Q4 2021 Central Puerto SA Earnings Call
Okay.
Good morning, and welcome to the Central part of this conference call. Following the results announcement for the fourth quarter ended on December 31, 2021, and full year 2021, all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded.
If you do not have a copy of the press release, please refer to the Investor support section on the company's corporate website at Www Dot central Puerto Dot Com.
A replay of today's call may be accessed by accessing the webcast in the Investor support section of the central part of its corporate website.
Before we proceed please be aware that all financial figures were prepared in accordance with the I F. R. S and are stated in Argentinian pesos unless otherwise noted.
It is worth noting that the financial statements for the fourth quarter ended on December 31, 2021 include the effects of the inflation adjustment.
Accordingly, the financial figures mentioned during the call, including the data from previous periods and the gross comparisons had been stated in terms of Argentine pesos of the end of the reporting period also please note that certain statements made by the company. During the conference call are forward looking statements and we refer you to the forward looking statements section of our earnings release and recent filings with the S E.
See.
Central Puerto assumes no obligation to update forward looking statements, except as required under applicable securities laws.
To follow the discussion better please download the webcast presentation available on the company's website. Please be aware that some numbers mentioned during the call may be rounded to simplify the discussion.
On the call today from Central Puerto is Fernando Bonnet, Chief Executive Officer, and Ricky Tornado, Chief Financial Officer, Milagros Grande financial manager and Nicholas Marquee Investor Relations Officer.
And now I'll turn the call over to Fernando Bonnet, Mr. Burton you may begin.
Thank you very much good morning, and welcome those joining you today with our management team from what I say, Argentina to report on the results of the fourth quarter 2021, and the full year.
And then answer any questions you might have.
I would like to begin to vehicle than those in the recent events the industry agenda. Finally, the operating figures of the fourth quarter and full year 2021.
<unk> will present, the most recent financial news episodes.
First of all I would like to comment on the less development in the industry. As you can see on page three in terms of installed capacity. The system reached 42989 megawatts in the first quarter comparisons when you well, resulting in 2% increase compared to the fourth quarter to dose answer it.
It mainly based in new renewables projects, which added 1000 megawatts the system with.
With a breakdown of 70% and 30% solar.
As of December 31, 2020, while the installed capacity continues to be 59% thermal and 25% hydro 12% renewals up 4% nuclear.
In fourth quarter, 2021, NSE generation increased 1% to.
35000.
530, <unk> compared to 35 133 gigawatt hours in the fourth quarter 2012.
Mainly due to.
1% increase in hydro.
22% increase in renewals.
And 45% increase in nuclear partially offset by a decrease of 7% in term.
Renewables rice was due to a new installed capacity and new class improvement is due to a higher availability of our future too.
Which had its maintained during fourth quarter 2012.
For for thermal that are worth and overall lower availability.
78% for the fourth quarter of 2021 compared to 82% from the third quarter of 2021, 79% in the fourth quarter of 2012.
During the fourth quarter 2021, the main sources of energy generation continue to be.
Thermal and hydro with the share of 60% and 80 218.
Percent lifting.
Meanwhile, renewables keep raw wins represent 14%, 2% more than in the fourth quarter of 2012.
Finally on page four energy demand increase 6% Abdou <unk>.
<unk> 3472, G O what's hour compared to 31.
<unk> thousand 432 G O what in the fourth quarter of 2002 it whatever.
What are the industry in great demand and rice.
7% the commercial demand grew.
7% in the residential demand increase and 6%.
There were increases in all demand segments, the rising commercial industrial demand.
And four in the fourth quarter of 2021 is attributed to a recovery of the economy activity and lower restrictions imposed by the government.
All three months of the quarter show comparative increases.
So fourth quarter of 2021 and in terms of the minus Stryker, 44%. These represent about residential users.
28% is represented by commercial and the remaining 27 is related to great demand and industrial.
