Centrais El�tricas Brasileiras Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 5, 2023

Key Takeaways

  • Positive Sentiment: Advance in hydroelectric acquisitions including 23% of Funes and full control of Ibirapuitã and Abu Dhabi plants adds 1,475 MW of fully contracted capacity.
  • Positive Sentiment: One-time BRL 9 billion cash inflow from Itaipu partnership sale significantly strengthens liquidity.
  • Positive Sentiment: Voluntary dismissal program cut BRL 1.1 billion in costs in Q1 and aims for nearly BRL 2 billion in annual savings.
  • Positive Sentiment: Q1 results show solid performance with BRL 11 billion in revenue and 44% EBITDA growth, bolstered by regulatory tariff uplifts and Saesa consolidation.
  • Negative Sentiment: Free-market industrial clients can request contract reductions or exits over an 18-month window, creating volume and revenue risk.
AI Generated. May Contain Errors.
Earnings Conference Call
Centrais El�tricas Brasileiras Q1 2023
00:00 / 00:00

There are 1 speakers on the call.

Operator

[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Presenting the team from Petrobras, we have here today, Guilso Figueres Jonas, the President of El Alto Bras, Villarreal Price's Financial Vice President and Investors Relations Rodrigo Limpi, Vice President of Regulation and Institutional Relations and the new Vice President Vice President of Commercialization and Vice President of People, Personnel and Culture Anne Eduwolf, Vice President of Strategy Business Strategy and participations. Be informed that This video conference is being recorded and will be made available in the site of IR in the company and will be available in both languages. If you need simultaneous translation, we have these 2 available in the icon called Interpretation located in the bottom of this, if you can choose Portuguese or English. For you listening in English, the option to silence the original audio, click and mute original audio. For Q and A.

Operator

We said, you should be sent by the Q and A button on the bottom of the screen. Your names will be announced so that you can be so that you can make the question to request your microphone whenever you make this. A request to activate your microphone will appear on the screen. The disclaimer, anything that is said during this presentation about the business perspective of the company projections, operational targets and financial ones. They are premises of the Board of Elaitobut as well as formations that are currently available for the company.

Operator

Future considerations are not guaranteed of performance because they involve risks and uncertainties and therefore, they depend on circumstances that can may or may not occur. The investors should then understand that economical conditions in general and other operational activities can affect the operational results expressed in the future. Now, Douglas Ferriere, the President of Tuvalu, so that we can start the presentation. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Good afternoon, everyone. I would like to greet the shareholders, the investors, analysts that work with Petrobras so that we can share the main results of our 1st trimester, the second that we complete here since we have arrived.

Operator

We highlight here in the beginning what are the main highlights of this quarter. Basically, on the partnership, the advance that we have had in the process of acquisition of Sant'Antonio and Regia, the advance and acquisition of Funes of 23% and then our revenue, 93% of the company investors in BRL168 1,000,000. We're going to be able to detail here more, but it deals with one of the main companies in Brazil. So this is a very, very important human data investment. The second one the second highlight here in this quarter is the receiving of BRL 950,000,000 before into the contract of transfer of partnership participation in Itaipu.

Operator

This is one of the preconditions of the privatization and capitalization where this asset was financed in 20 years. And now with the discount that we speak further ahead, we'll have we had influx of cash of BRL 9,000,000, which is really important for the liquidity. Another part that is really important, the transitions that we started to develop along the recent years. So we will follow here not just the team of SAES, but also the in Asia. As a compliment to that, we had participation from CEMIGI.

Operator

And with this, we now have the We have a controllership of investment of BRL200 1,000,000. I mean also of Hichiro Basu hydroelectric unit and also the hydroelectric unit of Abu Dhabi, BRL393,000,000, having 100% of these plants. These plants are totally contracted and regulated. So this is not an instrument of competition. It's basically a relative participation that the company has and that they can start operating these plants with more efficiency.

Operator

So these are highlighted this quarter, very important to continue of compulsory loans highlighted by some analysts that I follow in the morning. For the Q2 in a row, we have reduction in the stocks of provisioning of compulsory loans. We few want to lower our provisions of loans, we will not add whatever is a benefit for the company as long as we have an agreement, then we can provide liquidity. And as a counterpart, we have here a decrease in the values that were provisioned. So highlights also In this quarter, the continuity of our processes of PTVs, we had 2,500 registered.

Operator

We had up to April, 19 seventy 4 people that have been dismissed by this process of voluntary dismissal with an important remuneration for this process. People that could become part of the program that were retired or should be retired. So there were senior people in the company and then we had this process of running here up to April 30, we had we still have a EUR 520,000,000 remaining. This news that we are with new Vice President evaluating the schedule of the dismissal of these remaining people. So we are launching here in the month of May, the second, this new store plan with the remaining group of people in the companies have so it depends on the And this will depend on the moment of the career of each person and the demand that the company has.

Operator

And this has been already cleared up in the presentations. And then strengthening of the holding, strategic aspects and of several dimensions in our restructuring process. So strengthening, We had 6 directors and now we have 11 vice presidents that we will show a little bit further ahead. But in this Vice President, we need a complimentary of appointing the people more 3 directors in subsidiaries. So it's the beginning of a process of restructuring that we want to finish by June, appointing Agilwan in a meritocratic way, Agilwan who is part of the current managers or people with high potential that could occupy these positions.

Operator

So we can have with a lot of discipline and plan and meritocracy, an important example of creating value, starting the capitalization. All the partnerships we have renovated them, understanding the simplification that we need to do The control now of 100 percent of each one of our controlled companies, we have also an excellent here our CDE, the payment of EUR 621,000,000 in this quarter already done here in April, we had an auto deposit in funds. So all the commitment of cash that the company had done in terms of capitalization has already been done. The following slide, moving on to talk about our transformation and I will now show you on the left side Already here some observation about the deliverables already performed. So the dismissal plan already, 80% of register already dismissed by year 2022.

Operator

And so we have here in supply, we have a commitment in a disagreement where we have 80% of the first stage captured here, we have 2 elements: 1, CapEx, a reduction of BRL 160,000,000, which would be equivalent to 9% of our expenses of BRL 1,800,000,000. So this is very important for CapEx and an OpEx in the economy of 143 percent, mentioning the company so EUR 280,000,000 addressed where we had EUR 120,000,000 reduction. We appointed all the N1 managers, the below presidents for the holders and the control companies already done. We already worked on we worked through these levels, all the agreements already agreed. Most of the companies with the exception of some subsidiaries and managements.

