The first quarter, 2025. I am Adriana Wagner, Interim IR Manager of ENGIE Brasil Energia, and I would like to make a few announcements before we start the video conference. At this moment, those connected are in listener mode only. Later, when we open the Q&A session, participants will be able to send them through the Zoom Q&A option. I would also like to remind you that this video conference is being recorded. We have made our website available at www.engie.com.br/investors. The results of the presentation and earnings release, in addition to complete financial statements and other documents filed at CVM, where analysis of financial statements, operational results, ESG indicators, and progress in the implementation of new projects are disclosed in detail, among other highlights for the period.
Before proceeding, I'd like to clarify that statements that may be made during this video conference regarding the business outlook of the company should be treated as forecasts, depending on the country's macroeconomic conditions, the performance, and regulation of the electric sector, in addition to other variables. Therefore, they may be submitted to changes. We remind you that journalists who wish to ask questions can do so by email, sending them to the company's press office. The present ENGIE Brasil Energia's performance in the first quarter of 2025, we have here Mr. Eduardo Takamori, CFO and Investor Relations Officer. I now turn over to Mr. Takamori.
Good morning, everyone. It's a pleasure to have you with us here today.
We have the highlights for the quarter, and I would like to remind you that this quarter we were able to add over 900 MW of installed capacity in our portfolio, which is a very important landmark. We have reached 10 GW of installed capacity. If we include the generators that were implemented later on, we are very close to 10 GW, and we have approximately 11.6 MW of capacity in our generation park. This is without counting the fact that in the first quarter we signed a contract for the acquisition of the Santo Antônio do Jari and Cachoeira Caldeirão hydroelectric power plants, which will expand our portfolio by an additional 612 MW once the operation is completed. From the point of view of our adjusted EBITDA, we have had the effect of the partial sales of TAG in the first quarter of last year.
We also had an increase from 8.2% to 12%, an adjustment of 12.4%, and the adjusted net income with an increase of 3.8%. I would like to highlight, and this was approved in the past, we have the distribution of complementary dividends for the fiscal year of 2024, totaling BRL 715 million, and shares are traded ex-dividends starting May 7, and payment will take place on December 23, 2025. The total distributed profits for the fiscal year was BRL 1.8 million, and we will talk about it later in our other slides. Regarding our indicators, we had improved performance. We have had significant achievements and had a reduction of 0.48 to 0.45 between the first quarter last year and the first quarter this year, and the number of accidents, which is very significant.
[Foreign language]
From the point of view of the workforce, we had an improvement in the last 30 months. We went from 30% to 32% in the total share of women in the company, and we went from 38% to 34% in the total of women in leadership positions, which is quite a significant advancement. Now, on the bottom of the slide, we have our social responsibility investments. Even with a lower level of activities, we had more people engaged in relationship programs.
[Foreign language]
In terms of ISE, the company celebrates the 20th consecutive year as part of the Corporate Sustainability Index ISE, achieving 4th place overall among the 82 selected companies, showing that we are in the right track. From operational highlights here, we have a very interesting effect going from the left.
[Foreign language]
You can see that we went to 5.4 MW in the first quarter, decreasing from 5.9 MW in gross power generation.
We went from 6.4 MW in average to 5.4 MW, a significant reduction, but this was caused especially by the reduction of the hydro power plants. As you will remember, last year we had expressive rains. This led to a normalization in the rest of the country that explains an expressive part of this reduction in hydro power plants. When we look at other generation, the complementary sources, we can show.
We have doubled the generation.
If we look in detail, we had improved performances in the operational plants.
We can see the right side bar. We went from 487 MW to 991 MW. On the right side bar, we can see the effect of the inclusion of new enterprises, both from the point of view of M&A and also organic growth, which started last year. In the first quarter, this contribution was basically the contribution of organic growth, and this was only seen at the end of the month.
[Foreign language]
We've seen expressive growth, showing that we're finally concluding the investments we've seen in past years.
[Foreign language]
In the next slide, we're going into the most important sectors right now. We all know that the first quarter was emblematic. It resulted in expressive results. You can see on the table the curtailment, which was 19%. Naturally, we have two main factors leading to this increase in curtailment. The first one.
