Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
November 9th 2006 BOVESPA NYSE SHARE TOTAL MARKET VALUE Teleconference in Portuguese Bilingual Q&A Friday November 10 th 2006 Portuguese: (11) 2101-4848 Password: CPFL or 7953166 |
CPFL ENERGIA ANNOUNCES EARNINGS São Paulo, November 9th 2006 CPFL Energia S.A. (Bovespa: CPFE3 e NYSE: CPL), announced its 3Q06 results. The following financial and operational information, unless otherwise stated, is presented in a consolidated basis and is in compliance with corporate legislation. Comparisons refer to the 3Q05, unless otherwise stated. 3Q06 HIGHLIGHTS
(1) EBITDA is the sum of income, taxes, financial result, depreciation / amortization and private pension fund, plus adjustments related to the extraordinary item and non-recurring transactions.
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1) SHAREHOLDING STRUCTURE1
CPFL Energia is a publicly-held holding company whose results depend directly upon the results of the controlled companies, the foremost of which are: CPFL Paulista (100%), CPFL Piratininga (100%), CPFL Geração (100%) and CPFL Brasil (100%)
Notes: (1) The stock acquisition of 99.99% of Companhia Luz e Força Santa Cruz and the additional stock acquisition of 11% in Consórcio Energético Foz do Chapecó are still awaiting approval from the pertinent regulatory authorities; (2) Market includes 0.01% of others; (3) Considering combined stakes in Foz do Chapecó Energia S.A (85%) and Consórcio Energético Foz do Chapecó (60%).
1.1) Changes in Stockholding Structure
Acquisition of Companhia Luz e Força Santa Cruz
On October 2nd 2006, CPFL Energia formalized the purchase contract, expediting the direct acquisition of 99.99% of the Companhia Luz e Força Santa Cruz.
Santa Cruz is an electric power distribution, public service concessionaire, active in 24 municipalities in São Paulo State and 3 in the State of Paraná, covering an area of 11,849.5 km2, and serving more than 161 thousand consumers. Its domestic market share is 0.3% . This transaction will boost CPFL Energias domestic market share to12.7% .
In 2005, Santa Cruz sold 746 GWh of power, which generated net revenue of R$ 154 million, EBITDA of R$ 30 million and net income of R$ 14 million. During the first half-year of 2006 net revenue reached R$ 91 million, EBITDA was R$ 18 million and net income were R$ 10 million.
2
This R$ 203 million business acquisition is in line with the CPFL Energia strategy which foresees successive consolidation activity in energy distribution, with a view to optimize returns from the current portfolio of the CPFL Group. The following are the financial indicators implicit in this acquisition: considering 2005 indicators for the 2 companies, we obtain an EV/EBITDA index and P/VPA of 7.1x and 2.4x for Santa Cruz, against 8.7x and 2.8x for CPFL Energia respectively.
The stock acquisition of 99,99% of Companhia Luz e Força Santa Cruz is still awaiting approval from the pertinent regulatory authorities.
Sale of Stockholding in Companhia de Gás de São Paulo
On September 4th 2006, CPFL Energia sold 369,121,217 ordinary nominal shares, corresponding to 3.08% of Companhia de Gás de São Paulo stock (Comgás). The net value of the sale was R$ 89.9 million.
The shares had a book value of R$ 27.2 million. The operation generated gross income of R$ 62.7 million (difference between net value of the sale and book value) and net income of R$ 41.4 million, as registered in the 3rd quarter 2006.
2) STOCK MARKET PERFORMANCE 3Q06
CPFL Energia, currently with 17.75% free float, trades shares in Brazil (Bovespa) and on the New York Stock Exchange (NYSE).
In the 3Q06, CPFL shares displayed variations of 10.0% on Bovespa and 10.1% on NYSE, closing the quarter quoted at R$ 27.80 and US$ 38.43 respectively. Since the IPO, share appreciation has been 84.7% on Bovespa and 144.3% on NYSE.
The average daily trading volume during the quarter was R$ 16.0 million, of which, R$ 8.1 million was on Bovespa and R$ 7.9 million was on the NYSE. This represents a 132.6% increase over the average daily trading volume over 2005.
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3) DIVIDENDS AND INTEREST ON OWN CAPITAL
On September 29th 2006, payments were made with reference to the first half-year 2006 in the amount of R$ 612 million, which corresponds to 100% of net income for the period, and an effective share value of R$ 1.275606865 per share.
