Q2 2022 Central Puerto SA Earnings Call
Good morning, and welcome to the Central Puerto Conference call. Following the results announcement for the second quarter ended on June 32022.
All participants will be in a listen only mode should you need any assistance. Please signal a conference specialist by pressing the stocky followed by his area.
After todays presentation, there will 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 Puerto 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 second quarter ended on June 32022 include the effects of inflation adjustments.
Accordingly, the financial figures mentioned during the call, including the data from previous periods I'm. The gross comparisons have been stated in terms of Argentine pesos at the end of the reporting period.
Also please note that certain statements made by the company. During this conference call are forward looking statements and we refer to you to the forward looking statements section of our earnings release and recent filings with the SEC.
Central Puerto assumes no obligation to update forward looking statements, except as required under applicable securities laws.
To follow the discussion Bachelor of please download the webcast presentation are available on the company's website. Please be aware that some of the numbers mentioned during the call maybe round it to simplify the discussion.
On the call today from Central Puerto is Fernando Bonnet, Chief Executive Officer, and Enrico Daniel Chief Financial Officer, and Federico Bush, sorry financial controller.
Today's presentation will be carried out by Federico as Fernando has a cold or has lost his voice I will now turn the call over to Federico Bush sorry, Mr. Bush Hillary you may begin.
Okay.
Okay.
Yeah.
One maybe we have a slight technical difficulty just give me one second.
[music].
Yeah.
Thank you very much good morning, and welcome we are joining you today with Overwatch and people like to be.
You have to report results for the second quarter.
No.
Our third presentation any.
Question you may have.
I would like to begin today's call.
The recent events.
C J L.
The operating figures of the second quarter 2020.
Okay.
So I would like to comment on the latest regulatory.
Yeah.
On April 10.
Yes, because energy issued the resolution number 238.
Since June we've updated revenue ratio embraces energy and capacity of unit on the spot.
Great.
Rumination values increased by 30% retroactive to February two.
An additional 10% increase on June .
Okay.
This resolution also eliminated the use but the adjustment that reduced because CD payments declaration for the unit with lower T spot.
Oh generation units, we got through Destocking.
Steam turbines with no these but these changes.
Improving 30% capacity payments.
Secondly, I would like to mention the following updates regarding this and so forth.
But fiscal you'd be amazed at the.
Auction for 10 megawatt of these swaps priorities for our pockets of that Sangamo project on the mother framework located in Tampa.
Okay.
Now I would like to comment on the main metrics of the industry as you can see on pages two and three.
In terms of its total capacity the system reached 42882 megawatts in the second quarter of <unk>, resulting in a 1% increase compared to the second quarter of 2021, mainly based in new renewables projects develop.
As of June 32020.
The installed capacity continues to be.
15, 9%.
25.
12% when you're alone on 4%.
In the second quarter of the transition to energy generation increased 1.8% to 34004.
108 six.
<unk> tier one compared to 33870 <unk> in the second quarter of 2021.
Mainly due to an increase of 41% in hydro.
5% increase in REO, partially offset by an 8% decrease in thermo.
15% decrease in <unk>.
Renewal rate was due to the new installed capacity anhydrous easily with the increase in regard even why flows.
Softened as well that the region.
Last year.
Thermal units there was low but due to the increase of hydro and overall lower.
<unk> of 77% for the second quarter of 2022 as compared to eight 3% in the second quarter roughly 2021.
As for new growth. So it was really with the shutdown in China can you talk to nuke upfront.
During the second quarter of the trade between the two the main sources of energy generation continues to be thermal and hydro with assured.
66% and 52% respectively.
Renewals were 13% and.
6%.
In the first half of the 2022 anti generation increased one 4% to 70205.
Two hour compared to 69204 gigawatt in the first half of the 2021, mainly due to an increase.
<unk>, an 80% increase.
An 8% increase in nuclear and 4% in hydro, partially offset by a decrease of 3% in several months.
Finally, as you can see on page four energy demand increased 6% up to 34900.
48, <unk> compared to 32 1858, gigawatts in the second quarter 2021.
