Profit of Brazilian giant Eletrobras grew by 31% in the first quarter

RIO DE JANEIRO, BRAZIL – Brazil’s state-owned Eletrobras, Latin America’s largest electric power company, which is in the process of being privatized, reported Wednesday that in the first quarter of this year it obtained a net profit 31% higher than in the same period last year.

The electric giant, Brazil’s largest generator and transmitter, controlled by the State but with shares traded on the São Paulo stock exchange, recorded in the first three months of 2021 profits of R$1.6 billion (US$301.9 million), according to the statement sent to the press.

The company attributed the good result for the quarter to the increase in its revenues from transmission operations after the tariff readjustment authorized by the sector’s regulators and a 5% reduction in its personnel, material, and service costs.

According to Eletrobras, both factors guaranteed growth in profit even though the company had a negative impact of R$932 million (about US$175.8 million) in the quarter due to the increase in its provisions for contingencies, in the midst of the crisis generated by the covid pandemic.

According to the company’s balance sheet, its gross operating profit or EBITDA grew by 11% in the first quarter, to R$3.8 billion (about US$716.9 million), while operating income increased by 8%.

Eletrobras’ Financial and Investor Relations Director, Elvira Presta, in a statement in which she highlighted the cost reductions achieved by the company, reaffirmed the power company’s commitment to “financial discipline”, which allowed the debt to EBITDA ratio to fall to its lowest level in recent years.

He added that, in continuity with the rationalization of the portfolio and corporate shareholdings, Eletrobras ended the first quarter as a shareholder in 83 specific companies. Its goal is to reduce this number to 49 by the end of 2021.

The company reported that its investments in generation totaled R$273 million (about US$51.5 million) in the first quarter, almost half of which was earmarked for the construction of Angra 3, the country’s third nuclear generation plant.

Transmission investments in the quarter totaled R$142 million (about US$26.8 million).

Eletrobras owns 43% of the country’s transmission lines, with a total length of 76,230 kilometers, and has an installed generation capacity of 50,676 megawatts (MW), equivalent to 29% of Brazilian production.

President Jair Bolsonaro intends to privatize the power company, the second-largest state-owned company in Brazil after the oil company Petrobras. Still, the sale depends on the authorization of Congress, where there is strong resistance.

According to the sale model approved and presented by Bolsonaro to Congress, Eletrobras will promote a capital increase in which the government will abstain from participating, allowing private shareholders to become majority shareholders.

The operation, which is expected to be concluded later this year, may yield the State an economic benefit over R$62.25 billion (US$11.745 billion), according to the company’s latest calculations.

The state-owned company had a net profit of R$6.387 billion (about US$1.205 billion) in 2020, a value 43% lower compared to 2019, due to the worse performance in the generation segment, with unscheduled shutdowns in some of its plants, and due to the increase in provisions.

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