Recently, Companhia Paranaense de Energia (ELP) posted positive results for the fourth quarter and 2009. During the quarter, COPEL posted a net income of R$180.0 million (US$103.0 million), almost flat to R$179.9 million (US$78.6 million) in the fourth quarter of 2008.
EPS amounted to R$0.66 or 38 cents compared to R$0.66 or 29 cents in the year-ago quarter. The difference in EPADR was only due to the exchange rate. Reported EPS was much below the Zacks Consensus Estimate of 52 cents.
Net revenues reached R$1,485.6 million (US$849.0 million), up 5.9% from R$1,402.8 million (US$612.6 million) in the same quarter of 2008 due to increase in electricity sales to final customers. The increase was also due to the 25.1% upturn in the telecommunications revenues driven by new clients and higher volume of services provided to existing clients.
Total power consumption by COPEL grew 5.7% (5.4% year over year in the Residential segment, 7.0% in the Commercial segment, 4.2% in the Rural segment, and 5.7% in the captive Industrial segment). Power consumption by free customers fell 11.0% year over year due to a decrease in demand.
EBITDA reached R$370.1 million (US$211.5 million) compared to R$380.9 million (US$166.3 million) in the year-ago quarter. EBITDA margin decreased to 24.9% from 27.2% in the same quarter of 2008. Full-year 2009 net income was R$1,026.4 million (US$510.6 million), down from R$1,078.7 million (US$586.3 million) in 2008.
The company reported an EPS of R$3.75 or US$1.87 from R$3.94 or US$2.14 in 2008. EPADR was slightly below the Zacks Consensus Estimate of US$1.95. Net income contracted due to a 6.4% increase in operating expense in the year.
Net revenues were R$5,617.3 million (US$2,794.7 million), slightly up from R$5,458.8 million (US$2,966.7 million) in the previous year due to increase in electricity sales to final customers and a 30.1% upturn in the telecommunications revenue.
Total power consumption billed by COPEL grew 3.1% (5.3% year over year in the Residential segment, 5.9% in the Commercial segment, and 4.6% in the Rural segment, while the captive Industrial segment fell 1.0%). Power consumption for free customers fell 13.2% year over year due to a decrease in demand.
EBITDA reached R$1,738.8 million (US$865.1 million) compared to R$1,851.4 million (US$1,006.2 million) in 2008. EBITDA margin decreased to 31.0% from 33.9% in the previous year.
The company has a strong balance sheet with net cash of R$23 million (US$13.1 million), up from R$16 million (US$8.9 million) at the end of the third quarter and a net debt of R$51 million (US$21.6 million) at the end of 2008.
COPEL remains better positioned than many of its U.S. and emerging market utility peers, given the growing demand for electricity and a strongly-favorable outlook for the Brazilian economy. We expect the Brazilian economy to outperform the more developed economies of Europe, the U.S. and Japan. However, being a state-owned company, management at times gets distracted by political issues. Thus, we maintain our Neutral recommendation on COPEL.
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