CIG — 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: Decreased by 30.2%, impacted by increased depreciation, interest rates, and leverage.
• Investments: Total investments for the first nine months of 2025 reached BRL 4.7 billion, 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:

• Cemig continues to execute its largest investment program, focusing on substations and network expansion, with significant projects in distribution and generation.
• The company received accolades, including being named the best energy company in Brazil by Veja Negócios and recognition for its financial team and ESG initiatives.
• A collective agreement was reached regarding the health care plan for retired employees, ensuring sustainability for both the company and its retirees.

3. Forward Guidance and Outlook:

• The company remains optimistic about future tariff reviews due to its substantial investments in regulated areas, which are expected to yield positive returns.
• Cemig is committed to maintaining its investment plan while managing debt levels effectively.

4. Bad News, Challenges, or Points of Concern:

• Distribution results were adversely affected by the migration of large clients to the basic network, leading to a decline in revenue.
• The trading business faced challenges due to reduced margins and the need to purchase energy at higher spot prices, resulting in a BRL 136 million impact on distribution.
• Operating costs are rising, particularly in outsourced services and personnel, which may pressure margins moving forward.
• The energy market experienced a 4.4% drop, impacting all customer segments.

5. Notable Q&A Insights:

• A question regarding Technical Note 53 clarified that the changes in loss calculation methods would not have retroactive effects on past accounting, and Cemig remains within regulatory limits.
• In response to inquiries about trading strategy, management emphasized a focus on closing positions rather than expanding exposure, indicating a cautious approach to market fluctuations.

Overall, while Cemig demonstrated resilience through significant investments and maintained strong ratings, it faces challenges from client migrations, market conditions, and rising operational costs that could impact future performance.