Companhia Paranaense de Energia (ELPC) 2016 Q2 法說會逐字稿

完整原文

使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主

  • Operator

  • Good afternoon, and thank you for waiting. Welcome to Companhia de Energia Copel's conference call to present the second quarter of 2016 results. We would like to inform you that all participants will be in a listen-only mode during the Company's presentation. Afterwards, we will have a question-and-answer session when further instructions will be given. (Operator Instructions)

  • Before proceeding, we would like to clarify that forward-looking statements that might be made during this call related to Copel's business perspectives, operating and financial projections and targets are beliefs and assumptions of the Company's management, as well as information currently available. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions, as they refer to future events. And therefore they depend on circumstances that may or may not occur.

  • General economic conditions, industry conditions, and other operating factors may affect the future performance of Copel, and may lead to results that differ materially from those expressed in such forward-looking statements.

  • Today with us we have Mr. Luiz Fernando Leone Vianna, CEO of the Company; Mr. Luiz Eduardo da Veiga Sebastiani, CFO and Investor Relations Officer; Mr. Jonel Nazareno Iurk, Business Development Officer; Mr. Sergio Luiz Lamy, President of Copel GeT; Mr. Ricardo Goldani Dosso, President of Copel Renovaveis; and Mr. Francisco Cesar Farah, CFO of Copel Telecom. The presentation that will be made by Copel's management may be accompanied at the Company's website www.copel.com/investor relations.

  • Now we would like to give the floor to Mr. Luiz Fernando Vianna, CEO of the Company.

  • Luiz Fernando Leone Vianna - CEO

  • Good afternoon, and welcome to our conference call about the results of the second quarter of 2016. 2016 has been a very intense year. So far we are having political, economic, social, and even sports events, which give us a sensation that a lot is changing. As far as Copel is concerned, 2016 is also a very intense year.

  • Challenges are overcome every day, and with a lot of work and resolve we have been achieving our objectives and improving our company. One of the objectives was reached at the beginning of the fourth tariff review cycle of Copel Distribuicao. We worked with much dedication in the last few years to improve the quality of the services delivered, and we carried out a robust investment program in the last four years, and practically doubled the size of our distribution company, which now has a massive base of BRL4.9 billion.

  • Of this investment, besides giving us a higher return to our shareholders, is perceived by our customers through the recognition of Copel's service quality. In 2016, Copel Distribuicao was voted for the third consecutive year as the best energy distribution company in Brazil in the opinion of customers. This was the fifth time in the last six years that we won this award. And this makes us very proud, because it concerns the quality of our service, which is delivered to a customer that is very demanding.

  • At the beginning of the fourth cycle-- the beginning of the fourth cycle also brought about a very interesting aspect to our customers. Tariffs charged by Copel Distribuicao dropped, on average, 15%. The residential class, which represents the most in the captive market, had a reduction of 14.3%. This reduction, besides representing savings for our customers, this is positive also for Copel. Because it should encourage a rebound in consumption and reduce delinquencies, such was that have been affecting the distribution company's results in the last few quarters.

  • In the segment of transmission, the Ministry of Mines and Energy brought news about the RBSE indemnification, which are the transmission assets existing in May 2000. By means of Ordinance 120 of this year, the Ministry established the inclusion of the RBSE in the regulatory asset base. A restatement of the value of the assets since 2012 and payment of indemnity by means of the [APR] as of [2017] tariff process.

  • With that, the Company based on the Aneel tariff regulation procedures, recalculated the cash flow estimate for these assets. And this had a positive effect of BRL978 million in the operating revenue of the second quarter. And it is important to stress that this calculation was made based on the best estimate of our management once Aneel has not yet ratified the final result of the evaluation report of Copel's assets.

  • The fourth slide shows that 2016 has been very intense in the evolution of many projects that we are either building directly, or by means of participation. As you can see on slide number 4, we started operation of the Bateias-Curitiba Norte transmission line and the Curitiba North substation. This project that operates 230 kV required BRL69 million in investments and adds about BRL8 million to the Copel GeT APR.

  • Still in Copel GeT, we received the environmental license for the beginning of the construction of the fourth and last stretch of the Araraquara Taubate II line. And we expect this line to start up in April, 2017, when it will be adding BRL27 million to the Copel GeT APR.