Going now to our key performance indicators for the quarter as you can see on page five energy generation. During the fourth quarter 2021 was 3727 terawatts hour of electricity, 2% lower than in the same PD.
2012.
The decrease was mainly caused by yeah.
29% drop in energy generation from peer highlighting their plant due to a significant decrease of water inflow as a result of the drop in Argentina in the region.
And two.
3% decrease on renewable generation, mainly due to a lower win in some of our wind farms. This was partially offset by a decrease by an increase.
5% for an hour somewhat units due to terminal six full operation and a higher availability of our Mendoza steam and gas turbines.
The steam production during the fourth quarter 2021 increased 36% totaling.
360.
<unk> thousand 411 toss produce due to our good performance of leukemic whoosh of cogeneration plant and terminal six full operation.
Regarding the availability of our thermal units during the fourth quarter of 2021, it increased 88% in line with a strong availability history of central part does equipment.
As a reference the market ever rush availability for the thermal units for the fourth quarter of 2021 was 78% according to data from companies.
Finally, I will refer to our key performance indicators of the full year at the state on the basics.
In 2021 generation remained stable with 4390 twos year, what's produced compared to 4331 outlet for the same period.
Two dosing to them.
What are the main variation where.
An increase of 7% or six 687 Jia what's in the terminal machines due to terminal six production the recovery to ever us operation of the Siemens brand combined cycle and you kind of push out from the failure.
For the second quarter of 2020, and a higher generation from the steam and gas turbines from.
Mendoza power plant and when a site is Poland.
Two.
18% or 240, Gol's, increasing renewals as a result of the full previous operation of an Aveva won monkey and illegals. This was partially offset by a 25% or 1800 70 70 hour decreased in <unk>.
Hydro generation from peanut allergy user do you do and lower water flow as explained before.
A simple election improved 12% and our reach.
1 million to have DNA <unk> thousand 923 tons during 2021 compared to <unk>.
1 million 81900 F 15, eight dose of two dose into it.
The result, the nukes.
Leukemic Gousha good performance and currently have six full operation.
During 2021 availability of our thermal units remain a stable 89% same as in the same period of 2020.
So when a robust aberration of availability in the last few years and performing above the average.
Of the market, which was <unk> 81 for the whole system.
31% for the consumer.
Sorry.
Now I will turn the call over to Milan, Russ will comment on the financial Hi, Fernando I will now comment on the very solid so fourth quarter I don't think anyone under four year going now to the results for this quarter as you can see on page eight our revenues were $14 1 billion as compared to 14.
<unk> billion.
The fourth quarter of 2020, each one question increase was mainly due to first a 32% increase in sites under contract, which totaled $9 5 billion basis in the fourth quarter of 2021 as compared to 7.2 billion pesos in the fourth quarter of 'twenty 'twenty, mainly due to a full C O D of term.
I'll take that one.
Yeah.
And second a 6% increase in steam safe, which told US zero point 38 billion pesos in the fourth quarter of 2021 compared to zero point 36.
Medium basis from the same period of tiny tiny high inflation adjustment over the peso depreciation during this period conceived at 36% increase office team production as park terminal six.
T O D and Linda has good performance.
This was partially offset by a 36% decrease in spot sales.
I see which resulted in a 3.9 billion pesos in the fourth quite often so anyone as compare to 6 billion pesos in the fourth quarter of 2020 due to a lower hydro generation and a decrease in production from central part of combined cycle.
And some of its steam turbines. This was partially offset by the temporary additional income related to resolution 10 37. It is important to highlight that during fourth quarter of 2020 terminals seeks produced an open cycle and it was for a minute 80, and then a net loss of a solution.
Going to page nine we can see the changes in our E. D. Eight excluding impairment I'm funny ethics difference in interest, which was 11.1 billion pesos in the fourth quarter of 2021 compared to 9.2 billion pesos of fourth quarter of tiny tiny these 26% increase.
That's driven by the following changes.
