Central Puerto S.A. — Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022; audited consolidated financial statements for 2022, 2021 and 2020. The filing is an annual Form 20-F, not a standalone fourth-quarter report. Financial statements are prepared under IFRS in Argentine pesos and restated under IAS 29 for hyperinflation. Figures are stated in the December 31, 2022 measuring unit unless otherwise noted.
Business context
Central Puerto is an Argentine power-generation company operating thermal, hydroelectric and wind assets. At December 31, 2022, it had 4,809 MW of installed capacity, generated 17,484 GWh and represented approximately 12.6% of electricity generated by private-sector SADI generators. The company also held interests in natural-gas distribution businesses and entered the forestry sector through the acquisition of Forestal Argentina and Loma Alta Forestal.
Revenue is highly concentrated in Argentina and CAMMESA. Approximately 86% of consolidated revenue came from CAMMESA in 2022. The company’s common shares trade on BYMA and its ADSs trade on the NYSE under CEPU.
Key financial metrics
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | Ps.101.39 billion | Ps.111.19 billion | Down 8.81% |
| Gross income | Ps.48.07 billion | Ps.53.60 billion | Down 10.32% |
| Gross margin | 47.41% | 48.21% | Down 80 bps |
| Operating income | Ps.61.89 billion | Ps.50.08 billion | Up 23.57% |
| Net income | Ps.19.08 billion | Net loss of Ps.1.26 billion | Returned to profitability |
| EPS | Ps.12.65 | Ps.(0.96) | Improved |
| Operating cash flow | Ps.55.64 billion | Ps.50.72 billion | Up 9.70% |
| Investing cash flow | Ps.(31.26) billion | Ps.(13.49) billion | Higher investment outflow |
| Financing cash flow | Ps.(16.31) billion | Ps.(37.34) billion | Lower financing outflow |
| Cash and cash equivalents | Ps.9.24 billion | Ps.0.55 billion | Increased materially |
| Other current financial assets | Ps.41.75 billion | Ps.38.65 billion | Increased |
| Current trade and other receivables | Ps.43.89 billion | Ps.44.32 billion | Down slightly |
| Total debt | Ps.63.43 billion | Ps.83.75 billion | Down 24.3% |
All debt was denominated in U.S. dollars. The filing separately reports debt of approximately US$358.0 million, consisting of US$255.4 million of non-current debt and US$102.7 million of current debt. Approximately 97% of financial liabilities were denominated in U.S. dollars according to the risk disclosures.
Revenue and operating performance
- Spot-market revenue was Ps.40.17 billion, or 39.62% of revenue, down 13.41% year over year.
- Sales under contracts were Ps.53.86 billion, or 53.12% of revenue, down 8.19%.
- Steam sales increased 46.83% to Ps.4.91 billion, supported by San Lorenzo and Luján de Cuyo operations.
- Conventional-generation revenue declined 6.51% to Ps.80.68 billion.
- Renewable-generation revenue declined 17.38% to Ps.18.26 billion, mainly due to lower generation from certain wind farms.
- Generation increased 21.5% to 17,484 GWh from 14,389 GWh in 2021, driven primarily by higher Piedra del Águila hydroelectric generation and greater San Lorenzo output.
- Weighted average availability for thermal and hydro plants declined to 89.20% from 91.14%; thermal-only availability declined to 84.11% from 87.55%.
Material changes versus the prior comparable period
- Revenue declined despite higher generation because regulated spot-market prices lagged inflation and certain contracted-generation revenues declined.
- Operating income increased principally because of higher foreign-exchange-related operating income, lower maintenance and other operating costs, and increased steam revenue.
- Net income benefited from a Ps.12.17 billion bargain-purchase gain related to the forestry acquisition and lower income tax, but was reduced by a Ps.30.46 billion loss on the net monetary position and Ps.43.45 billion of finance expenses.
- Finance income increased to Ps.25.54 billion, including Ps.22.47 billion of gains on financial assets measured at fair value through profit or loss. Finance expenses increased 25.21%, primarily because of foreign-exchange losses on U.S.-dollar liabilities.
- The company recorded Ps.14.02 billion of impairment charges, including Ps.5.97 billion for the San Lorenzo cogeneration unit, Ps.2.52 billion for the Manque wind farm and Ps.5.53 billion for the La Genoveva wind farm.
- Investing cash outflows increased to Ps.31.26 billion, including Ps.10.36 billion related principally to the forestry acquisition and Ps.3.35 billion for property, plant and equipment and inventories.
- Total debt declined from Ps.83.75 billion to Ps.63.43 billion, while current debt increased to Ps.18.19 billion from Ps.13.27 billion.
