CPFL Energia S.A. (CPL)

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CPFL Energia S.A. (CPL)

Q1 2013 Earnings Call

May 10, 2013 10:00 am ET


Wilson Pinto Ferreira - Chief Executive Officer


Vinicius Canheu - Crédit Suisse AG, Research Division

Marcelo Sá - Bradesco S.A. Corretora de Títulos e Valores Mobiliários, Research Division

Felipe Leal - BofA Merrill Lynch, Research Division

Sergio Tamashiro - Banco Safra SA, Research Division



Good morning, and thank you for waiting. Welcome to CPFL's conference call about the result of the first quarter of 2013. Today's event, we have Mr. Wilson Ferreira Junior, CEO of CPFL Energia, as well as other officers of the company. This call is being broadcast simultaneously on the Internet at the Investor Relations website of CPFL Energia at www.cpfl.com.br/ir, where you can also find a respective presentation for download. [Operator Instructions] I would like you to remind you that this call is being recorded.

Before proceeding, let me mention that forward-looking statements that might be made during this call regarding the company's business outlook, projections and financial and operating targets are assumptions on the part on the company's management and information currently available. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events, and therefore, will depend on circumstances that may or may not occur. Investors should understand that general economy conditions, industry conditions and other operating factors may affect the future performance of CPFL Energia and may lead to results that differ materially from those expressed in such forward-looking statements.

Now I would like to give the floor over to Mr. Wilson Ferreira Junior. Mr. Ferreira, you may proceed.

Wilson Pinto Ferreira

Very well. Good morning, everybody, investors and analysts that follow our first Q 2013 earnings call. And today, we will have a longer presentation, where we will try to talk, among other things, about the changes in the profile of consumers for the company and this has to do with very bullish future perspectives. And I think it's important to share with our listeners during this call some of the regulatory evolutions that we have finally achieved and that has a major impact on our results of this quarter. Of course, we will be talking about results and the market perspectives for our company, and conclude by talking about the main projects and the major investments made, especially in CPFL Renováveis.

Now let's go to Slide #3 because we have an important fact that occurred in Q1 that corresponds exactly after 12 years to the consumption to residential consumers of CPFL Energia. Once again, going back to the level of pre-rationiong situation in 2001. I think it's very important to tell you about the relevant change in the consumption, energy consumption scenario and the macroeconomic scenario and the Brazilian demographics. And all this together leads to a very good perspective.

To continue back in this period, we reduced by over 50% the unemployment rate in the country, reaching 5.5%. Total income with a favorable behavior of [ph] growth of 57%. Minimum wage on [indiscernible] terms growing almost 60%, that's 59% [indiscernible] assignments. Each one of these elements has an impact on household consumption and commercial consumption increasing 63% credit granted. Urbanization rate of Brazil reaching 85%. Gini index that devaluates income concentration or income distribution dropping 3 points, reaching 0.52.

And you can see the ownership indicators of appliances. Refrigerators, 93%, TV sets, over 95%, but still more potential of growth, which is very important. And we're pleased to hear that washing machines, for instance, there's only 44% of household have, not to mention freezers and microwave ovens. And this kind of appliance is becoming an integral part of Brazilian's life and ownership indicator, all of them well within the washing machine indicator.

Household density and habitants per resident, as you can see from 3.5% to 3.1 people who are domicile or the residents. And at the same time we see an evolution in energy efficiency, refrigerator for instance, with a unit consumption of 30% [ph] lower than we had in 2004, and washing machines with the consumption 7% lower than in 2004, all these variables lead to important changes in the profile of future consumption.

I think it's also important to share with you, on page 4, in general, the change in the position of facilities at we develop [indiscernible]. As you can that at the turn of the century, little [indiscernible] before, we did a -- [indiscernible] the major players with the developed economies, and this has totally changed the central players of the emerging economies, the crisis went fell very quickly and drastically. .the peripheral countries, the emerging markets and Brazil was a victim at the end of the '90s, had a major impact from these crises. And today, crisis affects mainly the greater economy, the European and the U.S. economy.

There was a high financial volatility at the turn of the century in the world, as emerging countries today have a much higher level of autonomy. And Brazil had made a major [indiscernible] effect to conclude that in the case of Brazil, the major changes that we had were at the turn of the century. Interest were close to 20% a year. And today, interest rates are lower and stable at 7.25% a year. And also we have a domestic market that is very robust nowadays and public [indiscernible] from 60% of the GDP, 60%, to 35% of the GDP. The country with [indiscernible] that was over 1,500 points, with 147 points. And we didn't really have international reserves, $28 billion, today we have $379 billion, which was literally [ph] transferred to foreign capital. And today, we have an intensification of social policies about 20% of the [indiscernible] correspond to 57% of income, when in the past, it was 63% at the turn of the century. We started this century with the necessary learning curve with the theme of the energy crisis, and we will be able to talk about that, how much we have evolved during these years.

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