Central Puerto S.A. Q1 2023 Earnings Call
Good morning and welcome to the Central Porto Conference call following the results announcement for the first quarter ended on March 31, 2023.
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After today's 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.centralporto.com.
A replay of today's call may be accessed by accessing the website in the Investor Support section of the Central Porto corporate website.
Before we proceed, please be aware that all financial figures were prepared in accordance with IFRS and are stated in Argentinian pesos unless otherwise noted. During the call, including the data from previous periods and the growth comparisons have been stated in terms of Argentinian pesos.
of 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 you to the forward-looking statements section of our earnings release and recent filings with the SEC.
Central Porto 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 of the numbers mentioned during the call may be rounded to simplify the discussion.
On the call today from Central Porto is Fernando Bonnet, Chief Executive Officer, Enrique Terrenio, Chief Financial Officer, and Federico Bazori, Financial Controller. And now I will turn the call over to Federico Bazori. Mr. Bazori, you may begin.
Thank you very much. Good morning and welcome. We are joining you today with our management team from Buenos Aires, Argentina to report on the results of the first quarter of the 2023 and then answer any questions you may have.
I would like to begin today's call by analyzing the recent events, the industry in general, and finally the operative figures of the first quarter and the most recent financial news and results.
I would like to mention the following updates regarding Central Porto.
On December 12, 2022, through resolution 826 of the 2022, the Secretariat of Energy authorizes generators a tariff increase of 25% in February of 2023 and 28% in August of 2023.
Through resolution 826 of the 2022, the Secretariat of Energy authorizes generators a tariff increase of 25% in February of 2023 and 28% in August of 2023 to spot energy.
On February 7th of the 2023, through Resolution 59 of the 2023, the Secretariat of Energy authorizes generators that have combined cycle units to adhere to the agreement on availability of power and improvement of efficiency with the aim of encouraging the necessary investment of major and minor maintenance.
of the machines.
Through this agreement, the other generators undertake to achieve at least 85 percent availability of average monthly power in exchange for a new power and generation price. In the case of power, an amount of $2,000 per megawatt-month is a total of $2,000 per
It's established plus the sum in pesos corresponding to 85 percent and 65 percent of the power value established in resolution 826 of the 2022 for the periods of spring, autumn, and summer winter respectively. Additionally, the price for generated energy is set at $0.00.
3.5 dollars per megawatt in the case of using gas and at 6.1 dollars per megawatt for alternative fuel like this
New Investments and Acquisitions
In line with our growth strategy, focus on new opportunities in the energy sector and other business in which Argentina shows strong comparative advantages, we perform the following transactions.
On February 17, 2023, Pro-Ernest Socia Anonima acquired from Enel Argentina Socia Anonima 75.68% of the capital and bonds in stocks of Enel Generation Costanida Socia Anonima.
called Cédral Costanera. The transaction price amount...
48 million dollars.
By taking possession of Central Costanera, Central Puerto reinforces its growth in Argentina, and consolidating as market leader in the generating sector.
the value of Central Cortania represents a unique opportunity as a strategic asset.
The growth potential of each acquisition is based on the operational and corporate synergies, experience management, and knowledge in technical and operational field. On May 3rd of 2023, the Verona Sociedad Nónima acquired 100% of the capital stock and votes of Empresa-Herrez Argentina Sociedad Nónima, La Missiona Sociedad Nónima, Ensececerína Sociedad Nónima, and the Verona Sociedad Nónima Foundation.
consisting of 88,000
63 hectares geographically located in the center of the province of Corrientes, of which approximately 26,000 hectares are planted with pine out of a total of approximately 36,000 plantable hectares. The company is focused on increasing its environmental performance and contributing to global decarbonization objectives.
Now, I would like to comment on the main metrics of the industry as you can see on page 4.
In terms of in-store capacity, the system reached 43,278 MW in the first quarter of the 2023 compared to 42,871 MW in the first quarter of the 2023, resulting in a 1% increase.
As of March 31, 2023, the install capacity is divided in 59% thermal, 25% hydro, 4% nuclear, and 12% renewable. In the first quarter of 2023, energy generation increased 8% to 38,000.
627 GWh per hour compared to 35,719 GWh in the first quarter of 2022.
mainly due to, first, a 1% increase in thermal generation, second,
a 74% increase in hydro generation, which was partially offset by, first, a 28% decrease in nuclear generation, and second, a 3% decrease in renewable generation.
The increase in thermal generation was mainly due to higher dispatch. The average system availability was 73% in the first quarter of the 2023 compared to 76 in the first quarter of 2022.
The increase in hydro generation is mainly related with the increase in the inflow of the Paranal River. In contrast, in the case of generation from nuclear sources, the decrease is related with a severe technical failure in Adutia II. We got it in renewable energy.
the decrease in generation was related to lesser wind resource.
Energy demand increased 14 percent to 39,490 GWh compared to 34,513 GWh in the first quarter of 2022 in which presidential demand grew 25 percent, commercial 7 percent.
and large industrial commercial demand of 4%.