[Foreign language]
We had critical events in the North of the country.
[Foreign language]
It can happen this year from the point of view of our results.
[Foreign language]
This growth above than average was reversed, and the system was not able to deal with it.
[Foreign language]
Even though.
[Foreign language]
This curtailment was very high.
[Foreign language]
It was somehow used in terms of generation that was already expected.
[Foreign language]
Solar generation. We generated only BRL 965 million, but when included in terms of the overall generation.
[Foreign language]
It represents 4%.
[Foreign language]
Of decrease in the total generation.
You can see here the benefit of a diversified portfolio. It enables us to have a rebalanced.
In the next session.
[Foreign language]
We introduce our energy business strategy, and in this slide, I would like to highlight higher figures, which show an expressive evolution in the numbers of clients and consuming units. We have reached 1,800 clients, and I am very happy to announce this.
[Foreign language]
We had over 980 consuming units, an increase, as you can see. From the point of view.
[Foreign language]
Uncontracted energy in the gray bars on the right side. You can see that we had a decrease of approximately 1% of our total portfolio, 26%, 27%, and 28%, and accelerated in 29%. This is very compatible with our expectations for the first quarter, and you will probably remember that last year we accelerated our process. We volunteered to do it, and with all of these elements, we imagined that we would have this level of sales that you can see here, demonstrating that we had significant growth in other areas which have contributed for us to reach this level of sales.
[Foreign language]
Now I turn over to you, Adri.
[Foreign language]
Hello, thank you, Taka. Good morning, everyone. I'm going to move on with expansion in slide 13, with an update on the projects that we are implementing right now. The first project we have, the Serra do Assuruá wind complex, we reached 98% in the constructions in the first quarter of 2025. The electromechanical assembly is completed and taken into account the most recent position. Until yesterday, we reached 155 generators, and the other 33 are being tested, and the whole operational piping is either being tested or is operating. We also have the photovoltaic complex, Assú Sol, with implementation activities reaching 93% in the first quarter of 2025. Thus far, we have four of the five plants with business operations and another six being tested. We continue with operations and will continue monitoring and updating the status and progress over the next quarters.
I will now move on to transmission projects. The first one in a more advanced stage is Asa Branca Energy Transmitter. In 2023, we started it, and the implementation moves on, as already informed in previous quarters. Activities are related to civil constructions and assembly of the metal structures for the first parts of the construction, and we will continue updating it according to Asa Branca's advancement. The next one is Graúna. This was purchased in September last year at an auction. It is in the earlier stages in 2025. We signed the main contracts for execution, and we will continue updating the status of the implementation of this project over the next quarters.
[Foreign language]
We talked about the construction projects, and now we have another slide on contract signing for the acquisition of two hydroelectric power plants in the state of Amapá. This happened on March 21st. We have Santo Antônio do Jari and Cachoeira Caldeirão HPPs. They are both 100% operational with long-term contracts, and we will install capacity to our portfolio as soon as we have the closing of the operation, which is expected to take place in the upcoming months. I would also like to highlight that the meantime for these concessions will be updated regarding the closing expectations. I would also like to remind you that this is an acquisition process, and that is why we included this slide here. This will happen after closure of this operation. This is a traditional slide on Jirau HPP.
It is a power plant where our controller, ENGIE Brasil Participações, has a participation of 40%. There is nothing really new here, but I would like to reinforce that the company has done really well with 100% availability in the first quarter, as we have seen in prior periods. In the last slide of this expansion session, we have a summary of the projects under construction. You can see it on the left side of the slide, two for generation and two for transmission. On the right side, we have the projects under development. They are in our portfolio waiting for business conditions so that their implementation is feasible. With this, I close this session to make it very clear what is under construction and what is under development. With this, I conclude the expansion session and turn back to Takamori for the financial performance.
[Foreign language]
Our financial performance shows very good levels despite the natural decline we had this quarter because of the amount of invested capital that was allocated for the company. This was to be expected.