  • With relation to the transmission SPC, on July 29th, Matrincha SPC obtained operational license, which allows the commercial operation of the project made up of over 1,000 kilometers of transmission lines and two substations, adding an APR of BRL61 million to Copel. And it's important to see that in the line, we'll have 100% of the energy of the (inaudible).

  • SPC Guaraciaba, which will also distribute energy from the (inaudible) region, has already been tested and now only the license for operation was still waiting to start commercial operations.

  • And lastly, the Paranaiba SPC has concluded the construction of 967 kilometers of transmission line, which will help in the interconnection of the Northeast region with the Southeast, and should start commercial operation in the next few weeks. Jointly, these three projects, Matrincha, Guaraciaba and Paranaiba represent an additional BRL132 million to Copel's APR.

  • Now it's a great honor for me to give the floor to Sebastiani, our CFO. And he will be talking about the results of the period.

  • Luiz Eduardo da Veiga Sebastiani - CFO

  • Thank you very much, Mr. Vianna, our CEO; and other officers of the Company who are present here in this room. And thank you very much for your interest. Good afternoon to our investors and analysts. And once again, I thank you for participating in our call.

  • Before talking about the results, I would like to say that we concluded successfully the long-term financing for the Brisa Potiguar wind farm, which is in operation in Rio Grande do Norte. By means of an important partnership with BNDES, we finished a BRL300 million debentures private issue, which was totally subscribed by the development bank, a process that involved many challenges and was pioneered in the Brazilian electric sector. The conclusion of this operation opened the gate so that we may obtain with BNDES long-term financing for other projects that we are building, such as the Mata de Santa Genebra transmission lines; and the windfarm of Cutia.

  • And about the results, as you can see on slide number 5, we had important events that were recorded in the second quarter of 2016, starting with the RBSE as already mentioned by our CEO. We recorded extraordinary revenues of BRL978 million in this line of availability referring to the re-measurement for fair value of the transmission assets according to the Ministry of Mines and Energy.

  • And on the positive side, we had BRL211 million in provisions for litigation. And the main one is BRL193 million from a victory that obtained in a claim that demanded payment of Cofins and the respective interest and fines related to August 1995 through December 1996.

  • On the other hand, we recorded BRL147 million in provisions, made up mainly by BRL80 million referring to administrative and labor litigation, and BRL61 million related to allowance for doubtful accounts, especially in the distribution company.

  • Going to slide 6, we present the details of our operating revenue that had a reduction of 6% in the second quarter of 2016, being close to BRL3.7 billion. And the main reason for the drop was the 40% reduction in revenue from sale to other utilities, due to the non-operation of our Arauacaria thermal power plant in the quarter. The variation that we see in revenue was impacted by the lower result from sectorial financial assets and liabilities, negative BRL727 million due to the amortization of BRL398 million due to the recovery by a tariff of deferrals realized in 2013 and 2014, and also the lower cost for the purchase of energy vis-a-vis the tariff coverage.

  • On the other hand, revenue from the use of the power grid grew by 273%, which can be explained by the re-measurement of the transmission assets referring to the RBSE, as I mentioned before. Revenue from sales to end customers increased by 4% due to the adjustments applied to the tariffs of Copel Distribuicao over last year. Nevertheless, these adjustments would not have been affected by charges and the drop in the captive market of Copel due to [reach some of the] free market of Copel GeT.

  • The other operating items composed by telecom revenue, gas distribution, and others, grew by 7%. So mainly the 20% increase in the telecom revenue which comes from the increase in our client base.

  • On the next slide we give you details of the operating costs and expenses, lower than BRL2.4 billion in the second quarter of 2016, 34% lower on a year-on-year basis. And this is driven majorly by a 41% slump in the cost for the purchase of energy, driven by the end of existing energy contracts that were replaced by energy contracts coming from the quota system clearly cheaper, and the reduction in the Itaipu Tariff as well.

  • On the other hand, we see that we had a 9% growth in the charges for the use of the grid coming from the higher expenditures with reserve energy. Manageable cost went up 13% in the second quarter of this year, driven by higher expenditures with payroll and third-party services, due to inflation that reached about 10% in the period, beside the increase in other costs such as leases and rents and the discontinuation and sale of assets.

