Ladies and gentlemen, thank you for standing by. I'd like to welcome you to Colbún's Third Quarter 2025 Results Conference call on the 3rd of November, 2025. At this time, all participant lines are in listen-only mode. The format of the call will be a presentation by the management team, followed by a question-and-answer session. Without further ado, I would now like to pass the line to Miguel Alarcón, the CFO. Please go ahead.
Thank you for joining us once again in reviewing our quarterly results. My name is Miguel Alarcón. I am the company CFO, and joining me today are Soledad Errázuriz, Isidora Zaldívar, and Carolina Plasser from our Investor Relations team. I hope that you have received our earnings report and an earnings review presentation that we are prepared to complement the analysis of our figures. Otherwise, you can download them from the Investor section on our website. On this occasion, we will review the highlights of the quarter, our liquidity and debt position, and to conclude, the company's consolidated results for the third quarter of 2025. Now, please go to slide number four to review the highlights of this quarter. First, regarding our commercial strategy. During 2025, power purchase agreements have been signed in Chile for 693 GWh per year.
In Peru, supply contracts have been awarded for 55.4 MW per year. Second, regarding the latest developments on our pipeline of projects. During this quarter, the company's main advances in renewable energy and storage projects were, in Chile, Horizonte Wind Farm. The Horizonte Wind Farm complex reached full commercial operation during this quarter, achieving a total installed capacity of approximately 816 megawatts, consolidating it as one of the largest wind farm projects in Latin America. BESS Celda Solar, the project reached 46% progress, mainly related to the arrival of all battery megapacks on site. Diego Almagro Sur, construction phase of the project started, with 3% overall progress reported. Third, regarding our power plant operations. On March 23 of this year, Santa María Thermal Power Plant became unavailable due to the loss of lubrication in the steam turbine.
The repair work was completed as planned, and operations resumed on October 23 of 2025. On July 9 of 2025, an incident occurred at unit number one of the Rucúe Hydroelectric Power Plant, caused by a gas leak that ignited during metalization works on the turbine's work plates and upper cover as part of its major maintenance activities. To date, progress has been made in the repair of electrical and mechanical systems, removal of damaged components, and preparation for critical techs, reaching 33% overall progress. The unit is expected to be back in service by the end of January of next year. Finally, on August 29 of this year, a force disconnection occurred at unit number two of the Nahuenco Thermal Power Plant due to a rupture in the expansion joint connecting the bypass stack with the inlet to the heat recovery steam generator.
The unit resumed its operations on October 10 of this year. Now, please go to slide number five to continue reviewing the relevant events of the period. Regarding our financial debt, in September of 2025, Colbún issued its second green bond in the international market for a total amount of CLP 500 million, with a coupon rate of 5.375%, achieving the lowest spread for a Chilean corporate bond in the last 20 years. Of the proceeds obtained from decisions, CLP 266 million were used to partially redeem the company's outstanding CLP 500 million bond of the same type, maturing in 2027. Finally, regarding mergers and acquisitions, on August 21 of this year, Colbún completed the acquisition of the 41.379% stake in Inversiones Las Camperas S.A., the controlling entity of Fenix Power Peru. As a result of this acquisition, Colbún now holds 100% of the company's ownership.
Now, please go to slide number six to review subsequent events of the quarter. First, regarding the CNE error in the valuation of billing differences. On October 14, the National Energy Commission, CNE, approved the technical report for the determination of the average node prices of the national electric system for October 2025. This report includes the correction of an error regarding the treatment of inflation effects due to the simultaneous application of CPI variation and the use of the current interest rate for non-indexed operations in local currency. The correction applies only to regulated clients. Colbún submitted observations during the public comment period, which lasted for 10 days. We expect no material financial impact, as required sales represent a small portion of total revenues.
The company remains available to implement any mechanism or formula that the authority may establish, provided it is consistent with the applicable regulations in order to correct the error identified. Now, continuing with the conference call, please go to slide number eight to analyze the liquidity and consolidated financial debt held by the company. Total financial debt on a consolidated basis this quarter reached $2.6 billion, with an average life of 5.9 years and an average interest rate of 4.7% in dollars. Net debt over EBITDA for this quarter reached 2.6 x. Now, I will turn to Carolina, who will speak about the main drivers of the results for the third quarter of 2025.
