Good day, ladies and gentlemen and welcome to Enel Américas' Q1 2025 Results Conference Call. My name is Gigi and I'll be your operator for today. This presentation contains statements that could constitute forward-looking statements.
These statements occur in a number of places in this presentation and include statements regarding the intent, belief, or current expectations of Enel Américas and its management with respect to, among other things, Enel Américas business plans, Enel Américas cost reduction plans, trends affecting Enel Américas financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere.
S upervision and regulation of the electricity sector in Chile or elsewhere, and the future effect of any changes in the laws and regulations applicable to Enel Américas or its subsidiaries. Such forward-looking statements reflect only our current expectations, are not guarantees of future performance, and involve risks and uncertainties.
Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in the equity capital markets, an increase in the market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere and other factors described in Enel Américas' integrated annual report.
Readers are cautioned not to place undue reliance on those forward-looking statements, which state only as of their dates. Enel Américas undertakes no obligation to release publicly the result of any revisions to these forward-looking statements, except as required by law. I would now like to turn the presentation over to Mr. Jorge Velis, Enel Américas' Head of Investor Relations. Please proceed.
Thank you, Gigi. Good morning, everyone and welcome to our Q1 2025 esults presentation. I'm Jorge Velis, Head of Investor Relations of Enel Américas. In the coming slides, our CEO, Aurelio Bustilho, and our CFO, Rafael de la Haza, will be presenting the main figures of this period.
Let me remind you that this presentation will follow the slides that have been already uploaded in the company's website. Following the presentation, we will have the Q&A session. If you want to make a question, please send it through the webcast or write us to our corporate email, ir.enelamericas@enel.com. Now, let me hand over the call to Aurelio, who will start by outlining the main highlights of the period in slide number 3.
Thank you, Jorge. Good morning, everybody. First of all, I would like to thank all the people, all our people for the results in preparing this presentation. During the Q1 of 2025, we had an important 11% increase in investments in grids, isolating the currencies devaluation impact that we had.
This allowed us to improve our response time to service outage, confirming our commitment with our customers to improve service quality and to be a more resilient company. In generation, we increased our production by 23%, mainly explained by renewable capacity additions and better hydro conditions in Colombia. EBITDA in this quarter reached $11.01 billion.
If we isolate the impact coming from currency devaluation, EBITDA reached $1.13 billion, which is 5% higher than the same period of last year, mainly explained by better results in Argentina and generation business in Colombia. Thanks to the deployment of the funds that we received from the sale of Peruvian assets, we have been able to reduce our debt level, and financial expenses decreased by 21% this quarter compared to the Q1 of 2024.
Also, we have implemented a change in the visual identity of Brazil, reflecting the evolution of the company in the country and the record investments planned for the grids, and in grids, focusing on quality improvement and resilience. This is aligned with our ongoing efforts in expanding our field teams, reducing emergency response time and increasing the capacity of our service channels.
All in, this has allowed us to improve our emergency response time during the summer, which improvements of 50% in São Paulo, 40% in Rio, and 30% in Ceará, despite an increase of 35% in climate events. Before going to the details of our operational and financial performance of this period, I would like to have an update on the regulatory topics that we are facing this year.
2025 is an important year with relevant regulatory milestones in the region. Starting with Colombia, the commercialization tariff revision process is still ongoing w hile for the distribution tariff process, we expect to have news about the technical document in the Q3 . In generation business, a law project that at 5%, the energy sales of hydroelectric energy, the spot market is under discussion. We expect to have more details about this in the coming weeks.
In Brazil, the concession renewal process is moving ahead as expected. By the end of March, we formalized our intention to renew our concessions, and now ANEEL, the regulator in Brazil, has 60 days to deliver its recommendation to the Ministry of Mines and Energy. Finally, in Argentina, after the public hearing held in February, the ENRE, the regulatory authority in Argentina, published on April 30 a resolution that puts into effect the 5-year tariff review for EDESUR for the period 2025-2030, effective as May 1 in 2025.
Among the main elements established are the new WACC before tax of 9.99%, an increase in the distribution component of 33% in May and subsequent increase of 0.36% per year for the following 30 months, leading to a total increase of 15.69%.
