After IPO, EBITDA, profit and revenue on the rise highlight second quarter

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After IPO, EBITDA, profit and revenue on the rise highlight second quarter

7/24/19

* Net income grows 32.6% in the 2^nd quarter to R$519 million and reaches R$1 billion in the first half.

* EBTIDA stays at R$1.4 billion in the 2^nd quarter, up 23.6%; in the semester it reaches R$2.7 billion.

* Investments increase and total R$1.1 billion in the second quarter and R$2.2 billion in the semester.

* Total volume of distributed energy increases 3.36% in 2Q19 and 4.59% in the first half of the year.

Neoenergia, one of the leaders of the energy sector in Brazil, posted positive results in the second quarter of 2019, with growth in the main financial and operating indicators. Net income was R$519 million, an increase of 32.6% over the second quarter of 2018 (R$392 million). In the first half, the accumulated was at R$1 billion, the largest in the history of the company for the first six months of the year.

The company's EBITDA reached R$1.4 billion from April to June, with expansion of 19.6% compared to the same period of 2018. In the first quarter, it was R$2.7 billion, up 23.6% over the same period of 2019. Net revenue, in turn, reached R$6.58 billion in the quarter, 5.4% higher compared to the period from April to June 2018. From January to June, it reached R$ 13.5 billion, up 17.5%.

The consistent results were driven especially by the 3.36% growth in the total distributed energy volume of the four Neoenergia companies compared to the second quarter of 2018, together with the tariff adjustments granted by the National Electric Energy Agency (Aneel) to Coelba (BA), Celpe (PE), Cosern (RN) - Elektro (SP) had no correction in the period. The data reflects the recovery in electricity consumption, which has been rising above this year's forecast GDP growth of 0.97%, according to the Focus Bulletin in June 2019.

"The results show the successful execution of the long-term strategic plan based on investment in regulated business. After our IPO, the good operating performance allowed the Group to make, for the first time, more than R$1 billion profit in the first half of a year, which is another historical milestone for the company".

Neonergia is a giant with excellent economic-financial and operational performance of the Brazilian electricity sector, with solid growth history, as well as long-term organic investments, strengthening our confidence in Brazil, where we have been operating since 1997." Mario Ruiz-Tagle, Neoenergia´s CEO

INVESTIMENTS AND IPO

The executive also highlighted the increase in the group's investments in Brazil, which reached R$1.1 billion in the second quarter and R$2.2 billion in the first six months of 2019. To support its expansion plans, Neoenergia raised R$4.1 billion by June this year - of this total, R$1.3 billion refers to the issuance of Green Debentures, the largest infrastructure with green seal ever held in Brazil, with disbursement in July this year.

The company also maintained its focus on financial discipline. Operating Costs and Expenses grew by 2.32% YTD ended June 2019, according to IGP-M released by Fundação Getúlio Vargas of 6.5% for the same period.

On July 1, Neoenergia finalized the IPO process at B3 and became part of the Novo Mercado, the highest level of corporate governance of the Exchange. With the operation, 19.71% of the company's shares were traded. Spanish company Iberdrola remains the parent company, with a 50% stake, and Previ remained a relevant partner, with 30.29% of the capital. The company remains focused on maintaining business and services in the country, where it is present in 18 states, providing the best experience for 34 million people it serves.

QUALITY OF SERVICES

Neoenergia companies also stood out in improving the quality of services provided to their nearly 14 million customers, with favorable developments in the indicators that measure the duration (DEC) and frequency (FEC) of power outages.

Neoenergia remains committed to its Energy Recovery Plan. In the second quarter, it carried out around 114,000 inspections, focusing on higher damage areas with the objective of incorporating new customers.

"Quality of energy supply is an absolute priority and much of our investment goes into improving and expanding our grids and services." Mario Ruiz-Tagle, Neoenergia´s CEO

In this year's ABRADEE Award, Elektro was elected the Best Distributor of the Country and Cosern was ranked second best, and received the Best Distributor of the Northeast award. Regarding Performance Evolution, Coelba was in third place.

RENEWABLES

Central pillar to Neoenergia's growth strategy, investment in renewable energy aims to make the group one of the leaders in energy transition through decarbonizing the economy. In the second quarter, EBITDA in this segment was R$178 million, a slight reduction of 4.49% compared to the same period of 2019, due to the more favorable wind period last year, impacting wind generation. This effect, however, was mitigated by the startup of the Baixo Iguaçu (PR) plant, which was mainly responsible for the R$34 million increase in gross margin from renewables in the second quarter compared to the same period of 2018.