First a 29% decrease in administrative and selling expenses totaling.
Zero 9 billion pesos in the fourth quarter of 2021 as compared to one 3 billion pesos in the fourth quarter of 'twenty change this wasn't Mcgee deal.
Two.
0.2 billion pesos drop in Texas, and as you well point 1 billion pesos reduction and maintain those expenses.
And 11% in depreciation and amortization that totaled 2.8 billion pesos during the fourth quarter of 2021 .
Third $2 85 per cent decrease in foreign exchange difference unabated assets, mainly related to trade receivables due to a lower depreciation of the Argentine peso in this quarter.
Fourth the reversal of commissars penalty related to determine your terminal six totaling four $4.4 million.
And fifth the positive result from the sale of property plant and equipment.
On page 10, we can see that consolidated net income was zero point 85 billion pesos compared to a consolidated net income of zero point 82 billion pesos in the same period a tiny tiny.
To the factors mentioned before the net income was affected by first a lower financial income that amounted $1 3 billion pesos in the fourth quarter of 2021 compared to 3.5 billion pesos in the fourth quarter was 2020.
Due to the reduction of net gains on financial assets at fair value second a higher income tax for the period, which grew 50%.
Total two 4 million patients in the fourth quarter of 2021 compared to one 6 billion pesos in fourth quarter of 'twenty. 'twenty. This was mainly due to the changes in the corporate income tax rate and cancellation of certain deferred tax assets.
And Sir.
Was positively impacted by no lower financial expenses, which amounted to <unk> 7 billion pesos during the fourth quarter of train to anyone as compared to 9 billion pesos in the fourth quarter enough to anything.
There were less foreign exchange difference due to a lower the reputation of the Argentine peso during the quarter and then our U S dollar denominated debt.
Funny collection total one Boeing 87 billion pesos in the fourth quarter of 2021 , including the 80 associated with their funny trade receivables for winter Lugano.
Yeah mounts are being collected on time and according to the signed contract.
Going to page 11, you can see our cash flow for 2021.
Net cash provided by operating activities was 26 billion pesos. This included $8 9 billion pesos in collection from what they'll do going stagnant.
Net cash used by investing activities was $6 9 billion basis, mainly due to the construction of terminal six loss from the sale of short term financial exit.
Italy, offset by the sale of property plant and equipment additions.
Finally on the financing side 19.2 billion pesos were used to loan payments for 12.9 billion pesos and interest payments for 4.2 billion pesos.
On page 12, we can see the key financial figures for the full year.
Revenues decreased 1% to 57.1 billion pesos for 2020 one.
Compared to $57 5 billion doing 'twenty 'twenty they decline.
Revenue was mainly affected by a lower hydro generation as he sky before offset by a greater production from turman.
Thermal and renewable sources, mainly due to terminal six and as you know there's all one another positive impact that couldn't offset inflation impact on costs was the Tony among 9% type increase fortinet he ever seen on the temporary additional income related to 10 37 resolution.
In the last quarter of the year.
Adjusted EBITDAX impairment and funny effects.
Adjusted EBITDA that inc. Excluding them and them funny affects different I mean, just for the 'twenty 'twenty. One reached 35.3 billion pesos compared to 39.4 billion peso seem to any change mainly due to lower gross profit and operating income as a result of the higher cost of sales related.
Two more potent yourself fuel spare parts and increase of cost per action.
So it was negatively impacted by a lower FX difference on interest on trade receivables.
Finally, consolidated net loss was 0.6 billion basis in 2020 , one compared to a gain of 10.5 million basically seen tiny tiny.
Did you two losses on net monetary position less financial income as a result of lower gains on financial assets higher taxes, unless is from associate particularly from ecolab.
All this was partially offset by lower financial expenses for new collections totaled 8.2 billion during 2021 .
Thank you and now we invite you to ask any questions to our team.
Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that while posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.
Once again, if you have any questions or comments. Please press star one on your phone. Please hold while we poll for questions.
