Currency Volatility Slashes Copasa’s Q4 2024 Profits Despite Record Annual Investment

Companhia de Saneamento de Minas Gerais (Copasa) reported a 23.5% profit decline in the fourth quarter of 2024, according to financial results released yesterday.

The water utility giant earned R$271.9 million ($47.7 million) in Q4, down from R$355.2 million in the same period of 2023. Financial expenses surged nearly fivefold to R$109.3 million ($19.2 million) compared to Q4 2023.

Currency volatility between the Brazilian real and euro drove this dramatic increase. Rising debt levels over the previous 12 months further compounded the financial pressure.

Copasa’s net operating revenue reached R$1.98 billion ($347.4 million), showing a modest 0.6% year-over-year increase. Water, sewage, and solid waste services generated R$1.76 billion ($308.8 million), virtually flat with only a 0.1% improvement from Q4 2023.

Total costs and expenses rose 7.8% to R$1.06 billion ($186 million). This increase contributed to a 5.8% EBITDA decline, which fell to R$640.5 million ($112.4 million) with a margin of 36.0%.

The company’s debt position deteriorated significantly. Net debt jumped 41.31% to R$5.37 billion ($942.1 million) by December 2024. This pushed the Net Debt/EBITDA ratio from 1.5 to 1.9, indicating higher leverage.

Copasa Maintains Growth Amid Financial Challenges

Despite financial challenges, Copasa maintained strong operational performance. The company expanded its consumer base to 5.70 million water connections and 4.14 million sewage connections. Water distribution loss rates improved to 38.1% from 38.6% in December 2023.

Copasa invested heavily throughout 2024. Capital expenditures totaled R$2.17 billion ($380.7 million), a 33.2% increase from 2023. The investment focused on expanding infrastructure across the 638 municipalities served by Copasa in Minas Gerais.

For the full year 2024, Copasa recorded a net income of R$1.31 billion ($229.8 million), representing a 4.5% decrease from 2023. Annual revenue grew 6.3% to R$7.78 billion ($1.36 billion).

In short, the company maintained its dividend policy with a 50% payout ratio. Regular dividends for 2024 totaled R$605.8 million ($106.3 million).

Looking ahead, Copasa plans approximately R$9 billion ($1.58 billion) in investments from 2025 to 2028. The company continues to transition from discretionary governance to contractual oversight in municipal agreements.

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