Highlights:

• Adjusted net income in 2023 was R$ 3.421 billion, 23.8% higher than reported for 2022.
• Adjusted Ebitda was R$ 7.270 billion, an increase of 4.7% with an adjusted Ebitda margin of 67.6% in 2023, growth of 9.3 p.p.
• The Company’s net operating revenue reached R$ 10.748 billion in 2023, 9.7% less than this same item in 2022.
• The Board of Directors approved the distribution of mandatory and complementary dividends totaling R$ 994.5 million (R$ 1.2188/share), to be ratified by the Annual General Meeting (AGM).

ESG

• ENGIE Brasil Energia is for the first time a component of the S&P Global Sustainability Yearbook 2024, Electric Utilities sector. Out of the 199 evaluated companies in the electric energy sector worldwide, just 24 are included in the publication (12% of the total).
• The Company progressed from a “B” to an “A-” classification in the CDP Climate Change 2023, this ranking reflecting EBE’s second report to be submitted on an individualized basis. The climate change questionnaire assesses such aspects as governance, strategy and management of risks and opportunities
• For the 19th consecutive year, the Company continues to be a component of the Corporate Sustainability Index (ISE), reaching 5th place in the general ranking as well as being the best placed company in the electric energy sector as a whole.
• And for the fourth year, the Company’s shares are also part of B3’s Efficient Carbon Index portfolio.

ENGIE Brasil Energia (EGIE3) recorded an adjusted net income of R$3.421 billion in 2023, an increase of 23.8% when compared to 2022, due to the stronger result from the equity stake in TAG, the greater participation of the transmission segment and the recovery of costs related to the renegotiation of hydrological risk, attenuated by the lower contribution of the generation segment, due to the sale of Pampa Sul TPP. Adjusted net income also received a boost from an improvement in the net financial result between the periods.
The adjusted Ebitda was R$ 7.270 billion, an increase of 4.7%. In the light of the non-recurring effects of net impairment, the sale of a subsidiary and proceeds from insurance claims, Ebitda increased by R$ 495 million (7.3%) between the years, increasing from R$ 6,790 million in 2022 to R$ 7,285 million in 2023.
The results reflect the Company’s achievements during 2023, a year which will go down in the annals of ENGIE in Brazil as one in which it concluded the successful exit from coal-fired operations. “After investing R$ 22 billion in expansion of renewables and transmission in the past eight years, we have risen to the position of the largest generator in the nation with 100% of its installed capacity derived from renewable sources. And we do not intend to stop there. The numbers are impressive: from 3.7 GW of hydrothermal capacity in 1998 up to 8.3 GW of proprietary installed capacity, 100% of it renewable and with a broad based diversification of sources”, declares Eduardo Sattamini, Chief Executive Officer at ENGIE Brasil Energia.

Expansion
In 2023, the Company invested R$2.854 billion, of which R$981 million in the last quarter alone. During the course of the year, the Santo Agostinho Wind Complex received R$1.067 billion, while R$1.051 billion was invested in Serra do Assuruá. In 4Q23, 25 generating units of the Santo Agostinho Wind Complex entered commercial operation, which at the end of 2023 had 33 wind turbines operating commercially and another 22 undergoing testing. At the beginning of 2024, another 20 began commercial operation, therefore, 53 wind turbines, out of a total of 70, are already operating commercially in Santo Agostinho.
“We have been endeavoring to contribute proactively with this change-over to renewables so that the full potential of Brazil in the generation of accessible, competitive and sustainable energy becomes a reality and drives domestic socio-economic development. We continue to see the country as an important player in the drive towards a global carbon-neutral economy. We plan to invest at least another R$14 billion by 2025 in the construction of wind farms and photovoltaic systems, as well as a new transmission system,” adds Sattamini.
In generation, ENGIE expects to begin gradual commercial operations in the second half at the Serra de Assuruá Wind Complex in the state of Rio Grande do Norte, and also the Assú Sol Photovoltaic Complex in the state of Bahia – both with completion slated for the end of 2025. In the Transmission segment, the Gavião Real project, complementary to the Novo Estado Transmission System, has reached 81.9% completion of work at the site. The main agreements for the supply of services, equipment and materials to the Asa Branca Transmission System – to traverse the states of Bahia, Minas Gerais and Espírito Santo – have already been signed and delivery should take place well ahead of plan.

