ENGIE Brasil Energia’s good performance of last year continued in the first quarter of 2019. The Company reported growth of 15.6% in net income, 25.1% in net operating revenue and 15.9% in Ebitda (Profit before interest, taxes, depreciation and amortization) compared with the first quarter of 2018. Other important events early in the second quarter  were the ENGIE Group’s debut in the natural gas sector with the acquisition from Petrobras of a stake in Transportadora Associada de Gás S.A. (TAG); and the startup in commercial operations of the Umburanas Wind Complex in the state of Bahia, the latter adding 360 MW to  ENGIE Brasil Energia’s proprietary installed capacity which now totals 8,365.5 MW.

“Once again, we can report solid and significant growth across all the key financial and operational indicators”, comments chief executive officer, Eduardo Sattamini. He observes that the Company closes  the first quarter with the same consistency of results that it has been reporting in recent periods. “Moving in the direction of meeting the objectives, supported by our convictions and our team’s ability to deliver, we are on track to realize the strategy of consolidating our position as a key player in Brazilian energy infrastructure”, the executive adds.

In the first three months of this year,  the Company’s net operating revenues were R$ 2.3 billion, 25.1% more than  posted for the same period last year. Factors most contributing to these increases were operations in energy trading, short term market operations, increased volumes and average price of energy sold and revenues from the sale of solar panels.

ENGIE Brasil Energia registered an Ebitda of R$ 1.2 billion in 1Q19, 15.9% more than in 1Q18. This increase is largely due to higher volume and net average selling price as well as a reduction in the cost of energy purchases for portfolio management and improved results from transactions in the short term market, among others. The Ebitda margin was 51.9%, a decline of 4.1 percentage points in relation to 1Q18, mainly a result of the increase in energy trading operations.

Net income for the quarter was R$ 565.5 million, 15.6% higher than 1Q18. Among other factors, this result is due to an increase of R$ 166.2 million in Ebitda, for the same reasons as already mentioned but offset by the increase in financial expenses and depreciation and amortization following recent investments in the expansion of the Company’s generator complex with a corresponding increase in leverage.

The Company’s shares ended the first quarter 2019 recording a 29.4% (R$ 42.71 per share) appreciation, much exceeding the performance of the Ibovespa and the Electric Energy Stock Index (IEEX)  which reported a gain of 16.6% in 1Q19. With this, ENGIE Brasil Energia closed the first quarter with a market capitalization of R$ 34.8 billion.

Investments – In the first three months of this year, ENGIE Brasil Energia invested R$ 768.9 million of which R$ 719.9 million were applied in new projects: phases 1 and 2 of the Campo Largo Wind Complex; the Pampa Sul Thermoelectric Power Plant; phase 1 of the Umburanas Wind Complex and the Gralha Azul System, a transmission line in the state of Paraná. The company also invested a further R$ 37.7 million in generator complex maintenance and revitalization projects and R$ 11.3 million in modernization work at the Salto Santiago and Salto Osório hydroelectric plants.

Natural Gas – On April 5, the Aliança Consortium was pronounced the winner in the offer to acquire a 90% stake in the equity of Transportadora Associada de Gás S.A. (TAG), the largest natural gas transportation company in Brazil, and equivalent to an enterprise value of R$ 35.1 billion. The consortium is made up of Engie Brasil Energia S.A. (32.5%), Engie S.A. (32.5%) and Caisse de Dépôt et Placement du Québec – CDPQ (35%). ENGIE’s entry into this segment is aligned to its global strategy of seeking the leadership of the energy transition. Following the announcement of the acquisition, Fitch Ratings reiterated the Company’s credit risk classification.

At the Board of Directors Meeting on April 17, approval was given for the eighth  simple debentures issue worth R$ 2.5 billion for working capital formation to finance the implementation of the Company’s business plan. On April 24, the Umburanas Wind Complex, built in the state of Bahia at an investment of R$ 1.8 billion, was authorized by the National Electric Energy Agency (Aneel) to begin full commercial operations. And finally, on April 26, the Annual General Meeting approved the distribution of additional dividends worth R$ 76.7 million (R$ 0.0940/share) for the fiscal year ending December 31, 2018. Since May 7, 2019, the shares have traded ex-dividends with payment date to be set by the management board in due course. Total dividend payout for the fiscal year 2018 was R$ 2,272.5 million, representing 100% of adjusted distributable net income.

PROJECTS UNDER CONSTRUCTION

Campo Largo Wind Complex – Bahia (Phase II). The start of activities for the installation of the Campo Largo Wind Complex – Phase II, located in the municipalities of Umburanas and Sento Sé, approximately 420 km from the state capital of Salvador. Once complete, the second Phase will have a total installed capacity of 361.2 MW and 200 average MW  of assured energy representing an investment of R$ 1.6 billion. Phase II is scheduled to go into full operations at the beginning of 2021.

Pampa Sul Thermoelectric Power Plant – Rio Grande do Sul. Pampa Sul TPP is being built in the municipality of Candiota, state of Rio Grande do Sul, and will have an installed capacity of 345 MW. The coal for this coal-fired plant will be mined from a seam in the same municipality and the plant will be integrated into the National Interconnected System (SIN) with a Company-built 525 kv transmission line linking Candiota II Substation. Pampa Sul’s Operation License is pending issue.

 PROJECTS UNDER DEVELOPMENT

Of the projects under development by ENGIE Brasil Energia, two are already eligible to take part in the A-4 and A-6 energy auctions scheduled for this year. The projects are the Santo Agostinho Wind Complex in the state of Rio Grande do Norte (800 MW), consisting of 24 Specific Purpose Companies (SPCs), each of which responsible for the development of a wind generation project and located in the municipalities of Lajes and Pedro Avelino, 120 km from the state capital, Natal; the Umburanas Wind Complex– Phase II (300 MW) has its environmental licensing already regularized and is to be developed by ENGIE Brasil Energia adjacent to the Campo Largo Wind Complex, thus enjoying synergies at both installation and commercial operations’ phases.

In addition, the Campo Largo Wind Complex – Phase III (250 MW) awaits environmental licensing while two photovoltaic solar energy generation projects are under development: one in the state of Rio Grande do Norte, the Assu Photovoltaic Plant (146.8 MWp), and one in the state of Bahia, the Alvorada Photovoltaic Complex (90 MWp). Both are currently involved in solar irradiance measurements with their Preliminary Licenses already issued making both projects eligible to participate in the new energy auctions. The Company also has a project for the installation of a natural gas-fired thermoelectric plant, Norte Catarinense TPP (600 MW) in the municipality of Garuva, state of Santa Catarina.