Business Context and Reporting Period
Company: Central Puerto S.A. (NYSE: CEPU), a major private sector power generator in Argentina.
Reporting Period: Fourth Quarter (4Q) and Full Fiscal Year ended December 31, 2021.
Filing Date: March 9, 2022.
Accounting Standard: Financial statements are adjusted for inflation under IAS 29, expressed in the measuring unit current at the end of the reporting period. Consequently, figures are not directly comparable to previously published statements without adjustment.
Key Financial Metrics
| Metric (Million Ps.) | 4Q 2021 | 4Q 2020 | FY 2021 | FY 2020 |
|---|---|---|---|---|
| Revenues | 14,083 | 14,009 | 57,079 | 57,521 |
| Operating Income | 6,264 | 7,702 | 25,712 | 42,181 |
| Adjusted EBITDA | 9,088 | 10,257 | 36,423 | 51,170 |
| Net Income (Loss) | 849 | 876 | (648) | 10,502 |
| EPS (Ps.) | 0.55 | 0.56 | (0.49) | 6.91 |
| Cash & Equivalents (End of Period) | 282 | 421 | 282 | 421 |
| Consolidated Net Debt | (22,875) | N/A | (22,875) | N/A |
Note: All figures are in Millions of Argentine Pesos (Ps.) adjusted for inflation. Net Debt is negative, indicating a net debt position.
Material Changes vs. Prior Period
- Revenue: 4Q2021 revenue increased 1% year-over-year (YoY) to Ps. 14.1 billion, driven by a 32% rise in contract sales (Terminal 6 and Genoveva I) and higher steam sales. Full-year 2021 revenue decreased 1% to Ps. 57.1 billion due to a 10% drop in spot sales caused by hydro generation declines.
- Profitability: Operating income fell 19% in 4Q2021 and 39% for the full year 2021. The full-year decline was primarily due to a 28% increase in impairment charges (Ps. 7.8 billion) and a significant reduction in foreign exchange gains on operating assets.
- Net Income: The company reported a net loss of Ps. 0.65 billion for FY2021, a sharp reversal from the Ps. 10.5 billion profit in 2020. This was driven by lower financial income, higher tax expenses, and increased impairment charges.
- Generation: Total energy generation increased 1% in 4Q2021 and 6% for FY2021. However, hydro generation dropped 29% in 4Q2021 and 25% for the full year due to regional droughts. Renewable generation grew 22% in 4Q2021 and 37% for the full year.
- Cash Flow: Operating cash flow for 2021 was Ps. 26.0 billion. Investing activities used Ps. 6.9 billion (mainly for Terminal 6 construction), and financing activities used Ps. 19.2 billion (loan repayments and interest).
Outlook, Risks, and Management Commentary
- Regulatory Developments: Resolution No. 1037/2021 established an export account to accumulate margins from energy exports to Brazil (due to drought there) to finance infrastructure. An additional transitory remuneration of $1,000/MWh was assigned for exports between Sept 2021 and Feb 2022.
- Operational Risks: Significant hydro generation shortfalls were caused by droughts affecting the Limay and Collón Curá rivers. Thermal availability decreased slightly due to maintenance and minor failures, though it remained above the market average.
- Financial Risks: The company faces exposure to Argentine peso depreciation, though this impact was lower in 2021 compared to 2020. High inflation (50.9% in 2021) necessitates IAS 29 adjustments, complicating historical comparisons.
- Capital Projects: Terminal 6 reached full commercial operation, contributing to thermal generation growth. Renewable capacity expanded by 25% YoY, with 400 MW added in 4Q2021.
- Conference Call: Management scheduled a call for March 10, 2022, to discuss results.
Investor Verification Checklist
- Inflation Adjustments: Verify the impact of IAS 29 inflation adjustments on the comparability of 2021 figures versus 2020.
- Impairment Charges: Review the specific details of the Ps. 7.8 billion impairment charge on property, plant, and equipment for FY2021.
- Hydrology: Monitor water inflow levels in the Limay and Collón Curá rivers for future hydro generation forecasts.
- Debt Structure: Analyze the consolidated net debt position of Ps. 22.9 billion and the composition of USD-denominated debt.
- FONI Collections: Confirm the timeliness of FONI trade receivable collections (Ps. 8.2 billion collected in 2021) for the Vuelta de Obligado Plant.