Thank you, Miguel, and hello to everyone. Before starting with our quarterly results review, I would like to highlight some relevant data about the system's operation on slide number 10. In Chile, the average marginal cost measured at Alcajuel increased 26% compared to the third quarter 2024, averaging $40 per megawatt hour. Electricity demand decreased by 0.6% compared to the same quarter of last year. On the other hand, the hydrological year that started in April has presented a probability of exceedance of 94%. In Peru, Santa Rosa's average marginal cost reached $29 per megawatt hour. Electricity demand grew 1.4% compared to the same quarter of last year. In terms of hydrological conditions, the hydrological year that ended in September 2025 recorded an exceedance probability of 5%. Now, please go to slide number 11 to review the quarter's physical sales and operating income figures.
In Chile, physical sales during the quarter reached 2.7 TWh , decreasing 4% compared to the third quarter 2024, mainly explained by lower spot market sales due to the lower generation recorded during the quarter. This effect was partially offset by higher sales to regulated clients, mainly driven by the incorporation of higher-up contracts and higher sales to unregulated clients, primarily reflecting increased consumption from mining clients. In Peru, physical sales during this quarter reached 1.1 TWh , decreasing 2% compared to the third quarter 2024, mainly due to lower sales in the spot market. This effect was partially offset by higher sales to regulated clients, driven by the entry into force of a supply contract with Electro Oriente, and higher sales to unregulated clients, mainly due to the entry into force of a contract with this loose and increased consumption by mineral gas.
For the third quarter of the year, consolidated operating income amounted to $388 million, increasing 1% compared to the operating income recorded in the third quarter 2024, mainly driven by higher physical sales to contracted clients in Chile and Peru, primarily due to the incorporation of new contracts during 2025, both in the regulated and unregulated sectors. This effect was partially offset by lower physical sales in the spot market in both countries due to lower generation levels recorded during the period. Now, please go to slide number 12 to review the generation and raw materials and consumables use cost figures. In Chile, the total generation of the quarter reached 2.3 TWh , decreasing 18% compared to the third quarter of last year.
This was mainly explained by lower hydro generation resulting from less favorable hydrological conditions and lower coal-based thermal generation, as Santa María Thermal Power Plant remained unavailable during the quarter following the incident that occurred in March of 2025. These effects were partially offset by higher wind generation, mainly due to the commissioning of Horizonte Wind Farm and the acquisition of San Juan and Antofagasta Wind Farms, and higher gas-based thermal generation driven by a higher economic dispatch, as a result of a lower hydrology availability recorded during the period. In Peru, total generation reached 1.2 terawatt hours, decreasing 2% compared to third quarter 2024. This was mainly due to the lower economic dispatch of thermal units associated with more favorable hydrological conditions observed in the Peruvian electric system.
Consolidated raw materials and consumables use cost in third quarter 2025 amounted to CLP 290 million, increasing 27% compared to third quarter 2024, mainly due to higher energy and capacity purchases in both countries given the lower generation recorded during the quarter and higher gas consumption costs given the higher generation with that fuel intake. These effects were partially offset by lower coal consumption costs as there was no generation with this fuel during the quarter due to the unavailability of Santa María Thermal Power Plant. Now, please go to slide number 13 to review the main differences in consolidated EBITDA for this quarter. Consolidated EBITDA reached CLP 127 million during this quarter, decreasing 25% compared to third quarter 2024.
EBITDA in Chile amounted to CLP 104 million, decreasing 29% compared to third quarter 2024, mainly due to a lower gross margin during the period associated with higher energy and capacity purchases due to the lower generation previously mentioned and higher natural gas consumption, primarily due to greater generation with this fuel. EBITDA in Peru amounted to $23 million in third quarter 2025, increasing 2% compared to third quarter 2024. This higher sales to regulated and unregulated clients was offset by lower energy and capacity sales, while other expenses by nature decreased mainly due to lower operational insurance costs. Now, please go to slide number 14 to review the consolidated net income of the quarter. Non-operating income for third quarter 2025 caused a loss of CLP 32 million compared to a loss of CLP 8 million in third quarter 2024.
