Good morning, and thank you for waiting. Welcome to CPFL Energia 2Q 2019 Earnings Results Call. Today, we have with us Mr. Gustavo Estrella, CEO of SEKESCA de Neuvia and Mr. Pan, CFO and IR Officer as well as other officers of the company.
The presentation will be available for download at the website www.ctfl.com.brir. We inform that all participants will be in listen only mode during the company's presentation. After that, there will be a question and answer session and further instructions will be given. It's important to mention that this call is being recorded. Before proceeding, let me mention that forward looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996.
Forward looking statements are based on the beliefs and assumptions of CPFL Energia management as well as on information currently available to the company. Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Satefla de Neuvia and cause results to differ materially from those expressed in such forward looking statements. Now I will turn the conference over to Mr.
Gustavo Estrella. Please, Mr. Estrella, the floor is yours. Good morning, everyone. Thank you very much for being with us in this call for the Q2 of 2019 for CPFL Energia.
I will start on July 3, where we have a few highlights for this quarter. The first one is an increase of 0.9% in the load of our concession areas. I think it is important to say that we did have a migration movement from free client to the National Grid, the direct connection to the National Grid. So this 0.9% in the same comparison base will be around 1.5%, which is more or less what we have had in terms of load increase in the concession area in the past few years. We'll talk more about that in the coming slides.
The second highlight is about our EBITDA. We have reached BRL 1,500,000,000, a growth of 9.9 percent vis a vis 2018. The net income of BRL574,000,000, up 27.4 percent vis a vis the Q2 of 2018. Here, we have an important variation in our net debt. We are reaching a net debt of BRL 11,000,000,000.
And our leverage, which is an indicator of net debt over EBITDA, is of 1.93x. And once again, I should highlight that this figure is already impacted by the results of our IPO in June, where we had BRL 3,700,000,000 coming into the company's cash. Investments of BRL 521,000,000 also up 23.5 percent vis a vis 2018. Here, our forecast for 2019 is a total investment of BRL 2,200,000,000 for the whole year of 2019. An important impact also was in the tariff adjustments of RGE, now combined to RGE South with an important increase in our parcel B, which basically has a transfer of the IGPM rates.
So we reached a growth of 7.14% in Parcel B of our prior RGE and 9.10% of RGE sales, 2 important impacts with growth in Pasha V. And finally, this is the effect of our re IPO. As I said, in June, we had funds coming to the company of BRL 3,700,000,000 at BRL 27.5 per share in this period of a little over 1 month. We had a variation in the share prices of almost 24% starting on June 12, which was the pricing. And also with a daily volume of trading of BRL 109,000,000, very significant to the company.
Turning to Slide number 4. We have our energy sales. As we have mentioned, our load in the concession area had an increase of 0.9% adjusting the impact of our clients to the national grid and this client has zero margin. Therefore, it does not affect our results, but that affects the perception of growth in energy consumption. So in comparable basis, the load is actually growing 1 0.5%.
In sales, there was a drop of 0.8%, and this is an important effect in this quarter. It was the billing calendar effect. This billing calendar did cause a negative effect on sales, but I think the most important figure is really the load, which is what is affecting the non billed invoice. That's what's affecting the company's results this month. So when we analyze sales by segment, and this is the figure that really has to do with the 0.8%, and we do have a negative performance in residential, industrial and others.
And we have a chart on the bottom right of this page. We show the billing calendar, the temperature and the migration to the national grid. If we make the adjustments in each one of these segments, you can see that the residential area goes from a drop of 1% to a growth of 1 point 9%. If we adjust the billing calendar and the temperature and if we hold the same analysis for the industrial area, we would go to a growth of 1.4% and the commercial area from 0.5%, it would grow 2 point 4%. So it's important to make this type of adjustment to show that you can have consistent and realistic overview regarding energy consumption, which is maintaining at 2% level as we have had for the past 2 years.
Also important is to talk about losses. Losses are basically stable vis a vis 2018. We also have had challenges in the macroeconomic scenario in which the country finds itself today in terms of loss of control. So we are maintaining losses, but these are still above the regulatory losses. So we do face a challenge there.
I will talk further on about delinquency, but losses is a challenge for us right now. And now we have the profile of our market. 38% of the market comes from the industrial area, followed by 29% coming from residential area, commercial area 17% and others also 17%. Now turning to Slide number 5. We talk a little bit about the weather and the macroeconomic scenario.
