Companhia Energetica de Minas Gerais (CIG), known as CEMIG, reported encouraging results for the second quarter of 2011 as the company’s net income rose 29% year over year to R$523 million (US$328.9 million), due primarily to higher revenue in the quarter. However, the results, though robust, were 0.6% below the previous quarter’s income.
Revenue
Net revenue of the company escalated 11% year over year to R$3,820 million (US$2,402.5 million) and also registered a 5.4% sequential increase, due primarily to higher prices for electricity sold and higher demand.
Electricity sold improved modestly by 1% year over year to 16,936 GWh in the second quarter of 2011, while sliding down 5.8% sequentially.
Among others, residential sales grew 4% year over year, industrial sales increased 7.5%, rural consumption went up by 0.6% and commercial consumption grew 8.7%. Transactions on CCEE were down by 43.9% year over year.
Expenses/Income
Operating expenses in the second quarter jumped 7% year over year to R$2,781 million (US$1,749 million), attributed to an increase in expenses for electricity bought for resale, outsourced services and gas bought for resale.
EBITDA in the quarter soared 20% year over year to R$1,267 million (US$796.9 million) and margin increased by 3.2% to 33.2%.
Balance Sheet/Cash Flow
The company’s cash and cash equivalents were R$3,037 million (US$1,934.4 million) versus R$2,733 million (US$1,666.5 million) in the previous quarter.
Net cash flow from operating activities increased significantly year over year (262%) to R$1,297 million (US$815.7 million) in the quarter. However, capital spending was down 46% year over year to R$919 million (US$578 million).
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.