Energy trading and revenue
Net operating revenue posted R$ 10.748 billion in 2023, 9.7% down on 2022. This variation reflects in large part the reduction in revenue from energy sales agreements in both regulated and free contracting environments. This was a reflection of a combination of variations in energy sales volume as well as net average selling prices; a decrease in the remuneration of concession financial assets corresponding to the installment payable for the grant of the Jaguara and Miranda hydroelectric plant concessions. There was also a decrease in operating revenue in the transmission segment and from energy trading activity. These impacts were partially offset by the growth in transactions conducted across the short-term market.
The average price of energy sales agreements net of tax on revenue and trading operations, was R$ 226.42/MWh in 2023, 1.6% greater than 2022. “We continue to pursue a commercialization strategy of gradual sales of available energy to mitigate the risk of exposure to spot prices”, Sattamini points out.
For the calendar year 2023, free consumers (with the exception of CCEE and other revenues) represented 41.4% of the physical sales, an increase of 0.3 p.p., and equivalent of 37.2% of total net operating revenue, 0.2 p.p. less than 2022. Stability in the free consumer’s share of the total is due to lower purchasing volumes and consequently reduced volume available for sale to this market niche.
“The opening up of the Free Energy Market as from January 2024 to companies connected to the medium and high voltage grid will reinforce our purpose, enabling us to contribute to the decarbonization of an increasingly greater number of customers. Fully confident in the expansion of this market, consumption of which increased 10% in 2023, the Company is maintaining its rhythm of investments, alert to the scenario in the sector, where the indications are of a need for regulatory adjustments in our business environment”, the CEO concludes.

ESG
ENGIE Brasil Energia remains part of the Corporate Sustainability Index (ISE) – of which it has been a component since the index’s inception – and the Carbon Efficient Index (ICO2),both indices developed and managed by the B3. For the first time, the Company has been listed in the S&P Global Sustainability Yearbook 2024, Electric Utilities sector. Among the 199 evaluated names, just 24 are included in the publication (12% of the total).
A further highlight of the period was the Company’s graduation from a “B” to an “A-” classification in the CDP Climate Change 2023, following the submission of EBE’s second individualized report. The climate change questionnaire evaluates aspects such as governance, strategy and management of risks and opportunities.
In terms of governance, ENGIE was awarded the Pro-Ethics Seal 2022- 2023 by the Federal Office of the Comptroller-General (CGU) in partnership with Instituto Ethos. The award recognizes companies that adopt best practices of ethics, transparency and integrity in the management of their businesses.

Dividends
The Board of Directors approved the proposal to distribute mandatory and complementary dividends worth R$ 994.5 million (R$ 1.2188/share), subject to ratification by the Annual General Meeting. Hence, distributed earnings in 2023 amounted to R$ 1.907 million (R$ 2.3368/share), a payout of 55% and a dividend yield of 5.6%.

Share performance
In 4Q23, ENGIE Brasil Energia shares reported an appreciation of 9.9%. Over the same period, the Electric Energy Stock Index (IEEX) and the Ibovespa appreciated 11.1% and 15.1%, respectively. For the full calendar year 2023, EGIE3 outperformed the aforementioned indices, accumulating a positive valuation of 28.2%, compared to 21.0% for the IEEX and 22.3% in the case of the Ibovespa.

At the close of the final trading session of December 2023, the Company’s shares were priced at R$ 45.33/share, corresponding to a market cap of R$ 37.0 billion.