The first question comes from Frank Mcgann from Bank of America. Your line is live.
Okay, great. Thank you very much for the presentation.
I was wondering if you could just perhaps.
Perhaps discuss what you think.
Or how of as you look out over the next you know.
Over the four quarters of two of them towards the Q.
Would you have expected maintenance that will affect that plan that would occur.
Correct.
The level of generation that you could have any comparing year over year versus last year how should.
Are there any specific period, they're going to have better comps.
Comparisons or or or.
The additional generation that we could expect from any of the units to go out over the next several quarters.
Okay. Thank you Frank for your question.
In terms of new maintainer or Capex during the D.
This year that 2022 we are not expecting beef.
<unk> periods for our four hour, we've melded the combined cycles, we fogged the mayor of Danos took place.
At year end 2021, so we are not expecting.
Being maintained names for the combined cycles.
And we'll decide if and when they are they're in Mendoza.
And in terms of generation.
We are not seeing.
The change in hydro, we see and more ways that we are in.
In these low inflow so the hydro.
We are not seeing a recovery there.
The service recovery.
And in terms of.
<unk> of course, we are expecting more generation for our German and seek brushy, which estelle operation in October as a combined cycle.
Last year and for D C.
For Leap unit, yes, we expect an increase in the new generation.
To having that combined cycle operating meaningful you do that you ended 2022.
I don't know if you have another question.
More or less what we expect for the generation.
Okay. If I could just maybe ask you owe because just in terms of Heidi.
No major improvement expected, but.
I don't know if you've seen any signs at all.
Was there any change in in the outlook. There, obviously, we can't predict the weather going forward, but I'm.
Just what you've seen so far and then secondly on nature of the export what is the status right now of of benefits that you could receive four for any export.
Israel controller.
Sorry, you mean exports energy exports exports exports of energy Yeah, Yeah mhm.
Asia is really the credit I believe you will see for some sort of exports edition of how important that is or if.
Is that.
Where how that's actually how that's working if you could just kind of go through that'd be helpful.
Yeah, we would be government establish a scheme last year.
At the end of the year that allowed no doubt, but that low bandwidth to make some export down and share with us some some part of the income.
That's operates from September .
We have some benefit there in September October and November .
Yes, $95 million the error of additional income for us.
But we.
We did with the increase of consumption in Argentina, the recovery of the industry Argentina.
We need as you May know we need then we.
Yeah.
Javier peak of consumption during during the last year and the beginning of these one and Liza exportation, whereas stopped seems November so since November we have mother's parking anymore.
And we are not seeing Moorefield vision.
Especially because the lack of fuel that we are suffering now the local natural gas and the lack of Oh.
Diesel here in Argentina, So we are not as baked in.
Exploitation in the near future.
Okay, great. Thank you very much very helpful.
Yes.
Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press Star then one on your phone at this time.
Your next question is coming from Marciano, Aaron Sep from balanced capital Your line is live.
Hi, Thanks, a lot.
From <unk> capital.
First of all thank you for the materials once again my questions.
Great question.
And want to wind them one by one.
<unk>.
First.
I would like to ask.
What do you see the this year a capacity factor for some of our units.
In this sense, if you think.
The lack of gas or a substitution for diesel.
Because I believe it is probably in the single until my goodness.
It sounds like.
I'm not sure on prices.
Okay Firstly.
The capacity factor is another change that the government introduced less VR the starfish.
They eliminate the penalty in the capacity factor for.
For the term of unions that are not fully.
These budge.
And that was.
Do you in September and goes through February of this year.
We are recovering some conversations we did with the government with the secretary of energy young and they say to us that they are going to maintain that.
Elimination so the capacity factor will be the same for the.
The units that are full dispatch on the unit the Cavaliers. These budge.
So this is old news because these units are.
As you mentioned with the lack of gas these units.
Kind of operates the old units can operate with few so we see for the future.
