from R$946 million ($286.7 million) at prior-quarter end. Loans and financings decreased 5.9% sequentially to R$8,856 million ($2,802.5 million).
In the first nine months of 2017, the company generated net cash of R$2,143 million ($676 million) from its operating activities, growing substantially from R$229 million ($64.5 million) generated in the year-ago period. Capital spent on fixed and intangible assets decreased 7% to R$783 million ($247 million).
During the period, the company paid approximately R$269 million ($84.9 million) as interest on equity and dividends.
Comp En De Mn Cemig ADS Price and Consensus