EDP Brasil reaches an EBITDA of R$806.8 million in 1Q16 | EDP Brasil

EDP Brasil, a company that operates in the areas of generation, distribution, commercialization and power services, closed the 1st quarter of 2016 with an EBITDA (earnings before interest, taxes, depreciation and amortization) of R$806.8 million, an increase of 97.5% over the R$408.6 million recorded in the same period last year. Liquid profit also maintained a positive trajectory and increased by 261.3%, from R$83.6 million to R$302.1 million.

Net operating revenue, excluding construction revenue, fell 1.8% in the first quarter of this year, to R$2.05 billion. This performance can be explained by accounting for higher Regulatory Liability in the Distribution area. This item, which was R$56.5 million in the 1st quarter of 2015, grew to R$329.1 million, mainly due to the amortization of unmanageable costs in both concession areas, in addition to reducing costs with CDE and Itaipu.

Generation leads gains

The Generation area increased by 143.0% in EBITDA and by 301.0% for a net profit of R$435.1 million and R$108.3 million, respectively, with the improvement of water conditions and consolidation of Pecém I TPP.

The operational and regulatory optimization of the Pecém I TPP, promoted over 2015, allowed the power plant to reduce costs and operate in a more efficient manner. The unit, which has been fully accounted for in the balance sheet as of the last quarter of last year, reversed the R$51.4 million loss in the first quarter of 2015 and accumulated gains of R$43.0 million earlier this year. EBITDA increased from R$91.8 million to R$200.7 million, an increase of 118.7%.

It was also important to generation performance to renegotiate hydrological risk. The units that adopted this process in January of 2016 (UHE Mascarenhas, PCH Jucu, PCH Rio Bonito, PCH São João and PCH Francisco Gros) generated a positive impact of R$10.8 million on the balance sheet.

In distribution, EBITDA and net income contracted 41.8% and 44.6%, respectively, to R$130.6 and R$53.7 million, influenced mainly by the drop in the volume of energy distributed by both distributors. Commercialization and services registered a negative EBITDA of R$2.5 million and a loss of R$6.7 million, due to the the reduction in the average purchase and sale price. This was the first full accounting quarter of APS Solutions, a company focused on power efficiency solutions. The company projects with the most impact on revenues, however, should be accounted for in the last quarter of the year.

Portfolio Optimization

EDP Brasil maintains its portfolio optimization strategy. On January 29th, the Company concluded the sale of the Pantanal Energética to the Cachoeira Escura, generating an accounting gain of R$278.1 million in the 1st quarter.

The Cachoeira Caldeirão HPP, with 219 MW of installed capacity, with three 73 MW turbines, is in the final stages of construction, with 97% of the work completed. The schedule predicts beginning operation of the first generating unit in January of 2017.

The works at the São Manoel HPP also follow the predicted schedule and budget, completing 49.2%. by the end of March. The hydroelectric plant received investments of R$1.4 billion.

Investments

EDP Brasil made investments of R$95.9 million in the 1st quarter of 2016, 43.5% higher than the R$66.8 million for the same period in 2015. This amount disregards contributions to hydroelectric projects under construction.

Capex remained concentrated in distribution, an area that amounted to R$70.1 in investments. The resources were used, mainly, to combat losses and PDD/Defaults, in addition to the expansion of lines, substations, distribution networks, as well as for network improvement and the replacement of equipment.

Operational efficiency

The distributors maintain a program to combat losses in the concession areas. In Espírito Santo, EDP Escelsa presented a reduction of around 2.04 percentage points in the non-technical losses index compared to the 1st quarter of 2015 of 14.69%. In São Paulo, EDP Bandeirante also improved, reducing losses 0.43 percentage points, of 11.37%.