AXIA Energia S.A. Q2 FY2023 earnings call

Key managerial messages and operational highlights include: Successful completion of collections and hedging related to USD exposure, with almost 96% of bonus hedging covered. Voluntary separation programs: First voluntary separation program expected to save BRL1.2 billion annually with an 11-month payback; second voluntary separation program had 1,475 applications with BRL513 million cost and BRL688 million annual savings. Financial highlights: Net profit up 4%, EBITDA up, and consolidation of Santo Antonio Energia added significant revenue. Investment plans: BRL17 billion in contracted investments for 2023-2027, including BRL6.7 billion in transmission assets, BRL4.6 billion in quota system mills, etc. They also plan to participate in transmission auctions worth BRL35 billion total.

The segment performance includes various aspects. In generation, Eletrobras ended the quarter with over 43,000 megawatts, representing 22% of Brazil's generation, and 97% of its generation came from clean energy sources. Transmission saw a 30% growth in revenue for the '23-'24 cycle. Financially, net profit was up 4% to BRL9,246 million for Q2, EBITDA was BRL6.595 billion. The consolidation of Santo Antonio Energia contributed BRL949 million in effects, with additional revenue from that consolidation.

Management's forward-looking guidance includes continuing liability management efforts,推进 compulsory loans negotiations to reduce net debt by BRL5.4 billion this year, focusing on tax optimization, and actively participating in transmission auctions with BRL35 billion in total expected. They also aim to complete the reversal of cross-ownership strategy to reach 31 SPEs and continue with M&A operations in renewable sources and transmission assets.

Risks discussed include potential decommissioning of Angra 3 which could impact Eletrobras, as well as FX exposure if hedging is not fully completed. There are also regulatory uncertainties around transmission auctions and the progress of privatization-related projects.

Q: Regarding Angra 3, what's the impact if decommissioned?

A: Eletrobras is the guarantor of BRL6 billion debt. If decommissioned, they could seek compensation from Electronuclear, but the impact on Eletrobras' equity would need further assessment.

Q: How is the energy trading strategy performing?

A: The strategy involves selling forward based on demand and asset flexibility scenarios. They have a strategic committee, and the trading results are a result of last year's strategy deployment with improvements in sales team approach.

Q: What about transmission auctions?

A: Eletrobras was competitive in previous auctions, and they are proactively preparing for December auctions, working on partnerships and studying routes and structures to be competitive.