Welcome to Ciner Jesus' conference call to discuss the 2nd quarter 2018 results. All participants will be able to listen to the call. We will then begin the Q and A session, and further instructions will be This conference call will be taken will take place in Portuguese, and simultaneous translation will also be provided into English. This event is also being broadcast over the Internet via webcast. This conference call contains forward looking statements that are subject to known and unknown risks and uncertainties that could cause the company's actual results to differ materially from those in the forward looking statements.
Such statements speak only as of the date they are made, And the company is under no obligation to update them in light of new information or future developments. The accounting conditions and other factors may impact the actual company results. I'll now turn over conference to Mr. Mauricio Gutierrez. I would like to thank you for taking part in this Q2 results.
Ricardo Boteno, Sao Jose, BPF Distribution, Understanding Logera, Ogier, Cogent Verdel, Finance Director and Mariana Roja, IR Manager. Let's move on to Slide 3. The first highlight is consolidated consumption, up 2.5% when compared to Q2 of last year, a prudent year 3% growth. Financial highlights include adjusted EBITDA of BRL 653 1,000,000 and net revenue of BRL 103 1,000,000, up 30%. Another highlights above that.
The net debt EBITDA ratio is now 3x from 3.2. Total investments amount to BRL125 1,000,000, a 20% drop in the semester because we have the 4th cycle of price adjustments. And one of the highlights is that we were awarded TRY19 Or rather, we were awarded the R19 lats of the auction. And that's the results of lot 26 that was awarded back in April 2017. On to Slide 4.
This is quarter by quarter consumption evolution as of 2016. You can see that the market is picking up. It's a growing trend, 2.5% growth. Once you take into account the unbilled sales, that will be a little less, that will be at 1.9%. Let me point out that in April May, we had good months, very positive months, 4.8% and 4%, respectively.
But back in June, we felt the impact of the truck drivers strike because that impacted economy overall. There was a 1.3% fall in consumption. We ran some simulations internally to analyze consumers' consumption. The growth would be at 3.9%, if not for that negative impact. We had substantial growth in some concessions.
You can see that in the following slide, Slide number 5 now. Atogorsu grew 2 8.5% growth, backed by stronger rural activities by choosing families and also from the industry led by the food industry, in particular. In the South and Southeastern regions, all classes, all industries contributed with the highlight going to the food industry, and better works and wood products in particular. In total, teams the decisive factor was in the nonmetallic minerals industry and a major consumer coming back. In microbrosso, we had growth in the quarter despite the strike effect I've already mentioned.
We had drops in industrial and residential segments. But the driver here was the temperature. Cold smell affected the entire region. As you can see in the chart at the bottom, the behavior was similar, up 3% compared to the country that is by 1.3%. And to Slide 6, these are losses.
On the left, total losses, 11.85 percent of injected energy, small increase 0.04% when compared to the previous quarter. This minor increase was again influenced by the contraband strike and slower economic activity and that variation in the unbilled sales. But that might be going back to normal trends in the 2nd semester. As I said, Mato Grosso was the most effective state, but we're still working hard to reduce those losses. We hired additional staff a year ago.
We are now boosting our new inspection activities that we are committed to continue the regulatory standard soon. We've had constant reductions. I'd like to point out MAPFRE Grosso is 1.3 percentage points below the regulatory standard. Moving on to Slide 7. This is the delinquency rate.
This the sales. These are provisional reversions, but without non recurring items, the indicator would be at 0.61% compared to 0.31% in June 2017. Let me point out that for the 6th quarter in a row, that rate is below 1%. Thus, nonrecurring items, as I said. On to Slide 8.
Now service quality indicators. All companies are below the DEC limit. Now that the new distributors and switching companies only not to gross, it's a little above that standard, but it's slowly going back to the standard. We had a 2 hour reduction in the past 2 months. Marginal results that concession showed some improvement, but the lowest monthly indicators and that's true.
So we're slowly going back to the standard. We have a consistently see improvement in token fees that the leverage total more than 10 hour reduction as compared to 2017 numbers. Our concessions have been beaten or have been breaking their own records in Paraiba and Mato Grosso do Sul in both including Mato Grosso do Sul under Energy's Asset Management. Moving on to Slide 9. Let me now talk about the Aphrahi award results.
All 9 distribution companies were competition in 11 categories. And these are the highlights Among companies with more than 500,000 customers, the award was given to ESS among those 100 500,000 customers. Energia for Boraema, Minas Gerais and Nova 3rd order with Tide. On to Slide 10, let me now talk about P and S Oil, a 7% increase, Most of this has resulted to labor claim compensation in Mato Grosso, A R19 $1,000,000 payment was made. It had been provisioned in previous quarters, but there will be a reversal of provisions.
We had larger teams hired as well to improve quality of service. And also introduce the footprints we hired in the workplace as well and other third party services. Was a 4.9 percent drop in expenses in the quarter. Despite having that variation between 4% and 7%, depending on the index. On to Slide 11 now.