This variation was mainly explained by higher financial expenses following the end of the capitalization of financial expenses associated with Horizonte Wind Farm and by higher other profit loss due to the recognition of expenses related to the partial prepayment of the 2027 bond. The company reported a net profit of $25 million in third quarter 2025 compared to the CLP 83 million profit obtained in third quarter 2024, mainly explained by the lower operating and non-operating results during the quarter, partially offset by lower tax expenses. Now, please go to slide number 15 to review the consolidated cash flow. The company began the period with a cash balance of CLP 788 million and ended with CLP 949 million.
Regarding operating activities, during third quarter 2025, an inflow of CLP 93 million was generated compared to the inflow of CLP 151 million in third quarter of 2024, mainly due to higher operating payments associated with the maintenance work. In terms of financing activities, they generated a cash inflow of CLP 163 million, which compares to the outflow of CLP 47 million in third quarter 2024, mainly due to the issuance of the 2035 bond and a loan granted to Colbún Jose Escobar. This increase was partially offset by the partial prepayment of the 2027 bond. The acquisition of the remaining 41.379% interest in Inversiones Las Camperas S.A. completed during the quarter and interest payments made during the period.
Lastly, investment activities generated a cash outflow of CLP 94 million during this quarter compared to the outflow of CLP 81 million in third quarter 2024, primarily due to higher CapEx disbursements, mostly related to Celar Pulal and Diego de Almagro Sur battery storage projects, as well as contract closure payments following the COD of the Horizonte Wind Farm. This concludes Colbún's third quarter of 2025 results review. Thanks for listening, and now we are open to answering your questions.
Thank you very much. We will now move to the Q&A part of the call. If you would like to ask a question, please press star two on your phone and wait to be prompted. If you are connected from the web, you can type your question in the box provided or request to ask a voice question. We will give it a few moments for questions to come in. Okay, our first question is from Tomás Peruchín from Balance Capital. Your line is now open. Please go ahead.
Hi, good morning. Can you hear me correctly?
Yes, we can hear you.
Okay, thank you for the presentation. I have two questions. First, could you provide more color on the methodological error made by the authority when accounting for inflation effect on tariff? What impact do you expect for this year and for 2026 results? Second, could you comment on the additional impact you expect from the new BESS regulation and the revenue contribution you anticipate from the incorporation of Celar Pulal and Diego de Almagro Sur ? Thank you very much.
Carolina, I think you're muted. We cannot hear you.
[Foreign Language]
Hi, Tomás. This is Miguel here. Thank you for your questions. Regarding the first one, and maybe just as a context, as you know, the error comes from applying two times the CPI variation and the current interest rate for non-indexed operations in local currency. Even though that last one already includes an implicit inflation component, that is basically what is the double counting on the inflation. From the very onset, we, together with the other power generation companies through the AG, the Associated Generation Companies, have been working with the authority, first trying to, I would say, to reach an understanding in terms of what the error was about and then setting the amounts.
I think to everybody at this point, it is pretty much agreed that the total amount is about CLP 115 million in total for the system, and the impact on each of the companies depends on the share of those contracts that each of the companies holds. In our case, as you know, less than 7%, maybe 5% of our total sales are linked to regulated customers. Although I cannot specifically comment on the amount that is directly linked to us of those CLP 115 million, I can say with confidence that it is not a material amount for Colbún financials. That is the first question. Regarding the impact of both BESS projects, we cannot provide color in terms of expected revenues or EBITDA. As you know, we do not provide guidance.
What I can say is that one should come in line towards the third quarter of 2026, that being Celda Solar , while Diego de Almagro Sur BESS should come during the first quarter of 2027. Each should add another 300 gigawatt hour per year of equivalent generation injected.
Okay, thank you. Our next question is from Andrew McCarthy from LarrainVia . Can you provide some further color on expected amounts and timing of insurance recoveries that you could receive for the outages of Santa María, Rucue, and Nehuenco, please?
Hi, Andrew. Thank you for your question. This is Soledad. Regarding the final amounts, we still cannot provide any color because the amounts are under review. Actually, the adjuster hired a third party that is calculating the business interruption loss, so we do not have numbers yet. We expect to have the final numbers on the loss and insurance recovery by the first half of next year.
Thank you. Our next question is from Felipe Flores from Bonchile. Hi, I have a question regarding Santa María. While the plant started operating again on the 23rd of October, according to the data uploaded by the coordinator, TER Santa María did not generate after that day and has remained at 0 GWh every day until yesterday. Is that correct? Has there been any other problem, or is the plant still not completely available?
