Central Puerto ((CEPU)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Central Puerto’s recent earnings call conveyed a generally positive sentiment, highlighting significant financial growth and successful project acquisitions. The company expressed optimism about the future, driven by market liberalization, despite facing challenges such as decreased hydro generation and uncertain market dynamics in the newly liberalized environment.
Strong EBITDA Growth
Central Puerto reported a robust increase in adjusted EBITDA, reaching $101.1 million, which marks a 64% rise quarter-on-quarter and an 8% increase year-on-year. This growth is attributed to effective fuel cost pass-through and solid operational performance, showcasing the company’s ability to manage costs efficiently and enhance profitability.
Revenue Increase
The company experienced a substantial revenue increase, totaling $233.9 million, up 30% from the previous quarter. This growth was primarily driven by higher contract sales from renewables and thermal sources, reflecting Central Puerto’s strategic focus on expanding its energy portfolio.
Moody’s Credit Rating Upgrade
In a testament to its healthy financial position, Central Puerto received an upgrade from Moody’s, moving from AA- to AA. This upgrade underscores the company’s strong financial health and its ability to meet financial obligations, providing confidence to investors and stakeholders.
Battery Energy Storage System Award
Central Puerto successfully participated in the AlmaGBA BESS bidding process, securing 205-megawatt hours of new capacity. This project is scheduled to be operational by mid-2027, highlighting the company’s commitment to expanding its energy storage capabilities and enhancing grid reliability.
Market Liberalization Impact
The Energy Secretariat’s Resolution 400/25 marks a pivotal step in market liberalization, creating a strong business outlook for Central Puerto. The new spot revenues, now denominated in dollars, help mitigate currency and inflation risks, providing a more stable financial environment for the company.
Acquisition of Cafayate Solar Farm
Central Puerto’s acquisition of the Cafayate solar farm adds 80 megawatts of installed capacity, contributing to a 24% increase in renewable generation revenues. This acquisition aligns with the company’s strategy to enhance its renewable energy footprint and capitalize on the growing demand for clean energy.
Year-on-Year Generation Decline
Despite the positive financial performance, Central Puerto faced a 20% decline in total generation year-on-year, primarily due to lower hydrology at the Piedra del Aguila. This decrease highlights the challenges posed by environmental factors on the company’s overall generation output.
Hydro Generation Decrease
The company reported a decrease in hydro volumes, which affected its overall generation output. This decline underscores the impact of environmental conditions on Central Puerto’s hydroelectric operations, necessitating strategic adjustments to maintain energy production levels.
Uncertain Market Dynamics
Central Puerto acknowledged the uncertainty in the market for selling to large users, with a significant reliance on future regulatory clarity and market stabilization. This uncertainty poses challenges for the company as it navigates the evolving energy landscape.
Forward-Looking Guidance
Looking ahead, Central Puerto anticipates significant growth momentum driven by the Energy Secretariat’s Resolution 400, which liberalizes the power market. The company expects a 20-25% increase in EBITDA as a result. Additionally, strategic growth initiatives, such as the acquisition of the Cafayate solar farm and successful participation in the AlmaGBA Battery Energy Storage System bidding process, are expected to bolster the company’s capacity and financial performance.
In summary, Central Puerto’s earnings call highlighted a positive financial trajectory, with strong EBITDA growth and revenue increases. While challenges remain, particularly in hydro generation and market dynamics, the company’s strategic initiatives and market liberalization efforts position it well for future growth. The overall sentiment was optimistic, reflecting confidence in Central Puerto’s ability to navigate the evolving energy market.