CEMIG Posts Solid Q1 Earnings - Analyst Blog

Companhia Energetica de Minas Gerais CIG, also known as CEMIG, posted a net income of R$1,250.1 million (US$529.7 million), up 52.1% year over year, in first-quarter 2014.

Revenues

CEMIG generated net revenues of R$4,760.8 million (US$2,017.3 million), reflecting an increase of 29.5% year over year. Sales to end consumers accounted for 71% of the net revenues generated.

Electricity sold to CEMIG's final consumers increased 10.7% year over year to 11,963 MWh.

Expenses/Income

CEMIG's operating expenses were R$2,949.0 million (US$1,249.6 million), up 20.0% year over year. The company recorded an increase in costs related to electricity brought for resale, use of the national grid, post-retirement liabilities, outsourced services, royalties for use of water resources and others expenses.   

Partially offsetting these were decreased costs associated with personnel and managers, materials, depreciation and amortization, operational provisions and infrastructural construction costs.

Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for non-recurring items, grew 32.6% year over year to R$2,108.5 million (US$893.4 million) while EBITDA margin was 44.3% versus 43.3% in the year-ago quarter.

Balance Sheet/Cash Flow

Exiting first-quarter 2014, CEMIG had cash and cash equivalents of R$1,110 million (US$491.2 million) versus R$2,202 million (US$937.0 million) recorded at the previous quarter-end. Loans and financings were R$2,154 million (US$953.1 million), down 9.5% sequentially.

Cash flow from operating activities went up 65% year over year to R$618 million (US$261.9 million). Capital spent on fixed and intangible assets purchased was R$76 million (US$32.2 million), down 65.3% year over year.

CEMIG is one of the largest integrated electric utilities in Brazil with approximately 97% of the company's installed generation capacity being hydroelectric power. The company has a $9.2 billion market capitalization and currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the electric utility industry include Brookfield Infrastructure Partners L.P. BIP, Calpine Corp. CPN and CPFL Energia S.A. CPL. All of these companies sport a Zacks Rank #1 (Strong Buy).