Hi, Felipe. This is Soledad again. Thank you for your question. Yeah, that is correct. Santa María has not dispatched since returning to operations on October 23rd, and that is due to economic dispatch reasons. The plant is fully available to start dispatching once the coordinator requires it.
Thank you. Our next question is from Fernán González from BTG. What impact did the accident at the El Teniente mine have on Colbún in the quarter? Could this have an impact in the fourth quarter too? You have insurance for Santa María and Rucue to cover for the outages. What could be the timing of the payments based on the historical experience?
Hello, Fernán. Thank you for your question. Related to the accident in El Teniente, yes, we have observed an impact on the physical sales related to that client. At its peak, it reached 30% of decrease in physical sales related to Colbún. We expect that figure to decrease as the operation of that mine is resuming. It is important to highlight that the impact on the income related to that client is not as affected as physical sales, given the nature of that contract. Related to the insurance of Santa María and Rucue, as Soledad was mentioning, we expect to have more news during the first half of the next year.
Thank you. Just a reminder, if you'd like to ask a question, please press star two on your phone. That is star two from the phone. If you're connected from the web, you can send a text or request to ask a voice question. We'll give a few more moments. Our next question is from Isabella von Maltzan from Bank of America . Could you give more color on the recent news saying that Colbún is looking to expand in Portugal and Spain? Are you considering other regions as well? Could you please explain why your sales are focused on unregulated and not regulated customers? Is this mainly related to contract expiration by the end of 2024? If so, are you looking to increase your contracts with regulated customers?
Hi, Isabela and Miguel here. Thank you for your questions. I'm going to tackle the second half of the question because there's another half which Soledad will take later on. Regarding Portugal and Spain, yes, we've said publicly that the Iberian Peninsula, actually, more than just those two markets, is something of interest to us. The reason for that is actually many. It has to do with regulation. It has to do with hard currency. It has to do with penetration of renewables. The fact that we believe that would add value in terms of our experience dealing with long-term complex PPAs with unregulated customers. Regarding that note, you also asked about our preference for unregulated. I think we've stated this before many times, and we believe that our generation matrix is much better equipped to serve those types of customers.
Those types of customers have other features that we prefer in terms of consumption pattern, in terms of bilateral conditions that you can set in an agreement, of course, that also reduce potential regulation changes risk. We also like to avoid, but that, again, is our current focus. That does not mean in any way that we are not also interested potentially in going to the regulated segment going forward. It is that, as of today, and again, because of our matrix and pipeline, we believe we're better equipped to serve industrial customers.
Thank you.
Hi.
Thank you. I will just read the other part of the question from Isabela. Are you working on liability management for your upcoming 2027 notes? Do you plan to buy Fenix Power's 2027 notes? Net leverage rose to 2.6 x in the third quarter of 2025. Do you expect it to increase further in the coming quarters? At what level do you expect net leverage to reach by the end of 2025 and 2026?
Hi, Isabela. Thank you for your question. Regarding Colbún's 2027 notes, we already refinanced 53% of those with the issuance of new 2035 bonds in September this year for CLP 500 million. We are analyzing options to refinance the remaining portion of that debt. Regarding the Fenix 2027 notes, we are analyzing alternatives and are considering options to refinance those, expecting to have an alternative in place by the end of this year or the beginning of next year. For this refinancing, following the private market, it will be through a bank loan since the total outstanding debt is less than CLP 200 million. It is too small to be refinanced in the capital markets.
In the future, although as the project pipeline materializes or we are successful in buying operating assets in that country, we could add up those cash flows with the loan we will issue and then go to international markets again. Thank you. Sorry. In terms of the net debt to EBITDA you mentioned, for this year, it should be in line with the results we posted in the third quarter of this year. For 2026, we expect a slight decrease, but it will depend on next year's results. We cannot give guidance on those, so we cannot comment more on that. Thank you.
Thank you very much. We will give it a few more moments for any further questions to come in. Okay, it looks like we have no further questions. I will now hand it back to the Colbún team for the closing remarks.
Okay, so thank you, everyone, for joining this third quarter 2025 conference call. Thank you for your questions. Hope to see you for the year-end results around the end of January of 2026. Have a good week to you all. Bye-bye.
That concludes the call for today. Thank you and have a nice day.