EDENOR current report, Q3 FY2013

Abrir documento

EDENOR Form 6-K Summary: Third Quarter 2013

Business Context and Reporting Period

This filing covers the third quarter ended September 30, 2013, for Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR), Argentina's largest electricity distributor. The company serves approximately 7 million people in the Buenos Aires metropolitan area. Financial figures are presented in Argentine Pesos (ARS) and translated to U.S. Dollars (USD) at a rate of Ps. 5.793 per USD as of September 30, 2013. The company operates under International Financial Reporting Standards (IFRS).

Key Financial Metrics

Revenue and Profitability (3Q 2013 vs. 3Q 2012):

  • Net Sales: Increased 24.5% to Ps. 911.7 million (from Ps. 732.4 million).
  • Net Operating Loss: Widened 62.8% to a loss of Ps. 413.5 million (from Ps. 254.0 million).
  • Net Loss: Increased 84.9% to Ps. 512.3 million (from Ps. 277.1 million).
  • Adjusted EBITDA: Deteriorated to a loss of Ps. 288.3 million (from a loss of Ps. 116.1 million).

Cash Flow and Liquidity (Nine Months Ended Sept 30, 2013):

  • Operating Cash Flow: Positive Ps. 997.8 million (USD 172.2 million).
  • Investing Cash Flow: Negative Ps. 683.5 million (USD 118.0 million), driven by capital expenditures.
  • Cash and Equivalents: Ended the period at Ps. 287.5 million (USD 49.6 million).

Debt and Capital Structure:

  • Outstanding USD Debt: USD 211.4 million (net of held notes), comprising USD 14.8 million in Senior Notes due 2017 and USD 196.6 million in Senior Notes due 2022.
  • Capital Expenditures (3Q 2013): Ps. 225.4 million, primarily for new connections and grid enhancements.

Material Changes vs. Prior Period

The significant increase in Net Sales was driven by Resolution No. 347/12 (approx. Ps. 142.2 million) and a 6.1% increase in energy volume sold (5,893 GWh). Residential sales volume rose 12.9%, while industrial sales declined 4.1%.

Despite higher revenue, profitability collapsed due to:

  • Cost Increases: Transmission and distribution expenses rose Ps. 170.2 million, and selling expenses increased Ps. 39.5 million. These were largely attributed to salary increases, higher ENRE penalties (Ps. 32.7 million increase), and service fees.
  • Financial Charges: Commercial interests accrued to CAMMESA increased by Ps. 188.6 million, and exchange differences added Ps. 80.7 million to the loss.
  • Operating Expenses: Total operating expenses for the nine-month period increased 43.8% year-over-year.

Guidance, Outlook, and Material Events

Asset Sales and Restructuring:

  • EMDERSA Sale: On October 30, 2013, EDENOR closed the sale of its indirect stake in EMDERSA (parent of EDELAR) and related credits to the Government of La Rioja for a total of Ps. 75.2 million. Payment is structured in 120 monthly installments with a 24-month grace period.
  • EGSSA Sale: On October 4, 2013, the company received the final payment for the EGSSA sale (Ps. 53.3 million), settled via Senior Notes due 2022 (USD 10.0 million nominal) and cash.
  • Merger: EDENOR initiated proceedings to absorb its subsidiary, Emdersa Holding, to simplify its corporate structure. This is expected to have no financial impact.

Government Agreements:

  • Railway Power Supply: An agreement was reached with the Federal Government to partially finance Ps. 114.3 million in electric works for the Mitre and Sarmiento railway lines. The government will contribute Ps. 60 million.

Risks and Contingencies:

  • The filing contains forward-looking statements subject to risks including general economic conditions, industry regulations, and operating factors.
  • Significant exposure to regulatory penalties (ENRE) and exchange rate fluctuations.

Investor Verification Checklist

  • Verify the sustainability of the Ps. 142.2 million revenue boost from Resolution No. 347/12 in future quarters.
  • Monitor the collection schedule of the Ps. 75.2 million receivable from the EMDERSA sale (120-month term).
  • Assess the impact of rising salary costs and ENRE penalties on future operating margins.
  • Review the company's ability to service USD 211.4 million in debt amidst local currency volatility.
  • Confirm the execution of the Ps. 60 million government contribution for railway infrastructure projects.