Operator

So we also continued the negotiation of our compulsory loans. We have serial loans, we have paid around BRL 780,000,000, 43% of stakeholder shares. We have accumulated EUR 5,000,000,000, EUR 640,000,000 at the end of the year. And also we're almost R692 1,000,000 of a loss balance reduction. So almost BRL 2,100,000,000 total.

Operator

This is the first time it happens in many years in the company, at least the ones that we have the ones that have participated in. Another important instrument was 90% of currency exchange exposition without the bonds in the United States. We have 2 more operations happening with subsidiaries with lower values that we will conclude this Q2 or semester, 2nd semester. We have here several deliverables that will be operated. I'd like to rank here.

Operator

First of all, we will do by the end of June 2023, LATOBUS Day, where we will share with the investors and analysts the essence of our strategic process with a important reference of goals and strategic actions that the company plans to execute. Along this point, we go through the 2nd phase of supplies that is expected for our fixed semester 2023. So we're looking here at the CapEx of with expected reduction of BRL 280,000,000, 10% of the expenses of the remainder of EUR 2,800,000,000. And in OpEx, EUR 200,000,000 or equivalent to 25%. So these two phases when he talks about supplies is really important, either for OpEx for more competitive than in CapEx in the acquisitions done by the company.

Operator

So in May, we will launch the dismissal plan for the remaining employees of the company. We are also within an ambition to the partnerships with around 74 agreements should be done 31 by the end of the year and there are several operations of the corporation sales of divesting and we will also give liquidity to our partners and are in our joint ventures. This is important for the liquidity of the company and the results as They go through in a control exercise by Alator Bras. We have a renegotiation in the structure of capital of Faiza, running and this will happen along the 3rd quarter. And then not just achieve 100 percent of participation, but also to together with BNTS so that we can restructure this debt process so that we have a letter of buzz with a bigger share.

Operator

So we believe that this is a relevant important that adds a lot of value to the company. And finally, we also We plan to share here with you this strategy of optimization of fiscal credits. We have fiscal credits relevant in holding and also in the subsidiaries, I'll gather with either capitalizations where we can where we have to provide the capital allocate capital to companies, to partners, to joint ventures so that we can generate tax revenues in the holdings, M and As in joint ventures as we have done with Sais and receivables. So this set of values create a lot of worth. This makes a valuable, the important creation of the value for the portfolio of the company.

Operator

So these are the points that we in our transformational process led by Camilo. And here we have I The new leaders in the company. So as I had mentioned, but we have Antonio Baleschao, Director of Engineering. He is the CEO of the company, Italo de Freitas, Professional Engineer. In the mid-sexy for more than 30 years.

Operator

This is Jean Carlos Gimadain, who will lead our area of commercialization, also professional, very recognized in the area, has gone through several companies, Edipay, like such as Edipay, one of the subsidiaries of data as well, Edu Wolf, who was the Head of M and A of ENGIE outside Brazil and now is with us, involved in a set of operations and the maintenance of 2 professionals that are very valued to our company, Jose de Golinte, the regulation And from one of the former Enel, Elvira, the financials Since being here since I joined in my first time in the company, Camilla Rauge, well risk and conformity and governance. We have brought Henao Tuco Hero, former Director of Supply in Vale with big experience in CSN and several big sized companies for this. And we also brought Renato Dominguez who do people, management and culture, 30 years of experience in this area other human resources with through many own consultancies, but also several companies, Tigri, CPG. We also made an invitation of revitalizing so that Marcelo Sequeira can come, a current Board member. And now through May, I will and then here our Vice President of research and development, digital and information technology and bring August to SIBERA and then I hope to conclude this.

Operator

So we have the team basically completed here working a process of transformation that has led with me together with many together with Camilo and many other of these Vice Presidents here. And in the next slide, I would like to show here and give the floor to Zenerato so that he gives his first comments with you. But far great moves impacting the LATOBRAS field, we have the PDV, the reposition, structural optimization and the Renato will make a brief comment about these challenges. [SPEAKER JOSE ANTONIO ALVAREZ PALLETE:] Thank you, Wilson. Good afternoon, everyone.

Operator

It's a great pleasure to be here and talk about these movements that are shown here related to us, to management and to the culture. So the figures of PDV that you see here for the voluntary dismissal that has already shown in the previous slides. But I want to highlight the impact and the expectation we have of this annual savings the EUR 1,100,000,000 that has already down to EUR 150,000,000 up to April in a month of EUR 70,000,000. And then now in May, we have this dismissal plan that we will be launched the second one with 1500 people already registered for it, making that the organization comes close the size in terms of people, fair with its performance and with what it needs in terms of people to operate and operate in an efficient way and annual savings of EUR 680,000,000 EUR 600,000,000 to EUR 800,000,000. So together, the total savings expected savings of almost EUR 2,000,000,000 in this process non voluntary dismissal.

Operator

And then here, we are replacing some of these professionals, especially in the maintenance area of 832 professionals. This starts next week. We have the first wave, 831 people arriving in the company and starting the operations by June, especially with the focus of operational continuity and innovating this field, which is replacing many of the people that have left, especially retired people in the 1st dismissal plan. And then optimization of the structure starts the centralization of the organization. Up to June, we will finished implementing this new structure with the strengthening of the corporate functions.

Operator

So reducing the number of management positions in 30% when we compare with the pre capitalization, It's an important impact in terms of point of view in terms of cost and also of being an organization that is much leaner and lighter and more efficient, of course. And lastly, the process of strengthening of cultural transformation with our strategic objectives aligning of the organization with people and a new design of career track plans and onboarding of young people that we should start to be doing in the 2nd semester. So with this, I finished this part and I thank you very much, Wilson, and then I give you back the word. Thank you, Zernato. I would just like to So we have around 8,000 people in the company.

Operator

So but we started here with 10,000. So we see this reduction. So I'm Trying to be concise here in the explanation. First, I would like to talk about the sustainable growth of the company. In this quarter, we had an we have added new megawatts to the company with finishing the cycle of Santa Cruz, our terminal electric in Rio de Janeiro with more 450 Megawatts in the buying the hydroelectric unit of Santo Antonio.