Tariffs will also be updated through monthly inflation adjustments based on the consumer and wholesale inflation indicators, with a weight of 33.3% and 66.7% respectively. Now let's analyze our investments of the period in the coming slide. During the Q1 of this year, our CapEx decreased by 27% compared to the same period of last year, reaching $406 million.
This is mainly explained by lower CapEx in generation due to the completion of renewable projects in 2024. However, it is important to highlight that investments in grids business increased 11%, excluding the effect of currency devaluation, reaching $0.3 billion. 59% of total investments were allocated to Brazil and 30% to Colombia.
We see that Argentina is becoming more relevant in terms of investment with 12% of the total investments. In terms of business lines, 74% of total CapEx was devoted to grid and 55% to generation. Regarding grid's CapEx, we see that investment devoted to network upgrade increased by 42% compared to the same period last year.
Let's now analyze grid's operational highlights in slide 6. Electricity distributed reached 27.3 TWh in the Q1 , which represents an increase of 0.2% compared to the same period last year, explained by higher sales in Brazil, partially compensated by lower sales in Argentina due to a milder temperature in Colombia. Regarding number of customers, we had an increase of almost 400,000 in the last 12 months, reaching 22.7 million customers.
Smart meters increased by 82%, reaching 1.5 million in this period, explained by the deployment in São Paulo. Net RAB and net RAB per customers increased 15% and 13% respectively, isolating the impact of currency devaluation. This reflects the significant investments that we are doing in our grids.
In terms of SAIDI improved in all subsidiaries, while SAIFI showed mixed results. Finally, regarding energy losses, we improved in Enel Ceará and remained flat in Colombia, but increased in Enel Rio and Enel São Paulo due to higher temperatures and EDESUR due to weather events in 2025 and increased in tariff indexation during the past year, especially in Argentina. Let's continue with generation operational risk highlights.
Installed capacity reached 12.9 GW, which is 5.1% more than the same period of last year, thanks to the renewables projects that began operations during 2024. With this, 98% of our capacity is renewable. We are currently working in the construction of 0.5 GW or 500 MW of new capacity related to solar projects located in Colombia, Guayepo III and Atlántico, which will start operations between 2025 and 2026. In the right chart, we see that our energy balance on a consolidated basis. You can see in the right side of the chart.
We can see that in this quarter, we increased our sales by 13%, reaching 17.4 TWh. From these, 9.7 TWh came from our production and 7.6 TWh came from energy purchases. The increased amount of energy sold came mainly from higher renewable production and higher purchases from third parties.
Energy sales increased in Brazil and Colombia, mainly in non-regulated market in the case of Brazil, and regulated and spot markets in case of Colombia. Now, Rafael will comment on the financial results of the period in the coming slides. Please, Rafael.
Thank you, Aurelio. Good morning to everybody. Buenos días a todos. EBITDA in this quarter reached $1.01 billion, a reduction of 6.5% compared to the Q1 of 2024. This is mainly a consequence of a currency depreciation in Brazil and Colombia. If we exclude this effect, we get to an adjusted EBITDA of $1.13 billion, which is 5% higher than Q1 2024.
This result is mainly explained by lower results in generation in Colombia, as Aurelio said before, due to the reliable conditions in the country and higher tariffs and distribution in Argentina. Net income reached $0.25 billion in this quarter, which is 32% lower than the Q1 of last year.
If we isolate the contribution from discontinued operations in Peru in both periods, net income decreases 5%, explained by the lower reported EBITDA, partially compensated by lower financial costs and taxes. Just to remind you that in 2024, we sold the contribution of our businesses in Peru. We sold the generation in May 2024, and the distribution in June 2024.
There were some months in which Peru was contributing to the results of the company during the first half of the year. Funds from operation reached $0.47 billion, an improvement of 6% compared to the same period of last year. This is mainly explained by lower taxes paid and lower financial expenses due to lower debt and lower interest rates compared to the Q1 of 2024.
Just to remind you that, in 2024, in the Q1, we saw a consolidated net debt of around $6.7 billion and a gross debt of around $8.4 billion. If we compare it to the current one, this is explaining substantially the reduction in terms of financial expenses of this Q1 of 2025 when compared to the Q1 of 2024.
