Companhia Energetica de Minas Gerais CIG, also known as CEMIG, reported improved year-over-year results for 2014. Adjusted net income came in at R$3,125.2 million (US$1,329.9 million), up 9.1% from the year-ago tally.
Revenues
CEMIG generated net revenue of R$19,540 million (US$8,314.9 million), increasing 34% year over year. Sales to end consumers accounted for 76.4% of net revenue.
The company sold 63,470 Gigawatt hours (GWh) in 2014, reflecting an increase of 3% over the preceding year.
Expenses/Income
Operating expenses escalated 29% year over year to R$14,451 million (US$6,149.4 million). The increase was led by higher costs related to electricity brought for resale, use of national grid, post-retirement liabilities, employees’ and managers’ profit shares, materials, raw materials and inputs for production of electricity, outsourced services, operational provisions and other expenses.
On the other hand, these were partially offset by a reduction in costs associated with personnel and managers, depreciation and amortization, royalties for use of water resources and infrastructure construction expense.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 23.1% year over year to R$6,381.3 million (US$2,715.4 million), while EBITDA margin was 32.7% versus 35.5% in 2013.
Balance Sheet and Cash Flow
Exiting fourth-quarter 2014, CEMIG had cash and cash equivalents of R$887 million (US$331 million) versus R$1,327 million (US$546.1 million) recorded at prior-quarter end. Loans and financings declined 12.3% sequentially to R$1,832 million (US$683.6 million).
In 2014, CEMIG generated cash of R$3,734 million (US$1,588.9 million) from its operating activities, up 6% year over year. Capital spent on fixed and intangible assets grew 7% to R$1,000 million (US$425.5 million).
During the year, the company paid approximately R$3,917 million (US$1,666.8 million) as interest on equity and dividends.
CEMIG is one of the largest integrated electric utilities in Brazil, with approximately 97% of the company’s installed generation capacity being hydroelectric power. With a market capitalization of $5 billion, CEMIG currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the electric utility industry include Empresa Nacional de Electricidad S.A. EOC, Enersis S.A. ENI and Alliant Energy Corporation LNT. While Empresa Nacional de Electricidad and Enersis sport a Zacks Rank #1 (Strong Buy), Alliant Energy carries a Zacks Rank #2 (Buy).
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