Companhia Paranaense de Energia (ELP), also known as COPEL reported its financial results for the fourth quarter and fiscal year 2010. Net income in the year increased 24.8% year over year to R$987.8 million (US$564.5 million) or R$3.61 per share (US$2.06 per ADR). Earnings per ADR were below the Zacks Consensus Estimate of US$2.12 per share.
The year-over-year momentum was driven by higher revenues, which were partially offset by higher expenses in the year.
Revenue
In the fiscal year 2010, operating revenues surged 10.4% year over year to R$6,901.1 million (US$3,943.5 million) due to higher sales volume. Results surpassed the Zacks Consensus Estimate of US$3,480 million.
Electricity sales to final consumers improved 7.5% year over year with residential sales spiking 4.6%, industrial 5.8%, commercial 6.3% and rural 5.6%.
During the fiscal year 2010, operating costs and expenses went up 14.6% year over year to R$5,968.1 million (US$3,410.3 million), attributed to a 8.6% year-over-year increase in electricity purchased for resale, a 21.5% hike in materials and supplies, and a 8.2% increase in raw material and supplies for electricity generation. Third party service expenses soared 9.3% while costs for natural gas and supplies for the gas business were up by 12.2%.
EBITDA decreased by 6.8% year over year to R$1,476.0 million (US$843.4 million) with EBITDA margin of 21.4% versus 25.3% in the fiscal year 2009.
Balance Sheet
Exiting the fourth quarter of 2010, COPEL’s cash and cash equivalents plummeted 3.9% sequentially to R$1,794.4 million (US$1,094.1 million) versus R$1,867.2 million (US$1,091.9 million) in the previous quarter. Loans, financing and debentures, net of current portion were up 9.9% sequentially to R$1,281.0 million (US$781.1 million).
Net cash flow from operating activities spiked 0.5% year over year to R$1,247.7 million (US$713.0 million) in the fiscal year 2010 while capital spending increased 45% to R$353.4 million (US$201.9 million).
Companhia Paranaense de Energia is a fully integrated electric utility of Brazil engaged in the generation, transmission, and distribution of electricity to the State of Paraná. The provincial government of the State of Paraná controls 58.6% of the shares of COPEL. The company faces stiff competition from Cia Energetica de Minas Gerais (CIG) and Enersis S.A. (ENI).
We currently maintain an Outperform recommendation on the stock.
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COPEL-ADR PR B (ELP): Free Stock Analysis Report
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