Companhia de Saneamento de Minas Gerais (CSMG3) Q2 2025 earnings summary

Executive summary

• Investments in 1H25 reached BRL 1.2 billion, up over 31% year-over-year, with record CAPEX and strategic initiatives such as zero-based budgeting and shared services center implementation.

• Net revenue in 2Q25 ranged from R$1.78 billion to R$1.98 billion, up 0.9–2.1% year-over-year, driven by tariff adjustments despite lower water consumption.

• EBITDA margin declined to 38.0% in 2Q25 from 41.5% in 2Q24, with net income down 11% year-over-year to R$289.4 million, mainly due to higher costs and depreciation.

• Dividends and interest on equity for 1H25 totaled over BRL 344 million, with additional payouts scheduled for later in 2025.

• Credit ratings remained at AAA by Moody’s and Fitch, reflecting strong fundamentals.

Financial highlights

• Net revenue grew 2.1% in 2Q25, with consolidated 1H25 revenue at R$4.04 billion, up 5.6% year-over-year.

• EBITDA margin for 2Q25 was 38.0%, down from 41.5% in 2Q24, and net income dropped 11% year-over-year.

• Operating cash flow remained strong at BRL 554 million in 2Q25.

• Leverage increased to 2x Net Debt/EBITDA, with net debt at R$5.85 billion as of June 2025.

• Effective tax rate improved to 15% due to better use of tax incentives.

Outlook and guidance

• Multi-year investment plan targets BRL 2.5–2.54 billion in 2025 and R$3.2–3.8 billion annually through 2029, focusing on universalization, quality, and efficiency.

• Leverage is expected to approach 3x as investments ramp up, with a solid capital structure and long-term debt profile.

• Ongoing 3rd tariff review, with WACC preliminarily increased to 9.152% for 2026–2029.

• 83% of water and sewage revenues are secured by concessions expiring after December 2031.