[Foreign language]
In blue, I would like to highlight that since 2024, we have approximately 25% of contribution from tax, and we chose to make these investments in 2016 and 2017. And today this represents 25% of our adjusted EBITDA, even after the partial sales of our participation at TAG. In the next slide, we have the net operational revenue.
[Foreign language]
Our profit was of 15%. Our contribution, as you can see in terms of energy, is approximately at the same level. We went from BRL 2.25 billion, and the contribution of transmission, we went from BRL 300 million to BRL 700 million, especially because of constructions. I would like to remind you that this is what we've achieved, and we have other elements, variation in generation.
We have the increase of the sales volume and the average price aligned with last year's, even though the average price is still quite profitable. This was neutralized by the lower contribution of hydroelectric power plants, as we had already mentioned in the beginning.
[Foreign language]
Of our shares, we can see the contribution of our EBITDA and our participation on the net income. You can see that after the adjustments of all costs and expenses, it generated approximately BRL 950 million of net income, with a contribution of BRL 167 million to our EBITDA. This is the blue bar that you have seen, BRL 167 million. This is basically what we have seen last year. In this slide, as we always do, we go from an absolute EBITDA in this period. We will make the first adjustment. There was a very significant non-recurring element last year, which was the conclusion of TAG, and we observed a more recurring starting point going from BRL 1.8 billion reaching BRL 2 billion in the year. Of course, this has an expressive effect on FRS effects, basically because of the increases and also the construction margin for Asa Branca.
We had an evolution of the EBITDA of BRL 1.67 billion, going to BRL 1.8 billion.
[Foreign language]
And basically this is the combination of price and volume, and also the existing assets, with a lower amount of purchase of energy. Naturally, we need to buy less energy, and the accumulated effect is for generation. In the second bar, we subtract the benefit, we have the effects of the rain, especially in the first quarter last year. We also have a better structure of operational expenses, basically as a result of the operation of new assets, including costs that we had already mentioned before. Now, moving on to net income, it is important to analyze the non-recurring effect and the net income of the partial sales of TAG last year.
When we remove this BRL 826 million of net income, we go from a starting point of BRL 793 million reaching BRL 826 million, even though it is superior to the first quarter of last year. We had two elements that somehow have reverted the operational result. We had the financial result greater than last year. In other words, it was more expensive. Basically, this is because we had a lower financial revenue, even though our cash position is very similar. This happened because we had a decrease in debentures, and so it was not possible to see the effect for the whole period. It is not just multiplying at the end of the quarter. This is explained by this lower revenue and higher cost of accounts payable.
[Foreign language]
The second element of highlight here is depreciation and amortization. As you know, we have different assets with significant depreciation, and as of now, we can see an increase of BRL 77 million when compared to last year. We had better results and paid more taxes. Now, regarding our balanced debt, we show you an evolution in the gross debt going from BRL 24.4 billion at the end of last year to BRL 26.6 billion now, with a greater leverage going from 3.5 x of adjusted EBITDA. When we take into account the cash and equivalents, we reach BRL 20.6 billion of net debt.
That generates a ratio of approximately two, very similar to what was seen in the first quarter.
Actually, at the last quarter of last year. We are comparing the first quarter this year to the last quarter last year. Now, regarding the debt profile and composition, it is very adequate for our ability to pay. I would like to highlight that we voluntarily had an indexation related to CDI for the cost of debt and also to make it more attractive for our cash position, expansion, and implementation of our projects. Our debt, which was mostly IPCA, is now 2/3 of the debt and CDI with a more significant share of 30%. We will see that the nominal cost of debt is 11.6%, equivalent to IPCA plus 5.8%.
Now, in the last slide, I would like to highlight that we did something very innovating in terms of part of our debt, trying to optimize the portfolio, generate value to our shareholders, and doing this as smartly as possible. We worked with our partners, and the commission uses carbon credits.
As far as we know, this is the first operation of this kind in Brazil, which makes us very proud that we can generate value to our partners and our shareholders.
[Foreign language]
Now CapEx .
