Engie Brasil Energia (EGIE3) Q3 2024 earnings summary

Executive summary

• Secured Block 1 in Aneel Transmission Auction, adding 780 km of lines across five states and expanding grid presence in Paraná and Santa Catarina.

• Early commercial operation began for 50 wind turbines at Serra do Assuruá (27% of project capacity) and initial plants at Assú Sol Photovoltaic Complex (90.5 MW in test operation).

• Completed R$2.0 billion debenture issuance to fund energy projects and working capital.

• Recognized for transparency and named best energy company in Brazil, including Anefac's Transparency Trophy and Exame's Best and Biggest ranking.

• Major investments in the quarter totaled R$1.9 billion, focused on new wind, solar, and transmission projects.

Financial highlights

• Net operating revenue rose 0.9% year-over-year to R$2,537 million in 3Q24, with energy sales volume up 4.3% to 8,942 GWh.

• Adjusted EBITDA fell 5.8% to R$1,665 million; adjusted net income dropped 28.2% to R$666 million, mainly due to lower TAG participation and higher financial costs.

• Net debt increased 24.5% year-over-year to R$19,095 million; net debt/EBITDA at 2.7x.

• Adjusted EBITDA margin was 65.6% in 3Q24, down from 70.3% in 3Q23.

• Return on equity (ROE) was 26.5% in 3Q24.

Outlook and guidance

• Ongoing construction of major wind and solar projects, with Serra do Assuruá Wind Complex expected to be completed in 1H25 and Assú Sol Photovoltaic Complex targeting full operations by 4Q25.

• Curtailment for wind and solar assets expected to remain high in 2025, despite new transmission lines.

• Dividend payout to remain at least 55% of distributable net income, with a return to 100% when feasible.

• Leverage expected to stay below 3x net debt/EBITDA, with a hard covenant at 4.5x.

• Focus on expanding renewable capacity, regulatory modernization, and maintaining organic growth.