The half-yearly dividend yield, related to the first half-year 2006, based on the average price of shares for the period (R$ 30.05) is of 4.3% . When considering the final price of the period (R$ 26.46), the half-yearly dividend yield is of 4.8% .
The dividend policy establishes that the distribution of income in the form of dividends and/or interest on own capital (JCP) must be at least 50% of net income based on half-yearly adjustments.
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4) ENERGY SALES
4.1) Energy Sales to End Consumers
Energy Sales - GWh | ||||||
2Q06 | 2Q05 | Var. | ||||
Captive Market | 8,166 | 7,692 | 6.2% | |||
Free Market | 2,322 | 1,713 | 35.6% | |||
Total | 10,488 | 9,405 | 11.5% |
During the 3Q06, CPFL Group energy sales to end consumers through the distribution and commercialization segments totaled 10,488 GWh, an increase of 11.5% in relation to the same period the previous year. This increase is mainly due to the acquisition of 32.7% of RGE. Deducting this effect, growth would have been 6.7% .
Sales to the captive market totaled 8,166 GWh, which represents an increase of 6.2%, compared to 3Q05. This increase is also due to the purchase of RGE. Without this effect there would have been a reduction of 0.9% .
In the free market, sales reached 2,322 GWh, increasing 35.6% in relation to the same period the previous year. This increase is owed to the success of the groups commercializing arm in winning captive clients which had migrated to the free market, and also to the increase in consumption from clients base of CPFL Brasil.
4.2) Captive Market
Captive Market - GWh | ||||||
2Q06 | 2Q05 | Var. | ||||
Residential | 2,430 | 2,172 | 11.9% | |||
Industrial | 2,817 | 2,977 | -5.4% | |||
Commercial | 1,386 | 1,243 | 11.5% | |||
Rural | 571 | 434 | 31.5% | |||
Others | 962 | 865 | 11.1% | |||
Total | 8,166 | 7,692 | 6.2% |
In the captive market we have commented the evolution of the following classes: industrial, residential, commercial and rural. It should be emphasized that these evolutions are also influenced by the acquisition of 32.7% of RGE:
5
Deducting the effect of the purchase of RGE, the industrial class would show a reduction of 12.5% and the residential, commercial and rural classes would show an increase of 6.2%, 6.1% and 15.7%, respectively.
4.3) Sales by Consumption Class
5) ECONOMIC AND FINANCIAL PERFORMANCE
CONSOLIDATED INCOME STATEMENT | ||||||
- CPFL ENERGIA (R$ Thousands) | 3Q06 | 3Q05 | Var. | |||
OPERATING REVENUES | 3,219,836 | 2,763,030 | 16.5% | |||
Net Operating Revenues | 2,343,809 | 1,956,423 | 19.8% | |||
Cost of Electric Energy | (1,105,653) | (995,771) | 11.0% | |||
Operating Cost/Expenses | (591,900) | (480,083) | 23.3% | |||
Income from Electric Energy Services | 646,256 | 480,569 | 34.5% | |||
EBITDA | 791,627 | 570,141 | 38.8% | |||
Financial Income (Expense) | 1,075 | (71,370) | -101.5% | |||
Operating Income | 647,331 | 409,199 | 58.2% | |||
Income Before Taxes | 708,041 | 409,663 | 72.8% | |||
NET INCOME | 446,761 | 239,964 | 86.2% |
5.1) Operating Revenue
Gross operating revenue in the 3Q06 reached R$ 3,220 million, representing growth of 16.5% in relation to the same period the previous year. Net operating revenue showed an increase of 19.8% (R$ 387 million), compared to 3Q05.
6
The main contributing factors for this evolution of net revenue were:
(i) Increase in energy sales to end consumers by 11.5%, coupled with distributors tariff adjustments (R$ 350 million)
(ii) Increase of 41.3% (R$ 53 million) in TUSD revenue.
(iii) Cessation of emergency charges levied by ANEEL (R$ 49 million)
The evolution of net revenue was partially offset by the increase of 15.8% (R$ 118 million) in ICMS and PIS/COFINS.
5.2) Electric Energy Costs
Electric energy costs, which consists of the cost of purchased energy and charges for the use of the system, totaled R$ 1,106 million in the 3Q06, representing an increase of 11.0% (R$ 110 million) in relation to the same period the previous year.
