Sao Paulo, Brazil-based
Companhia de Saneamento Basico do Estado de Sao Paulo, or
bottom-line results in the second quarter 2012 weakened compared
with the year-ago period. The water and sewage service provider
reported a 39% decline in net income that settled at R$292.8
million (US$149.4 million) compared with R$479.6 million (US$301.6
million) in the year-ago quarter.
Earnings per share came in at R$1.29 (US$1.31 per ADR), down
from R$2.11 (US$2.65 per ADR) in the year-ago quarter. Results also
lagged behind the Zacks Consensus Estimate of US$1.43 per ADR.
Net revenue in the second quarter increased 5.8% to R$2,478.3
million (US$1,264.4 million), driven by higher water supply, sewage
collection and treatment, and construction revenue. Results,
however, failed to surpass the Zacks Consensus Estimate of US$1,281
Billed water and sewage volume in the quarter went up by 1.4%
year over year to 886.8 million cubic meters. Of the total volume
reported, roughly 57.7% represented water variation and about 42.3%
came from sewage. The increase in billed water and sewage volume
was due to higher number of connections and acceleration in
Water loss rate in the second quarter 2012 was at 25.9% versus
26.0% in the year-ago quarter. Water volume produced increased 2.1%
year over year; water connections soared 2.6% and sewage
connections rose by 3.5%.
SABESP's cost of sales and services, as a percentage of revenue,
hiked 180 basis points to 63.6% in the quarter. Gross margin came
in at 36.7%. Operating expenses, including selling, administrative
and other expenses in the quarter plummeted 10 basis points in the
quarter to 10.8% of total revenue.
EBITDA in the quarter was around R$798.5 million (US$407.4
million), up 2.9% year over year with a margin of 32.2%.
Exiting the second quarter 2012, SABESP's cash and cash
equivalents stood at R$1,752.5 million (US$842.5 million), down
13.2% from R$2,019.3 million (US$1,109.5 million) in the previous
quarter. Loans and financing, net of current portion decreased 0.7%
to R$7,244.4 million (US$3,482.9 million).
Net cash flow from operating activities increased by 9.6% year
over year to R$878.5 million (US$448.2 million). Capital spending
on property, plant and equipment together with intangible assets
declined 3.6% year over year to R$466.1 million (US$237.8
Following its second quarter 2012 earnings announcement, SABESP
keeps up its position as the largest water and sewage services
provider in the world, serving roughly 7.58 million customers for
water and 6.02 million for sewage.
The company faces stiff competition from
Veolia Environnement S.A.
), a privately held Thames Water Holdings plc, and GDF Suez
SABESP -ADR (SBS): Free Stock Analysis Report
VEOLIA ENVIRON (VE): Free Stock Analysis Report
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