Commercial user grew 7% residential grew 7%.
Demand for person.
For the second quarter of 2022 demand dropped to 46% represented by incidents of user.
7% by commercial activity and the remaining 27% was related to rate demand industrial less promotion.
In the first half of the 2022 the composition remains stable.
With 46% or 28% for Gamesa and Jamie seven linked to create demand.
So that so much.
Go now to our key performance indicators for the quarter. So you can see on page five energy generation to the second quarter of 2000 and to do what 4280 <unk>.
14% higher than the same period of the 2021.
The increase was mainly caused by a 39% increase in energy generation from thermal unit mainly from Danielle.
Due to <unk> related to the combined cycle full operation and higher these budge.
Steve.
45% decrease in energy generation from the hydro plant.
Due to the lower water inflows of Niemeyer Weaver compare with the second quarter of 2021.
Focus per cent decrease in energy generation from our newer units due to lesser wind resource.
Regarding.
Our turnaround journey.
First quarter of 2022.
It reached 83% in line with the strong demand.
Three of the central part of the equipment at.
Terrific the market average.
Common unit for the second quarter of 277% according to the different companies.
Steam production increased 104% totally.
585000.
45 stones produced during the second quarter of <unk> compared to 287400 <unk>.
During the second quarter of the 2021.
Due to the commissioning of the gymnastics cogeneration plants.
Going now to our key performance indicators for the first center in the first half of the trended into.
<unk> increased 23% to 8860 <unk> compared to the 7200 atg on what's for the same period in <unk>.
2021.
At our restaurants domestic energy generation increased 1% during the first half of the 2022 compared to the first hospital switching you can do one according to the that upfront comments.
Increase in the energy generated by synthetic part it was due to an increase of 37 in electricity generation for thermal units, mainly due to the sixth generation.
Net recoveries for the average production of the Siemens branded combined cycle.
With our plan.
5% increase in the energy generation from renewal of units.
This was partially offset by.
Yes.
The decrease in energy generation from the hydro plants, given that either due to lower inflows awfully mind Weaver.
During the first half of the 2022 machinery.
Our thermal units reached 83% compared to 89% in the same period of the 2021.
<unk> mentioned the extraordinary maintain independence.
Our nation and one ensuring from water side certain small failures.
Or is it something Julien.
As a reference the market average <unk> for common unit for the same period.
76% according to the data from companies.
See production, increasing 90% totaling one medium 46300 <unk> done studies during the first half of the 2022 compared to 549515 tons during the first half 2021.
One usually the commission off January six cogeneration.
And now I will comment on the financial highlights first.
First I would like to comment on certain key financial information related to be a little bit.
Sure.
On April 22.
<unk> financial debt and in EMEA look with financing costs.
As Tom said.
The scale of the majority of this indebtedness was our 2022 and worked on sales in April .
And back in policy with the aim to reduce financial call.
I will now comment on the results of the second quarter of 2022.
Going now to the results for this quarter as you can see on page nine.
Revenues were based on 19 one.
<unk> billion as compared to 20.1 billion during the second quarter 2021.
Despite per cent decrease was mainly due to <unk>.
Sure.
37% decrease in sport energy sales, which totaled pesos seeks.
<unk> 4 million in the second quarter of the trends in Q2 as compared to sales volume to be up in the second quarter, we advanced into one.
Due to higher inflation and price adjustments and lower generation from the hydro plant.
Scheduled maintenance of certain steam turbines from parts of the site and the commitment of six plants in the beginning of that contract.
Partially offset by a.
79% increase in sales, which total pesos, one 1 billion in the second quarter of 2022 compared to pesos CLO <unk> 6 million in the second quarter of the previous year due to a 100.
So that should increase.
In Sigma.
At 36% increase in sales under contracts, which amounted to pesos 11 1 billion in the second quarter of 2022 as compared to pesos eight.
8 million in the second quarter of the trended into one due to a higher generation of term of central states and their performance of wide plan. Despite a heightened stations adjustment over the peso depreciation in the period.
Going to page 10, we can see the changes in our EBITDA, excluding impairment and falling FX difference and interest.
