Companhia Paranaense de Energia
), or COPEL reported impressive results for first-quarter 2014. The
company's net income increased 46.3% year over year to R$583.1
million (US$247.1 million). Earnings stood at R$2.13 per share or
90 cents per American Depository Receipt (ADR).
COPEL generated revenues of R$3,051.1 million (US$1,292.8 million),
reflecting an increase of 28.2% year over year.
The top-line improvement was driven by sales increase in the
following categories: 19.6% in electricity sales to final
customers, 52.9% in electricity sales to distributors, 8.8% in use
of the main distribution and transmission grid, 60.0% in
construction, 20.0% in telecommunications and 2.1% in distribution
of piped gas. However, revenues generated from other sources
COPEL announced that electricity sales to final customers increased
by 6.6% to 7,231 Gigawatt hours (GWh) in first-quarter 2014. The
rise was prompted by a slight hike of 0.8% in electricity sales in
the Industrial segment and an 11.5% increase in the Residential
segment. Electricity sales in the Commercial segment were up 9.2%
while increase of 11.8% and 6.8% were recorded in the Rural and
Other segments, respectively.
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 recorded 27.6% year-over-year increase in its operating costs
and expenses, totaling R$2,401.8 million (US$1,017.7 million) and
representing 78.7% of revenues generated in the quarter.
The increased costs and expenses were primarily due to higher costs
in the following categories: 16.7% in electricity purchased for
resale, 17.3% in pension and healthcare plans, 15.7% in materials
and supplies, 405.1% in natural gas and supplies for the gas
business, 212.4% in provisions and reversals and 53.1% in
Earnings before interest, tax, depreciation and amortization
(EBITDA) increased 29.1% to R$858.6 million (US$363.8 million) with
an EBITDA margin of 28.1% versus 27.9% in the year-ago quarter.
Exiting first-quarter 2014, COPEL had cash and cash equivalents of
R$1,384.7 million (US$612.7 million), down 20.5% from R$1,741.6
million (US$741.1 million) at the previous quarter-end.
Loans, financing and debentures increased 6.8% sequentially to
R$3,755.5 million (US$1,661.7 million).
In first-quarter 2014, COPEL used cash of R$24.7 million (US$10.5
million) for its operating activities as against R$8.6 million
(US$4.3 million) used in the year-ago quarter. Capital spending on
the purchase of property, plant and equipment was R$193.4 million
(US$81.9 million), significantly above R$10.2 million (US$5.1
million) spent in first-quarter 2013.
COPEL plans to spend R$2,616.7 million as capital expenditure in
2014. Of the total amount, roughly R$1,309 million will be used for
the Generation and Transmission business, R$895.9 million for the
Distribution business, R$80.0 million for the Telecommunications
business and R$331.8 million to be invested in new businesses.
COPEL presently has a $4.4 billion market capitalization and
carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the
electric utility industry include
Black Hills Corporation
NRG Energy, Inc.
Brookfield Infrastructure Partners L.P.
). All of these companies sport a Zacks Rank #1 (Strong Buy).
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