We have the 2 main impacts in our market, and they are related to weather. The first, rainfall, especially in the South region, which is affecting significantly our irrigation market, you can see in the month of April May, we have a rainfall volume that is higher than all time averages. Therefore, we have an energy consumption related to irrigation that is lower than what we expected. And also talking about temperature, we have a very specific effect in the South region where we have an average of temperature in this quarter of almost 1 degree higher than the all time averages. Therefore, consumption, especially residential and commercial related to heaters, also that allows us to have a lower energy consumption.
And in the bottom part of the slide, you see that we have a scenario of a slow economic recovery. The unemployment rate is still high, around 12%. Industrial production, there was a drop in the 2nd quarter of 1% in retail sales with a shy growth of 0.8%. So all of these combined can somehow explain energy consumption at low levels, close to 2% as we had in this quarter. Turning to Slide 6.
To talk about delinquency, as I said, we also have a major challenge when we talk about delinquency. In comparison to 2018, we had a growth of 53.7 percent of our ADA in the results from BRL 41,000,000 to BRL 64,000,000. And also there is a shy or a slow drop visavis the Q1 of 2019, but this is a subject that's really taking up our time and we are dedicating a lot of attention to controlled delinquency. And as we can see, the main action regarding collection is to disconnect energy. So you see that there is a significant growth when we compare that to 2018 of over 30%.
And not even that has been enough to control our delinquency. Of course, that this increase in the disconnections is recent, and so we expect that it does bring positive impact over the next month. And on the bottom, basically, doing the benchmarking with other companies, we see that in general, there is an upward trend in delinquency, not only in our concession areas, but also in other concession areas as well. That's something that's general that's happening. On Slide 7, talking about hydrology, the expectation to close the reservoir levels for August now, it should be close to 44%.
The all time average is around 54% for the same month, August. A little bit below, but this is not a concerning scenario, at least not in the short term. We see here as an expectation for the next 3 months. So we should have rainfall that is lower than the average. This is already happening.
For the Southeast in August, we should have around 80% and in the South region, 40%. So this is a point of attention, and it should bring the short term prices to higher levels, but this is not a major concern as of now. To the right, we have what we expect for DSO. And remember, these are the most critical months for DSO from July to September, and we should reach something close to 45%. But in the year average, it should be 15% to 16% for 2019.
Now on Slide 8, we have our performance on renewable generation. We have here our 3 main sources. The first of them, the biomass, has a positive impact of 21 gigawatts hour. Basically, thanks to better weather conditions that allowed us to have a sugarcane crop with a higher bagasse production so that we could have also higher generation than 2018. In our SHPPs, we have an increase of 132 gigawatt hours.
Thanks to Boavito Dez that allowed us to have a greater generation capacity when compared to 2018. And finally, in the wind area, we had a drop of 67 gigawatts hour basically because of lower wind performance. We still have went lower than the ideal curve, and that is affecting generation in this quarter. Well, I will now turn the floor to Mr. Pan, and he's going to go into the details about the financial results for this quarter.
Thank you very much. I will try to speak Portuguese, and I hope you may understand it. We have reached our EBITDA in the Q2 from 9.9%. It has increased. We had an EBITDA of BRL 873,000,000 in the 2nd quarter in the Distribution segment, an increase of 13.8% in the comparison to the same period of 2018.
The main effects have been BRL235 1,000,000 in market growth, and there was a variation of 0.9% in the net load of losses. And also, there was an increase of tariffs because of adjustments in the IGPM and Paulista and Piratinga as well as the application of the 4th tariff review cycle for RG in June of 2018. We also had a higher restatement of the financial asset of the concession in the amount of BRL 63,000,000, thanks to a higher IPCA. On the other hand, we had a positive effect of BRL 93,000,000 in the Q2 of 2018. That was because of the new regulatory asset base adopted with the tariff review.
This has not repeated this year. And finally, there was an increase of BRL 86,000,000 of DMSO. And we should highlight here expenses with asset write offs as well as some income CapEx, which are not related to inflation, BRL 25,000,000. EBITDA, which has increased BRL 22,000,000 because of the delinquency increase. Also, expenses that have been impacted by inflation corresponding to BRL 17,000,000 legal and judicial expenses BRL 8,000,000 and expenses with private pension funds BRL6 1,000,000.
In the conventional generation segment, we had an EBITDA of BRL334 1,000,000 in the 2nd quarter, an increase of 11.8% in the comparison to the same period of 2018. The main effects were the inflation transfer to contract prices, BRL 22,000,000 and on the higher volume of hydro and thermal generation amounting BRL 13,000,000. For CPFL Renewable, we had an EBITDA of BRL 251,000,000 in the second quarter, which corresponds to a drop of 1.9% in the comparison to the same period of 2018. And the main facts here were 1st cohort tax credits recovery in the Q2 of 2018, amounting BRL 17,000,000. Lower wind farms generation corresponding to 16,000,000.