5.3) Operating Costs
Operating costs reached R$ 592 million in the 3Q06, registering an increase of 23.3% (R$ 112 million) in relation to the same period in 2005. The main contributing factors for this increase are:
(i) PMSO: the main variations on this item occurred due to the following factors:
7
Note: PMSO considers Personnel, Material, Outsourced Services and Others
(ii) Fuel Consumption Account (CCC) and Energy Development Account (CDE): spending on CCC and CDE increased 41.7% and 46.7% respectively (R$ 76 million). It should be noted that the company has no management control over these expenses, as they are defined by ANEEL
The increase of operating costs was partially offset by the Private Pension Fund item, which showed a reduction of 108.9% (R$ 24 million). This expense represented a cost of R$ 22 million in 3Q05 but in 3Q06 has turned into revenue of R$ 2 million. This variation is due mainly to the increase in expected rate of return on plan assets, as defined in the last Actuary Report.
5.4) EBITDA
Based on the factors described above, EBITDA of CPFL Energia during the 3Q06, was R$ 792 million, registering an increase of 38.8% (R$ 221 million) in relation to 3Q05.
The sale of stock in Comgas also contributed to this increase, with CPFL obtaining gross income of R$ 62.7 million (detailed in item 1.1, page 3). When taking into account this operation, the non-operating result was transformed from R$ 0.5 million in 3Q05 to R$ 61 million in 3Q06.
5.5) Financial Result
During 3Q06, the financial result showed an improvement of 101.5% (R$ 72 million). The result was negative by R$ 71 million in 3Q05 but turned positive by R$ 1 million in 3Q06, due basically to the increase of 76.3% in financial revenues (R$ 94 million), up from R$ 124 million in 3Q05 to R$ 218 million in 3Q06, due mainly to the favorable decision for the company regarding the legality of the broader base for the calculation of PIS/Cofins.
The financial result was partially offset by the increase of 11.3% in financial expenses (R$ 22 million), up from R$ 195 million in 3Q05 to R$ 217 million in 3Q06, which can be explained by the increase in the groups indebtedness, up from R$ 4.6 billion in 3Q05 to R$ 5.1 billion in 3Q06, and from the maintenance of the nominal cost of the debt.
5.6) Net Income
Net Income in the 3Q06, was R$ 447 million, gaining 86.2% (R$ 207 million) over the same period of 2005.
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6) INDEBTEDNESS
CPFL Energia indebtedness totaled R$ 5,098 million in 3Q06, an increase of 9.7%, compared to the same period the previous year. Although the debt has risen in nominal terms, its cost has remained practically unaltered.
The increase of indebtedness is mainly due to the net effect of incorporation of the portion of RGEs debt, after the acquisition of 32.7% of RGE. Also contributed to debt balance variation, the following factors:
(i) Liquidation of Floating Rate Notes; and of CPFL Paulista debentures
(ii) Emission of debentures by CPFL Piratininga; RGE debt contracts indexed to CDI; and BNDES funds for CPFL Paulista, CPFL Piratininga and generation projects
The cost of debt remained practically unaltered when compared to 3Q05, as the fall in the CDI and TJLP indexes during the period were compensated by the rise in the IGP-M/IGP-DI
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LOANS AND FINANCINGS - 3Q06 (R$ Thousands) | ||||||||
PRINCIPAL | ||||||||
CHARGES | SHORT TERM | LONG TERM | TOTAL | |||||
LOCAL CURRENCY | ||||||||
BNDES - Repowering | 122 | 3,806 | 17,770 | 21,698 | ||||
BNDES - Investment | 10,297 | 170,299 | 1,213,389 | 1,393,985 | ||||
BNDES - RTE, Parcel "A" and Free Energy | 1,273 | 327,124 | 194,758 | 523,155 | ||||
BNDES - CVA Portaria 116 | 60 | 9,535 | - | 9,595 | ||||
FIDC | 16,127 | 22,469 | - | 38,596 | ||||
Furnas Centrais Elétricas S.A. | - | - | 117,116 | 117,116 | ||||
Financial Institutions | 1,458 | 15,758 | 300,268 | 317,484 | ||||
Others | 542 | 35,086 | 15,881 | 51,509 | ||||
Subtotal | 29,879 | 584,077 | 1,859,182 | 2,473,138 | ||||
FOREIGN CURRENCY | ||||||||
Floating Rate Notes | - | - | - | - | ||||
IDB | 884 | 1,788 | 77,662 | 80,334 | ||||
Financial Institutions | 4,836 | 94,799 | 236,252 | 335,887 | ||||
Subtotal | 5,720 | 96,587 | 313,914 | 416,221 | ||||
DEBENTURES | ||||||||
CPFL Paulista | 35,633 | 372,453 | 634,097 | 1,042,183 | ||||
CPFL Piratininga | 14,392 | - | 400,000 | 414,392 | ||||
RGE | 17,125 | - | 230,000 | 247,125 | ||||
SEMESA | 13,969 | 129,645 | 299,479 | 443,093 | ||||
BAESA | - | 6,189 | 55,705 | 61,894 | ||||
Subtotal | 81,119 | 508,287 | 1,619,281 | 2,208,687 | ||||
TOTAL | 116,718 | 1,188,951 | 3,792,377 | 5,098,046 | ||||
It should be emphasized that R$ 3.8 billion of CPFL Energias financial debt, or 74.4% of the total, is considered long term.
