AXIA Energia (AXIA6) Q2 2024 earnings summary

Executive summary

• Achieved a 16% year-on-year reduction in PMSO, targeting BRL 6.3 billion recurring PMSO for 2024, with ongoing efficiency initiatives and internal process improvements.

• Completed the incorporation of Furnas, streamlining the corporate structure, enabling BRL 1.1 billion in deferred tax credits, and strengthening operational scale.

• Launched and completed share buyback programs, including a new program for up to 10% of outstanding shares over 18 months.

• Disposed of thermal power plants for BRL 4.7 billion, supporting net zero commitments and transferring credit risk to the acquirer.

• Significant capital raising of BRL 16.4 billion in 2Q24, including debentures and loans, strengthening the cash position.

Financial highlights

• Regulatory net operating revenue rose 9% year-on-year to R$9.7 billion, with recurring regulatory EBITDA up 10% to R$6.0 billion.

• IFRS profit dropped 31% year-on-year due to adjustments, while net income for the quarter reached R$1.74 billion.

• PMSO dropped 16-17% year-on-year, despite hiring nearly 2,000 new employees.

• Compulsory Loan liabilities reduced from BRL 22 billion to BRL 15 billion year-on-year through negotiations and payments.

• Free cash flow reached R$3.0 billion, with operating cash flow at R$4.5 billion in 2Q24.

Outlook and guidance

• Optimistic about future efficiency gains and profitability, aiming to match industry peers and consolidate leadership in clean energy.

• Investment program includes BRL 5.6 billion for transmission auctions, 245 large-scale projects, and ongoing modernization of assets.

• Focus on organic growth, asset modernization, robust service provision, and sale of uncontracted energy with price upsides.

• Regulatory changes in transmission tariffs (RAP) will impact revenues in the second half, with ongoing administrative appeals.