Starting from $1.177 billion EBITDA for the Q1 of 2024, we see that generation had an important increase of $36 million, mainly explained by the contribution of our businesses in Colombia and Argentina. Grids slightly decreased due to lower results in Brazil. Customers and others also improved.
With this, we get to an adjusted EBITDA of $1.133 billion for the Q1 2025, which is 5% higher than the same period of 2024. FX had a negative impact of $126 million, resulting in a reported EBITDA for this quarter of $1.007 billion. From our reported EBITDA, 50% came from Brazil, 41% from Colombia, 6% from Central America, and 3% from Argentina. In terms of business line, grids represents 58% of our EBITDA, generation 39% and customers contribute with 3% of the total. On slide 11, we will focus on the cash flow of our company.
Starting from an EBITDA of $1.01 billion, we see the net working capital amounted to $0.34 billion, slightly higher than the Q1 of 2024. Taxes paid during the period amounted to $0.1 billion, a lower amount compared with last year, where net financial expenses also decreased, reaching $0.1 billion.
With this, funds from operations amounted to $0.47 billion, an improvement compared to the same period of 2024. After investments for $0.41 billion, we get to an adjusted free cash flow of around $60 million. Let me now analyze the debt of our company in the following slide number 12.
Gross debt amounted to CLP 5.7 billion, an increase of 8% compared to December 2024 and this is mainly explained by FX impact, as we said before, a higher debt in Brazil. If we compare this quarter with the Q1 of 2024, the previous year, our debt significantly decreased, as we already mentioned at the beginning of this presentation. Net debt reached CLP 2.9 billion, an increase of 34% compared to the end of 2024.
This includes positive free cash flow for CLP 0.1 billion, net dividends paid for CLP 0.4 billion, extraordinary operations for CLP 0.3 billion, mainly related to the payment of the second installment of the pension fund in Enel São Paulo, an FX effect for $0.1 billion. In terms of currency and country, we see that Brazil remains as the largest contributor, while the debt at the holding level represents only 11% of the total.
Finally, regarding the cost of the debt, we can see a slight increase for this period, going from 10.3% to 10.7%, explained mainly by higher interest rates in Brazil. I remind you that in 2024 was 11.3%, and now we see 12.7% interest rates in Brazil. On the next slide, Aurelio will conclude this presentation with some closing remarks.
Concession renewal process in Brazil is moving ahead as expected. We confirmed our intention to renew our concessions. We continue to focus in our investments in grids, aiming to improve our service quality for our customers. EBITDA net of FX improved mainly due to better results in grids in Argentina and in generation in Colombia.
We reduced our financial expenses and keep a solid and flexible financial position which allow us to execute our CapEx plan. Finally, our shareholders approved a final dividend of $407 million to be paid on May 29, bringing the total dividends paid by our company in 2025 to almost $800 million, reflecting the record net income generation in 2024.
Thank you, Aurelio. Thank you, Rafa. Thank you, everybody, for your attention. Now we begin our Q&A session. Remember that you can send your questions through our webcast. Okay. The first question comes from Javier Suárez from Mediobanca. Can you please indicate if your guidance for 2025 is confirmed?
Hi, Javier Suárez. Good morning, and thank you very much for your question. This is Rafael de la Haza. Yes, we are confirming our guidance for 2025 so w e will see, of course, still volatility in terms of FX, but we do not see any extraordinary event to indicate anything different to the guidances that we announced in 2024 for the period 2025, or for this year, let me say, in terms of EBITDA or in terms of net income. The answer is yes, we are confirming our guidance for 2025.
Second question from Rubén Alvarado from BICE. Three questions. First one, regarding the 34.1% increase in net debt in the Brazilian subsidiaries, is this product of the concession renewal or could you provide us with an update on the debt restructuring? Have you been able to prepay additional debt or should we expect a decrease in financial expenses? And lastly, could we have an update regarding the assets held for sale, specifically if there is a set date for the sale of Piura in Peru and the assets in Argentina?
I suggest, Rafael, if you can answer the question regarding the financial debt position, and I can answer the question related to the assets for sale in the last one, right?
Yes. Okay.
You can start with the.
Yes. Thank you very much for your question. Regarding the increase in net debt in our Brazilian subsidiaries, let me say it's substantially due to the fact, as we saw in the slide, we were explaining the debt due to the payment, the second installment of the payment of the São Paulo's pension fund.