  • The provisions and reversals line was positive by BRL64 million, a behavior which can be explained by the recording of the reversal of BRL193 million in provisions for fiscal litigations related to Cofins, whereas we have already mentioned. And this was offset by the recording of provisions for administrative and labor litigation and credit for doubtful accounts, mainly in the distribution company.

  • Slide number 8 shows that EBITDA was 212% higher to the one posted in the same period last year, amounted to BRL1.5 billion, with a margin of 41% over the operating revenue. Growth can be explained by the re-measurement of assets related to the RBSE, which allowed for an increase of BRL978 million in the period.

  • [Gross] generation of Copel GeT accounted for 91% of the consolidated EBITDA, Copel Telecom 2%, and the other companies of the group accounted for 7%. And the main contribution came from (inaudible). Copel Distribuicao closed the second quarter of 216 with a negative EBITDA of BRL169 million, vis-a-vis a positive result of BRL196 million in the same period in 2015. The result was once again impacted by the drop in the market and by the recording of provisions, especially for doubtful accounts that were BRL43 million higher than the tariff coverage in the period.

  • On slide 9 we present the consolidated net income of Copel, BRL997 million in the second quarter of 2016, 230% higher on a year-on-year basis. Analyzing the results on subsidiaries, we can see that Copel GeT closed the period with a net income of BRL839 million compared to the [resale] loss of BRL64 million; and Copel Telecom positive BRL15 million.

  • These were our highlights. And now we would like to open for questions from you. Thank you.

  • Operator

  • (Operator Instructions) [Carolina Cardenas], Santander

  • Carolina Cardenas - Analyst

  • Good afternoon, everyone. I have two questions. The first one has to do with the posting of the RBSE, the recording of the RBSE that you had in the second quarter. I would like to know if you can give us more details about that, which were the hypothesis that you had to reach this amount that you mentioned in revenue in order to post this amount. And do you have any expectations regarding when Aneel will manifest itself about this register and open a public hearing maybe about this theme?

  • And the second question has to do with energy from generation. In your Gen Co, do you have energy available and anything new about the new contracts for this energy?

  • Unidentified Company Representative

  • I would like to ask Adriano to answer your first question. Because he's in charge of our accounting.

  • Adriano Fedalto - Accounting Superintendent

  • Carolina and everybody, good afternoon. Regarding the accounting for the RBSE, it was the most relevant event in our quarter. And I can say in a few words, after we had Ordinance 120 in April 2016, we have debated this very extensively with agents of the sector and with our auditors and the technical people in Copel. It does not have the-- totally ratified by Aneel yet. So we took all the assets that were in operation in [2015] list of assets that we sent to Aneel when we submitted this. And we estimated the new replacement value for these assets. So we took the methodology of Aneel. We estimated what would be the new replacement value according to this methodology. We reached almost BRL1 billion that we recognized in our revenue.

  • Together with that, we had the [adherence] instead applying the methodology of Ordinance 120 with the regulatory [RPC], the (inaudible) of Aneel itself. So applying both methodologies, the value was very much compliant with this amount. So what we are expecting is a manifestation on the part of Aneel. And we were there quite a few times at Aneel in order to mitigate the interests that we still have and our expectation is that in the next quarter we will have this issue solved. And we expect these amounts to be confirmed regarding this indemnification.

  • Carolina Cardenas - Analyst

  • Thank you very much.

  • Unidentified Company Representative

  • I would like to ask Sergio Lamy, who is the President of our Gen Co company to answer.

  • Sergio Luiz Lamy - President of Copel GeT

  • Carolina, good afternoon. With relation to the negotiation of new contracts, we-- at the end of last year and the beginning of this year, we monitored the behavior of the price curve, and as we saw some sign that the price of energy was going up, then we started with a new commercialization strategy already in the first quarter of this year.

  • We started to sell energy in many different auctions, in limited values or limited amounts, because with the perspective that if what is really going on, we wanted to optimize our average price. I do not have the amounts sold here. But it was a significant amount sold since the beginning of this year until the last auction that was held in August.