Operator

So, 28% of the capacity in Brazil. So with the controls where we have 1475 Megawatts of added Megawatts with Saesa, Baguari, Talispiris, Hichuru Basio and leaving Llanelli, which will add the 5 50 megawatts that we of what we already constitute. And we are hearing this seek to become one of the biggest companies of renewable energy in the world. And with these movements, we are naturally meeting this and we are here It was our energy, which is renewable, which is cheaper also, means 20% of the energy generated in Brazil, 22 of the capacity installed. And I understand 7% of it coming from clean sources.

Operator

In transmission, we had the same behavior. I highlight here the increase of an investment. We doubled the investments in the corporation in the same quarter compared to the previous year. And now we reach here 74,000 kilometers, 38 percent of Brazil, 282 substations. Brazil has 194,000 kilometers of transmission and we also have the perspective, excellent perspective of great implementation of great size investments with CapEx of almost BRL 6,000,000,000 And this EUR 837 million is up to EUR 2027, EUR 186,000,000 only in this year, 2023, some already implemented in the Q1.

Operator

So sustainable growth sustainable growth and also transmission and the decarbonization of our generating energy. In the next slide, we have an evaluation here. I'd like to highlight here, it's really important that our revenue in the 1st quarter reaching of EUR 11,000,000,000 revenue, 1% of it is revenue regulated indexed to the IPCA, most of it. So I look at here EUR 4,200,000 of the transmission, EUR EUR 2,620,000,000 in the generation in market in the long term, 38% in the generation of codes, decreasing along the time, but it means 9% and all of this comes to 71%. So we'll see here in the superior block about EUR 3,000,000,000 or 27% of our revenue coming from markets, free markets.

Operator

And the highlight here in the free market is that the 86% of it are in bilateral agreements, which is typical in the free market, but also with index to the inflation, only 4% of this that is that in particular liquidity is in the short term market. So these are revenues of rents, of transmission lines for telecommunication, of providing operational services we have in Belmont, all of them are also indexed. So it would have been correct to say that 71 plus 2, 73 plus something else close to about 96% of the company is bilateral contracts indexed. So very good. So with that said, characterize, it's a very robust company in terms of revenue generation.

Operator

And I go to the second slide the following slide where I come here to show you Jean Carlos Guimaraes, who together who is joining us, telling us about what the market has been debating these bilateral contracts in the concerning this law from 2015, 13,800 and 182. So Jean, please, you have the floor. Good afternoon, everyone. These contracts, they have been agreed on this law from 2015 And they are electric intensive clients. This contract, they have amounted 12 41 megas that have been contracted.

Operator

They have a specific tariff in the 184 megawatt hour. So, it's important to highlight that this price, What effect stays in the Petrobras in terms of effective revenue is equivalent to quotes, so BRL 90. So this difference between EUR 90,000,000 and EUR 190,000,000 goes to the investment funds in the Northeast and also in the Southeast in terms of generating energy. As these prices are above from a point view of their clients to the prices of the market, many of them have been options of reducing the contract the amount contracted. And this law, you see this in the law says you have 6 months for this reduction and also breaking this contract.

Operator

But in this case, he needs to wait 18 months without having being fine. So here we had the Q1, we had a reduction of this number of processes and this should increase along the year and then along 2024 as well. So basically, this is it, Wilson, what I have to say for now. Thank you, Joao. I'd like to highlight here that in this comment from Joao that this rule is the request of a breach with 18 months ahead.

Operator

So once upon request, we have 18 months to execute the contract in the terms that it exists today. From there on, the following 18 months, we're talking about half of twenty twenty five. The consumer who took This decision has a risk in terms to contract this energy in the free market as prices are above or if we have the variation of As we have had already 3 years ago, but in an unfavorable situation And then obviously, related to economic perspective as well. So we Obviously, these 2 favorable conditions, the risk of this consumer increases a lot, which could impose this decision in the level of responsibility that is really big. So moving on, we have here the variation Of our volumes of revenue generated, we see here that 90% growth in this quarter compared to the first the same quarter in the previous year and we see a growth the lower quotes, which is the process of de coating.

Operator

And also, we have a growth in the ACR with 86%, so a rigorous growth. So we have the cooperation of Saiese in our portfolio, so the importance of this transition. And the free market is growing 29 sense also with the quotes coming comforted in the 2, 3 markets, 29% growth and 27% of the volumes that you have to put in the short term market. On the other side, we have the growth of the revenues of generation from 22% to BRL 2,200,000,000 reaching BRL 6,500,000,000. And then here we have readjustments of the quotes that are but reaching basically despite the volume of our quotes, we had growth in the unit values.

Operator

So with the reduction of volume compensated by the growth of the price of codes of BRL 1,000,000,000 and we have an increase also in the volume of markets or regulated markets, BRL 2,600,000,000 reaching revenue average of BRL 2 100,000,000,000 reaching a revenue average of BRL 2 100,000,000 per megawatt hour. And then in the 3 markets, From we have a growth important growth of volume of 26% and the growth of revenue of 26 percent reaching a total revenue of BRL 2,600,000,000 or 200 megawatt hours and this volume liquidated in the short term in the BRL440,000,000. So the performance in the generation is very prong besides the economic moment that we are living in Brazil. So here we have this regulatory view of the transmission. So I'd like to highlight this because as the values of revenue of transmission are different from the regulatory, I'd like to highlight first that we continue evolving a lot in terms of regulatory.

Operator

So the green ones on the left side show that in our portfolio, our regulatory revenue of EUR 3,334 1,000,000,000 due to about EUR 600,000,000 growth. So it doesn't reflect in this trimester in the reported IFRS almost EUR 4,216,000,000,000. This is due to the fact that you have the revenue of the transmission segment indexed Here to the variations basically, especially on the 2 inflation rate, Pesia, 2% in this quarter against 2.3% in the same quarter last TRD in Beijing, aiming with an even bigger one. So you can only keep this revenue stable because we had important growth of the assets in the concession in terms of BRL 350,000,000. So this is the important part I'd like to highlight and 15% increase, liquidated of inflation of and the reprofiling of also of the figures you see on the slide.