Going now to our key performance indicators for the quarter, as you can see on page 6, energy generation during the first quarter of the 2023 was 5,137 Wh, 12% higher than the same period in the 2072.
The increase in the energy generated by central Porto was due to first, a 15 percent increase in energy generation from thermal units mainly from the acquisition of central costanera partially offset by low generation on Porto site. Second, an 8 percent increase in energy generation from the hydro plant per alaglia due to higher feed flow.
was 73% compared to 84%
in the same period of the 2022 due to lower generation due to the technical failures of Porto-site steam turbines. As a reference the market average availability for thermal units for the same period was 73% according to data from Camisa.
Steam production decreased 6% totaling.
435,055 tons produced during the first quarter of the 1993 compared to 460,705 tons during the first quarter of the 1992. Due to lower demand.
our client terminal say social-anonym.
Going now to the results for this quarter as you can see on page 8 our revenues decreasedeter.
27.9 billion in the first quarter of the 2023 as compared to pesos 35.1 billion in the first quarter of the 2032. This 20% decrease was mainly due to...
First, a 36% decrease in sales under contracts, which amounted to pesos $11.7 billion during the first quarter of the 2023 as compared to pesos $18.4 billion in the first quarter of the 2022.
It was impacted by the ending of the Rio de Lopez TGPPA contract in August of 2022 and negatively impacted by a higher inflation adjustment over the peso depreciation in the period. It's worth to mention that the impact related to the ending of Rio de Lopez TGPPA contract will be recovered with a new PPA contract for the Rio de Lopez
13.3 billion in the first quarter of 2023 as compared to 14.3 billion in the first quarter of 2023, negatively impacted by a high inflation adjustment over the tariff increase in the period and due to lower generation mainly for technical failures.
of Porto site steam turbines of pesos 2.8 billion partially offset by central container revenues of pesos 1.8 billion.
a 23% decrease in steam sales which total pesos 1.3 billion in the first quarter of the 2023 compared to pesos 1.7 billion in the first quarter of the 2022.
Fourth, FOSU segment that total pesos 1 billion in revenues during the first quarter of the century.
We can see the changes in our adjusted EBITDA of pesos 29.8 billion in the first quarter of the 2023 compared to pesos 32.2 billion in the first quarter of the 2022. The 7% decrease was driven by the following changes.
First, the above mentioned drop in revenues. Second, 16% increase in administrative and selling expenses that total pesos 2.4 billion in the first quarter of the 2023 as compared to pesos 2.0 billion in the first quarter of edge 2022.
For central Puerto, the deviation is mainly driven by pesos, 0.17 billion increases in the third party services. Pesos, 0.11 billion from central Costa Rica and pesos, 0.05 billion are coming from forestry segment.
Third, 9% increase in cost of sales that total pesos 17.0 billion in the first quarter of the 2033 compared to pesos 15.5 billion in the first quarter of the 2022. The deviation is mainly explained by including central costa nera for pesos 1.3 billion and policy segment for pesos 0.6 billion.
partially offset by a reduction in Central Puerto of Pesos, 0.6 billion, mainly driven by lower third-party services and insurance costs in the first quarter of the 2003.
of pesos, $0.6 billion, mainly driven by lower third-party services and insurance costs in the first quarter of the 2003-04.
3% increase in depreciation and amortization that total pesos 6.0 billion during the first quarter of the 2023 as compared to pesos 5.8 billion during the first quarter of the 2023. A pesos 6.4 billion increase mainly explained by first.
40-year exchange difference on operating assets mainly related to phony trade receivables that generated a positive variation of pesos 3.4 billion during the first quarter of 1993.
pesos 9.4 billion in the first quarter of the 2023 compared to pesos 5.9 billion during the first quarter of the 2022 due to a higher depreciation of the Argentine peso during the quarter.
Second, an increase in pesos of $4 billion due to a fair value recognition in biological assets from the forestry segment. Third, a pesos $1 billion decrease in other income results due to an insurance recovery in the first quarter of 2022.
As a result, adjusted the VITA excluding FX difference, interest related to financial receivables, and biological assets fair value recognition was pesos 16.5 billion in the first quarter of the 2023, compared to pesos 26.3 billion in the first quarter of the 2023.
We can see that consolidated net income was pesos 0.1 billion in the first quarter of the 2023 compared to a consolidated net income of pesos 9.8 billion in the first quarter of the 2022.
In addition to the above mentioned factors, net income was negatively impacted by first an increase of pesos 7.3 billion in net monetary position loss which amounted 13.7 billion during the first quarter of the 2023 due to a higher inflation compared to pesos $2.5 billion in 2020.
An increase in share of the loss of associates of pesos of 0.3 billion in the first quarter of the 2023 amounted pesos of 0.7 billion in the first quarter of the 2023 compared to pesos of 0.4 billion in the first quarter of the 2022. Third, an increase in financial expenses which amounted to pesos of 0.7 billion in the first quarter of the 2023.
