EDENOR 3Q21 Financial Summary
Business Context and Reporting Period
Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR), Argentina's largest electricity distributor, reported results for the third quarter ended September 30, 2021. The company serves approximately 3.2 million customers in the northwestern zone of Greater Buenos Aires. Financial figures are presented in Argentine Pesos (ARS) on a constant purchasing power basis in accordance with IFRS, except for the Income Statement which is also shown at historical values.
Key Financial Metrics
| Metric (3Q21) | Value (ARS Million) | YoY Change |
|---|---|---|
| Revenue from Sales | 29,236 | (16%) |
| EBITDA | 3,496 | +3% |
| Net Income | (618) | Loss increased 504% |
| Capital Expenditures | 3,599 | (15%) |
| Operating Cash Flow (9M) | 17,270 | (34%) |
| Financial Debt (USD) | 98.1 Million | N/A |
| Cash Position (Net of Debt) | (80) Million USD | N/A |
For the nine months ended September 30, 2021, Revenue was ARS 80,802 million (-19% YoY), EBITDA was ARS 6,129 million (-22% YoY), and Net Loss was ARS 13,341 million. Energy sales volume increased 6.6% to 5,795 GWh in 3Q21.
Material Changes vs. Prior Period
- Revenue Decline: Sales revenue dropped 16% in 3Q21 due to ongoing tariff renegotiations for Distribution Value Added (VAD) and seasonal price effects in an inflationary environment, partially offset by a recovery in commercial/industrial demand and a 9% average tariff adjustment effective May 1, 2021.
- EBITDA Improvement: Adjusted EBITDA rose 3% in 3Q21, driven by reduced operating costs, improved energy loss rates (down from 23% to 19%), and income recognized under the Framework Agreement for investments.
- Net Loss Expansion: Net losses widened significantly due to higher financial expenses (primarily interest on deferred payments to the Wholesale Electricity Market/CAMMESA) and a substantial income tax charge (ARS 1,405 million) resulting from deferred liability adjustments.
- Operating Expenses: Decreased 11% in 3Q21, largely due to a lower allowance for impairment of trade receivables compared to the pandemic-impacted 3Q20.
Outlook, Risks, and Contingencies
- Regulatory Framework: The company is awaiting a definition from the Secretariat of Energy regarding the "Special Liabilities Regularization Regime" for accumulated debt with CAMMESA (ARS 21,460 million principal as of Sept 30, 2021).
- Investment Funding: Under the Framework Agreement, the company received a disbursement of USD 1,500 million for network maintenance. As of the report date, USD 1,347.1 million had been drawn down. The regulator instructed the return of USD 76.4 million in excess funds, which the company paid under protest.
- Service Quality: SAIDI (outage duration) and SAIFI (outage frequency) improved by 14% and 16% respectively, exceeding regulatory targets for the end of 2021.
- Forward-Looking Risks: Results are subject to inflation, tariff adjustments, and the resolution of outstanding liabilities with the wholesale market. The company notes that forward-looking statements are based on current estimates and are subject to uncertainties.
Investor Verification Checklist
- Verify the status of the "Special Liabilities Regularization Regime" and the resolution of the ARS 21,460 million debt with CAMMESA.
- Monitor the outcome of the tariff renegotiation for Distribution Value Added (VAD) and its impact on future revenue recovery.
- Confirm the final determination of the USD 76.4 million excess fund payment dispute with the regulator (ENRE).
- Assess the sustainability of the 19% energy loss rate and the effectiveness of fraud detection initiatives (MIDE meters).
- Review the maturity profile of the USD 98.1 million Senior Notes due in 2022 against the current negative net cash position (USD -80 million).