We have EBITDA for the quarter. The chart shows us that the adjusted EBITDA is at 39%. Let me give you some nonrecurring examples on the right. That's part of our scope here today. Dancitory costs have been at a constant level.
And then we have the BNLR effect as of 2016 was considered revenue. And if I could, the EBITDA BRL106 and minor reversal of the tax that took place Q2 last year. Again, not considering nonrecurring items, the quarter EBITDA is up 21% compared to the same quarter last year. Let me point out that the EBITDA growth has negatively impacted by the unbilled sales market. Historically, the unbilled sales in the 2nd semester is always negative because usually we move away from the 1st semester where it's hotter and we have milder temperatures later in the year.
And we have additional impacts of the strike, as I mentioned, and consumption that we had expected in late May. So as that we were also in June, Tubohita, this is a temporary effect and the market will pick up actually the following months. I think it's also important to say that when you look at the unbilled line in the past 6 months, it's relatively small impact there. Now Slide 12, net income. When we compare to the initial quarters, it's up by 38%, but the effects are non recurring, 31% for gross revenue.
In the quarter, we had more financial expenses, especially for the networks that have been incorporated. The impacts come from energies of Mato Grosso. Despite the reduction, we have been BRL580 1,000,000 since last year. On Slide 13, indebtedness. 8,300,000,000 The net debt to EBITDA ratio is now down from 3.2 to 3 times.
The cost is improving, the debt cost and otherwise, This is by type of index. The 7% is indexed to the CPI. So we're benefiting from lower interest rates. Now Slide 14, investments. In the 1st semester, we are at BRL825 1,000,000.
As we said, a 24% drop. Given the end of the price adjustment conclusion in Atavros and Atavros as well. The transmission business, investments amounted to BRL47 1,000,000 in a year. We are advancing the environmental licensees. Let me update you on these projects.
We're still within the time frame scheduled in Ergiza, Farah, this is out for both Farah and Goyas. These are the lots that were awarded back in April 2017. As to environmental licensees, Inspections have taken place. And bank analysis are underway, and we expect to be granted their license soon. On the land front, the negotiations with land owners affected by those transition lines are also underway.
As to Energiza Para 2 for us awarded last year, we're signing concession contracts now in September. But we are currently conducting topographic studies. Everything is going according to plan. On Slide 15, we draw a comparison between regulatory EBITDA and reported EBITDA. In the past 2 months, without those nonrecurring items, For the consolidated growth group, we are above the regular target of 23% 20 9% of these companies are above the regulatory, coming from 24% back in December 2017.
Well, this concludes my presentation. Thank you. Quality. Please hold. Mr.
Maurino Freibergier from Bank of America would like to ask your question. Good afternoon, everyone. Good afternoon, Ricardo. I actually have 2 questions, if I may. The first one has to do with PMSO.
Could you give us some color on what happened in October, so in Turkey? Now that you have hired people, but could you give us a notification of what going out, what will be for the following quarters? And the second question is about delinquency. Several companies in this industry, in this industry have been suffering a lot. Once you have control that, could you give us some more detail of the measures you have taken to keep that global, if you like us already?
Share our answer. In case of PNSO, we had more staff hired in Matu Dorsa, RMB5.7 billion. And the same thing happened in the token teams. We are replacing 3rd party services regarding our own employees. As I mentioned during the presentation, you have more staff, but at the same time, you have a reversal in labor compensation.
So we are working very hard in much reversal in the school. In particular, almost BRL19 1,000,000 in the 2nd semester. But that amount had been provisioned. So when you look at the accounts, overall expenses down a little bit. This issue in Mathew Bros.
Will soon may come back again in the next quarters. We're still addressing the labor compensation issues, something that we have inherited, but we're still but we are tackling for the CVV. We had some one off defense in 2017. The summer capkins and then the COVID-nineteen. Of course, that impacts the numbers, but we're working hard maintain, feeling consider rates low.
We shut down service if necessary. We analyze several pieces of data, whether you shut down services early on or whether you postpone it. So this is something we're working very hard on a day to day basis to keep that indicator as well as it is. I don't know whether Thank you, Jeremy. What I can say, I think once you've summarized that pretty well, especially fighting delinquency, We've been changing a lot of things as of last year, trying to improve measurements and address those that can actually yield a better cost of of operation.
We have war rooms. We have integrated teams, sales and retail departments. Monitor these activities out of 2. So we have gained speed and integration and more accuracy to implement transactions. We're now rolling out an advanced analytics project.
We ran a pilot in Parrara and now we're scaling that up and we're going to roll out to other companies. It's a very interesting project. We'll be able to assess credit risk of every consumer, and we can customize these actions. And you can apply those actions that can give better results at the lowest possible cost. The war room something implemented we did late last year, and we are now installing the analytics.
So it's a slow actions implemented in fight delinquency. Ms. Maria Carro Carneiro from Credit Suisse is now asking her question. Good afternoon. Thank you for taking my question.
You mentioned that volumes were impacted by the truck drivers strike and other specific conditions that hurt the average growth rate when compared to other quarters. And now we're now starting a new quarter. After the fact, what's your take on the outlook for the next quarter? And again, unbilled energy that hurts your first purchase last quarter. Do you have any outlook for the following quarter?