Operator

And now speaking on the financial performance, I I will help talk about the first slide and then Oviedo will take on. I'd like to highlight here a couple of things. In the second quarter we reported the financial results of growth of IFRS or the adjusted value of 13%, BRL 9,200,000,000 in the quarter revenue, a growth of EBITDA reported 44%, BRL 4,800,000,000 in the adjusted EBITDA of EUR 5,600,000,000, so above the inflation. However, our result in the last line that has a set of items that we are considered non occurring that we have reported BRL406 So these are highlights in this quarter, the growth of revenue, the consolidation of Saiesa and our regulatory recovery, our investments that I will talk more about, the reduction of provision for compulsory loans. So also continuing this in this line.

Operator

And also savings related to 3 employees that have left to have an add of no prevent the health plan and so on. We are already working, as Hanato has said, with an expectation of savings of BRL 70,000,000 monthly. Just with the people in the company, we have a growth of Due to the consolidation of Saesa, an increase of also of our consultancies and landlords To valuibalize all of this condition, we also had a growth of EUR 400,000,000 in our operational cost because we had here the cost relation of Saies of 300,000,000 and we are just 15%. Those add more than the values that we are reporting here. And then we have here in the effect of what we understand that we have to be observed that non occurring yard the anticipation of the payment, we have a discount for anticipation of resources that are brought forward at above BRL 1,800,000,000 and then also And reducing compulsory loans provisions, we have a reduction of BRL 335 1,000,000 in terms of BRL 77,000,000 in the monetary updated.

Operator

So we have in this starting this quarter a part of EUR 1,800,000,000, which is amortization of capitalization and part of obligations related to regulatory funds, totaling Nuna, as you can see, EUR 1,800,000,000. So this is something that becomes a priority in the company in the evolution of alternatives for additional financial expenditure. So moving on to Elvira. So we have half another presentation, so I'd like to reach 45 minutes. So thank you, Will.

Operator

So I'd like to talk about some details related to the demonstration of results. As Wiss has already mentioned, we had here a growth relevant of our gross revenue of 3%, EUR 11,000,000,000. And I would also like to make some comments on our base in which we consider reoccurring, which is our adjusted base. The more relevant of increase of revenue already is the consolidation of the Saes Energy Company And that are and this is reflecting the regulatory environment as also in the free Santo Antonio also has price average price is well over €200,000,000 and this reflects in this increase of revenue. The slide that I will highlight more up ahead, I'm not going mention now, but we will show more details later on.

Operator

But in the block of costs, Zenix operational costs that is in light blue, It's important to highlight the Sant'Antoine in the same way that he adds value. He also brings its costs. In the morning in this period. So in the construction, we have actually has accelerated a lot of the investments in the adding value to the transmission, which is very positive and we have an increase in the revenue of EUR 200,000,000. And in the case of our thermoelectric Santa Cruz in the Q1, it did not only was dispatched, but also it It was performing some tests to do a cycle, so there was no need which so there was no need for fuel, which saves EUR 200,000,000 in amortization.

Operator

And I'd like To show here of all the Ancel consolidation, we have BRL 500,000,000. So we have an increase of 80 and expressed an increase. And this is in effect non cash, which is the amortization of these new contracts that we signed with the capitalization. So this brings more or less EUR 350,000,000 and also the depreciation that comes from Santo Antonio in this year. And the final financial results, the duties of the debt with Santo Antonio, which are consolidated thereafter renegotiations, we see a reduction in these amounts and the programs for relevant value that is the IPCI and also the duties and so special projects they see here, very important to highlight that in this moment, we're having this impact on the financial results, which is also non cash impact.

Operator

But an impact, a cash impact, which is because it's very important because this impact follows the flow of 20% a year. So we pay this R900 1,000,000 referring to the initial projects recovering to the basins and also in the Amazon region. And now in April, we have already paid, say, the Alto referred to this year, which is EUR 620,000,000. So from this, in terms of cash, we have to pay for, we have done everything, but the amount of debt will go to the financial result is higher. So it's important to make this comment.

Operator

And also in the currency exchange situation, we did not We have even better result, positive result in the quarter last year. So we had that's why this negative result that year's year. And then we show the hedge here for 90% of our expedition. So starting in May, this exchange currency exchange variation will stop existing. So now moving on to the second to the following slides.

Operator

So this year, the detail of the graph of the composition of our revenue of growth revenue, remembering always that these two extremes are IFRS and we are focusing here in these columns of darker blues, where is the reoccurring results. As already mentioned, the main effect was increasing the degeneration with the concentration of Santuno and Nigeria. Besides that, we also had Electron North in the regulatory environment and then this has added EUR 600,000,000 in terms of revenue. And already plane, we did not have the operation of Santa Cruz in the first effect. So this brings us result and also from a regulatory view, we had an increase of revenue from IFRS, we have as a light reduction as already explained by Wilson and also due to inflation.

Operator

And I'll move you on To the next slide, the PMSO. So on the left side, we have the graph, the superior part is IFRS and the lower one is What we consider the reoccurring, so that we can make a comparison and effect of comparing on a regular basis. We have They consider SantoTran and SantoTran as SantoTran as SantoTran as SantoTran as you know, because it has added EUR 72,000,000 of BMSO. So here on the right side, so the main points that I would like to highlight. Our main expenses is People and that has grown €44,000,000 as we highlight on the right, reoccurring people only which has only increased 12%, which is much lower than we have just in the collective bargaining.

Operator

And the main we have economy with the dismissals that have already happened. The program with the collective agreement as already explained EUR 100 and also health plan has been intensified as it usually happens when we have the dismissal plans added more EUR 10,000,000 and also we had the expenses even though we have kept the reoccurring. In fact, it doesn't come back to happen the other people that have been dismissed together with PDV, the dismissal plan. So these are the main points and in the block of services. And also the last comment, so the perspective is that from now, one continued this reduction In the product, the dismissal plans as they keep on going and that they will launch and that are still coming out in the next month.

Operator

In the blocks of services, I'd like to highlight here, we had an increase of BRL 59,000,000, but a great part of that are expenses that also will happen For a limited time, which are the consultancies that are helping us with all of this plan of transformation, we had here EUR 28,000,000 for the transformation office and other and legal services and also technical nature like maintenance of assets from our subsidiaries. So this has added to EUR 22,000,000 and others, we have a small increase of EUR 7,000,000, mainly from according to the by the retired from chefs and we have overall savings, as we highlighted too, is the initiative of insurance. We had already implemented last year and now in this Q1, we had implemented more EUR 17,000,000 reduction with the insurance and also let us know, which is making some elimination of assets and rights and had that another EUR 5,000,000. And now with operational provisions. This is one of the highlights in the quarter comparing to the same quarter last year, an impressive result.