  • But what I can tell you is that we have already about 75% or 80% contract for the energy that we produce and for 2018 already 60%, around 60%. So this commercial strategy will continue. We are having auctions in a limited quantity, and in many auctions we continue with the same strategy for the second half of 2016.

  • Carolina Cardenas - Analyst

  • What about price or price range for these contracts?

  • Sergio Luiz Lamy - President of Copel GeT

  • The most recent contract for conversion of energy for 2017 are around near the BRL60 per megawatt hour, for 2018 BRL150, for (inaudible) BRL185 for 2016, and over BRL200 per megawatt hour for 2017 on.

  • Carolina Cardenas - Analyst

  • Thank you.

  • Operator

  • [Vinicius Canheu], Credit Suisse

  • Vinicius Canheu - Analyst

  • Good afternoon. I have a question about distribution. For several quarters, we see very high provisions in distribution. I remember I have asked this in other conference calls. And you said that you still have had many workers that were participating in the redundancy program, the labor redundancy program. And now we see the level of provisioning in distribution that continues to be very high, but mainly because of doubtful accounts. So could you give more details why do you still have such a high level of provisions, and when you expect this level to go down?

  • Unidentified Company Representative

  • Adriano will be answering your questions.

  • Adriano Fedalto - Accounting Superintendent

  • Good afternoon, Vinicius. Regarding your question, this is one of the issues in our control (inaudible). Because this is of concern to us. And with the support of our executive committee, we hired a company from outside to review all the processes, all these suits, all these claims. And so we add up all these contingencies, the amount is quite [expensive].

  • So we are starting this in the third quarter, and we expect to be able to have a very positive result from this endeavor. I would say that for the second half of the year, we already expect to give you some good news in these regard.

  • Vinicius Canheu - Analyst

  • So the monetary restatement value is mostly concentrated in the figure that we see in your operating result, and not in the financial result. Is this what you mean?

  • Adriano Fedalto - Accounting Superintendent

  • Yes. That is correct. Copel historically has always restated contingencies in the operating results. So you are right in your statement.

  • Operator

  • [Mrs. Maria Laverde, GPF]

  • Maria Laverde - Analyst

  • Good afternoon. I would like to know about your reversal of the position for litigation regarding the Cofins tax. I think I read something saying that this discussion was made ahead of [CAF], and that you expect more discussions about that regarding interest, et cetera.

  • Unidentified Company Representative

  • Good afternoon, Maria. With relation to the Cofins provision, today there was an article published. Because we have two large suits in the administrative instance of [IRS]. One has to do with 1995 and 1996, which is being evaluated by CAF. But the second one that we had was referring to 1998 to 2001. Essentially it had to with the collection or not of Cofins on electricity charges. So we have already been successful in the second case and there is no appeal possible on the part of the IRS. So we were able to totally reverse the BRL190-something million, and also remove this possibility.

  • So from 1998 to 2001, the issue is closed. So this is the reversal that we put in our balance sheet. And the CAF is evaluating the other period. And the essence of it is the same. And we expect to have good news to report to you.

  • Maria Laverde - Analyst

  • What would be the amount of this other period which is already provisioned?

  • Unidentified Company Representative

  • 1995 and 1996, provision of BRL45 million for this specific period.

  • Maria Laverde - Analyst

  • Thank you.

  • Operator

  • (Operator Instructions). As there are no more questions, we would like to turn the floor back to the Company for the closing remarks.

  • Unidentified Company Representative

  • We would like to reiterate the fact that this is an unprecedented year in all aspects. We understand that as of the third quarter we will be seeing a higher degree of stability, some new definitions, and we are placing our bets on the new management of the Ministry of Mines and Energy, already giving a very good contribution to the country and to the power sector of Brazil. And with better communications between the agents and the ministry, and we are already see this coming back.

  • And of course, if you wish to ask other questions or if you have any doubts after we close this call, we remain at your disposal. And of course we expect to see you all in our next conference call. And we expect to have good news to convey to you. Once again, thank you very much for your presence. And I wish you all very good weekend.

  • Operator

  • Copel's conference call is closed. We thank you for participating, and wish you all a very good afternoon.

  • Editor

  • Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.