CIG-C — Companhia Energética de Minas Gerais

Cemig Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Recurring EBITDA: BRL 1.5 billion, down 16.3% year-over-year.
• Net Profit: Declined by 30.2% due to increased depreciation and interest rates, alongside a lack of significant nonrecurring gains compared to the previous year.
• Investment Program: BRL 4.7 billion invested in the first nine months of 2025, with BRL 3.6 billion allocated to distribution.
• Debt Metrics: Net debt to recurring EBITDA ratio at 1.76, maintaining a AAA rating from two agencies.

2. Strategic Updates and Business Highlights

• Investment Focus: Continued emphasis on regulated areas, particularly in substations and network expansions, with a goal of enhancing service quality in Minas Gerais.
• Recognition: Cemig was awarded as the best energy company in Brazil by Veja Negócios and received multiple awards for financial transparency and sustainability.
• Health Care Plan: Finalized a collective agreement ensuring a sustainable health care plan for retired employees.

3. Forward Guidance and Outlook

• Investment Strategy: The company remains committed to its investment plan, which is expected to yield positive results in future tariff reviews.
• Operational Resilience: Despite current challenges, management expresses confidence in the company's ability to navigate market fluctuations and maintain financial health.

4. Bad News, Challenges, or Points of Concern

• Client Migration: Significant loss of large clients to the basic network has negatively impacted distribution results.
• Market Conditions: Increased costs due to higher interest rates and depreciation, alongside a drop in energy margins, have pressured profitability.
• Regulatory Changes: The new Technical Note 53 regarding loss calculations may have implications for future accounting practices, although management asserts current metrics remain within regulatory limits.

5. Notable Q&A Insights

• Technical Note 53: Management clarified that the new method for calculating losses will not retroactively affect past results, and Cemig remains compliant with regulatory standards.
• Trading Strategy: The company is focused on closing existing energy positions rather than expanding, indicating a cautious approach in response to market dynamics.

Overall, while Cemig faces challenges from client migration and market pressures, it is actively investing in infrastructure and maintaining a strong financial position, supported by a solid credit rating. The management remains optimistic about future growth and operational resilience.