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01/10 05:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative factors: a decline in net production and energy sales, increased energy losses, and substantial financial obligations. Although FFO improved, the overall financial performance is weakened by debt and miscalculation costs. The Q&A highlights management's lack of clarity on future strategies and potential risks. Despite confirming guidance, the absence of new partnership announcements or strong positive catalysts suggests a negative sentiment. Given the market cap, the stock is likely to react with a negative movement in the range of -2% to -8%.
EBITDA Stable at $1,004 million for the first 9 months of 2025 compared to the previous year. The resilience was due to optimized sourcing strategies and gas trading activities, which offset lower hydro dispatch and renewable energy production.
Net Income Decreased by 21% to $352 million for the first 9 months of 2025 compared to the previous year. This was due to higher depreciation, amortization, impairment, and bad debt expenses, as well as lower capitalized expenses on renewable projects.
Net Production Decreased by 9% during the first 9 months of 2025 compared to the same period in 2024. This was driven by lower hydro dispatch, maintenance of two solar plants, and higher curtailment levels caused by transmission line limitations.
Energy Sales Decreased to 22.7 terawatt hours for the first 9 months of 2025, mainly due to the expiration of regulated contracts. Third-quarter sales also dropped from 8.4 to 7.6 terawatt hours year-over-year.
Thermal Production Margin Added $74 million during the first 9 months of 2025 due to increased thermal production, competitive gas sourcing, and favorable trading opportunities.
CapEx Totaled $245 million for the first 9 months of 2025, with 41% allocated to grids, 31% to thermal power projects, and 27% to renewable and storage projects. The focus was on grid resilience, thermal plant maintenance, and renewable project completion.
Gross Debt Remained at $3.9 billion as of September 2025, with an average cost of 4.8%, down from 5.0% in December 2024. The average debt maturity decreased from 6.2 years to 5.5 years.
Liquidity Available committed credit lines of $640 million and cash equivalents of $373 million as of September 2025, ensuring a comfortable position to meet capital needs and debt maturities.
FFO (Funds From Operations) Improved by $248 million to $615 million for the first 9 months of 2025 compared to the previous year. This was driven by the recovery of $285 million in PEC receivables and lower financial expenses.
Gas sales to Europe: Completed gas sales to Europe in October with margins similar to Q2 2025. Evaluating options to secure competitive gas from Argentina for 2026.
Energy sales: Energy sales reached 22.7 TWh, with a decline due to expiration of regulated contracts.
Thermal generation performance: High-level performance of thermal generation fleet offset lower hydrological conditions, maintaining operational stability.
Winter plan implementation: Implemented a comprehensive winter plan to strengthen grid resilience and improve service continuity, including emergency crews, vegetation management, and telecontrol units.
Hydro production: Hydro production remained in line with strategic plans despite dry conditions, supported by flexible hydro plants and diversified gas supply.
CapEx allocation: Total CapEx of $245 million focused on grids (41%), thermal power projects (31%), and renewable/storage (27%).
Distribution network improvements: Enhanced network reliability and quality of service for 193,000 customers, including targeted measures for vulnerable customers.
Regulatory updates: Key regulatory changes include updates to the distribution cycle (2024-2028), energy auctions, and stabilization mechanisms. Awaiting final reports and settlement of outstanding debts.
Energy transition commitment: Focused on operational excellence, sustainable growth, and advancing energy transition.
Hydrological Conditions: Lower hydrology in 2025 has impacted hydro production, requiring reliance on thermal generation and gas optimization to mitigate exposure to hydro volatility.
Regulatory Context: Uncertainty around the VAD 2024-2028 regulatory cycle and pending settlements for PAD decree 2020-2024, as well as changes in maintenance and technical standards, could impact financial and operational planning.
Energy Sales: Decline in energy sales due to expiration of regulated contracts, leading to lower sales volumes and impacting revenue.
