Companhia Paranaense de Energia (ELP), also known as COPEL, reported its financial results for the third quarter 2010. Net income increased 11.2% year over year to R$316.2 million (US$179.7 million), or R$1.16 per share (US$0.66 per ADR) compared with R$284.4 million (US$161.6 million) or R$1.04 per share (US$0.55 per ADR) in the third quarter of 2009. Earnings per ADR were below the Zacks Consensus Estimate of US$0.71 per share.
The year-over-year momentum was driven by higher revenues, partially offset by higher expenses in the quarter.
Revenue
Considering the top line, net revenues of R$1,610.4 million (US$915.0 million) soared 13.5% year over year due to higher sales volume. Electricity sales to final consumers improved 5.2% year over year, with residential sales soaring 1.4%, industrial 6.2%, commercial 9.4% and rural 8.6%.
During the quarter, operating costs and expenses went up 12.4% year over year to R$1,223.6 million (US$695.3 million) attributable to a 17.7% year-over-year increase in electricity purchased for resale, a 56.4% hike in materials and supplies, and a 79.7% increase in raw material and supplies for electricity generation. Third party service expenses soared 21.3% while provisions and reversals were up 139.4%.
EBITDA increased 14.7% year over year to R$489.0 million (US$277.9 million) with an EBITDA margin of 30.4% versus 30.1% in the third quarter of 2009.
Balance Sheet
Exiting the third quarter, COPEL’s cash and cash equivalents soared 26.5% sequentially to R$1,867.2 million (US$1,091.9 million). Loans, financing and debentures, net of current portion, were down 18.5% sequentially to R$1,165.4 million (US$681.5 million).
Net cash flow from operating activities spiked 15.1% year over year to R$415.6 million (US$236.1 million) in the quarter while capital spending plummeted 8.2% to R$198.7 million (US$112.9 million).
We currently maintain an Underperform recommendation on the stock.
COPEL-ADR PR B (ELP): Free Stock Analysis Report
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