Transportadora de Gas del Sur (TGSU2) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 reached ARS 107.3 billion, up from ARS 87.2 billion year-over-year, driven by a strong recovery in the natural gas transportation segment and despite a significant decline in the liquids business due to a major flood event.

• Revenues increased to ARS 322.43 billion, a ARS 24.83 billion rise year-over-year, mainly from higher natural gas transportation revenues.

• The company restored natural gas transportation services by end of March after the Complejo Cerri flood, with processing plant operations partially resumed by mid-April and full production achieved in early May; full restoration of liquids operations is ongoing.

• The Five-Year Tariff Review (5YTR) was approved, setting new tariffs and an investment plan for 2025-2030.

• A capital reduction was approved, canceling 5.25% of capital stock from shares repurchased in 2019 and 2020, and 41.7 million treasury shares were canceled.

Financial highlights

• Natural gas transportation EBITDA surged to ARS 104.8 billion in Q1 2025 from a negative ARS 11 billion in Q1 2024, mainly due to a 675% tariff increase and monthly adjustments.

• Liquids business EBITDA dropped 50% to ARS 21.4 billion, impacted by an 80,000 metric ton sales volume decline and halted operations post-flood.

• Operating profit rose to ARS 141.09 billion from ARS 101.81 billion in Q1 2024, mainly due to higher gas transportation revenues and lower costs.

• Cash position increased 10% to ARS 956 billion (approx. $882 million), with EBITDA generation of ARS 192 billion (55% transportation, 45% non-regulated).

• Capex for the period was ARS 55 billion; no income tax paid in Q1 2025.

Outlook and guidance

• The new five-year tariff revision grants a 3.67% increase, to be reflected in 31 monthly adjustments, with future monthly inflation-based adjustments pending regulatory approval.

• The company is focused on fully restoring the Cerri Complex and expects to reach optimal product stock levels in the short term.

• EBITDA for the transportation segment is expected to be around $300 million annually, subject to inflation and other variables.

• The Perito Moreno pipeline expansion is expected to be operational in 2027, 18 months after the bid award.

• Some operational and financial impacts from the flood are expected to persist into Q2 2025, especially in April and possibly May.