Companhia Paranaense de Energia
), also known as COPEL, continued reporting its year-over-year
net income decline with a fall of roughly 7.7% recorded in the
third quarter of 2012. Net income came in at R$319.3 (US$159.7
million) or R$1.17 per share (US$0.59 per ADR). However, the
results surpassed the Zacks Consensus Estimate of US$0.48 per
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Net operating revenues in the third quarter increased 1.9% year
over year to R$2,053.0 million (US$1,026.5 million).
Revenue improvement was witnessed across all the company's
business categories: Electricity sales to final customers grew
about 4.1%; sales to distributors surged 1.0%; use of main
transmission grid climbed 6.3%; telecommunications revenue
increased 3.3%; distribution of piped gas spiked 14.6%. Other
operating revenues shot up 61.9%. However, construction revenue
dipped 31.5% year over year.
During the quarter, operating costs and expenses went up 3.8%
year over year to settle at R$1,710.9 million (US$855.5 million).
Significant increase in the following expenses contributed to the
inflated operating expenses: 17.2% rise in electricity purchased
for resale, 13.2% in expenses related to use of main transmission
grid, 23.9% in private pension and health plans, 21.8% in natural
gas and supplies for the gas business and 16.0% in material and
supplies for the gas operations, among
Higher costs in the above-mentioned categories were partially
offset by a 2.6% decline in material and supplies costs; a 34.6%
decrease in provisions and reversals; a 32.7% fall in
construction costs and a 23.6% decline in other costs and
EBITDA plummeted 5.2% to R$477.1 million (US$238.6 million) with
an EBITDA margin of 23.2% versus 25.0% in the year-ago quarter.
Exiting the third quarter 2012, COPEL's cash and cash equivalents
increased 11.2% sequentially to R$749.5 million (US$374.8
million) while loans and financing decreased 6.2% to R$1,994.7
million (US$997.4 million).
In the third quarter 2012, COPEL generated R$531.8 million
(US$265.9 million) of net cash flow from operating activities,
while capital spending was R$220.7 million (US$110.4 million).
For the year 2012, COPEL plans to spend approximately R$2,257.4
million, with roughly 47.4% on Generation and Transmission, 48.9%
on Distribution and 3.7% on Telecommunications. Nine months ended
September 30, 2012, the company completed investing roughly R$1.0
billion as capital expenditure.
Companhia Paranaense de Energia is a fully integrated electric
utility of Brazil engaged in the generation, transmission, and
distribution of electricity to the State of Paraná. The
provincial government of the State of Paraná controls about 58.6%
of the shares of COPEL. The company faces stiff competition from
Cia Energetica de Minas Gerais
We currently maintain a Neutral recommendation on the stock.