Operator

The compulsory loans, we do not have an increase provision, we have a reversion where we that due to the work that has already been mentioned in our conferences in the line that highlights Cezas Green PCO deal last year, we had a provision of Amazon Energy, distributor to the Electronaut and also the I ended all the provisions, and we do not have impacting basically in any of PCLD. And now going to the last line about legal provisions, we had an increase of EUR 350,000,000 to EUR 370,000,000, which is highlighting the great part of this are the updates in the old process that are already existing and some situations of process there was a reclassification of risk in function due to some unfavorable decisions and In the same way that we have the initiative according to the compulsory loans and there is another initiative led by the Bauer Legal Vice President to address these other process that are non compulsory and will obtain some reductions and agreements in the future. So to the next slide, we have a variation of the EBITDA with an increase of 10%, which has already been explained by the previous events. And then the partnership, We don't have Itaupu, less 116,000,000 and now Puy is not uncontrolled by us and the other effects of expenses I have already explained.

Operator

So in the next slide, so that we can reach the conclusion, variation of our net profit, which is the most relevant one, the financial result in which has this fall of BRL 3,000,000,000 and this variation of BRL 3,200,000,000 negative, what we have today with reoccurring values that are being addressed are highlighted on the bottom. So it refers This EUR 1,300,000,000 refers to these insurance expenses, EUR 709,000,000 Sant Antonio, which renegotiate in this variable and our currency liquidity of BRL 886 and also in the part of light that we have this discount of BRL 335 1,000,000 in order to receive BRL 950 1,000,000, which we would take 20 years. We have already received. And this is the single event. So and after the compulsory loss, each TriMas rate attempts to decrease in the volume of contingencies and this has been over 5 this value has already been over EUR 500,000,000 and now you see it's lower.

Operator

And also leverage, we see the company continues this in the value of net debt and EBITDA, we have the composition, the gross debt we had EUR259,000,000,000 last year, now we're going to EUR 158,000,000,000 and we also had a small decrease in the cash due to the payments that have already been done, but we kept the growth of EBITDA and also the net debt in 2x and some and also the payment of ZEDEA, which we paid already in April, EUR 126,000,000 dividends that will pay in the end of May up to June and also we reached BRL900 from HPE. And also the last slide of the investments that have been on behalf of significant growth of 191 percent consolidating the candidacy that started last quarter. So over EUR 1,500,000,000 investment is that the operation that Wissen has already mentioned, adding the companies that also the Cemigui of the plants of Ichirubacio and Bagua Dien also continuing the buying of Sant Antonio and also inside the investments, the wind park in which of Oshkoshinib that we are building. So we have here the financial highlights And then we can go on to link. Thank you, regulatory, because we had important decision here related to so I will give the word to Link so that he can explain here.

Operator

So thank you, thank you, Vivi. Good afternoon, everyone. So I will go here to the slide that we brought here highlights the main focus in the RBSE, which is a team that Bjornsson has already highlighted. We had the new technical norm of SSAT, which had a difference of our nomenclature inside Nel, but it was also issued inside the SGT last Friday, which consolidated the analysis of the contributions of transmissions of generators of consumers in relation to what setting the technical norm of the same number of last year. It brought it did not bring a lot of innovation in terms of understanding to the new node, but it brought an understanding that is very similar and sharing and splitting this in 3 topics.

Operator

The first topic, which is amortization, which is the anticipated and even though it didn't bring a change in understanding, technical terms the 86, 85,022, but it gave us 2 ways. The same way of payment up to which is post anticipated, which was highly widely discussed in our public audience meeting in 2017 and also was in our understanding the position of the promoters office and not to change in this item and keep it as into the flow of payment, the way in this post dissipated manner and also brought some of the possibilities. And also, as shown in the 20 mature technical note the possibility of change of amortization to anticipate as June 20 one which was the understanding the technical term and that was concluded in these two ways related to the separation of flows of application of KR only in the installment that is different from that of the methodology that it was already on. It changed bringing the technical term last year and also broadly reaffirming the understanding that the agency should be changed so that I'm sorry, that your should be changed so that it can be have the calculated the debt that is still due payment and also some difference in calculation.

Operator

We are still looking at the numbers that were made available and we had the Today, they included in the this process inside the meeting. And now on Friday, we are here with Elleta Brase and also Baia Brace discussing with Enel for us several times with the legal time, the technical team, the legal team in the next week, we will be there in the public audience referring the legal reference and the predictability of the rules that define in several decisions that were taken in the sector highlighting that we don't have any merit decision related to the team, But possibly, it will be taken on Tuesday. We are not sure in which way we will forward which way The Board will forward because these votes have not been made available yet, but they hope that they keep the same terms of the consolidated process and the final stage of discussion is final. And also, So only this update of our BSE. So now we wait for the decision in the next Tuesday.

Operator

So we have 2 more slides. I want to highlight that we made available, as you may, our annual report that I recommend reading, we have completed and summarized in English and Portuguese with the where we talk about the future of the company, any sequence, some recognitions. First of all, Ratso Bras leading the initiative that's launched by the favor by the global pact of United Nations, human rights in the electric sector and also some recognition done by several organizations and agencies and that puts best as one of the best companies in the Electric Energies in Brazil. And IFR awards in category of Latin America equity by capitalization and the permanent and our stay in many other awards placed here, so I just want to say that this is a permanent commitment that we have. And obviously, as closing this our first intervention here with her.

Operator

I'd like to thank you. This is a work that has been done in a very cohesive way with the Board of Directors, Valatobraz and the new executive management. And I'd also like to highlight and share that the Board has met We in a very intense manner, we are advancing. And I clearly have the impression that we are advancing very much so in the strategic in our strategic agenda, creating value for the company. And this is due to the dedication of everyone to a greater cause, which is adding value to all the to everyone who reach El Rehubraz interact.

Operator

So now We're free for questions that you may have. So now we will start the Q and A. We ask you to make the Q and A in the same way and wait for the answer of the company and to ask questions. This should be sent by the Q and A icon in the bottom of the screen. And then based on the order of appearance, your name will appear as to ask the question and then a request To activate, your microphone will appear in your screen.

