Central Puerto S.A. 1Q2021 Financial Summary
Business Context and Reporting Period
Central Puerto S.A. (NYSE: CEPU), a major private power generator in Argentina, reported consolidated results for the first quarter ended March 31, 2021. The filing was submitted on May 12, 2021. Financial statements are adjusted for inflation under IAS 29, expressed in the measuring unit current at the end of the period. Consequently, figures are not directly comparable to previously published statements without adjustment.
Key Financial Metrics
| Metric | 1Q2021 (Million Ps.) | 1Q2020 (Million Ps.) | Variance |
|---|---|---|---|
| Revenues | 10,164 | 11,419 | (11%) |
| Gross Profit | 4,973 | 6,686 | (26%) |
| Operating Income | 7,766 | 9,191 | (16%) |
| Adjusted EBITDA | 9,679 | 10,848 | (11%) |
| Net Income | 640 | 1,364 | (53%) |
| Net Debt (Consolidated) | (38,446) | N/A | N/A |
| Cash & Equivalents | 184 | N/A | N/A |
Operating Metrics: Energy generation decreased 11% to 3,479 GWh. Thermal unit availability was 89% (vs. 93% in 1Q2020). Steam production increased 3% to 262,000 tons.
Material Changes vs. Prior Period
- Revenue Decline: Driven by a 31% drop in Spot Sales/Energia Base revenues due to suspended monthly price adjustments under Res. 31/2020 and operational failures. This was partially offset by a 13% increase in contract sales from new wind farms.
- Cost Increases: Cost of sales rose 10%, primarily due to a 43% increase in material purchases and higher maintenance expenses.
- Profitability: Gross profit margin contracted from 59% to 49%. Net income fell 53% due to higher financial expenses (driven by FX differences on USD-denominated loans) and a loss from associates (Ecogas).
- Generation Mix: Hydro generation dropped 33% due to low water inflow. Wind generation rose 19% due to new capacity (Manque, Los Olivos, La Genoveva I). Thermal generation fell 7% due to equipment failures.
Outlook, Risks, and Contingencies
- Debt Refinancing: Installments on a syndicate loan for the Brigadier López Thermal Plant (maturing June, September, December 2021) are subject to Central Bank FX restrictions (Communication "A" 7230). The company is negotiating rescheduling with lenders (Citibank, JP Morgan, Morgan Stanley).
- Regulatory Risk: Prices for Energia Base units remain fixed in Argentine pesos since February 2020 due to suspended adjustment mechanisms. Management is in meetings with the Energy Secretariat regarding a 2021 tariff update scheme.
- Project Status: Terminal 6-San Lorenzo cogeneration plant is under construction, with full commissioning expected in Q3 2021. Partial commissioning of the gas turbine was achieved in November 2020.
- Cash Flow: Operating cash flow was positive at Ps. 4,021 million, but financing activities used Ps. 4,439 million, primarily for loan principal and interest payments.
Investor Verification Checklist
- Verify the status of negotiations regarding the rescheduling of syndicate loan installments under BCRA Communication "A" 7230.
- Monitor updates on the tariff adjustment scheme for Energia Base units with the Energy Secretariat.
- Review the impact of suspended price adjustments on future revenue recognition.
- Assess the timeline for the full commissioning of the Terminal 6-San Lorenzo plant and its transition to a 15-year PPA.
- Confirm the sustainability of thermal unit availability given recent equipment failures.