Central Puerto S.A. — Form 20-F Summary
Business context and reporting period
Annual report for the fiscal year ended December 31, 2023, filed April 29, 2024. Central Puerto is an Argentine power-generation company reporting under IFRS in Argentine pesos, restated for hyperinflation under IAS 29. Comparative figures are stated in the December 31, 2023 measuring unit and are not directly comparable with previously published financial statements. The company operated 7,173 MW of installed capacity, generated 20,774 GWh, and represented approximately 19.68% of power generated by private-sector generators in Argentina.
Operations include conventional and renewable power generation, steam sales, gas transportation and distribution investments, and forestry assets. Approximately 84% of consolidated revenue came from CAMMESA in 2023.
Key financial metrics
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | ARS 313.57 billion | ARS 315.74 billion | (0.69%) |
| Gross income | ARS 103.40 billion | ARS 149.69 billion | (30.92%) |
| Gross margin | 32.98% | 47.41% | Down 14.43 points |
| Operating income | ARS 338.22 billion | ARS 192.73 billion | +75.49% |
| Income before tax | ARS 163.90 billion | ARS 80.34 billion | +104.01% |
| Net income | ARS 145.96 billion | ARS 59.41 billion | +145.68% |
| Net margin | 46.55% | 18.82% | Up 27.73 points |
| Operating cash flow | ARS 125.61 billion | ARS 173.26 billion | (27.50%) |
| Investing cash flow | (ARS 63.58 billion) | (ARS 97.35 billion) | Lower use of cash |
| Financing cash flow | (ARS 79.75 billion) | (ARS 50.78 billion) | Higher use of cash |
Reported 2023 results were significantly affected by non-operating and non-recurring items, including ARS 72.65 billion of bargain-purchase gains, ARS 43.99 billion of net impairment reversals, ARS 230.20 billion of finance income, ARS 356.77 billion of finance expenses, and an ARS 126.51 billion loss from the net monetary position. The reported operating margin therefore exceeded 100% and is not representative of recurring operating profitability.
Revenue mix and operating performance
- Spot Sales revenue increased 24.32% to ARS 155.52 billion and represented 49.60% of revenue.
- Sales under contracts declined 21.89% to ARS 131.01 billion, primarily following the expiration of the Brigadier López PPA and lower wind generation.
- Steam revenue declined 3.23% to ARS 14.79 billion despite a 2.95% increase in volume.
- Forestry revenue contributed ARS 5.82 billion, the first reported year with this revenue stream.
- Total generation increased 18.81% to 20,774 GWh, driven principally by higher Piedra del Águila hydroelectric generation and the consolidation of Central Costanera. Thermal availability declined to 66% from 84%, while combined thermal and hydro availability declined to 73% from 89%.
Liquidity, debt and capital resources
- Cash and cash equivalents were ARS 13.47 billion; other current financial assets were ARS 89.84 billion.
- Current CAMMESA receivables were ARS 137.37 billion, while total trade and other receivables were ARS 315.88 billion.
- Loans and borrowings on the statement of financial position were ARS 335.18 billion, compared with ARS 197.52 billion in 2022. Management separately reported total indebtedness of ARS 342.37 billion; the difference should be reconciled to gross versus carrying-value presentation.
- All financial liabilities were denominated in U.S. dollars as of December 31, 2023. Management reported approximately US$442.50 million of foreign-currency assets and US$466.48 million of foreign-currency liabilities.
- The company issued a US$37.23 million, 7% Class A bond and US$50 million, 10% Senior Notes due 2025, and reopened the Class A bond for an additional US$10 million.
- The Brigadier López syndicated loan was prepaid in part during October 2023 and fully repaid on January 12, 2024.
- Management reported approximately ARS 89.8 billion of uncommitted bank credit lines and 2024 debt repayments of approximately US$58.9 million.
Material changes versus the prior comparable period
- Revenue was broadly stable in nominal restated pesos, but gross profit fell materially because costs increased 26.57%, including higher maintenance, depreciation, employee, insurance and acquisition-related costs.
- Net income increased primarily because of bargain-purchase gains, impairment reversals, foreign-exchange-related operating income and higher finance income, despite substantially higher finance expenses and inflation-related losses.
- Central Puerto acquired a 75.68% controlling interest in Central Costanera for US$48 million, increasing installed capacity and adding significant thermal-generation operations. The acquisition generated a bargain-purchase gain under IFRS 3.
- The group acquired forestry companies with approximately 88,063 hectares in Corrientes for approximately US$29.9 million and acquired a 105 MW solar farm in San Juan. The solar transaction included assumed and refinanced debt.
- Capital expenditures and acquisition-related additions totaled ARS 155.82 billion, compared with ARS 40.17 billion in 2022.
- Share repurchases totaled 2,299,993 shares for ARS 1.66 billion at December 31, 2023.
Guidance, outlook, risks and unusual items
- Management expects future performance to benefit from expanded generation capacity, completion of the Brigadier López combined-cycle conversion, renewable projects and forestry operations. Brigadier López construction is expected to be completed during 2025, increasing capacity by approximately 140 MW to an expected total of 432 MW.
- The company obtained 10 MW of dispatch priority for the San Carlos solar project and expects the project to reach commercial operation in April 2025 on a tentative basis.
- The Piedra del Águila concession expired in December 2023 and was extended through June 28, 2024. The company intends to seek further renewal, but the government may adopt a new regulatory framework or conduct a tender, creating a material risk to generation and revenue. The plant represented approximately 23.96% of generation and 9.81% of revenue in 2023.
- CAMMESA payment delays remain a significant liquidity risk. At the report date, CAMMESA was reportedly in arrears for December 2023 and January-February 2024 spot transactions and March-April 2024 FONINVEMEM payments, totaling an estimated ARS 89.04 billion.
- Revenue remains highly exposed to Argentine government-set remuneration, CAMMESA credit risk, inflation, peso devaluation, exchange controls, fuel availability, transmission constraints and regulatory intervention.
- Argentina’s CPI inflation was 211.41% in 2023 and the peso depreciated approximately 78.09%. These conditions materially affect reported results, debt service, purchasing power and asset valuations.
- Major operational outages included a Costanera unit unavailable from March 20 to October 3, a Central Puerto unit unavailable from January 17 to April 2, and scheduled Mendoza maintenance from July 11 to July 29.
- The auditors issued unqualified opinions on the financial statements and internal control. However, management excluded acquired businesses representing 17% of consolidated assets, 22% of liabilities and 13% of revenue from the 2023 internal-control evaluation; these businesses are expected to be incorporated into the control model in 2024.
- No material cybersecurity incidents were reported during the year.
Most important facts for investors to verify
- Reconcile reported earnings to recurring cash generation, excluding bargain-purchase gains, impairment reversals, foreign-exchange effects, inflation accounting and other unusual items.
- Track CAMMESA arrears, collection timing, interest accruals and the recoverability of CAMMESA and CVO receivables.
- Assess the renewal, tendering or termination outcome for the Piedra del Águila concession after June 28, 2024.
- Review U.S.-dollar debt maturities, covenant compliance, refinancing needs and the impact of further peso devaluation or exchange-control restrictions.
- Evaluate Central Costanera integration, operating availability, requested deratings and proposed decommissioning of 470 MW of steam units.
- Verify the timing, budget and financing of the Brigadier López conversion and San Carlos solar project.
- Assess whether the acquired businesses’ internal controls are incorporated effectively during 2024.
- Review the sustainability of dividends given CAMMESA collection delays, debt service, capital expenditures and Argentine foreign-exchange restrictions.