Which was based on 12 billion in the second quarter of 2022 compared to pesos 11 3 billion. After the second quarter of the credits in Q1.
The 6% increase was driven by the following changes first a 5% decrease in revenue explained before.
Hum.
5% decrease in the cost of sales that total basis.
$10 5 billion compared to pesos 11 billion in the second quarter operations in Q1, primarily driven by lower operational costs.
Third.
An 8% increase in administrative and selling expenses, but total pesos, one 3 billion.
During the second quarter of two <unk>.
Compared to $1 2 billion in the second quarter 2021.
Continuing with page 10, we can see that the consolidated net income was <unk> two point.
$4 billion in the second quarter of <unk> compared to a consolidated net loss of $7 to be in the same period of the 2021. In addition to the above mentioned factors net income was negatively impacted by first an increase in financial expenses, which amounted to pesos seek.
One 9 billion during the second quarter of 2000 diesel compared to pesos $4 7 billion in the second quarter FY 2021, mainly due to an increase in foreign exchange difference and the higher depreciation of the Argentine peso during the quarter.
An increase of net monetary position loss, which amounted to pesos for a meeting in the second quarter. The trend is going to be two due to a higher inflation during the second quarter of.
2022.
On higher volumes of my career.
And positively impacted by <unk>.
Increase in impairment of property plant and equipment that totaled pesos six 4 billion during second quarter of fiscal two one.
Second.
One Taiwan.
55% increase in foreign exchange difference on operating profit.
Related to <unk> that generated pesos $4 6 billion gain during the second quarter 2022.
Compared to pesos, one 8 billion gains during the second quarter of the trends in Q1.
Due to a higher depreciation of the Argentine peso during the quarter.
So an increase in financial income amounted to pesos $2 2 billion in the second quarter of 2000.
22, compared to pesos minus <unk> 3 billion in the second quarter.
One mainly due to higher financial assets results in the second quarter of 2020.
For lower income tax expenses amounted to pesos, one 1 billion in the second quarter update to our disposition compared.
Compared to pesos five 5 billion.
Second quarter opportunities in July .
Additionally, the share of profit of associates was pesos CLO 3 billion gain during the second quarter of 2022 compared to a loss of patients to $12 7 billion in the second quarter of the previous year.
Funny collections.
Zero four with all the other planned total.
So $2 1 billion in the second quarter of returns has been little as compared to $3 9 billion disciplined quarter. After 2021.
The amounts are being collected on time and according to the signed contract.
Going to page 11, you can see our cash flow for the second quarter of the 2022.
Net cash provided by operating activities was pesos 16 9 billion.
These include pesos to one 1 million in collection from what's already installed.
Thank you and now we invite you to ask any questions you may have.
Yeah.
We will now begin the question and answer session to ask a question you May Press Star one on your phone at this time.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause Buffy poll for questions.
Thank you. Your first question is coming from Frank Mcgann of Bank of America. Frank Please ask your question.
Okay, great. Thank you very much.
A couple of questions. If I could one is just what are the current plans for any stoppages or maintenance in the second half of the year.
And also what are the.
Any change in demand that you would expect in the second half versus what you've been seeing in the.
Overall trends in the first half and then if I could ask one additional question.
Overall hydro situation for periods or are the regular I think you mentioned in the release that there was some improvement starting in June I was just wondering how important that is how how much better you see the the overall conditions as youre looking into the third quarter.
And that plant or believes the contact you have expires next year I was just wondering if there's any.
Talks going on with the government or or plans for a possible renewal of the contract you have for the plant.
Okay. Thank you. Thank you for your questions.
Owing to your first question, we are not seeing.
Important maintain as for the rest of the year of course, we have small maintained Andre will have less but not nothing.
Significant hurdle for the rest of the year in terms of our equipment.
Or.
Our hydro we are not seeing a big.
Being maintained for the rest of the year.
The answer.
On September we have an intervention of next.
Next year September of next year, we have an intervention of our combined cycling when a sinus disease.
The first being maintained is that we face.
For our equipment.
