Release Date: November 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aguas Andinas SA (XSGO:AGUAS-A, Financial) reported a stable growth rate in EBITDA of 1.7%, driven by increased income and effective cost management.
- The company successfully managed to continue operations despite complex weather conditions, including significant rainfall and a city blackout.
- Aguas Andinas SA has implemented a robust investment plan focused on network maintenance, operational continuity, and resilience against climate change.
- The company has revalued its water rights, increasing its asset value by $390 billion, aligning accounting values with market values.
- The VIII rate fixing process agreement, representing 85% of regulated income, is expected to positively impact future financial results.
Negative Points
- Net profit decreased by 5.3% due to lower income before taxes and reduced financial income.
- Non-sanitary sector income declined by $600 million, attributed to non-recurrent engineering service incomes from the previous year.
- The company faced extraordinary costs due to extreme climate events, impacting sewage water collectors.
- Financial results were pressured by unfavorable exchange rate impacts and reduced cash flow levels compared to the previous year.
- The company anticipates increased CapEx levels for 2025-2030, which may impact short-term financial flexibility.
Q & A Highlights
Q: How will the projects announced for 2025 to 2030 affect the company's annual investment levels?
A: The projects will increase the CapEx level for 2025-2030, adding $380 million to the recurrent CapEx. The recurrent CapEx varies annually, typically exceeding $100 million, depending on the needs determined through development plans and concessions.
Q: How will the basic drought rate adjustment work for water purchases?
A: The 3.85% rate growth will be operational as wells become active. A temporary rate up to 3.85% can be triggered to cover water transfer costs, adjusted retrospectively to match actual costs and income.
Q: Will the financial cost pressures observed this quarter normalize in the future?
A: Financial results were impacted by exchange rate differences, normalized cash flow levels, and inflation affecting UF-indexed debt. As inflation stabilizes, financial results should improve.
Q: What is the impact of the rate fixing process on dividend distribution?
A: The rate fixing process positively impacts the results account, influencing dividends, which are determined annually based on the company's financial status and future project needs.
Q: Will new wells eliminate the need for water transfers with third parties?
A: The basic drought stage should reduce necessary transfers, and the final drought stage aims to eliminate them. However, long-term climate conditions are unpredictable, affecting future transfer needs.
Q: Why was the evaluation of water rights conducted?
A: The evaluation aligns accountable asset values with economic values, correcting distortions in financial analysis. It matches the rate fixing process, recognizing market value for water rights.
Q: Are all Biociudad projects approved in the rate fixing process?
A: Yes, all Biociudad projects are rated and will proceed as planned, following the timelines discussed in the rate fixing process.
Q: What is the annual CapEx for maintenance beyond the agreed projects in the rate fixing process?
A: Maintenance CapEx varies annually based on evolving needs. It includes development plans and profitability projects, with additional rated CapEx of $380 million for upcoming years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
