Centrais Elétricas de Santa Catarina (CLSC4) Q3 2023 earnings summary

Executive summary

• 9M23 consolidated revenue rose 4.16% YoY to R$7.813bn, EBITDA increased 19.26% to R$1.020bn and net profit rose 7.06% to R$468.1m.

• Q3 net profit fell 54.0% YoY to R$35.0m as the consolidated financial result worsened; generation output also declined amid low rainfall and reduced unit availability.

Financial highlights

• 9M23 gross operating revenue declined 2.36% to R$11.811bn; net operating revenue excluding construction revenue rose 5.8% to R$6.982bn.

• 9M23 adjusted EBITDA was R$1.0485bn, up 22.5% YoY, and adjusted net income was R$486.6m, up 11.3%, excluding generation GSF renegotiation effects.

• Q3 reported EBITDA increased 13.8% YoY to R$201.8m; adjusted EBITDA rose 29.7% to R$229.9m, while adjusted net income fell 29.6% to R$53.6m.

• 9M23 consolidated operating costs and expenses increased 2.1% to R$7.068bn; electricity costs rose 4.3% to R$5.084bn.

Outlook and guidance

• Five-year distribution modernization program invested US$338.57m of US$377.28m planned through Q3; funding includes US$276.05m from the IDB.

• Five solar distributed-generation projects totaling 10 MW were under construction, scheduled to operate from Nov. 2023 to Mar. 2024; a further 2.6 MW was to be prospected during 2023.

• Reactivation of the 1 MW Maruim hydro plant began in Q1 2023, with work expected through 2023 and early 2024; combined contracts were valued at ~R$8m.

• A R$800m sixth debenture issue for the distribution subsidiary was approved Oct. 19: R$400m in a 5-year series for investment and cash support, and R$400m in a 7-year series for future investment reimbursement.