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CIG Posts Impressive 3Q

Zacks Equity Research

Brazil-based integrated electric utility, Companhia Energetica de Minas Gerais (CIG), also known as CEMIG reported a 43% year-over-year increase in its third quarter 2012  net income, which settled at R$937 million (US$468.5 million).


Net revenue in the third quarter came in at R$4,810.1 million (US$2,405.1 million), up 19% year over year. Electricity sold in the quarter climbed 1.7% to 17,715 GWh at the end of the quarter.


Operational costs and expenses in the quarter totaled R$3,545.3 million (US$1,772.7 million), up 26.8% year over year. The expenses soared because of higher personnel costs, material costs, electricity bought for resale, infrastructure construction costs and gas bought for resale, among others.

EBITDA was R$1,753 million (US$876.5 million) in the quarter, reflecting a year over year improvement of 18%. EBITDA margin was 36.4% versus 36.9% in the year-ago quarter. Operating margin in the quarter came in at 26.3% compared with 30.7% in the year-ago quarter.

Balance Sheet/Cash Flow

Exiting the third quarter, the company’s cash and cash equivalents were R$2,539 million (US$1,269.5 million), up 8.7% sequentially. Loans, financing and debentures came in at R$9.7 billion (US$4.85 billion), up 38.6% from the previous quarter.

Cash generated by operations increased 16.4% year over year to R$1,533 million (US$766.5 million), while the company also raised its capital spending by 18.3% to R$803 million (US$401.5 million).

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 competes with its other players including Companhia Paranaense de Energia (ELP). The company recently released its third quarter 2012 results with a net income coming in at R$319.3 (US$159.7 million) or R$1.17 per share (US$0.59 per ADR).

The stock currently bears a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

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