CPFL Energia ended last year with positive financial results reflecting an improvement in the energy distribution market, with signs of a structural increase in low-voltage consumption, the company’s president, Gustavo Estrella, told Reuters.
The power company achieved a net profit of 1.33 billion reais in the fourth quarter of 2023, down 3.5% in the annual comparison. Earnings before interest, taxes, depreciation and amortization (Ebitda) reached 3.11 billion reais, 18.2% lower than that recorded a year earlier.
Two non-recurring items had a negative impact on the quarterly result, one relating to accounting adjustments after the consolidation of the Campos Novos hydroelectric power plant and the other linked to the accounting for a lawsuit regarding a pension plan.
“Removing these two effects, we went from an 18% decrease to a 27.7% increase in EBITDA, for us this reflects much better everything we are experiencing here, especially in energy distribution, with the increase in low voltage load,” Estrella explained.
In consolidated 2023, CPFL’s net profit grew by 6.1%, to 5.54 billion reais, while Ebitda increased by 4.6%, to 12.83 billion reais.
The company has proposed to pay a dividend of 3.173 billion reais, or 2.75 reais per share, which will be voted on at the meeting in late April.
According to CPFL’s CEO, one of the bright spots observed by the company since the last quarter of 2023 is the increase in energy consumption among low-voltage consumers, such as homes.
“It has a temperature effect, the very high temperature has led us to a recovery in the market, but our analysis is that it is not just that, we are starting to see a change in habits and a more structural increase in energy consumption.”
On the other hand, Estrella noted that the hydrology was very bad earlier this year, precisely in the critical months for supplying hydroelectric basins to cope with drought, which suggests a scenario of rising prices throughout the year.
“We won’t have any risk of rationing, but we have an almost certain risk of rising prices… The expectation is that in the second half of the year the PLD will start to rise,” he said, referring to the spot market price benchmark.
GROWTH AND RENEWAL OF CONCESSIONS
Regarding growth opportunities, the executive said CPFL will participate in the power transmission auction scheduled for next week, which will offer 15 lots with a total investment estimated at 18.2 billion reais. The strategy must remain the same as in past competitions, i.e. betting on lots close to those already owned by the company with the aim of obtaining operational synergies.
Regarding power generation, Estrella said the segment represents a “fairly risky” investment at the moment, given the overall still depressed energy price scenario in Brazil for the next few years, which impacts energy contracting prospects .
When questioned on the topic, he also reported little interest on the part of the company in participating in the processes of acquiring the assets of Emae or AES Brasil.
“We see generation as a very risky investment, especially uncontracted generation, so I would say the focus continues to be on distribution and transmission.”
Regarding the process of renewing energy distribution concessions, the director general of the CPFL assessed that the delay in defining the guidelines is negative for investors, since it brings “unnecessary instability” in a sector that depends on a long-term perspective.
CPFL has two concessionaires with contracts expiring in 2027, CPFL Paulista and RGE Sul, and one in 2028, CPFL Piratininga.
“We are talking about investments of 28 billion reais, my shareholder (the Chinese State Grid) is willing to make an investment of this size with the prospect of staying here for another 30 years. If we begin to doubt this vision for a long time- term, clearly (this) requires a change in operational strategy.”
He also reiterated the group’s commitment to distribution, which will receive 23 billion reais in contributions by 2028, and stated that the reforestation plan with the municipalities, to eliminate trees that pose a risk to the electricity grid, will be a of the most important actions to avoid interruptions in electricity supply in the face of new extreme weather events.
In distribution, CPFL Energia serves the cities of the states of São Paulo, Rio Grande do Sul, Minas Gerais and Paraná.
Source: Terra
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