My next question is about the fact that you are trying to reduce the incorporated company's remainder to reduce the impact of the company. How can you reduce that number actually? Would that impact future projections? Okay. Let me address part of that question.
As to the market, we believe that this will bring you more often events. Back is over, Mexico and back to normal. And of course, that impacts on the sales. Going back to business as usual, because the market is just going back to it's something we can show now. As to incorporation networks, Of course, you have that impact that is suggested by GE and its IGPM.
So this is going to end, But still, you have to make those adjustments. I understand. Thank you. Mr. Koi, Key Personnel Service from Franco Safra is asking this question.
Good afternoon. Thank you. I have two questions about the company's growth strategy. Selling assets, distribution of Enerto brands, it's a difficult Is this asset still corrected before the full year? On 31st, you have the minus 6 option.
Are you going to be participating once you take on this generation in your capital allocation strategy, Ricardo Portillo will be sharing that question? Hi, thank you. This is Ricardo Potego. Let me talk about the PLC first. PLC 77, that's the bill.
It tends to be voted in the 7. And we all know the press are going to be voted for the elections. The PLC the PLC, they get in the way of that option. Or those companies that have a pure oil companies in the north. There's a company that has no restraints, but there's a legal restraint You wouldn't be part of that rate before we address these 2 issues, which you won, considering the possibility of all assets available to us, conducting individual analysis as to the A-five-six.
Yes, we do have projects in our portfolio. We are considering possibly a particular part of that auction. 1 is a wind project, we have bought quite some time. But we are extremely concerned about the demand. The demand will be very weak, which can mitigate very low prices.
And then our projects will be impacted to or will be attractive, but we're still considering the possibility. But we on a short term basis, the company has been reducing its debt, but the spread level is still high. Hi, Andre. Yes, we have been improving. This year, we have CPE CPPI plus 1.4%, 1.1%.
We had an upgrade to AAA. Overall, for the country, our results to carry previous credit with higher spread. As these papers mature, we have a better overall rate. That's why we have we still see that difference. But it's going down.
The spread is going down. Perfect. Thank you. Mr. Marcelo Sa from UBS would like to ask your question.
Hi, thank you for taking my question. Let me follow-up on Carole's question about the unbilled sales. Could you give us further detail on how you book these numbers? Because I've talked to several customers and they all see differently how to handle unbilled sales. Does that make sense when you look at the adjusted EBITDA with the unbilled sales?
I believe it does. That explains part what will happen in Q2. But based on Q1, we had better EBITDA because they have an effective and a publicly effective under its sales. Our EBITDA is low because R63 million of under its sales. But if you see EBITDA would have a positive effect of price decreases, we would expect a higher EBITDA.
So it is my question. Does it make sense to adjust EBITDA based on the Ambre sales to compare that analysis? How do you treat that in your accounting practices? And my final question, still around the same issue. You looked at what you reported in the unbilled sales in 3% quarters.
And when you divide unbilled revenues divided by the part of the unbilled sales that you report, theoretically, you have the implicit average. It's a very volatile number. It's not relatable and it's not consistent throughout the quarters. How do these two things help each other, so to speak. But let me try to explain what happens.
I don't know that in a month of 31 days, you have 31 days of service. We see just 20 days were billed because of the calendar or for any other reason. So you have to estimate those 3 remaining days. We do have a system that will set the previous consumption of the previous month. And the other system estimates, the consumption of those 3 remaining days.
When prices go up or they go down, we may incur in some distortion because it cannot be 100% accurate. It's a system that looks back and makes a projection of those 3 remaining days in my sense. So where will be the distortions? Because taxes evolve, when you divide the product, of course, you are down to have some distortions. Best thing to do, in my view, is the standard in 5 months.
Unbelievable sales is not or are not relevant. I don't think we should focus on 1 quarter and take that as the benchmark for the others. I don't think that's fair to go. I'd rather look at the past 4 quarters, the last 12 months. And then on those sales is part and parcel process, it's a revenue that you have.
It is considerable, but it's not as relevant, but it's spread out throughout the years. That's the extension will get as a look at the bigger picture. Thank you. We take the past 12 months in in BRL99 1,000,000 of reserves for Q2, BRL88 1,000,000 for this quarter, including being less volatile. Thank you.
Thank you so much for your Now I'd like to turn over to Ricardo Botelho for his remarks. This quarter results show that we are consistently delivering our distributors, our distribution companies' results. So we have been results focused and providing excellent services, providing special recognition. We were awarded the Abu Dhabi award indicating that we're leaders in the markets we operate. We were awarded another lots in previous auctions.
So recording we're evolving according to plan. And we are committed to becoming one of the best in most respected companies in Brazil. We keep considering opportunities for growth while maintaining appropriate allocation of capital, bearing private shareholders and maintaining the sustainability of our business as we have already done in the past 13 years. Thank you so much for attending this conference call for the afternoon. This concludes Energies' conference call.
You may now disconnect.