Liquidity, debt and capital allocation
Management states that operating cash flow, cash and financial assets should be sufficient for working capital, debt service and planned capital expenditures for the foreseeable future. The company reported approximately Ps.23.55 billion of uncommitted bank credit lines and stated that it was in compliance with debt covenants at the filing date.
Key near-term requirements include debt service, including the Brigadier López loan maturity profile, the CP Manque and CP Los Olivos bonds, the Brigadier López combined-cycle completion project and the San Carlos solar project. The filing states that the Brigadier López financial-trust debt was fully repaid in April 2022, but Central Puerto’s separate Brigadier López loan remained outstanding.
Central Puerto paid a cash dividend of Ps.2.88 per ordinary share in December 2022. Dividend payments remain subject to Argentine exchange controls, shareholder approval, profitability and contractual restrictions. The Brigadier López loan limits dividends to US$20 million during 2023.
Guidance, outlook and management commentary
- Resolution 826/22 provided retroactive spot-market remuneration increases of 20% from September 2022 and 10% from December 2022, with additional increases scheduled for February and August 2023.
- Resolution 59/23 permits combined-cycle generators to join an availability and efficiency agreement offering a partially U.S.-dollar-denominated remuneration in exchange for at least 85% average monthly availability. Central Puerto submitted notices to CAMMESA to enroll all combined-cycle units, with increased remuneration expected from March 2023 transactions.
- The Brigadier López combined-cycle expansion is expected to increase capacity from approximately 281 MW to up to 420 MW, with completion targeted during 2024; timing and financing remain subject to execution risks.
- The San Carlos solar project was awarded 10 MW of dispatch priority, with estimated commercial operation at the beginning of 2024.
- On February 17, 2023, Proener acquired 75.68% of Central Costanera for US$48 million. The transaction increased Central Puerto’s reported installed capacity to approximately 7,114 MW, subject to the mandatory tender offer and regulatory processes.
- Management intends to renew the Piedra del Águila concession, which expires on December 28, 2023, but the concession does not provide for automatic renewal.
Risks, contingencies and unusual items
- Argentina’s 94.79% inflation in 2022 and 72.47% peso depreciation materially affect reported results, debt service, purchasing power and asset valuations. The filing recognizes a Ps.30.46 billion loss on the net monetary position.
- CAMMESA payment delays and counterparty credit risk can increase working-capital needs. Payments contractually due within approximately 42 days have historically sometimes taken more than 90 days.
- Regulated tariffs and remuneration are subject to government discretion, intervention and changes in the regulatory framework.
- Natural-gas shortages, liquid-fuel availability, transmission constraints, hydrology, wind conditions and plant outages can reduce generation and revenue.
- Most debt and certain receivables are U.S.-dollar-linked, creating substantial foreign-exchange exposure. The company reported no qualifying hedge for this exposure.
- LIBOR-based receivables and borrowings require transition to replacement benchmarks after the cessation of representative U.S.-dollar LIBOR settings.
- The company’s tax litigation includes disputes over inflation adjustments for 2014 and recovery claims for several fiscal years. The filing does not provide a clear final recovery value for all claims.
- The forestry acquisition generated a preliminary Ps.12.17 billion bargain-purchase gain. The purchase-price allocation remained subject to completion of the valuation process.
- Management and the auditor excluded the acquired forestry subsidiaries from the 2022 internal-control evaluation because they were acquired three days before year-end. The subsidiaries represented 7.47% of consolidated assets and 3.47% of consolidated liabilities.
- The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting. The auditor identified impairment testing and accounting for the forestry business combination as critical audit matters.
Most important facts for investors to verify
- Whether the Piedra del Águila concession is renewed before its December 2023 expiration and on what economic terms.
- Actual CAMMESA collection timing, outstanding receivables, and any deterioration in payment performance.
- Enrollment, availability performance and realized pricing under Resolution 59/23.
- Completion cost, financing and commercial-operation timing for the Brigadier López expansion and San Carlos solar project.
- Central Costanera’s final acquisition accounting, mandatory tender offer outcome and impact on consolidated debt and cash flow.
- Sensitivity of earnings and liquidity to peso depreciation, inflation, interest rates, fuel availability and tariff changes.
- Whether the 2022 impairment charges stabilize or require additional write-downs under revised operating and macroeconomic assumptions.
- Final valuation and accounting treatment of the forestry acquisition, including biological assets and bargain-purchase gain.
- Dividend capacity after debt maturities, exchange-control requirements and the Brigadier López covenant limitations.