This is the main reason of the increase that you saw in terms of net debt increase in our Brazilian subsidiaries and a lso we saw an impact in terms of FX that in the case of Brazil was around $187 million for the period comparing December 2024 with the Q1 of 2025. Those are the main reasons.
Regarding the asset that we have in Peru, the thermal plant in Piura, we are now working in structuring the contract, the gas contracts. We are in the middle of, let's say, an option of new gas spots in Colombia. We are not participate on this, but it's important to assure the sustainability of the plan. This is an asset that we have PPAs, we have the what we call and it's operating regularly, very well operated but w e prefer to restructure the contracts and the gas supply agreements in order to provide the information to regarding the asset sale.
Regarding Argentina, as we mentioned before, we decided to maintain the assets in our perimeter. In our vision, it was a very good decision because the risk of the country, if we see what was before and what is now improved, little by little we are improving the regulatory issues.
For now, we maintain our assets there and working on the recovery, let's say, let me tell you the regulatory framework with the government, with the operation of EDESUR and also the generation assets, so-called, we decided to maintain it for now. I don't know if there's another question related, but I think we answered.
Yeah, w e answered this one.
Okay.
The next question is from Andrew McCarthy. Do you have any preliminary expectations about the outcomes of the tariff review process in Colombia? What are the key points that will likely be debated with the regulator?
Thank you, Andrew, for the question. The process, in our view, not only in our view, it's delayed, probably will not have this process defined by this year. The regulation in Colombia is very well, it's a solid regulation, w e believe that we'll maintain this regulation. There's a lot of discussion yet to come but w e expect it from this delay that we'll have news by the end of this year or beginning of the next one.
But for now, it's moving, let's say, in the right way and o f course, regulation is always something that we need to take care to look at the details and so on. In the general view, it's moving forward in the correct way, despite all the discussions and all the political issues that also make part, an important part of this process, as we all know but w e are confident that we'll have it in a very good way.
Regarding another question, if I may jump into this question from Javier, right? For the CapEx to 5%, of course, it's we need to look in an overall way a nd to, of course, regarding the and related to the prices that we are practicing with the generation. We don't see major impact in our assets. It's part of the fine-tuning that the government wants to provide to generation assets. We do not see major impacts. I don't know, Javier, if you have calculated that.
No.
In our case, I think we can compensate this with the prices that we are practicing with our PPAs and the volumes that we have projected for this year.
Yeah. As you mentioned before, Aurelio, this is a project we need to obtain the details of this initiative so we cannot give any, we cannot, w e do not have at this moment any impact calculation because we need to have all the details to do it, no? So let's see how it evolves. For the moment, we do not have any calculation on this.
Thank you. We have a question from Fernando González. Did Enel reveal the quality indicators for your concessions in Brazil? And if so, how do they compare with your real performance? What is still pending for the renewal process of the distribution concessions?
Thank you, Fernando. Well, a good news that we had in the concession renewal was that last week, on the previous weeks, we had the renewal process advances for the first distribution of this process, which is Espírito Santo, right? And what we saw is pretty much aligned with what we are working and we are projecting.
Of course, the new contracts, they will be more, let's say, they will have more detailed indicators of quality, which is fair in our vision and of course p roviding us the condition of making more investments annually recognized by the tariff reset, so the tariff review so w ith this we think it's fair.
More quality, but on the other hand, the good conditions to operate and to invest and to have CapEx recognition for the distribution companies. Please keep in mind that the current contracts, we have almost 30 years of the old contract that we have today. It was, of course, constructed in another environment, in terms of data analytics, extreme climate events, social media and so on.
Now we are confident that these contracts reflect more especially Brazil the new environments of these extreme events, the conditions of especially the kind of energy that we have agreed, the data analytics, social media so w e are confident that this will reflect the current condition. It will be more rigid or aggressive, if you may say, yes. But on the other hand with the good conditions of operation. It's a different world, t he world changing, no?
Thank you, Aurelio. Thank you, Rafa. There are no more questions. We conclude our results conference call. Let me remind you that the investor relations team is available for any doubt that you may have. Thank you for your attention.
This concludes today's conference call. Thank you for participating. You may now disconnect.