Companhia de Saneamento de Minas Gerais (CSMG3) investor relations material

Executive summary

• Q2 2025 was challenging with lower volumes, but record investments rose 31–32% year-over-year, focusing on efficiency, universalization, and operational advances.

• Net revenue grew 2.1% year-over-year, driven by tariff adjustments despite lower consumption.

• Net income dropped 11% year-over-year due to lower EBITDA and higher depreciation from increased investments.

• Delinquency rate reached a record low of 2.83% in June 2025; loss rate improved to 37.6%.

• Maintained AAA ratings from Moody's and Fitch, reflecting strong fundamentals.

Financial highlights

• Net revenue grew 2.1% in 2Q25 compared to 2Q24, despite a 6.4% average tariff increase and lower consumption.

• EBITDA margin declined to 38.0% from 41.4–41.5% in 2Q24, impacted by lower volume and higher costs.

• Operating cash generation was BRL 554M in 2Q25, stable versus 2Q24.

• Net income fell 11% year-over-year, impacted by lower EBITDA and higher depreciation.

• Delinquency and loss rates reached historic lows, reflecting effective collection and operational improvements.

Outlook and guidance

• Multi-year investment plan targets R$3.2–3.8B (EUR 3.5B) annually from 2026, focusing on universalization, quality, and loss reduction.

• Leverage expected to approach 3x as investments ramp up, but capital structure remains healthy.

• Zero-based budgeting and efficiency initiatives to reduce PMSO costs in 2025–2026.

• 3rd tariff review underway, with new methodology and WACC preliminarily at 9.152% for 2026–2029.

• 83% of revenues secured by concessions expiring after December 2031.