• Adjusted EBITDA (Q4 2024): BRL1.3 billion.
• Net Income (Q4 2024): Almost BRL600 million.
• Adjusted EBITDA (Full Year 2024): BRL5.1 billion.
• Net Income (Full Year 2024): BRL2.8 billion.
• Dividends Proposed (2024): Total BRL2.3 billion, with a payout of 86% and dividend yield of approximately 8.4%.
• Copel Distribuicao EBITDA (Q4 2024): BRL715 million, 23.6% higher than the same period last year.
• Copel GeT EBITDA (Q4 2024): BRL613 million.
• Personnel Cost Reduction (Q4 2024): 26.2% reduction due to voluntary severance program.
• Leverage (End of 2024): 2.6 times net debt over EBITDA.
• Operating Cash Generation (Q4 2024): Exceeded BRL1.2 billion.
• CapEx (2024): 88% of total investments focused on Copel Distribuicao.

• Warning! GuruFocus has detected 7 Warning Sign with ELP.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cia Paranaense De Energia Copel (NYSE:ELP) reported a robust adjusted EBITDA of BRL1.3 billion for the fourth quarter and BRL5.1 billion for the full year 2024.
• The company proposed a significant dividend payout of BRL2.3 billion for 2024, representing an 86% payout ratio and an 8.4% dividend yield.
• Copel successfully renewed its three main power generation plants for an additional 30 years, ensuring long-term operational stability.
• The company executed strategic asset swaps and sales, including a BRL450 million sale of small hydropower assets and a BRL570 million sale of its stake in Baixo Iguacu.
• Copel maintained a strong focus on operational excellence and cost efficiency, achieving a 46% EBITDA efficiency above the regulatory level for its distribution segment.

Negative Points

• The performance of Copel's wind parks was negatively impacted by curtailment and unavailability of some wind turbines, affecting financial results.
• The company faced a 12% decrease in adjusted EBITDA compared to the fourth quarter of 2023, primarily due to lower sales mix and wind asset performance.
• Curtailment issues and wind volume below certification continued to pose challenges, with a curtailment rate of 13.1% in Q4 2024 compared to 8.3% in Q4 2023.
• Copel's trading segment reported a negative adjusted EBITDA of BRL15 million, reflecting lower trading margins due to price variations in submarkets.
• The company's leverage increased to 2.6 times net debt over EBITDA due to the grant bonus payment for plant renewals, although still within comfortable covenant limits.

Q & A Highlights

Q: Can you discuss Copel's approach to capital allocation and the optimal capital structure for the company? A: Daniel Pimentel Slaviero, CEO, explained that Copel is studying its optimal capital structure, aiming to balance short-term optimization with future flexibility. The current covenant is 3.5, but as a corporation, they are considering a higher limit. Felipe Gutterres, CFO, added that the study's results will be presented with the first quarter results, alongside a simplified dividend policy. The focus remains on good capital allocation and maintaining a strong AAA rating.

Q: How is Copel navigating the current energy price environment, and what are the implications for future contracts? A: Daniel Pimentel Slaviero, CEO, noted that Copel is capitalizing on current high energy prices, with sales already made at favorable rates. The company is not facing significant liquidity issues and is strategically contracting energy for future periods, including 2026-2029, to maximize value.

Q: What is the timeline for concluding the study on optimal capital structure and the new dividend policy? A: Daniel Pimentel Slaviero, CEO, stated that the results of the capital structure study and the new dividend policy will be presented in May, alongside the first quarter earnings call. The current dividend policy is flexible, but they aim to simplify it to benefit the company.

Q: Can you provide insights into the regulatory discussions on curtailment and its impact on Copel? A: Daniel Pimentel Slaviero, CEO, acknowledged that curtailment is a significant issue, but Copel's diversified portfolio mitigates its impact. He mentioned ongoing regulatory discussions to address curtailment, with a focus on reclassifying availability to reduce its effects.

Q: What are Copel's plans regarding participation in future transmission and generation auctions? A: Daniel Pimentel Slaviero, CEO, indicated that Copel does not plan to participate in the upcoming transmission auction due to unattractive assets. However, the company is focused on the capacity auction, with plans to compete with two hydro plants. Copel is open to opportunities beyond its home state of Parana.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.