Brazil’s Cemig Profit Doubles on Tax Gain

BRAZIL · COMPANIES

Cemig, the power utility of Brazil’s Minas Gerais state, reported third-quarter net profit of R$1.72 billion (about US$304 million), more than double the R$797 million (about US$141 million) of a year earlier. Most of the jump is a one-off accounting gain, and profit without one-offs rose a smaller 18.0% to R$922.8 million (about US$164 million).

Cemig’s American depositary receipts (ADRs, certificates that let US investors hold Brazilian shares) trade under the ticker CIG. All reais here are converted at R$5.64 per US$, the market close of 12 November 2026.

Why Profit More Than Doubled

Cemig reassessed lawsuits and tax disputes over social-security contributions on employee profit-sharing payments made between 1999 and 2016. It now rates the chance of losing those cases as possible rather than probable, so it released money it had set aside.

The release of provisions (funds a company sets aside for cases it may lose) totalled R$1.07 billion (about US$190 million). Of that, R$663.4 million (about US$118 million) went through operating results and R$407.8 million (about US$72 million) through financial results.

The net lift to profit was R$774.6 million (about US$137 million), according to Cemig’s results release. Without it, adjusted profit of R$922.8 million was 18.0% above the third quarter of 2025 but 17.3% below the second quarter’s R$1.12 billion (about US$198 million).

Cemig’s profit had fallen sharply in the third quarter of 2025, so the comparison base is low (see our report on that quarter). That makes the 115.5% headline rise look larger than the underlying trend.

What the Core Business Did

Net revenue rose 5.1% to R$11.16 billion (about US$1.98 billion). EBITDA, earnings before interest, taxes, depreciation and amortisation (a common measure of operating profit), rose 74.0% to R$2.69 billion (about US$476 million).

Adjusted EBITDA, which strips out the provision release, rose 31.1% to R$1.99 billion (about US$353 million) but fell 19.4% from the second quarter. Cemig credits its power-distribution arm, where adjusted EBITDA rose 50%, for the gain.

That arm benefited from a tariff increase in force since 28 May 2026, lower retirement-related costs and a better record on energy losses. Billed electricity volume grew 1.0%, and losses were 11.36%, below the regulator’s limit of 11.47%.

Debt, Investment and Payout

Net debt rose 17.2% to R$19.7 billion (about US$3.49 billion) from R$16.8 billion (about US$2.98 billion) a year earlier. That is 2.43 times adjusted EBITDA, against 2.30 times a year earlier, and 2.14 times on the definition used in its loan covenants (the financial limits written into loan contracts).

In September Cemig raised R$3 billion (about US$532 million) in corporate bonds, R$2.0 billion for its distribution unit and R$1.0 billion for its generation and transmission unit. It says 83% of its debt now falls due from 2029 onwards.

Investment in the first nine months reached R$5.1 billion (about US$904 million), up 7.8% from a year earlier and mostly in power distribution. In September Cemig also declared R$200 million (about US$35 million) in interest on equity, a Brazilian form of shareholder payout.

What It Means for You

For anyone holding Cemig ADRs, the headline profit overstates the underlying trend, so the adjusted figure is the better guide. Rising net debt and an adjusted profit below the second quarter are the numbers to watch.

Households and businesses in Minas Gerais pay the tariffs that helped lift distribution earnings. For related coverage, see our report on the Cemig outage in Belo Horizonte and the Cemig company profile.

What Is Not Known

The provision release is Cemig’s own judgment of its legal risk, not a court ruling. Whether the profit-sharing contribution cases will end in Cemig’s favour is not known.

What to Watch Next

Cemig holds its results webcast on Friday 13 November 2026 at 11:00 Brasília time (9:00 a.m. Eastern). The key question is whether adjusted profit, R$922.8 million this quarter, recovers toward the R$1.12 billion of the second quarter.

More: Brazil news in English, every day from The Rio Times.

Frequently Asked Questions

How Much Profit Did Cemig Make in the Third Quarter of 2026?

Cemig reported net profit of R$1.72 billion (about US$304 million), up 115.5% from R$797 million a year earlier. Adjusted profit was R$922.8 million (about US$164 million).

Why Did Cemig’s Profit More Than Double?

Cemig released R$1.07 billion (about US$190 million) of reserves for social-security contribution cases from 1999 to 2016. The net effect on profit was R$774.6 million (about US$137 million).

How Much Debt Does Cemig Have?

Net debt was R$19.7 billion (about US$3.49 billion) at 30 September 2026, or 2.43 times adjusted EBITDA. About 83% of the debt falls due from 2029.

Does Cemig Pay Shareholders?

In September Cemig declared R$200 million (about US$35 million) in interest on equity, a Brazilian form of shareholder payout. Its results release lists it among the quarter’s highlights.

Sources: Cemig, third-quarter 2026 results press release (quarter ended 30 September 2026); Cemig, investor relations. Exchange rate: R$5.64 per US$, market close of 12 November 2026.

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