We can see BRL 4 billion in 2025, and naturally now with the signature of the contract, we've already indicated what the additional value to be invested is going to be in these assets and these hydroelectric power plants that we are about to purchase, leading our investment to BRL 7.1 billion. The levels of 2026 and 2027 remain the same, BRL 2.1 billion and BRL 2.3 billion. When we provide a little bit more information about these amounts, basically for 2025 in green, we see that it's almost half of the investments in Assú Sol and Assuruá, and half, or the other half, BRL 2.9 billion, is for investments in Asa Branca. We're getting into a phase of more specific investments. In the upcoming years, 2026 and 2027, basically all of the investment will be to conclude Asa Branca and now.
[Foreign language]
We have an important CapEx for the upcoming years. Now, dividend policy, you can see the effect of dividends. We have BRL 2.3 billion resulting in a payout of 55%.
[Foreign language]
Our interest is to maximize this payout, but because of the expansion and growth.
Management made the decision to keep it at 55% of the management commitment with a minimum payout of 55%.
[Foreign language]
With this.
We closed the more formal part of the presentation and open for the Q&A session.
Yes, exactly. Thank you, Taca. We are now going to start the Q&A session, and I would like to remind you that to ask questions, you should use the Q&A tool in the Zoom bar. Our first question comes from Victor Cunha, sell-side analyst from Itaú BBA. He asked if we could give more details regarding the allocation strategy of physical warranty for the year. In addition, the company had a negative impact by the difference of prices in grocery stores in the Northeast and Southeast.
Thank you, Victor, for your question. Unfortunately, we cannot give any further detail about this because this is considered a sensitive topic, which affects our ability, our commercial ability. In the first half of the year, where we had the main price differences in grocery stores , we had a very limited position.
No, the second half, it was different, of course.
Because of the resource which is actually available for us. In the first quarter, the impact was quite limited.
Naturally, we do have this exposure, but I would like to highlight that these prices were caused by different elements.
In the second half, we have a lot of wind energy generation leading to these natural movements. What happened in the first quarter was, in fact, potential generation in a very specific time frame aligned with very expensive generation in Belo Monte and the transmission network leading to very high curtailment levels. I would like to highlight that this is part of the new pricing models. All of that led to more significant changes in the first half. Today, with the situation that we can see, we do not see a very significant difference. It is there, but not as intense as before. Perhaps the impact will be lower and easier to be managed by the company.
[Foreign language]
Thank you, Taka.
Next questions. We have two questions from physical persons investor, Felipe and Matheus. Their questions are related, and they ask why the company disseminates dividends and does not make payment after the announcement. They would also like to know if the dividends will be readjusted according to the inflation rates and also what the dates for dividend payment is going to be.
[Foreign language]
We've had significant investments last year. We made investments of BRL 10 billion.
[Foreign language]
Because of that, we had to take a series of measures to protect our ability to make payments. Also, make conservative decisions. Unfortunately, we were not able to pay and shorten these time frames. This is not recurring. This is not a recurring fact.
[Foreign language]
Thank you, Taka.
[Foreign language]
No, no. Would you like to complement? No.
Okay, the next question is from Felipe, a physical person investor, and he asks if the company thinks that leverage is reaching a peak or if it tends to grow after the latest acquisitions.
No, it will continue increasing. What we always see is that our capacity to generate cash, our profile. Today, we have a AAA rating for long-term debts. Naturally, we monitor it very carefully because we intend to remain with this AAA rating so that we can capture sources in a very competitive manner.
This level, for you to have an idea, is in the order of 3.5 x.
This is an acceptable level of debt. I can't tell you exactly what level we're reaching in the upcoming quarters, but yes, there is a trend for it to grow because of the new investments we've made, as you well mentioned.
Thank you, Taka. We have another question from Daniel from Safra sell-side, and he asks if we could give a little bit more detail about the expectation of the company on the resolution of curtailment. When do you expect curtailment levels to be reduced, and what would a reasonable curtailment level be from now on regarding the reimbursements? When do you expect to receive them, and what is the process for it?
I can't tell you that. We are trying, but we haven't been able to.
Also, some of the information is very sensitive for me to share, but I can tell you that curtailment is something that is here to stay. It affects every country.
[Foreign language]
In Brazil, we've made a series of decisions that have led to this offer. This is something we knew that was coming.
