The renewable generator Auren (AURE3) closed the first quarter with 10% higher profit, driven by the positive effect of rising energy prices on its supplier’s contracts, and is betting on a still positive trend for energy sales to large and medium consumers in the coming months, a company executive told Reuters.
The electricity company controlled by Votorantim and CPP Investments released this Tuesday a net profit of 253.6 million reais, 10.3% higher than the same period a year earlier, while Ebitda (earnings before interest, taxes, depreciation and amortization ) totaled 599.6 million reais, an increase of 32.7%.
The numbers were mainly driven by mark-to-market in energy purchase and sale contracts in the wake of the rise in prices recorded on the free market at the beginning of this year, when there was frustration with the rains in an important period for the Brazilian electricity sector.
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Excluding the non-cash effect of mark-to-market, Auren’s adjusted EBITDA was 360.0 million reais, a drop of 9.1% year-on-year, reflecting less favorable performances from both hydroelectric and wind generation.
Auren (AURE3): Results
According to Auren’s financial vice-president, Mario Bertoncini, as prices showed a reaction in the first months of the year, the company took the opportunity to sell energy and benefit from the trend.
“As of October last year, we began to see some possibility of ‘drying out’ of the hydrological maps. We started buying energy and sold it throughout the first quarter, with very important gains.”
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He also stated that the change in the energy price scenario led to a reaction from medium and large consumers, mainly from April onwards.
“February, March, we didn’t see clients in the market, we saw more ‘brokers’ zeroing out their positions… Clients, in a more consistent manner, entered the market from April onwards. April was very good, at the beginning of May we have important quotes from clients, both large and medium-sized”.
Bertoncini assessed that consumers should continue with longer-term energy purchases in the coming months, as long as there is no “downward jolt” in prices, which tends to discourage the appetite for long-term contracting.
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“If medium and long-term prices, which underpin consumer contracts, remain stable, or even possibly a little higher, I think demand should continue at the levels they are at.”
Regarding new growth opportunities, he cited advances in the construction of the solar and wind generation project Sol de Jaíba (MG), which will have around 620 MW of capacity and is half operational, and stated that the company should continue developing new plants hybrid, with potential for at least another 220 MW.
He also highlighted that Auren continues to evaluate opportunities for acquiring generation assets and that it is prepared and capitalized for such a move. The company ended the first quarter with more than 3 billion reais in cash and financial leverage of 1.9 times.
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