Dollars The end of the grace period in the O and M contract of the one funds of the Compas dos Santos and Tom Benejito. Also, seasonality of contracts have brought a gain of BRL 28,000,000 thanks to a higher allocation of energy in the Q2 of 2019. And remember, pesosat should be offset in the upcoming periods. And also lower expenses with GSF. In the segment of Commercialization Services and Others, we had an EBITDA of BRL 46,000,000 in the second quarter, down 2.3% in the comparison to 2018.
And the main effect to Bora and commercialization, a drop in the EBITDA margin because of a lower commercialized volume. And in services on the other hand, new contracts and a higher operating efficiency have allowed improvement in the results corresponding to BRL 11,000,000. So finally, our net income was BRL574,000,000 with a variation of 27.4 percent when compared to the Q2 of 2018. In addition to the variation of BRL 135,000,000 in the EBITDA, the main effects were in the financial results, an improvement of BRL 34,000,000 mainly because a drop in the net indebtedness, which already is adjusted by sectorial financial assets and liabilities with a benefit of BRL 22,000,000. And the revenue coming from fines and interests coming from late payments.
It's important to highlight that this lower ADA or higher ADA is offset by a greater financial revenue. Depreciation has varied BRL 6,000,000. There was an increase in taxes because of the improvement in the results. So now let's turn to the next slide. On the first chart, we show the financial covenants index variations.
In this calculation, but net debt is adjusted according to the equivalent stake of the Pachel Energia in each one of its subsidiaries. So considering that the pro form a net debt totaled BRL 11,000,000,000 and pro form a EBITDA for the last 12 months reached BRL 5,700,000,000. The ratio, pro form a net debtEBITDA at the end of the Q2 of 2019 has reached 1.93x. We should highlight that if we were not to consider the offering of the REITO, The net GAAP would be BRL 14,600,000,000 and the ratio would be 2.57 times. On the second chart, we show gross debt and the breakdown by indexer.
As we can see, 64% of that is linked to the CDI, which explains the performance in the 3rd chart, where we can see the reduction in the cost of CPFL Energia debt. In the last chart, we have the cost of the debt for CPETI Helenevaides. In May, CPETI Helenevaides has issued debentures in the amount of BRL 838,000,000, which have been allocated to prepayments of most or more expensive debt in order to get in line to Tepeca community cost. So let's talk a little bit about RioITO. The total offering, BRL 134,000,000 total offering, BRL 3,700,000,000.
We had 58% of investors. In Brazil, 42% of investors were foreign, almost 4x the subscription. So now we should have and participating here at least 1 independent member as the Novo Mercado Regulation defines. Eberfelio now has 2 independent members. The committee meetings can only be held validly with the presence of all three members of the related parties committee.
And so this is to show the market the concern about the subject on corporate governance with accountability and transparency. So we have created a new department called corporate governance. And the director responded administratively to the Chief Legal Officer and functionally to the Board of Directors. On May 21, Patapiale has announced a pay operation minimum of 50%. To pay more than 50% is going to depend on a balance between growth and yield.
Thank you very much. Ladies and gentlemen, we will now start the Q and A session, which will be held in Portuguese and translated into English. First question is from Thiago Silva, Santander. Good morning, everyone. Thank you very much for this call and congratulations on the results.
I have two questions. The first one is about the restructuring of the company and generation. Can you give us any guidance on how does this go and what can be done in the balance or in year to date fiscal office? And second question, is the growth via M and A? Just recently, the Governor of the Cebu Rio Grande do Sul mentioned that C3E is ready to be sold.
They need no further approvals. And obviously, considering the synergy you have and the location, I would like to know if there are ongoing negotiations. I know this is confidential, but I would like you to talk a little bit about M and A in general and specifically on something on this initiative. Thiago, thank you very much for your questions. Let's just start by generation.
We are still following this restructuring plan, And the most important action in the short term is the integration of CPFL Genovarez into the CPFL Energia group. This is already happening. We have an important date. We had it last week on August 5, where we, in fact, started the integration process. And some employees came to Compinas leaving Sao Paulo.
So we wanted to conclude over this year still in 2019 this integration basically of our employees, all the processes and systems of the company so that we can have the integration process, minimizing any possible risks in both companies' operations, specifically CPFLI Renovagas. Remember, we are still in the process of signing the SPA, which is the purchase and selling contract of operations that we have now with the State Grid. So the idea is to conclude that in the coming weeks. And after that, we should concentrate the share of SEPEPEL Renovarzyna, SEPEPEL Energia, so that we could then further on evaluate the upcoming stages of integration and restructuring process. So remember, CPAC Illegenovavez is a listed company.