Operator

And then now we'll go to the first question, which comes from Andre Sampayo, a sell side analyst from Santander Bank. Andres, you may open your microphone, Please, on that, you can go on. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So good afternoon, everyone. I have two questions. The first question is referring the contracts of Sebastian and Tobiada.

Operator

I would like to know more about what you already understand is a contract, what has already been requested in terms of canceling? And also And if this is already known by the company, this is reflected in the energetic balance. So if we some adjustment, it should be done or not. So depending on the discussion of Dominguez and Sobralginho. And the next question, Angra, if you can talk about the expectation of Angra.

Operator

In fact, And still speaking about Angre, if we decide to build Angre, how would this division of cost of mobilization and the suppliers, would it be shared by the stake, economic stake or the originary in regional one. So thank you, Andre. So I'd like to I'll ask In the specific case of Tumviere, Subalginio, Carlos talks. So that just going Tulip related to Angra 3 we had this week. I recommend that you have access to the material that has been shared by Alexandre Civeta, who was there in the National Congress.

Operator

He reaffirmed that the commitment that we have structure of Angra, which with I always said is really important for the electric system, especially in the Southeast region, the metropolitan area of Sao Paulo and Minas Gerais, which is this process in the clear manifestation from the minister, it's a priority of the government. So now I will give the word to Linxo to talk about the expectation and this risk you have mentioned. And then Jean Carlos will talk about Tovian and Sobrijina. So, Lee, please. So, thank you.

Operator

So, I think you approach a very important point that the scenario that we work with is to complete execution of the project. So the project already has most of it is already concluded. It's a significant part that is already advanced. So there are still some important parts, but most of that has been done. We have discussed here together with the ministry that has done this interference also with some of our courts that we can approve the tariff and all the contact that we have had with public sector where we had some audience.

Operator

There was specific presentation about nuclear energy, Angra 1, Angra 2 and also mining associated to the nuclear energy and also the project of Angra 3. So our scenario is executing the project. Our role as shareholders is to contribute and We finished on the modeling and within the execution of the project. So we are in fact restructuring inside of Petrobras areas that are destined to following this project due to the importance of the project Chuleto Bras and also in something like as is we don't work with this and our non execution, but from electric or nuclear, it's we talk about We have to talk about the shareholders. There is no rule of how it will be treated.

Operator

So it's not the basic scenario that we work with. And lastly, I would like to highlight that this is a project that the risk of 70% of the construction is already concluded. Basically, what's missing from the moment that we follow-up with this critical process, which is compliance with the CFO work. This is a project with similar to Andre Choe, same size, same machine. Now we have here in terms of investment, besides commissioning, which is the main activity that needs to be developed, We have here the instrumentation, which is very modern, is the greatest change related to the instrumentation.

Operator

So I think this is the fundamental factors that we have the development of this construction. So Jean Carlos, please. So good afternoon, Andrea. What happens with this impact? Basically, it's given to, as mentioned already.

Operator

So this volume is unlocked and We consider it as not contracted energy impacted to the quotation. So the price €109,000,000 to €185,000,000 great part of it is for the investment funds, the Northeast, Southeast. What the company retains basically is the value similar to the quote. So with this with the breach, we incorporated this volume is already informed and this means value that we can put in new operations of new operations. So thank you.

Operator

So very clear. Thank you very much. Thank you, Andre. Our next question comes from Marcelo Sa Angelo Tsai from Itau. Okay, Marcel, you can ask your question.

Operator

Please move on. Hello, everyone. Thank you very much for the call. I have some questions. The first is trying to understand with your head the terms of capacity, what will happen by the end of the year, If you have a relevant potential with the capacity you could offer And also about Andre, a question that may make sense or not is to have this discussion with the government is transfer of participation that Petrobras has in the assets in the nuclear assets, the government so that to this If you do make sense to have any type of negotiation with the government to take this this uncertainty that you have in these parameters of bunker trace?

Operator

And the third question This appears 0 for Eletrobras due to the new resources that will go to the fund that will not go to the company. So these are the 3 questions basically. So I'd just like to compliment. It's not that it's not the stage of the company, the resources to the transfer goes to the cash flow to the company and But it's a restricted fund. The company can only use it, these resources for ends establishing law.

Operator

So contracting this energy, which is another way of de coating, it would be free to sell the way you want. So in hydrological conditions, better price, better market price data. So you cannot use these resources to pay dividends. There are There is a specific destination to establish by law related to this is like the difference of HAG and the difference in revenue. Okay, it's clear.

Operator

Thank you, Marcel. And so about the comment, go ahead please. This participation that today there is nothing today that in discuss in this way. So the main focus of, I believe, of the government and Eletrobras is to define the conditions of the venture, the tariff is very important, the contracting who will supply the equipment, the conclusion of the construction. These are the main focus related to Andre Tris.

Operator

And then about the auction of capacity at the end of the year, You have a potential to watch much of capacity that you have today. And if it's an option to generate value for the company, what would be the amount that could go to auction and some idea of what do you think would be the contract in terms of capacity in this auction. So I can speak about that. So I think we have to wait first to define what will be the guidelines, the final objective of contracting and the source that would be able to participate If it's just the thermal ones and then we don't have anything to evaluate where we have to evaluate the opportunities. And but we have the work also here really associated to regulatory agenda, where we have the valuing of the attributes provided by the thermal electric plants, which could be in the process of contracting due to the necessity of even more system that of the service provided by the hydroelectrics.

Operator

I don't know if it's in this line, if you were specifically talking about the thermoelectric ones. No, in fact, it's our auction in general. So there's a discussion, there will be different products in the auction, main and no thermal will be 2 products that will be computing. So this is the question. So what has been raised in terms of hydrologic related to the amplification and not the current capacity, but will be the guidelines defined by the Ministry.

Operator

[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Rafael Nagrando is the next question and on the sales side from Credit Suisse. Rafael, you have the floor. So good afternoon, everyone. Just one question from my side, it will be related to the employees that are leaving. I don't know if you I would like to know if you have any relation of the average cost of the people who are coming in the company compared to those who are leaving by this dismissal plan.

