AXIA Energia S.A. Q3 FY2024 earnings call

Key Points

• Budget for 2025: End of significant budget adjustment, focus on operational efficiency, with PMSO targets below BRL7 million in 2024, below BRL7 million in 2025, and close to BRL5.5 million in 2026.
• Collective Bargaining Agreement: Allowed streamlining of structure, incorporated Furnas, signed thermal power plant contracts, and renegotiated insurance costs.
• Technology Use: Utilizing AI, machine learning for efficient equipment management.
• Financial Highlights: Renegotiation of Tucurui GSF, reversal of provisions from sales to Amazonas, revenue from transmission and profit terms, and reduction in compulsory loans liability.

Eletrobras' Q3 2024 had recurring operational expense at BRL1.7 million, up 7% from Q2 and 1% year-over-year. Renegotiation of the Tucurui GSF brought close to BRL1.3 billion. Reversed provisions of close to BRL400 million from sales to Amazonas. Revenue from transmission and profit terms was close to BRL6 billion and BRL5.4 billion respectively. Personnel costs were decreasing, and service line initiatives were affected by the Furnas merger. Core deposits revision had a net impact of BRL600 million.

Forward-Looking Statements

• PMSO: Committed to PMSO below BRL7 million in 2024, below BRL7 million in 2025, and close to BRL5.5 million in 2026.
• CapEx: Funds raised allow for substantial growth in CapEx, with investment volume expected to go over BRL3 billion in 2024, up from prior years' BRL2-2.5 billion.
• Investment Approval: Regulatory process working on safety-focused improvements, with backlog of investment possibilities and work on tariff revisions for investment recognition.

Risks Identified

• Price Volatility: Hydropower generation and price fluctuations impact revenue, with significant impact on future results.
• Equipment Costs: Upward trend in costs due to raw materials, demand, and supply issues, affecting profitability.
• Market Delinquency: Volatility in energy market with some companies facing critical situations, but Eletrobras not significantly exposed and working on renegotiations.

Q: About costs and PMSO trend.

A: Ivan Monteiro and others discussed PMSO downward trend and cost streamlining efforts.

Q: About investments and equipment costs.

A: Elio Wolff, Rodrigo Limp, and Renato Carreira talked about investment volume, regulatory approval, and equipment cost trends.

Q: About Collective Bargaining Agreement.

A: Renato Carreira explained associate participation and agreement details.

Q: About PMSO and sales strategy.

A: Ivan Monteiro and Italo Freitas discussed PMSO trend and market volatility impact on sales.