Companhia Energetica de Minas Gerais (CIG), known as CEMIG, reported encouraging results for the fiscal year 2010 as the company’s net income surged 6% year over year to R$2,258 million (US$1,290.3 million).
Revenue
In the fiscal year 2010, net revenue escalated 6% year over year to R$12,863 million (US$7,350.3 million) due primarily to expansion of the economy and thus higher demand for electricity.
Electricity sold improved 9.0% year over year to 66,255 GWh in the fiscal year 2010 versus 60,909 GWh in a year-ago period due to higher demand in all consumer categories.
Residential sales grew 2.0% year over year, industrial sales increased 10%, rural consumption went up by 11%, own consumption increased 3% while supplies grew by 2%, and transactions on CCEE were up by 88%. Commercial sales were, however, flat in the year.
CEMIG has witnessed continuous growth in its installed capacity over year. At the end of the fiscal year 2010, CEMIG’s total installed capacity grew by 1.2% year over year to 6,896 MW.
Operating expenses in the fiscal year 2010 jumped 8% year over year to R$9,216 million (US$5,266.3 million) attributable to a 16% rise in purchased energy, 11% in operating provisions, 13% in contract services, 37% in employee participations, 18% in material, 36% in gas purchased for resale, 68% on cost from operation, and 49% in other expenses.
EBITDA in the year plummeted 1% year over year to R$4,543 million (US$2,596 million) while margin declined 240 basis points to 35.3%.
Balance Sheet/Cash Flow
The company’s loans and financings at the end of the fiscal year 2010 was roughly R$6,244 million (US$3,807.3 million), up 54.4% year over year while cash and cash equivalents were R$2,980 million (US$1,817.1 million), down 32.7% year over year.
Net cash flow from operating activities increased 34.5% year over year to R$3,457 million (US$1,975.4 million) while capital spending increased by 14.6% to R$2,645 million (US$1,511.4 million).
Management plans to spend approximately R$2,319 million and R$1,134 million in the fiscal year 2011 and 2012, respectively.
CEMIG is one of the largest integrated electric utilities in Brazil with approximately 97% of the company’s installed generation capacity being hydroelectric power. The company is in stiff competition with its peers like Companhia Paranaense de Energia (ELP), EDP-Energias de Portugal, S.A. (EDPFY.PK) and privately-held Eletropaulo Metropolitana Eletricidade de São Paulo SA.
We currently maintain a Neutral rating on the stock.
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