Operator

The ones that are coming, they have an average remuneration, 50% of those that we have today in the company in the same categories. Thank you. Thank you, Rafael, for your question. Our next question now comes from Antonio Gonquierda, sell side analyst from Citi. Antonio, we will open your order so that you can ask your question.

Operator

Please go ahead. So everyone can hear me, go ahead. It's not about operational questions. My question is really sometimes the company they have to defend legally. So now all the companies they have a lot of contingency money remote.

Operator

So because absurd questions are presented, they have to be debated. Recently, the government has given demonstration that it want to create legal question the number of water has in these assemblies, which is a breaching contract, but the company maybe has to defend. So I would like to know what is the legal strategy that about the team and what's the official position of the company. The press only talks about one side. Nobody's defend publicly the fact that they're going to have to sold it, do its right and then to vote.

Operator

And I want to come back with this debate. You only hear one side of it, so I'd like to ask the company. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So first, Trunkietta, we have 2 And I speak very comfortably about this. So this process was an object of ample debate of the society through its representatives in the National Congress. So besides that, it's also a process like a call we have conducted by an evaluation of the accounting court in the unions.

Operator

So this has been an important approval. So remembering that this the public audience about this process It's a process from a legal point of view, I'm not a lawyer, but it's a perfect process. And so if you look at the process, I consider improbable, so less likely. So what LATOBAS can do is to the public organs. So we can clarify any questions.

Operator

So this has manifested in many very clearly and continues to which the company relates truth. So with the minister, which is Mr. Leschamps Sivero, we have had several interventions and interaction with the minister. And all the times we have put we have a position this way, we have to see that the robustness of the project, the process, over 300,000 workers from the reserve. And So it's not the classic process of privatization.

Operator

If to privatization you sold all the shares and then for the 3rd for any third party, our process, there was we didn't sell any shares directly. So in fact, it was diluted by the size of capital in which the use of this capital is actually allowing that the Brazilian people could have a reduction of its fees due to the quotes that generated those tariff like these were the main elements that determine the and also and then the worth of this contract from as the government received insight and also in terms of I think reducing the amount of and also the formation of funds that are in interest of the union. So this processing in general It has a set of advantages. So the advantage that one of the One of the main points is that the cooperation that is the model is a partnership model preferred by all the companies in the world to make this growth process viable. Our case, we have the advantage that we also have the Brazilian corporation like BREL, like VAG, so it's a Brazilian corporation.

Operator

All the members here are All the Board members are Brazilians. Decision process is in Brazil. So this is the first to defend in the process is a little bit. It's up to us as a company made available to provide information. I'm talking from a legal there are 4 actions of our constitutionality.

Operator

What are the speculations that have there could be a 5th one? So, sure, the questioning is given to anyone, is given to the government and it will exist this right. So, we have We are we're not direct parts, so we don't have a participation. It has to be evaluated in the sequence that they come. So we can be it can be somebody who can contribute to the process.

Operator

As we since we have done this since the first part, now we have 4 and now none of them have given any specific harm or hazard. So it's a process can be matured and will be sent to court and judged. So they are given this right. So I understand that we have maybe we'll have more in the company providing information or sharing information of everything that is demanded, it is totally open to this and anything above this, it has to be evaluated in other legal pier. So the company is making available all the information.

Operator

And I think in this and it's my second quarter here, but the biggest advantage of the capitalization process is actually is to have the company be the investor be in Brazil. So I think we have this here. We have to triple the transmission value, which is highly important. That's the Minister mentioned, the importance of the growth in this area. And now we have no capital to this investment that in the Q2, we are explicitly negotiating this.

Operator

And besides this also having We are nationalizing the putting this in brackets. So crossing participations in thermal hydroelectrics of renewable energy is also bringing this greater participation to the Brazilian company Petrobras. So this is what we can talk about besides this. We don't have any way of sensing the legality to ask you 2 questions. And from the community side, it's totally available for to share any type of information of all of the communities and also to make clear that we are already complying with the objective of the process of capitalization, which is to increase the capacity of investment of the company in the interconnection of Brazil and the development of renewable energy in Brazil.

Operator

And this is what's happening in the numbers online. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Thank you, Antonio, for your question. Remembering to ask questions, we should be sent a Q and A. And So your name will be announced and then you can ask the question live. Our next question is from Henrique and the rest of the time from JPMorgan.

Operator

Henrique, we will send your request so that you can open your microphone. Please, you can ask your question. Hello, everyone. I have some questions. The first is about We've seen an increase a great increase in the financial results.

Operator

Just 1,000,000,000 in the My question is, if this value is possible for the following quarters? My second question would be about Amazonas in Asia. We didn't see any relevant provisions related to Amazon in the Q1, which is a good news. I would like to know to understand if this If you plan to keep this? Thank you.

Operator

So, thank you, Henrique. So first of all, let me start clarifying about the financial results. In fact, BRL 1,000,000,000 that appears there, part of it referring to Sant Antonio is 70% of the debt, BRL600 1,000,000,000 other debts of ours. And these duties will decrease After negotiating this debt, which is the next step that is in our work plan, so we're restructuring. So here we are in a not trading this with the creditors to renegotiate this debt in a way that this value is reduced.

Operator

You will not disappear, But the intention is that naturally to decrease this. Another point that is important in the financial results is that we had an impact of the discount that was given to Emipad. This isn't a single time event, it doesn't repeat, which is the discount of BRL 350,000,000. And in the event that happens every three quarters is the correction, is the adjustment of the obligations of CTE and obligations of the reservoir flows and Amazon Elegao, which are obligations from the capitalization. So I think Link can talk about them as well as.

Operator

[SPEAKER JOSE RAFAEL FERNANDEZ:] Just to make some observation about the financial result that has been greatly impacted, we have the IPCR. We have an effect of very elevated IPCR, which has a counterpart in the revenue. So 70% of revenues is indexed by APACR. So just to so well mentioned. Thank you, Paolo, for the complementary view.

Operator

Thank you. So in fact, our in the last quarter, we had a relevant provision of Amazonas in which we reached 90% of the debt from El Eto Bras with Amazonas provisioned. And then this difference of 100%, in fact, there are values that of our current ongoing expenses and also debts of and other debts that are being paid and we're not observing any default And also, growing expenses that many times is questioned since May last year. We don't observe any default in Amazon distribution and we have the contract bilateral contract around EUR 350,000,000 a year a month. So most of it comes directly from CCE, which is part of the CCH related true gas And the remainder we received from Amazonas.

