Fiscal year 2019 for ENGIE Brasil Energia was characterized by important acquisitions, the Company advancing its strategy of transforming into one of the leaders of the energy transition towards a  low carbon economy. Via a consortium of its Controlling Company, ENGIE S/A and CDPQ, the Company acquired Transportadora Associada de Gás Ltda. – TAG. The partners’ investment of approximately R$ 35 billion, was the largest in the more than 20 years of ENGIE’s operations in Brazil.

In a further infrastructure investment, in December, the company acquired for a maximum of R$ 410 million, Novo Estado Energia, the concessionnaire for building, operating and maintaining 1,800 km of transmission line, a new substation and the upgrading of a further three existing substations, in the state of Pará and Tocantins.

In the same way as previous years, success in the new businesses was accompanied by consistent  deliveries. ENGIE Brasil Energia’s net income for 2019 was R$ 2.3 billion (R$ 2.8310/share). “This result, practically unchanged from 2018, is largely due to the impact of interest and monetary restatement of debt, contracted to fund recent expansion, the effect of which tends to gradually diminish over subsequent years”, comments the Company’s Chief Executive Officer, Eduardo Sattamini.

ENGIE Brasil Energia’s net operating revenue for fiscal year 2019 was R$ 9.8 billion, 11.5% (R$ 1.0 billion)  above that for 2018. Ebitda (earnings before interest, taxes, depreciation and amortization) was R$ 5.2 billion, an increase of 18.2% compared with the preceding year. Ebitda margin was 52.7%, a year-on-year increase of 3.1 p.p.

Good cash generation represented by Ebitda reflects a combination of factors, such as the contribution from acquired assets or those that went into operation in the period, the postive performance of the plants and the indemnity paid against a claim for contractual noncompliance during the construction of Pampa Sul Thermoelectric Plant. ENGIE Brasil Energia’s CEO also highlights the efficient management of both portfolio and costs, a characteristic of the financial discipline responsible for the soundness of the Company’s performance.

Sattamini recalls that ENGIE leads the transformation in people’s relations with energy. “On acquiring energy from ENGIE Brasil Energia, our clients are integrated into a value chain which has sociol-environmental responsibility as its principal differential”, the executive says. “Examples of this are the partnership agreements signed with L’Oréal Brasil and the Claro Group for the supply of renewable energy, contributing to the decarbonization of our clients’ productive processes”. Sattamini also mentions Banco Itaú which recently purchased carbon credits from the Lages Cogeneration Plant for offseting its CO2 emissions as well as using ENGIE solutions for monitoring electricity consumption  at its branches.

New plants – In 2019, Phase I of the Umburanas Wind Complex went into operation. This facility with the Campo Largo Wind Complex – Phase I – in commercial operations since December 2018 – comprises ENGIE’s largest wind cluster in Brazil. The assets together represent an investment of R$ 3.5 billion. Also at the end of June 2019,  the Pampa Sul Thermoelectric Plant in the state of Rio Grande do Sul went into operations, contributing a further 345 MW of capacity to the Company’s generator complex.

Among other important events were the startup of work on the Gralha Azul Transmission System in the state of Paraná, approximately a thousand kilometers in length, and the initial work  on Phase II of the Campo Largo Wind Complex, rendered fully viable thanks to the signing of more than 60 upfront agreements with free market consumers.

Comparison of quarters – In the fourth quarter 2019, net operating revenue increased by 21.4% (R$ 492.8 million) compared with 4Q18, while Ebitda rose 21.6% (R$ 233.8 million), from R$ 1.1 billion to R$ 1.3 billion. The positive variations were mainly due to the increase of 6.6% in energy sales volumes, the positive result from the corporate stake in TAG and improved results from transactions in the short-term market, among other factors. Fourth quarter 2019 net income was R$ 617.5 million, 18.9% less than reported in the same quarter in 2018, with a decrease due in large part to higher net financial expenses.

Subsequent events – In early 2020, the Board of Directors approved the proposal for distribution of complementary dividends of R$ 949.7 million (R$ 1.1640/share), to be ratified by the Annual General Meeting. The total payout for 2019 will amount to R$ 2.2 billion (R$ 2.6928/share), equivalent to 100% of distributable adjusted net income.