A lot of dispatch, but have loved to have the same dispatch of the combined cycle, while concentrating some videos of the year a lot of these budget bills units, especially when we haven't mentioned lack of natural gas.
And during the summer, we see a lot of dispatch on those units with fuel.
And we see for the future we have lack of.
Of liquid gas coming from for abroad, we will see a lot.
Of these much on those units in during the winter also.
So yes. We are we are this is a good news having these.
And Vishal income to maintain those units in good shape.
To be ready for this.
Complicated video, we see as a winter period with no natural gas in Argentina no.
And more price or more higher prices in terms of liquid gas.
Of course this alone.
Just to clarify.
So you see really we need to maintain.
Maintaining a loss.
Yeah.
Yes.
Okay great.
Well My second question is.
What do you think the main cash uses will be in the near term.
I mean this sounds Huntsville.
We have seen an increased activity in the Muslim market.
With me on Russia, and announce a satellite.
Are you looking into muscle of muscular here.
Can you tell us about.
Could.
It just initial rights bookshelves Schwarz, we understand this is like the main mainland.
Now to the below.
In Argentina.
Yes, yes, we are.
We are looking for four new projects in.
In terms of renewals, we are developing in fact projects.
The big frozen right now for US is that we are seeing an.
An increase in prices, especially related to.
To the transportation cost of shipping costs, we have seen at <unk>.
Keeping cost.
Wise or in some cases twice in some cases five times higher done them in the one that we see when we perform our power plants our.
Renewals plants during 2019 and 2020.
So.
Not all the projects are profitable for us in terms of unit cost drove the line if you need to construct.
<unk> shown with Transformers.
And with the prices right now that we are seeing in the market not all the projects held brokerage double.
We want.
Despite that we are developing we are trying to reach to find the best projects to move forward. We are looking very carefully those actions as you mentioned right. Now are small look shows if you see for our country May I was it was the last one there.
There is not much space there in line. So we are seeing different alternatives all into solar win win.
Ranked vannevar programs brushing to release some capacity of course, we are we are willing to to have an alternative there.
And the second questions you've made these how these auctions works I think.
So it shows worse unit two.
First unit two.
Establish.
Our request the axis and do it.
Maintain the axis again, the access and then maintain unit debate of how much do you need to pay is regarding or this is something that you need to go and auction. So if you have competent competence. There you need to make your option how how do you want to pay how much do you want.
You bet.
In workers that is.
At four four megawatts and paying quarters on unit to make Bureau option.
You have a base price, which is $500 per megawatt and then you need to low beyond that on an option to compete with the other one that one of the same.
Transportation leg.
Okay, great. Thanks.
My last question is regarding Capex.
Sure.
For this year.
Well in terms of maintaining capex. The same that we are seeing in the past we are not having a huge mounting on capex for 2022.
In 2023, and 2020 forward with <unk>, because we have the.
The extension of life of our combined cycle in <unk> and in 2024. The one that we have in Mendoza about for 'twenty 'twenty. Two we are not speaking in.
Much more capex on terms of maintain nodes that we see in 2021 in terms of new project defense depends on as I mentioned, if we can have a good project in terms of renewables, but we can go in.
And seed and win those transmission auctions.
We will have perhaps some additional capex, but.
Right now it's difficult to say because we are not seeing that they would moment tool to enter right now, but it could change.
Okay.
One last question.
So one or something that you already mentioned this.
That you received.
These items for the export found bluegrass Hill.
In transistors you won.
Yes.
That was the money that we collect.
For these new.
<unk> that the government established.
But this region goes from September to February .
Yeah.
It is over we don't come much more opportunities there.
Thank you. Thank you very much.
Youre welcome.
Thank you. This concludes our question and answer session I would like to turn the conference back over to Mr. Bono for any closing remarks.
Thank you everyone for your interest in since third workshop, we encourage you to call us for any information that you may need calibrated.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.
Okay.