Operator

So we are receiving in a way without default. So we have So we will decrease we will receive this installment from Manel related to TRYENERGY of EUR 450,000,000 a month that they had a technical note favorable to Enel and then and with the Director, Chigi, and we have a meeting with him in the following weeks to deal with the topic. So today, we don't have an expectation of undue provisions because the values have been paid, as I said, since May last year. So we still have the value of a less amount, but paid to the ongoing expenses. So the provision has already done.

Operator

We have a debt that is provision significantly of BRL 7,000,000,000, which we have to treat in a global solution, which involves the regulation, the Ministry of Mines and Energy, so that we have a recovery of these provision values. Thank you, Enrique, for your question. Our next question now is from Daniel Stavinski, another sales scientist from Safra Bank. And now we will open your order so that you can ask your question. Please proceed.

Operator

Thank you for the opportunity. I'd like to know a little bit more about the strategy of the company related to the decortization of the energy that is in the scenario of the fall into the prices of Tricity and Energy, how do you think about the strategy, commercial strategy and this will help a lot? Thank you. So I will growth as well. So first of all, refer to I like to say that this question about the scenario, because we forget that 2 years ago In the same economy we had today, we are operating with the biggest drought in our history, 91 years and operating the highest price.

Operator

So now we are one of the best indexes of RAIN. We are operating in the we have an excess of overflow of we have the first steps of we see the economy growing and we have an acquisition here of volumes of energy of 30 years. So this and our own results In 2023 results of the strategy implemented last year, they are robust and the prices they speak for themselves. So I believe that we need to complement. And with that, we have a Vice President of Commercialization.

Operator

We have the integration of this Vice President with 4 we kept 4 directors for commercialization, commercial ones in our subsidiaries. And we have here a strategy done from the holding with the support of not only by the people in the house, but also by the adding of consultants, things that we didn't have in the past and now instrumentation and systems. So important measurement of risk in terms of risk of the markets, risk of credit and operation done, we could deal with a mandate to our by our controlled companies and we have to come close to the consumer. So we brought strong Carlos that here, then he will complement with our answer. So he can talk about this commercial transfer, which is in his hand.

Operator

Daniel, good afternoon. I think we also have already answered most of the work that we have done, But I have 30 years of ratcheted sector and this is a cycle question about the price. Sometimes it's high, sometimes it's slow, sometimes it's to have a management of our portfolio that is very efficient and this is what we are implementing now. We are working with revisiting all the process of developing new process and we are going to strengthen our base of clients so that we have reoccurring revenues and also allocate and reduce the contraction of contract of energy so that we can allocate it in a more efficient and adding more value and also reducing the risk of exposition to on the short term. So this is a job that we are starting and we are strengthening our front of retail.

Operator

As Wissam has already mentioned, we have created these commercialization directors and departments, and we are structuring them and putting teams there, visiting clients and looking for contracts and we hope that this cycle, as I mentioned, that we are going through a low cycle, but low price cycle, but it's a question of time this price reacts again and it's important once reacting, we have to be position in our portfolio in a way to have good gains. Thank you. If you could just second question, just to if you could comment about the investments in the improvements in transmission and to enjoy the volume and seize the volume in this segment. So we are we highlighted in our presentation a set of we had several, I would say, initiatives or demands from ANEL, from ONS of a set of constructions to improve of improvements. And this was addressed and link can complement in each one of these institutions talked about.

Operator

So it has been prioritized by our in our budget a set of ventures BRL 7,000,000,000 that will bring a reoccurring revenue BRL 850,000,000. So this should be done along the 3 to 4 years. So the interest to do this as quick as possible, of course, but of course, dealing with the regulatory section as well. So I'd just like to compliment that part of this investment, they have revenue previously agreed that they have defined by the tariff situation and So we have a base of assets together with the operation, specifically in our engineering with the Vice President, Larry Jean, and Italo in the financial area, so that everything happens in the most efficient way possible and that we obtain the maximum value in reinforcing and improvements. Thank you.

Operator

Thank you, Daniel. So now we end our Q and A session and maybe we give the final words to Wilson so that he can do the closing. So I'd like to thank you for the participation to everyone here. I received here an advice here from our Board to to make this presentation a little bit shorter. So we made an effort because there is a lot to talk about, but we At least in this quarter, we tried we spoke for 52 minutes.

Operator

My idea here is that we reached 35. So this is our plan so that we have 1 hour to speak with you. So we extend a little bit, but we had For the 5 minutes of debate, you had good questions. I would like to reinforce with you that my optimism related to the company. So 6 months that I'm back and then I find a vigorous company with Our Board focused on strategy, focused on creating the instruments that are suitable for us to advance in our strategy, to incentive and encourage the management of the company, doing their best, responsible, sociable in all ways.

Operator

So we have a permanent concern from the group. I'm really happy to have here to be with 11 main executives and in the confidence with all the management constituted in a way that we start gaining some air to breathe in the end of June, so we can share with more detail our strategy, what are our priorities and what we see in the short, medium and long term, the way that we see creating value to the company. And again, and looking in our report, you have this clarity that the concern that the company has to do this in a sustainable manner, respecting the social and the environment, all the parts of what we relate to, all the stakeholders, it's very important. Quarter is a quarter that brings some elements of what we pursued for a long time. I highlight the reduction of provisions, the reduction of provisions.

Operator

So you put many people, you should say that the provisions are not reoccurring if every quarter is reoccurring. So we are in fording this curve and the cost of people MSO with the work that has been done in the procurement area. We have had the possibility to show our capacity to be efficient together with the workers and also the new group of people to the company focusing on areas that we didn't have a focus so important, what I call people management and culture, so commercialization, the team of innovation, digital, several instruments that we need to have here so that the company modernizes and automates and becomes more efficient and looking a permanent look in the sustainable of communication. And I would say that is a quarter that is starts FINNA shows the first evidence of what we think is the permanent objective of the managers of the company, directors and our Board of Directors. And I hope that we should be here in June and be here to the beginning of August to talk about the Q2, which I suppose would be even better.

Operator

So these are my final my closing and hope everyone has a good afternoon. Now the conference, Electrobras, is close. Thank you for the participation and have a good afternoon.

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