Renewable Energy Production: Reduction in renewable energy production due to maintenance of solar plants and higher curtailment levels caused by transmission line limitations.
Grid Resilience: Challenges in maintaining grid stability under adverse weather conditions, requiring significant investment in emergency crews, vegetation management, and telecontrol units.
Financial Performance: Decreased net income by 21% due to higher depreciation, amortization, impairment, and bad debt expenses, as well as lower capitalized expenses on renewable projects.
Debt and Liquidity: Gross debt remains high at $3.9 billion, with a decrease in average debt maturity and ongoing financial expenses impacting liquidity.
Climate Challenges: Extreme weather events necessitate increased operational and financial resources to ensure service continuity and system stability.
Transmission Line Limitations: Higher curtailment levels due to transmission line restrictions have negatively impacted energy production and operational efficiency.
Customer Debt: Increase in bad debt provision due to higher billing from tariff increases and long overdue customer debt.
Hydrology Guidance: For 2025, the company has set a hydro production target of 10.7 terawatt hours based on the last 10-year average. Despite 2025 being a dry year, the company is keeping its hydrology guidance unchanged due to the flexibility of its hydro plants.
Gas Supply Strategy: For 2026, the company is evaluating options to secure competitive gas from Argentina through firm contracts, continuing its strategy from past years.
Regulated Energy Auctions: Two regulated energy auctions are scheduled for the fourth quarter of 2025. Additionally, changes have been introduced to the 2025 regulated auctions, increasing the volume of the 2027-2030 auction from 1.7 to 3.4 terawatt hours per year. A short-term auction for 2026 with a volume of 1.5 terawatt hours per year is also planned.
PEC Receivables Recovery: The company expects to fully recover $149 million of PEC 1 receivables by the end of 2027.
CapEx Allocation: The company plans to continue focusing its capital expenditures on grid resilience, thermal power projects, and renewable energy and storage. Development CapEx for battery-related projects will be recorded starting from the next quarter.
Regulatory Developments: Significant regulatory updates are expected in the coming months, including the final report for the 2024-2028 distribution cycle and the settlement of outstanding debt related to the PAD decree for 2020-2024, expected in 2026.
2026 Investor Day: The company is preparing for its 2026 Investor Day, scheduled for the first quarter of 2026, where it will share a comprehensive view of its strategy and actions for long-term value creation.
The selected topic was not discussed during the call.
The earnings call reveals several negative factors: a decline in net production and energy sales, increased energy losses, and substantial financial obligations. Although FFO improved, the overall financial performance is weakened by debt and miscalculation costs. The Q&A highlights management's lack of clarity on future strategies and potential risks. Despite confirming guidance, the absence of new partnership announcements or strong positive catalysts suggests a negative sentiment. Given the market cap, the stock is likely to react with a negative movement in the range of -2% to -8%.
The earnings call presented strong financial metrics with increased EBITDA and net income, alongside reduced debt and CapEx. The Q&A confirmed conservative guidance and strategic plans. Despite minor concerns about potential fines and regulatory impacts, the overall sentiment is positive with strong financial performance and future guidance. The market cap suggests a moderate reaction, likely resulting in a positive stock price movement of 2% to 8%.
The company demonstrated strong financial performance with significant EBITDA and net income growth, and a solid liquidity position. Despite increased debt, the net debt-to-EBITDA ratio improved, indicating effective leverage management. Positive guidance and new contracts, particularly in renewable energy, contribute to optimism. However, concerns remain regarding regulatory uncertainties and debt management. Given the company's market cap, these factors suggest a positive stock price movement of 2% to 8% over the next two weeks.
The earnings call summary shows strong financial performance with a significant increase in EBITDA and net income, but concerns about increased debt and subsidy costs. The Q&A reveals management's unclear responses on key issues, adding uncertainty. The company's market cap suggests moderate stock movement. Overall, the positive financial metrics are offset by potential risks and unclear guidance, leading to a neutral prediction.
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