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COPEL Earnings in Q4 Improve Y/Y on Higher Revenues - Analyst Blog

Zacks Equity Research

Companhia Paranaense de Energia ELP or COPEL reported impressive fourth-quarter 2014 results. Net income came in at R$270.9 (US$ 106.7 million), up 52% year over year.  Earnings were R$0.99 per share or 39 cents per American Depository Receipt (“ADR”).

For 2014, the company’s net earnings were R$1,335.6 million (R$568.3 million), reflecting an increase of 21.3% from the year-ago tally. Earnings were R$4.87 per share or $2.07 per ADR (above the Zacks Consensus Estimate of $1.46 per ADR).


COPEL’s net revenue in the quarter soared 82.6% year over year to R$4,462.4 million (US$1,756.9 million).

The top-line improvement was driven by sales increase in the following categories: 43.2% in electricity sales to final customers, 149% in electricity sales to distributors, 9.3% in use of the main distribution and transmission grid, 11.7% in telecommunications and 32.7% in piped gas. However, these were partially offset by a 15.8% decline in construction revenues.

For 2014, the company’s net revenue was R$13,918.5 million (US$5,922.8 million), reflecting year-over-year growth of 51.6%.

Electricity Sales

COPEL’s electricity sales to final customers improved 7.2% year over year to 6,276 Gigawatt hours (GWh) in fourth-quarter 2014. The rise was prompted by a 5% increase in the Residential segment, 7.1% in Industrial, 10.63% in Commercial, 8.6% in Rural and 5.6% in Other segment.

Electricity sales to final customers include Copel Distribuição’s sales in the captive market and Copel Geração e Transmissão’s sales in the free market.


COPEL’s operating costs and expenses increased 72.9% year over year to R$4,151.1 million (US$1,634.3 million). As a percentage of revenues, it came in at 93% as against 98.2% in the year-ago quarter.

The company recorded steep increases of 751.8% in cost of materials and supplies for power electricity, 463.2% in natural gas and supplies for the gas business, and 106.8% in other cost and expenses. Additionally, higher costs were reported in the following categories: 63.4% in electricity purchased for resale, and 32.8% in pension and healthcare plans.    

Earnings before interest, tax, depreciation and amortization (EBITDA) improved 97.7% to R$518.7 million (US$204.2 million) with an EBITDA margin of 11.6% versus 10.7% in the year-ago quarter.

Balance Sheet

Exiting fourth-quarter 2014, COPEL had cash and cash equivalents of R$740.1 million (US$276.2 million), down 58.7% from R$1,790.1 million (US$736.7 million) at prior-quarter end.

Loans, financing and debentures grew 8.2% sequentially to R$4,755.3 million (US$1,774.4 million) from R$4,396.4 million (US$1,809.2 million) in the preceding quarter.

Cash Flow

In 2014, COPEL generated net cash of R$1,091.4 million (US$464.4 million) from its operating activities, down 18.4% year over year. Capital spending on the purchase of property, plant and equipment shot up 113.1% over the year-ago period to R$895.3 million (US$381 million).

During the year, the company distributed approximately R$669 million (US$284.7 million) as dividends and interest on equity.


In 2015, COPEL plans to spend R$2,476.9 million as capital expenditure. Of the total amount, roughly R$1,300.1 million will be used for the Generation and Transmission business, R$784.7 million for the Distribution business, R$107.7 million for the Telecommunications business and R$284.4 million as investments in new businesses.

With a market capitalization of $2.9 billion, COPEL presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the electric utility industry include Abengoa Yield plc ABY, Alliant Energy Corporation LNT and Avista Corp. AVA. While Abengoa Yield sports a Zacks Rank #1 (Strong Buy), both Alliant Energy and Avista carry a Zacks Rank #2 (Buy).

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