EDP Brasil, a company engaged in energy generation, transmission, trading, services and supply, saw a 45% net profit increase in 2Q17 compared to the same period of the previous year, reaching R$141.9 million. The company EBITDA (earnings before interest, taxes, depreciation and amortization) between April and June amounted to R$533.5 million, 16.1% higher than in 2Q16.

In the first half of the year, excluding the effects of the non-recurring events which have increased the comparative basis in the previous year, the results were also positive. The company adjusted EBITDA reached R$1.036 billion, 18.3% higher than in January-June last year. Net profits have increased by 86.2%, standing at R$252.3 million. These figures disregard the impact of two non-recurring factors: the completion of the sale of Pantanal EnergŽtica in 2016 and the accounting of the PecŽm TPP insurance premium.

"EDP results translate the good performance of our business portfolio, with particular emphasis, in this quarter, on our Trading, Supply and Hydroelectric Generation areas," says EDP Brasil CEO Miguel Setas.

In the second quarter, the company net revenue totaled R$2.581 billion, 27.4% higher than in April-June of 2016. Considering the accumulated results, revenues grew by 19% in the annual comparison, reaching R$4.888 billion.

The company has also continued its cost control program, keeping manageable expenses below inflation levels. In the second quarter of the year, the company balance sheet saw a 3.1% reduction in costs with Staff, Materials, Provisions and Others (PMSO).

"The implementation of Zero-Based Budgeting for the third consecutive year consistently translates into an evolution of structural costs below inflation," Setas points out.

Investments

EDP Brasil maintains its commitment to investing in the country and has once again increased its contributions in all operation areas. The company has invested approximately R$157,8 million in the second quarter of the year, 10.3% more compared to April-June 2016. In the first half of 2017 the company invested R$324 million, a 35.6% increase compared to the same period of the previous year.

Between April and June of 2017 the Distributors invested R$125,5 million, 8.1% more than in 2016. As for the first half of the year, investments increased by 43.4%. Part of this sum was allocated to the company program to combat non-technical losses, recomposition investments, and preventive grid maintenance.

As a reflection of the company investments in preventing fraud and theft and implementing grid improvements, overall losses have also dropped. The company strategy of shielding over 60% of its consumption base, among other investments, proved to be an effective preventive approach, resulting in a 0.43 pp and 0.5 pp decrease in S‹o Paulo and Esp’rito Santo, respectively.

Transmission

Considering the consolidated results of the October 2016 and April 2017 auctions, EDP now has a Transmission project portfolio which accounts for a Permitted Annual Return of R$494.2 million and an investment of R$3.1 billion, which will be allocated to the deployment of 1.3 kilometers of lines and the construction of four substations.

According to Miguel Setas, "EDP Brasil entry in the transmission segment aimed at diversifying and complementing the company operations across all segments of the electric power sector value chain, with adequate profitability and controlled risk ".

S‹o Manoel Power Plant

With 91.4% of the works completed by the end of June, the S‹o Manoel Hydroelectric Power Plant is being built on the Teles Pires River, on the border of Mato Grosso and Par‡. There will be five generating units, with an overall installed capacity of 700 MW, and the regulatory deadline to start operations is set to 2018. For this project, EDP has partnered with China Three Gorges (CTG) and Furnas Centrais ElŽtricas, each with a 33% stake.

The investment in the second quarter amounted to R$244.4 million, with the overall investment since the beginning of the works standing at R$3.1 billion.

Investments in Innovation

During the second quarter of 2017, EDP Brasil took decisive steps in the area of Innovation, of which two structuring initiatives stand out. The first was the creation of an Automation Excellence Center in Brazil. This is a training hub, which has already trained 20 employees. The company now has a structured program for the automation of administrative processes, with three robots in operation. "EDP Brasil is a process automation pioneer in the electric power sector. The goal is to improve efficiency and productivity levels, focusing our teams on of higher added-value tasks," Setas points out.

The second focal initiative is the launch of the startup incubator EDP Starter. First implemented in 2012 in Portugal, this EDP project is now being launched in Brazil. 150 companies have signed up, of which 5 will be selected to be incubated at the WeWork coworking space on Avenida Paulista (S‹o Paulo). The selected companies may receive funding from EDP venture capital fund.