14.7 billion during the first quarter of the 2023, compared to pesos 9.6 billion in the first quarter of the 2022, mainly due to an increase in foreign exchange difference due to a higher depreciation of the Argentine peso during the quarter, partially offset by an increase in financial income that amounted to a higher
and increasing depreciation and amortization of pesos, $0.2 billion in the first quarter of 2023.
and positively impacted by First, lower income tax that amounted to pesos 1.4 billion loss in the first quarter of the 2023 compared to pesos 3.7 billion loss in the first quarter of the 2022 Second, an increase of pesos 3.5 billion on foreign exchange difference and interest related to funny trade receivables
Third, fair value recognition forestry segment biological assets that amounted pesos $4 billion. Foney collections totaled pesos $3.9 billion in the first quarter of 2023, including VAT. This– lapel— said for one quarter of 2013— a new development contract arose in late 2017. The plan was long-term but was applicants they were tasked with initializing both Speaker for California and Reg.
compared to pesos 4 billion of the first quarter of the 2022.
representing a total of pesos 3.9 billion in which pesos 0.5 billion corresponds to central Costanera. The amounts are being collected on time and according to the signed contract.
during the three months of the 2023. This cash flow arises from first, pesos 1.5 billion gain from the pre-tax income obtained during the three months of the 2023.
Second, adjustments to reconcile profit for the year before income tax with net cash flows of pesos 10.5 billion gain.
3. Peso's $2.7 billion gain in collection of interest from clients, including the ones from FONI.
Fourth, insurance recovery spaces, 0.1 billion, partially offset by...
pesos, $0.1 billion, partially offset by fifth.
pesos 2.1 billion loss in variations in other non-financial asset inventories and biological assets.
2.1 billion lost in variations in other non-financial asset inventories and biological assets.
pesos 5.7 billion loss in variation in trade account payable. Other accounts payable are non-financial liabilities and employee benefits liabilities. Seventh, income tax paid of pesos 1.4 billion. Net cash used in investing activities was pesos 6.4 billion in the first three months of the level 3.
This amount was mainly due to first pesos 7.3 billion from central container acquisition. Second, pesos 1.4 billion on investments in capex partially upset by third pesos 2.3 billion gain in sale of financial assets. Second cash used in financing activities was pesos 1.4 billion.
Third, Bezos 1.4 billion in debt service amountizations of existing loans mainly related to expansion projects.
4. pesos 2.3 billion in interest in financial expenses mainly related to those loans
Thank you and now we invite you to ask any questions to our team. We will now begin the question and answer session. To ask a question you may press star then 1 on your touch tone phone.
If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
Your first question for today is coming from Martine Aromaset at Balance Capital.
Hi. Well, thank you for the presentation and for the material and solid waste.
I have four questions. I would like to run them one by one if that's okay. My first question is about a Vasa acquisition. I was wondering how much did you pay for the company and if it came with cash or get also.
that information because we signed a confidential agreement with the seller so we are not allowed to…
to comment on the pricing.
In terms of payment, we pay abroad, yes. Okay, thank you. And a follow-up, maybe what VDA do you estimate for this new course?
Well, in terms of the BDA, more or less the idea or the decision that we take was saying that they were implementing, the BASA were implementing is...
to conserve the forest and to increase the quantity of hectares that we plant so we are not
We are not selling the trees right now. We expect a better convenient exchange rate and a better convenient price so we are using the cash flow to increase the ECTARS plant so we are not having all the cash of ECTARS that we have received from this.
Also, as is a decision, an invasive decision is not relevant for Puerto Rico right now.
for this year at least. We expect to start cutting the trees in the next year's coming and increase the vida in those moments. But right now it's almost not relevant for Puerto Rico. We expect to start cutting the trees in the next year's coming and increase the
In terms of the other Lopez, we are working with the EPC constructor right now in terms of reaching a contract with them. We expect to have this contract signed.
I think in two months from now and we expect to have the plant working as a combined cycle at the end of 2024.
In terms of capex, we don't have the number yet about the Briana Lopez expansion but it will be around 130 something million dollars.
Great. And my last? Yes. Yeah. Okay. Let's see.
My last question then is about the new resolution 59. I was wondering what power plants did you add to that and how much additional EVPA do you expect from this resolution?
Okay, in terms of the plants we signed the contracts for the combined cycle of Buenos Aires and the combined cycle of Mendoza, the combined cycle of Taneira and Mitsubishi and in the combined cycle of the...
the Siemens one, the small one which is in Costa Rica also. And we expect, depending on the evolution of the dollars of course and the evolution of the rest of the regulation, you know that the portion that we set in dollars is not the whole remuneration.
graph, an increase.
trying to reach the inflation and the dollar is not getting
not get the lower than inflation in the future we expect an increase of around
$13 million between $13 and $15 in the 12 month period of new EBITDA coming from this new regulation.
Very clear, thank you.
clear. Thank you. You're welcome.
Again, if you have a question, please press star then 1.
This concludes our question and answer session. I would like to turn the conference over to Mr. Bonnet for closing remarks.
Thank you to everyone for your interest in Central Porto. We encourage you to call us for any information that you may need. Have a great day.