In terms of.
The demand.
We are seeing some recovery of the demand in fact, the industrial demand or on the levels more or less on the levels of the 2019 completely recovered after Kobe.
Uh huh.
We are not seeing much more increase in terms of demand, especially if we're seeing that we are seeing some acceleration on the industry growth.
And in terms of.
And residential demand, we will need to know how the this subsidy these restrictions will apply.
The new scheme that the government.
Announce if they will be 400.
Yeah, what <unk> was for salary.
For a month or two months that will depends on how the demand will.
Will be reduced in terms of not having the subsidy so for for Brady.
The demand of the residential demand for the future we will need to have more information about the implementation of this new scheme.
But we are not seeing.
Rising on the demand for the next month.
Anyway.
In terms of payer, allowing <unk> as you mentioned we are seeing.
Better inflows, especially during this winter the snow is higher than we expected.
In <unk>. So we are seeing more more inflows.
But we are ready.
We are not in the in the top of the ramp so we already are recovering the level with them.
And depending on how this does no continuous in the rain and summer.
For example, we will see we will have more information to see if we have.
We come back to the to the medium level of production or not I think today, it's too early to say that we are in the middle in the middle of the year.
We are in the draw year.
But in fact, we are seeing.
An improvement, but we don't know yet if this improvement will keep will continue in the in the during the summer.
And our last question is regarding the concession.
We have some.
Some.
Dogs with the government, but the previous administration.
In terms of energy I mean.
Right now with the new authorities, we're seeing we need to start again and the ministry of health.
If economy, we entered with him about that so I think we need to we need to start again with the discussions.
And see which is which are the expectations the new ministry have about about the conversations and.
I think we need to start again with these these meetings and these tuck ins in order to have more information to give to you in the market right now it's too early to have an impression of to give some color about that.
Of course, we something that we have on our agenda. So we expect to to start talking about that soon with these new.
Ministry and the new people in charge of electricity and energy.
So we will have more information, perhaps in the next quarter.
Okay. If I could follow up just quickly could you remind us what percentage of EBITDA.
If you could disclose it.
Did I get that represents and what percentage of EBITDA is currently in U S. Dollar Ppas. If you have the number.
Well, yes, yes, so right now with all the.
You're going to answer the second first.
Now with all the equipment that we have under construction installed more or less 70% between 70 to 75.
How that works.
Really that generates.
In dollars and the rest is in pesos at the spot.
The presentation.
<unk> dramatically change after our finishing the construction of their of the project that we.
Its telco striking during 2017 and 2018.
And in terms of EBITDA <unk> million dollars, let's say that roughly.
Number of.
The EBITDA right.
Okay. Thank you very much.
Youre welcome.
Thank you. Your next question is coming from <unk> Fernandez from balance.
Yes.
Good morning, everybody. Thank you.
For these materials in the presentation very complete as always.
Actually five questions sorry for the extension, but they should be quick I promise I.
I would like to go one by one if you don't mind.
The first one is related to.
The gummies.
Payment dates.
The.
Right now.
Or how they close the quarter and what happened in this.
In July .
And the early August .
Okay, Let's go for that thank you for your question.
In terms of the quarter the payments they start getting better in fact.
That was with the previous administration and the economy. So coming from 30 days of delay will reach almost 15 days of delay.
And in June then with the change in the administration, we suffer more delays at the beginning because some signing problems people.
The renewal of course, they renew all the staff in terms of economy and secretary of energy.
And we see.
Increase the delay too.
45, 50 days of delay.
And.
And with these new changes in the economy, we are seeing.
The rate of 60, 60 days more or less expecting that.
When the people getting a diner fees and istar.
Working again normally we we expect to reduce again these delays are no perhaps.
Again with fairy between 15, and 30 days of delay.
Okay great.
Then regarding the crucial.
We have been working during the past quarter some different structural fixes.
I don't know if the situation is resolved by now.
Sorry, you can repeat.
Some maintained is what is your question about.
Yes about the level of overall availability at <unk>.
Which had some issues.
Yes.
Yes, yes, yes last quarter.