A consequence of the increase in financial debt, was a marked increase in adjusted net debt, based on total debt (loans and financing and derivatives summed to private pension fund debt), excluding regulatory assets / CVA and cash availabilities, showing an increase of 15.0% in 3Q06 in relation to 3Q05, attaining a total of R$ 4,443 million. It should be emphasized that the Debt/EBITDA index of 1.7x remained unaltered.
R$ Thousand | 3Q06 | 3Q05 | Var. | |||
Total Debt (1) | (6,036,745) | (5,633,598) | 7.2% | |||
+ Regulatory Assets and Liabilities | 1,157,357 | 1,299,468 | -10.9% | |||
+ Available Funds | 436,076 | 471,247 | -7.5% | |||
= ADJUSTED NET DEBT | (4,443,312) | (3,862,883) | 15.0% | |||
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7) INVESTMENTS
During 3Q06, investments of R$ 194 million were made on maintenance and business expansion of which R$ 139 million was channeled to distribution, R$ 0.4 million to commercialization and R$ 55 million to generation. Altogether, CPFL Energia has invested R$ 557 million during the first nine months of 2006.
Among the main investments by CPFL Energia, the following should be highlighted:
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8) CASH FLOW
The table below demonstrates the evolution of cash flow in the 9M05 and 9M06, with the following comments referring to the evolution of cash flow during 9M06:
Consolidated | ||||
09/30/2006 | 09/30/2005 | |||
Initial Cash Balance | 678,780 | 499,838 | ||
Net Income | 1,058,742 | 640,561 | ||
Itens of Results not Affecting the Cash | ||||
Consumers, Concessionaries and Licensees | 192,081 | 93,023 | ||
Suppliers | (100,825) | (46,974) | ||
Cash Investments | 249,116 | 163,531 | ||
Others | 375,072 | 378,923 | ||
Cash Flow from Operating Activities | 715,444 | 588,503 | ||
Investment Activities | ||||
Acquisition of Stake | (415,048) | (1,866) | ||
Acquisition of Property, Plant and Equipment | (556,718) | (420,932) | ||
Others | 135,908 | (112,605) | ||
(835,858) | (535,403) | |||
Financing Activities | ||||
Loans, Financing and Debentures | 1,062,046 | 678,308 | ||
Principal Amortization of Loans, Financing and Debentures | (1,244,498) | (998,941) | ||
Dividend and Interest on Own Capital Paid | (1,099,949) | (555,974) | ||
Others | 24 | - | ||
(1,282,377) | (876,607) | |||
Generation of Cash Flow for the Period | (344,049) | (182,946) | ||
Final Cash Balance | 334,731 | 316,892 |
The final balance of 9M06 reached R$ 335 million, representing a reduction of 50.7% (R$ 344 million) compared to the cash flow starting balance.
Besides the cash generated from the companys operations, the following factors also contributed to the cash flow variation:
(i) Income payout relating to 2H05 and 1H06
(ii) Acquisition of 32.7% of RGE
The evolution of the cash flow was partially offset by sale of Comgás stock (comment in item 1.1, page 3).
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9) PERFORMANCE OF BUSINESS SEGMENTS
9.1) Distribution Segment
CONSOLIDATED INCOME STATEMENT | ||||||
- DISTRIBUTION (R$ Thousands) | 3Q06 | 3Q05 | Var. | |||
OPERATING REVENUES | 2,952,378 | 2,558,849 | 15.4% | |||
Net Operating Revenues | 2,119,017 | 1,788,693 | 18.5% | |||
Cost of Electric Energy | (1,058,453) | (981,086) | 7.9% | |||
Operating Cost/Expenses | (555,032) | (454,880) | 22.0% | |||
Income from Electric Energy Services | 505,532 | 352,727 | 43.3% | |||
EBITDA | 571,950 | 443,376 | 29.0% | |||
Financial Income (Expense) | 52,138 | (41,740) | -224.9% | |||
Operating Income | 557,670 | 310,987 | 79.3% | |||
Income Before Taxes | 558,539 | 311,472 | 79.3% | |||
NET INCOME | 346,140 | 190,245 | 81.9% |
Operating Revenue
During 3Q06, gross revenue was R$ 2,952 million, an increase of 15.4% (R$ 394 million) compared to the same quarter of 2005. Net operational revenue showed growth of 18.5% (R$ 330 million) compared to 3Q05.
