Business Context and Reporting Period
Company: Companhia de Saneamento Básico do Estado de São Paulo - SABESP
Filing Type: Form 6-K (Report of Foreign Issuer)
Reporting Period: Three and six months ended June 30, 2026
Business Overview: SABESP provides basic sanitation services (water and sewage) in São Paulo State. Since January 2026, following the acquisition of Empresa Metropolitana de Águas e Energia (EMAE), the company has expanded into energy generation and commercialization. The company is currently executing a transformation agenda focused on universalization, customer satisfaction, and operational reliability.
Key Financial Metrics (Consolidated)
All figures in thousands of Reais (R$), unless otherwise noted.
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Operating Revenue | 10,208,902 | 8,964,530 | 20,173,744 | 17,390,730 |
| Profit for the Period | 1,464,433 | 2,135,962 | 3,213,464 | 3,618,053 |
| Adjusted Net Income | 1,150,000 | 1,956,000 | N/A | N/A |
| Adjusted EBITDA | 3,503,000 | 3,617,000 | N/A | N/A |
| Earnings Per Share (Basic/Diluted) | R$ 0.41 | R$ 0.62 | R$ 0.91 | R$ 1.06 |
| Adjusted EPS | R$ 0.33 | R$ 0.57 | N/A | N/A |
| Net Debt | 34,216,916 | 27,771,376 | 34,216,916 | 27,771,376 |
| Cash & Cash Equivalents | 4,243,477 | 4,561,016 | 4,243,477 | 4,561,016 |
| Capital Expenditures (Capex) | 3,731,000 | 3,601,000 | 7,458,000 | 6,452,000 |
Material Changes vs. Prior Period
- Revenue Growth: Net operating revenue increased 13.9% year-over-year in Q2 2026, driven by a 12.1% increase in net sanitation revenue and a 17.3% increase in construction revenues. Adjusted net sanitation revenue rose 6.7% due to an 8.7% net price increase (tariff phase-in) and a 1.1% volume increase.
- Profitability Decline: Reported net income decreased 31.4% in Q2 2026 compared to Q2 2025. Adjusted net income fell 41.2% year-over-year.
- Cost Pressures: Operating costs and expenses increased 24.5% year-over-year. Key drivers included:
- 39.0% increase in services related to customer experience investments (call centers, marketing).
- 97.2% increase in treatment supplies due to inflationary pressures.
- 977% increase in general expenses, largely due to favorable legal rulings in the prior year that did not recur.
- Financial Expenses: Net financial result deteriorated significantly, with expenses increasing 759.4% year-over-year, reflecting a higher net debt balance (R$ 34.2 billion vs. R$ 23 billion in Q2 2025) and higher funding costs.
- Acquisitions: The company acquired control of EMAE (energy) in January 2026 and Águas de Castilho (sanitation) in May 2026, impacting consolidated balances and segment reporting.
Guidance, Outlook, and Risks
- Management Outlook: Management expects to invest approximately R$ 20 billion in CapEx for the full year 2026 to support universalization and operational resilience. The company remains confident in delivering its Universalization Factor (U-Factor) targets for the year.
- Transformation Strategy: Continued focus on customer-centric initiatives, including digital platform upgrades and proactive engagement, which are incurring higher upfront costs but are expected to improve long-term efficiency.
- Key Risks:
- Financial Risk: Significant exposure to foreign currency (USD, Euro, Yen) and interest rate fluctuations. The company utilizes derivative instruments to hedge these risks.
- Regulatory & Legal: Exposure to lawsuits regarding tariffs, environmental claims, and labor disputes. Provisions for legal claims totaled R$ 2.15 billion as of June 30, 2026.
- Operational: Inflationary pressures on key inputs (chemicals, energy) and weather-dependent consumption patterns.
- Unusual Items: Q2 2026 results included non-recurring costs of R$ 68 million related to the Jaguari incident and adjustments related to the EMAE acquisition.
Investor Verification Checklist
- Debt Servicing Capacity: Verify the sustainability of the increased net debt (R$ 34.2 billion) and the impact of rising interest rates on future cash flows, given the 759% increase in net financial expenses.
- Cost Inflation Trajectory: Monitor the trend of treatment supply costs and service expenses to determine if the 24.5% cost increase is a one-time step-change or a structural shift.
- Acquisition Integration: Assess the financial performance and integration progress of the newly acquired EMAE (energy) and Águas de Castilho (sanitation) subsidiaries.
- Regulatory Compliance: Review the status of the Universalization Factor (U-Factor) targets and potential penalties or incentives tied to performance agreements.
- Liquidity Position: Confirm the adequacy of cash reserves (R$ 4.2 billion) and committed credit lines to meet the R$ 20 billion annual CapEx plan and debt maturities.