Cemig’s Q1 2025 Earnings Call: Resilience Amid Challenges

Companhia Energetica Minas Gerais ((CIG)) has held its Q1 earnings call. Read on for the main highlights of the call.

Cemig’s Q1 2025 earnings call presented a mixed outlook, highlighting both achievements and challenges. The company demonstrated resilience with strong operational and financial highlights, including a robust EBITDA, successful debenture issuance, and significant investments aimed at strategic growth. However, challenges such as issues in the trading company and submarket price differences led to a decline in EBITDA and net profit. Despite these hurdles, the overall sentiment expressed during the call leaned towards resilience and a strategic focus on growth and efficiency.

Strong EBITDA Performance

Cemig reported a significant EBITDA of BRL1.8 billion for Q1 2025, showcasing sound results across all segments except for the trading company. This performance underscores the company’s operational strength and strategic management, despite facing sector-specific challenges.

Record Investment Program

The company is executing the largest investment program in its history, with investments growing sixfold since 2018. In 2025, investments reached BRL6.3 billion, marking an 18% increase from 2024. This aggressive investment strategy highlights Cemig’s commitment to infrastructure and network development, crucial for energy transition.

Successful Debenture Issuance

Cemig successfully issued BRL5 billion in debentures, with demand over 2.5 times the booking. This move extended the average debt tenure to 5.5 years, reflecting investor confidence and the company’s robust financial strategy.

AAA Credit Rating

Cemig maintained its AAA credit rating from Fitch Ratings, underscoring its strong financial position and ability to manage debt effectively. This rating is a testament to the company’s financial health and strategic foresight.

Significant Dividends Payment

Cemig is paying BRL541 million in dividends, demonstrating its commitment to returning value to shareholders. This decision reflects the company’s strong cash flow and profitability, even amid operational challenges.

Operational Efficiency Achievements

The company achieved notable cost efficiencies by migrating over 1,000 employees to a new healthcare plan, resulting in a BRL28 million reversal of provisions. This move highlights Cemig’s focus on operational efficiency and cost management.

EBITDA Decline in Trading Company

The trading company experienced a significant impact with a 9% decline in EBITDA due to price differences in submarkets and expected lower margins. This decline underscores the challenges faced in the trading segment.

Impact of Submarket Price Differences

Submarket price differences, particularly in March 2025, led to a negative impact of around BRL133 million on EBITDA. This highlights the volatility and challenges in the energy market that Cemig is navigating.

Decrease in Net Profit

Net profit was affected by increased financial expenses and lower equity income from Belo Monte due to submarket impacts. This decrease reflects the financial pressures faced by Cemig amid market fluctuations.

Volume Reduction in Gasmig

Gasmig faced a reduction in the volume of gas sold, affecting both EBITDA and net profit. This reduction points to challenges in the gas market segment, impacting overall financial performance.

Forward-Looking Guidance

During Cemig’s first quarter 2025 earnings call, the company reported a strong EBITDA of BRL1.8 billion and a net profit of BRL1 billion, despite challenges in their trading company. The company emphasized a significant investment program, with CapEx growing from BRL950 million in 2018 to BRL5.7 billion in 2024, and a forecasted BRL6.3 billion in 2025, marking an 18% increase from the previous year. Over 75% of these investments are dedicated to infrastructure and network development, crucial for energy transition. Cemig maintains a focus on efficiency and compliance with regulatory standards, ensuring cash generation to support investments. The company highlighted the issuance of BRL5 billion in debentures, maintaining a AAA credit rating by Fitch. Cemig’s strategic objectives include regionalization to enhance client proximity and operational efficiency, supported by IT innovations like a new ADMS and SAP S4/HANA system. Despite a 9% drop in EBITDA due to submarket price differences, Cemig remains committed to its investment and dividend distribution plans, aiming to maintain its leverage within comfortable levels.

In summary, Cemig’s Q1 2025 earnings call highlighted a mixed but strategically focused outlook. The company demonstrated resilience through strong EBITDA performance and significant investments, despite facing challenges in the trading company and submarket price differences. The forward-looking guidance suggests a continued focus on strategic growth, efficiency, and shareholder value, positioning Cemig for future success.