[Foreign language]
This level of curtailment is only significantly reduced.
[Foreign language]
The [Foreign language] coming in, and this will only happen between 2029 and 2030.
We have to wait four more years, and we would be very irresponsible to consider that this is going to be solved from a physical point of view. Another physical aspect we have here is that, naturally, the level of curtailment, both for the penetration of renewable sources in the region, a combination of water and other factors, but also on risk aversion in the transmission network. We know that there are some specific criteria, and apparently, there is a significant effort by the operator and other agents to find ways to increase the transmission capacity. Depending on the solution, this can lead to significant curtailment decrease, which could be between 1,000 or even up to 2,000, even without having a significant change in the system operation.
Depending on the timing of these new parameters and solutions in the short term, this may be solved in the next few months, but it depends a little bit on the conclusion of what we're doing.
[Foreign language]
Even if we solve the transmission issue, we will have levels of curtailment caused by the lack of demand for this energy. This is something that we see during the week where we used to have some significant cuts. We cannot imagine the country without physical curtailment.
[Foreign language]
You also asked about when reimbursement is going to be made. It's difficult to anticipate. We do have established rules for it, and we expect to receive it by the end of the year.
[Foreign language]
Naturally, this depends on CCEs, mechanics, and some rules for wind energy, and it depends on the effort and ability to execute it.
[Foreign language]
We have another question from Matheus Caetano. He would like to have more details about the operation involving the payments using carbon credits, how it was structured, and what the company or how the company sees this market, and if we have more room for such initiatives given the company profile and potential to generate carbon credits.
Matheus, I'm very happy that you are interested by it. We will now talk about how we can do it, but definitely we have more opportunity for such initiatives. Regarding green funding and creative operations, they are all welcome.
[Foreign language]
We generate more value to our shareholders.
[Foreign language]
This is relevant and there is more room for such operations. I would like to remind you that ENGIE generates carbon credits. It is an important carbon credit generator. We have a large portfolio of products.
[Foreign language]
We can meet demands in any state.
[Foreign language]
Thank you, Taka.
The next question is from Guilherme Lima, Santander Analyst, and he asked if we could comment about a possible proposal of increased energy transmission among the subsystems to increase the generation of renewable energy in the Northeast?
I think that we've already commented this answer before. In practice, yes, there are different actions that we can take. We will try to share this with the end consumers or part of this with the end consumers.
[Foreign language]
Curtailment is caused by a natural evolution.
[Foreign language]
We as a generation agent have to take risks, but we have curtailment caused by risk aversion or.
[Foreign language]
Short-term availability.
[Foreign language]
This should not be included in the generation segment. Part of it is regulated.
[Foreign language]
We do have this regulatory aspect, but we also have the optimization of the system and a series of actions that can be taken.
[Foreign language]
We have operational aspects.
[Foreign language]
[Foreign language]
Thank you, Taka. The next question is from Nayane Mendes, a physical person investor, and he is congratulating you for the results and asks if there is any update on green hydrogen. Thank you very much.
Green hydrogen.
[Foreign language]
Is at a less mature and developed stage than we imagined. We had a development of projects, but right now we have decided to give one step back and wait for the technology to evolve a little bit more. Both for the value chain, we would have to buy and pay.
[Foreign language]
It's difficult for us to make this feasible, to make these projects feasible. We've not given up. ENGIE globally still makes some effort. We have two projects, or there are two projects being implemented worldwide. We're here in Brazil. We need to focus a little bit more on the delivery of our wind and solar energy expansion of transmission in our portfolio first. We have decided to pause and wait a while.
[Foreign language]
Thank you, Taka. We have some more questions which will be sent directly to participants. I would now like to turn over to Takamo for his final considerations.
Thank you all for your participation. This quarter, we've been able to demonstrate that despite all adversities we've had in the electrical sector in Brazil and worldwide, we've been able to keep excellent EBITDA levels, demonstrating that all of the investments we've made are working. We will continue seeing the effect of these new assets, be it from the point of view of generation and transmission. We will be seeing it in the upcoming years. Thank you all for your participation. We remain available and wish you a wonderful day.