Business Context and Reporting Period
Company: Energy Company of Minas Gerais (Cemig)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Second Quarter 2025 (April 1 – June 30, 2025)
Business Overview: Cemig is a Brazilian utility operating in electricity generation, transmission, distribution, and trading, as well as natural gas distribution. The company is majority-owned by the State of Minas Gerais.
Key Financial Metrics (2Q25 vs. 2Q24)
| Metric (R$ Million) | 2Q25 | 2Q24 | Change % |
|---|---|---|---|
| Net Revenue | 10,786 | 9,436 | +14.3% |
| Net Profit (IFRS) | 1,188 | 1,689 | -29.7% |
| Adjusted Net Profit | 1,322 | 1,134 | +16.6% |
| EBITDA (IFRS) | 2,009 | 2,371 | -15.3% |
| Adjusted EBITDA | 2,212 | 1,916 | +15.4% |
| Net Debt | 12,229 | 9,889 | +23.7% |
| Cash & Equivalents | 3,035 | 2,391 | +27.0% |
Material Changes and Segment Performance
- Revenue Growth: Net revenue increased 14.3% driven by a 7.78% average tariff adjustment effective May 2025 and higher transmission construction revenue.
- Profit Decline (IFRS): Net profit dropped 29.7% primarily due to a R$131.3 million reduction in contractual assets (RBSE remeasurement) and a R$46.0 million negative impact in the Trading segment from spot price differences between sub-markets.
- Adjusted Profit Growth: Excluding non-recurring items, Adjusted Net Profit rose 16.6%, supported by a R$374.9 million gain from tariff subsidies and a lower effective tax rate (13.8% vs. 21.5% in 2Q24).
- Segment Highlights:
- Distribution (Cemig D): Adjusted EBITDA increased 39.2% due to tariff adjustments and lower default provisions. Energy distributed fell 3.3% due to customer migration to the free market and distributed generation.
- Generation & Transmission (Cemig GT): Adjusted EBITDA decreased 5.8% due to RBSE remeasurement and trading exposure.
- Gas (Gasmig): EBITDA increased 2.5% driven by higher volume sales to the free market.
- Debt: Gross debt increased 24.3% to R$15.26 billion following the issuance of new debentures (12th and 13th issues by Cemig D, 10th by Cemig GT) to fund investments.
Guidance, Outlook, and Risks
- Investment Program: Capex for 1H25 totaled R$2.75 billion. The company plans to invest R$39.2 billion from 2025–2029, with R$6.35 billion allocated for 2025.
- Dividends: Interest on Equity (IoE) of R$604.7 million was declared, to be paid in two installments in 2026.
- Regulatory Risks:
- STF Ruling: The Federal Supreme Court ruled on the constitutionality of Law 14,385/2022 regarding tax refunds to consumers. The company is awaiting publication to assess financial impact.
- Sub-market Price Exposure: Continued volatility in spot prices between Northeast and Southeast/Central-West sub-markets negatively impacts trading results.
- Asset Optimization: Completed the sale of four small power plants for R$52.4 million to optimize the portfolio.
Key Facts for Investor Verification
- RBSE Remeasurement Impact: Verify the long-term implications of the R$198.9 million reduction in transmission contractual assets due to ANEEL Resolution 3,469/2025.
- Trading Segment Exposure: Monitor the company's hedging strategies regarding the price differential between energy purchased in the Northeast and sold in the Southeast/Central-West.
- Debt Servicing: Confirm compliance with financial covenants (Net Debt/EBITDA) given the 24% increase in gross debt.
- Tax Refund Liability: Assess the potential cash outflow from the STF ruling on tax credits to be refunded to consumers.
- Customer Migration: Track the rate of industrial and commercial customers migrating to the free market and distributed generation, which reduces distribution volume.