Good day. Welcome to the Colbún Fourth Quarter 2022 earnings call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Miguel Alarcón. Sir, the floor is yours.
Hello everyone. Welcome to Colbún's fourth quarter 2022 earnings review call. My name is Miguel Alarcón. I'm the company's CFO. Joining me today is Isidora Zaldívar, Head of Investor Relations. I hope that you have received our earnings report and an earnings review presentation that we have prepared to complement the analysis of our figures. Otherwise, you can download them at investor section of our website. Agenda for today on slide 3 is as follows: We will begin talking about the highlights of this quarter to then analyze in detail this quarter's results. We will provide an update on our growth opportunities. Following the presentation, there will be time to participate in a Q&A session. Now, please go to slide 4 to review the highlights of this quarter.
On October 5, the company signed a green term loan with the Sumitomo Mitsui Banking Corporation for a total of $160 million, maturing on October 5, 2029. The proceeds from this facility will be used mainly for the financing of renewable energy generation projects. On October 27, Colbún S.A. and Codelco agreed to modify the PPA signed between the parties on 2010 and expiring in 2044 in order to gradually replace the energy supply to Codelco, currently supplied with coal-fired generation from the Santa Maria CT Unit to one based on renewable generation. On December 15, the company prepaid the remaining portion of an international bond issued in 2014 for $157.4 million and maturing in 2024.
On December 16, an interim dividend for $84 million was distributed, corresponding to 50% of the distributable net profit for the period January to September of 2022, in accordance with the current dividend policy. Please go to slide number 5 to review the main consolidated figures of the company. Consolidated EBITDA in the fourth quarter of 2022 reached $260 million, increasing 58% compared to $164 million EBITDA in the fourth quarter of 2021. This increase is mainly explained by, one, the higher income from ordinary activities due to greater physical sales to unregulated clients and to a spot market. This effect was partially offset by an increase in the costs of raw materials and consumables used, mainly as a result of a higher average price of gas and coal and greater generation with gas.
The company recorded a profit of $136 million, compared to a loss of $52 million in the fourth quarter of 2021, mainly due to, first, the higher EBITDA recorded in the period, and second, higher non-operating results, since during the fourth quarter of 2021, the company recorded provisions for impairment of individual assets. As of December 21st, 2022, the company holds $1,154 million of cash, and net debt to EBITDA ratio is at 1.3 times. Now, I will turn to Isidora, who will speak about the main drivers of the fourth quarter 2022 results.
Thank you, Miguel. Hello to everyone. Now, please continue to slide 7 for physical sales and generation balance analysis in Chile. Total generation of the period increased 36% compared to the fourth quarter of 2021, mainly explained by, first, greater hydrological generation due to better hydrological conditions. Second, greater gas generation due to a higher economic dispatch. Physical sales during the quarter reached 3.5 TW-hours, 31% higher than the last quarter of last year, mainly explained by, one, higher physical sales to unregulated clients due to the start of the contract with BHP in January 2022. Second, higher sales to the spot market as a result of higher generation recorded in the quarter. These effects was partially offset by the expiration of the contract with CGE on December 2021.
Spot market balance during this quarter recorded net sales of 455 GW-hours, while in last quarter of last year, net sales for 74 GW -hours were recorded. The variation is mainly explained by a higher generation during the quarter. Now, please continue to slide 8 to analyze the EBITDA from the generation business in Chile for the quarter. EBITDA in Chile reached $226 million this quarter, increasing by 55% compared to last year. This variation is mainly explained by higher operating income, partially offset by higher raw materials and consumable use costs previously mentioned. Now, please continue to slide 9 for physical sales and generation balance analysis in Peru.
Total generation of the period increased 29% compared to Q4 2021, reaching 1.2 TW-hours, mainly due to a higher availability of the plant and economic dispatch during the quarter. Physical sales during this quarter reached 1.2 TW-hours, increasing 30% compared to last quarter, mainly explained by, first, higher energy sales to the spot market as a result of the higher generation recorded during the period, and second, higher sales to regulated customers due to the expiration of contracts with other generating companies with DISCO, thus increasing the supply associated with current contracts. A spot market balance during this quarter recorded net sales of 556 GW-hours, compares to the net sales of 381 GW-hours during the same quarter of the previous year due to the higher generation recorded during the quarter.
Please continue to slide 10 to analyze the EBITDA in Peru for this quarter. EBITDA in Peru reached $34 million in this quarter, 85% higher than the EBITDA of $18 million recorded last year, mainly due to, one, higher sales to the spot market, and two, higher physical sales to regulated clients. This effect was partially offset by the higher raw materials and consumable use, given the greater generation recorded. Please continue to slide 11 for the consolidated net operating income and net income analysis. Net operating income this quarter recorded losses of $22 million compared to the $182 million losses recorded last year. The increase in tax expenses is mainly associated with the recording of provision for impairment of individual assets last year.
The company recorded a profit of $136 million compared to the loss of $52 million last year, mainly due to, first, the higher EBITDA recorded in the period, and second, the higher net operating results, since during last year the company recorded provisions for impairment of individual assets. Continuing with the conference, please go to slide 13, where Miguel will give you an update on the status of growth opportunities.
Thank you, Isidora. Regarding our growth opportunities in Chile, relevant updates for this quarter are as follows: For the Horizonte project, by the fourth quarter of 2022, 38% progress of the project was reached. The construction of the external access to the park from Route 5 was completed. The construction of platforms and foundations for the wind turbines is still in progress. 30 blades and 27 sections of towers were discharged to a site which will be installed during March of 2023. Junquillos project, during the month of December, the project reentered its environmental impact assessment into environmental impact assessment system.