At the end of the quarter is specifically in June .
We suffer.
A failure in our unit one of the units of the cogeneration and number 26 digit number 26.
We have the same issue that we have.
We faced last year, we did 27 unit the other one which is the failure in the <unk> box.
The gearbox connects the turbine with the generator.
We.
We need to change according to Siemens, which is a provider we need to change some pieces of D. C. Our books.
And we are taking.
Take that Rick.
Process, we need to bring the Pcs are very big pieces, we need to bring it in especial cargo. So we have several delays in terms of the to find a place to bring the pieces. So we're expecting to get the unit online again.
In the middle of August .
'twenty.
15 between 15 and 19.
These months.
Okay.
We are not expecting to have any any more growing with easier loans. Because we are changing the main component. So we are not expecting to have more failures.
Weighted to these geo box.
Okay great.
Regarding the San Carlos projects.
In cell touch on regulations on that.
It's been Mel Watt I don't know if you can share with us any capex.
Expectation for the project I mean, if you could break that down in terms of how much is the.
<unk>.
Panels.
On the construction and how much is for the.
Transmission payment that you have to make two comments.
Okay, Okay in terms of.
Therefore, the these new brushy.
As you mentioned, we get granted for the capacity for 10 megawatts. This is.
Receiving the we have a more or less.
Non budget prices, we are receiving we are resilient right now.
And this does mask.
The confirmed capex, but we expect with the number that we already have around $10 million in capex that we expect to deploy at the and perhaps the first 30% at the end of the year and then the rest in the lab in the next two quarters.
In terms of.
As you said, it's a small project connected in fit in 33 kilowatt line. So there is no much more capex related to transmission line.
The main components are as you mentioned.
Finance on trucks that is the main components of the.
Yeah.
Of the cost as I mentioned to you.
More or less 70% related to that and the rest is the civil awards to install them and some connection but not a big portion of connection.
The importance of.
In terms of the capacity payment.
Okay.
No no I was referring to that the amount of money that you need to be to come into for the transport.
In terms of the capacity payment needs around.
150.
$1000.
Sure.
Quarter.
Okay.
The amount of capacity payments that we need to pay to commission.
The continuation of these projects will be around.
Between 15 and 18 months.
Okay. So it's $150000.
Water.
Per quarter until you finish construction.
Yes.
Okay, that's great.
And I don't know if you have any updates regarding the <unk>.
Got you a little bit.
Closing.
Yeah, we're still working on that we are analyzing very detailed the one bit of capex.
Of course, we are we are.
And ladies and indeed, all the Kobe.
<unk> city in order to have.
The perfect ready to launch.
We finished that analysis and a nationally.
We are making a huge analyses about how the equipment is.
Maintain was maintained by by an answer so that take a time for us.
We are working with CMS on that but we are in a in a preliminary stage of analysis and trying to be ready when the conditions economic conditions and the COVID-19 conditions.
Getting more clear for us to launch.
That's appropriate.
But we are not launching yet.
Great I have a final one related to dividends.
Dividends I understand that you are still limited by some of the covenants on the loans that you took.
If we could expect that to be change at some point in time this year or the next one.
We are not expecting for this year for sure.
The next one we will see in the next one we need to we have to pay some portion of the loan.
And then breaking into 2000.
70, $535 million and I think there we can have some.
Release.
Two to analyze if we can reach all they've gotten that number.
In payroll the number.
We can have some release on that restriction, but not for this year for sure.
Okay. That's great. Thank you very much for your time that it was very clear.
Oh, Thank you for your question and your interest.
Okay, ladies and gentlemen, if you have a question. Please press star one on your <unk>.
I don't know Jonathan if you've got any questions that have come through on the webcast.
You'd like to look.
Okay. We appear to have no further questions in the queue on the phone lines.
The management for any closing remarks.
Okay. Thank you everyone for your interest in central Puerto we encourage you to call us for any information that you may need to have a great day.
Ladies and gentlemen, the conference is now concluded thank you for attending.
Attending today's presentation you may now disconnect your phone lines and have a wonderful day.
Okay.