CEMIG's 2013 Earnings Up Y/Y

Zacks Equity Research

Brazil-based integrated electric utility, Companhia Energetica de Minas Gerais (CIG), also known as CEMIG reported impressive results for 2013. The company’s net income, adjusted for non-recurring items, increased 9.7% year over year to R$2,954.8 million (US$1,374.3 million).

Including non-recurring items, the company’s net income was R$3,104 million (US$1,443.7 million), down 27.3% year over year.

Revenue

CEMIG’s net revenue of R$14,627.3 million (US$6,803.4 million) in 2013 represented a year-over-year increase of 3.5%. Electricity sales to end consumers accounted for 86.1% of the total revenue generated.

Electricity sold to CEMIG’s final consumers increased 3.3% year over year to 61,521 MWh in 2013.

Expenses/Income

CEMIG’s operating expenses totaled R$11,232 million (US$5,224.2 million) in 2013, down 2.8% year over year. Costs including charges for the use of the national grid, royalties for use of water resources, operational provisions and infrastructure construction costs, among others, decreased. Partially offsetting these were increased costs related to energy bought for resale, personnel, materials and post-retirement liabilities, among others.

Earnings before interest, taxes, depreciation and amortization (:EBITDA), adjusted for non-recurring items, grew 14.3% year over year to R$4,962.1 million (US$2,308.0 million) in 2013 while EBITDA margin was 33.9% in 2013 versus 30.7% in 2012.

Balance Sheet/Cash Flow

Exiting fourth-quarter 2013, CEMIG had cash and cash equivalents of R$2,202 million (US$937.0 million) versus R$2,111 million (US$946.6 million) recorded at the end of the previous quarter. Loans and financings were R$2,379 million (US$1,012.3 million).

In 2013, CEMIG’s cash generation from operating activities increased 45% year over year to R$3,515 million (US$1,634.9 million). Capital spent on fixed and intangible assets purchased was R$938 million (US$436.3 million), down 42% year over year.

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 has a $6.7 billion market capitalization and currently carries a Zacks Rank #2 (Buy).

Some better-ranked stocks in the electric utility industry include Exelon Corporation (EXC), Otter Tail Corporation (OTTR) and Public Service Enterprise Group Inc. (PEG), each with a Zacks Rank #1 (Strong Buy).

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