Regarding Celda Solar project, the environmental impact study for 420 megas photovoltaic project and 240 megawatts of BESS with a duration of five hours was processed and is currently in the stage of issuing addendum 1. About the Diego de Almagro BESS project, it's in its final start-up phase, pending authorization to energize the batteries for operational tests. For more information regarding our pipeline of projects, please review our earnings report. With this, we conclude Colbún's fourth quarter of 2022 results review. Thanks for listening, and now we're open to answer your questions.
At this time, we will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question is coming from Ezequiel Fernandez. Please announce your affiliation, then pose your question.
Hi, good morning, everybody. This is Ezequiel Fernandez from Balanz. Thank you very much for the call and the materials. I have three questions I would like to go. Actually four, but they're quick. I would like to go one by one, if you don't mind. The first one is related to the gas provision in this quarter, if you can confirm that almost all the gas that you procured were Argentine imports.
Hi, Ezequiel. Miguel here. Yes, 100% of the gas innovation came from Argentinian gas.
Okay, that's great. The second question is related to the PEC receivables. If you could tell us how much you have booked in your balance sheet for PEC 1, the PEC 1 excess and the PEC 2 receivables.
Sure. Let me give you round figures. That's for the sake of.
Yeah.
making it simpler. PEC 1, about $15 million. PEC 1 excess, about $25 million. PEC 2, roughly $35 million. All in all, we're talking about, like, $75 million.
Okay. The first one, the PEC 1, it's 15 or 50?
No, 1, 5. 1, 5. 1, 5.
Okay, 15. Perfect. I don't know if you expect to monetize a little bit more of the PEC 1. If you could tell us when would you expect to collect the excess PEC 1 and the PEC 2 money.
We are working with, as we did before with the other main generators of the country, with a couple of financial institutions alongside IDB. That should cover all of the amounts that I've just mentioned regarding at least PEC 1, PEC 1 excess and a portion of PEC 2. That depends on whether when the decree is approved. We expect to have it finalized and be able to fund and cross this accounts, I would say around March or April. I think we're working with a, with a good pace with the rest of the teams, but nevertheless, as you know, these are complicated contracts-
Mm-hmm.
With a lot of provisions, and because of that, it needs some time to take form. I would say within a couple of months, we should be in a good position to unload this accounts this year.
Okay. That's great to hear. My third question is regarding Peru. If you have any projects, any renewable projects going on there at the moment, or if it's just, you know, more of the same, evaluating and maybe waiting for Peru to get a little bit more stable?
We have actually, Ezequiel, a good number of projects under analysis. Those are mainly in early stages of development, so I cannot disclose the specifics about those projects yet. Hopefully within this year, we should be able to provide you with more information and details, at least on the more advanced projects. Just to give you a sense, we're analyzing five or six projects, roughly speaking.
Okay. That's great. My final question is regarding, dividends for this year, if you have any preliminary ideas or if you're just, still, you know, working with the usual 100% payout assumption.
That's a hard one, Ezequiel, because as you know, we as management only provide a recommendation, but in the end, it's the, in the shareholders' meeting in which dividends are sanctioned and approved.
Okay.
Now and for lack of better information, I would stick to the dividend policy, which is, if you recall, 50%. That again.
50% of... Sorry, yeah.
Yeah, the dividend is 50%. Again, that will be decided later on April, towards the end of April in our annual shareholders meeting.
That's great. Sorry about the confusion with 100%. That's all from my side.
No, no problem. Sure.
Your next question for today is coming from Alejandra Andrade. Please announce your affiliation, then pose your question.
Hi. Thank you so much for taking my question. This is Alejandra Andrade from JP Morgan. I have two questions. One is just kind of CapEx expectations for 2023. My second one is if you could give an update on where we stand on the PEC 2. you know, it's been approved, but like what are the kind of the next steps or is there anything holding up the proper implementation? Thanks.
Sure. Hi, Alejandra. Miguel here. As you know, this is one of the years with largest portion of deployment of the Horizonte CapEx. Because of that, I would give you around figure close to $600 million. The majority of those, of course, should go to Horizonte project. $600 million putting together expansion and maintenance CapEx, I think it's a good approximation. Regarding PEC 2, that I think referred to the previous question by Ezequiel, that's the financing we're working with other generation companies. I don't foresee, and we haven't seen no major issues. The thing is that this is a new piece of legislation.
It requires some variations from the PEC 1 structure, and because of that, it has taken a lot of time to put all the parties in place and in agreement with how do we transfer risks, pricing associated and such. Again, the expectation would be to have something finalized in the next couple of months. Whether towards the end of March or April. I don't foresee any major issues or problems regarding PEC 2 financing.
Great. Thank you so much.
You're more than welcome.
Once again, if there are any questions or comments, please press star one on your phone at this time. There are no more questions in queue.
Okay. Hope you can hear me correctly. Thanks to everyone for joining this conference call. Before finishing, I would like to acknowledge and thank the leadership of Thomas Keller for these past eight years as CEO of Colbún. As you may know, he is taking on a new role in the company, leading the company's development and growth efforts as our chief development officer. Again, we wish him the best and hopefully he can achieve a lot for the company going forward. That is all for now. We hope to see you all again for the next quarter review, and hopefully you have a great weekend. Bye-bye.
Thank you. This concludes today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.