So all the requirements of CGM and the stock exchange market will be respected over the process. But the process is the idea is that over 2020, we are able to conclude this restructuring process. So I would say that in the very short term, our main focus is on the reintegration of Cetate and Erenovables into Energia, obviously maintaining all the activities of the different companies throughout this period. Now about the M and A. First, specifically, about C3E.
We are following the movements of the state of Rio Grande do Sul on this subject of C3 privatization. We do not have any new information on this after they published the possibility. But just as every market, it's our expectation also that to see the government placing the company in the privatization process, while analyzing our strategy of focusing and growth specifically in the businesses in which somehow we have a leadership, whether in distribution or renewable generation. This asset, because of its geographic location, makes all sense in the world for CPFLI. And we will assess it if this privatization process really comes up.
And not only this one, I think the idea is really to look at the opportunities for investment in distribution that come up. We have an expectation that in addition to C3E, to see other assets that might be on the market. And for each one of them, we will have a focus and we'll analyze if it really makes sense to the company. But I'm sure that the group focus on growth and distribution. Now talking about generation, this integration process of the generation arm and also for us to be better prepared to address this type of growth we have here in addition to possible future M and As, also growing new projects.
We're also looking at opportunities to address that growth as opportunities come up. So I believe that growth is especially relevant and priority to the group and our radar is out there to check all opportunities that we might find in the market. Our next question comes from Marcelo Saeta Itau. Thank you for the call. I have two questions.
The first one has to do with the regulatory act in transmission and the contribution period has already come to an end and Enel will be publishing the procedures. And I would like to understand if you can discuss this or if it's all in writing at the distribution side because Anel has not sent any proposal yet in this regard about the back. Thank you, Marcelo. And I will give the floor to Andre Guommi, our Regulation Officer. Good morning, Marcello.
In fact, today, Anel has segregated the public hearings. So Enel is discussing generation and transmission, and we are waiting for the 2nd phase to be opened for distribution. So in fact, it was a request on the part of the distribution segment in terms of separating the WACC from distribution and generation and transmission because they are different segments. So we met as Abrade with Pictoroni and into the directors. And we expect in the second half of the year to resume the discussion about the distribution WACC.
So there is nothing I could add to that. One of the points of the proportion for the wire cut generation transition that will be attention of the market was a very small window, about 5 years, if I'm not mistaken. And you were with Enel, do you think this window could be expanded to 10 years? Or is it too early to say? Now this is the reason why we are to separate the discussion because of the rigs in the distribution segment because they are different from transmission and generation.
So that we could separate it and look at the distribution business separately as it has always been because in the walk, you have to look at other segments different from the generation transmission. So we have no details to give you, and we believe that in the second phase of distribution, we will be able to discuss also this issue of the window because we have not received any second phase or we have not talked of the second phase, so in the same way that there was for generation and transmission. So thank you very much. And I would like to understand now what you think about the prices for energy. You said that the rainfall expectation has worsened, but not enough to have a very big impact on the spot prices this year.
So what about this for the next year? And if we take a contract for 2021 or 'twenty two, what will be the price of energy today on a contract? Let's say, if you had to sign the contract today for these years, 2021 and 2022? Marcelo Vicahatoumuttien Marcelo Vicaratri Mutiam is going to answer your question. Marcelo, good morning.
There is Gustafo, Chair. We see this about 80% of the Southeast and the South and around 40%. And we have the reflex. We see the ARNA or the net ratio earnings. So we don't really talk about these prices.
We do not disclose the prices that we are going with or we are working with. So the market doesn't have this practice in place. But no congratulations regarding what has been negotiated in the last, let's say, 3 weeks for more long term prices. Thank you very much. The committee session has come to an end.
I would like to give the floor back to Mr. Gustavo Estrella for his closing remarks. Once again, I would like to thank you very much for your presence, for your questions. And in our evaluation, we are delivering a very consistent result in this quarter with a major growth in our income and also in our EBITDA. And this is the conclusion of a very relevant process for the company, our relisting in June.
And in fact, this addresses our perspective and prepares the company even better for the growth in the next few months. So I talked about our integration, cogeneration process, which is very relevant, and we have been preparing the company to address this level of growth. And Tom talked about our dividend policy and the other changes and especially in our related parties committee. So very important steps towards corporate governance. And this is the way preparing the company to address this growth and operating as we have always operated in the market in a transparent and open fashion with the full disclosure of information and looking at the market as a major partner of ours in this process of growth and of new businesses as well.
So once again, I would like to thank you very much for your presence in this call and wish you a good day.