The main contributing factors for this evolution of net revenue were:
(i) Increase in energy sales to end consumers by 6.2%, coupled with distributors tariff adjustments (R$ 318 million)
(ii) Increase of 41.8% (R$ 53 million) in TUSD revenue
(iii) Cessation of emergency charges levied by ANEEL (R$ 49 million)
The evolution of net revenue was partially offset by the increase of 8.2% (R$ 112 million) in ICMS and PIS/COFINS.
Electric Energy Costs
Electric energy total costs, which consists of the cost of purchased energy and charges for the use of the system, during the 3Q06 were R$ 1,058 million, representing an increase of 7.9% compared to the same period the previous year:
|
The cost of purchased energy in 3Q06 was R$ 857 million, which represents an increase of 6.4% (R$ 51 million) compared to 3Q05. The main explanatory factors for this increase are: |
|
(i) | Increase of 11.5% (R$ 98 million) in the cost of purchased energy, mainly due to the volume sold | |
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(ii) | Reduction of 107.5% (R$ 38 million) in the value referring to the net effect of the amortization and deferral of CVA | |
(iii) | Reduction of R$ 15 million in the transfer of Pis/Cofins to the generators | |
|
Charges for the use of the transmission and distribution system reached R$ 201 million during 3Q06, an increase of 14.9% (R$ 26 million) compared to the same period the previous year. |
|
Operating Costs
Operating costs in 3Q06 reached R$ 555 million, representing an increase of 22.0% (R$ 100 million) in relation to 3Q05. The main causes for this increase were:
(i) | PMSO: The main variations in this item were caused owing to the following factors: | |
|
Personnel expenses registered an increase of 14.1% (R$ 11 million) in 3Q06, due, among other factors, to an increase in payroll, as a result of salary readjustment occurred in June 2006, and from the advance payment made by the company in lieu
of the profit sharing scheme (PLR) of 2006 |
|
|
Expenses stemming from other operating costs increased 44.5% (R$ 19 million) during the period due to the change in bookkeeping criteria on research and development and energy efficiency, decreed by ANEEL through Resolution number 176 in
December 2005 |
|
(ii) |
Fuel Consumption Account (CCC) and Energy Development Account (CDE): expenses incurred with CCC and CDE increased 41.7% and 46.7% respectively (R$ 76 million). It is worth mentioning that the company has no management control over these
expenses, as they are defined by ANEEL |
|
The increase of operating costs was partially offset by the Private Pension Fund item, which showed a reduction of 108.8% (R$ 24 million). This variation is due mainly to the increase in expected rate of return on plan assets, as defined in the last Actuary Report.
EBITDA
Based on the factors described above, EBITDA, during 3Q06, was R$ 572 million, registering an increase of 29.0% (R$ 129 million) compared to 3Q05.
Financial Result
During 3Q06, the financial result showed an improvement of 224.9% (R$ 94 million). In 3Q05 this result was R$ 42 million negative which in 3Q06 rose to R$ 52 million positive, due basically to the increase of 100.2% in financial revenues (R$ 100 million), up from R$ 100 million in 3Q05 to R$ 200 million in 3Q06, mostly due to the favorable decision regarding the legality of the broader base for the calculation of PIS/Cofins.
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The financial result was partially offset by the increase of 4.5% in financial expenses (R$ 6 million), up from R$ 142 million in 3Q05 to R$ 148 million in 3Q06, explained mainly by the variation of the IGP-M during the period.
Net Income
Net Income in the 3Q06, was R$ 346 million, representing an increase of 81.9% (R$ 156 million) compared to same period in 2005.
IRT of CPFL Piratininga
CPFL Piratininga electricity tariffs were readjusted by an average of 10.79% on October 23rd 2006. This price adjustment to energy supply was differentiated according to the category of consumption. For residential and small scale commercial customers, connected to low voltage (less than 2.3 kV), the average index was 6.96% . For high voltage consumers, which include mid-sized and large industries, the average readjustment was 14.08% . The readjustment was ratified throughout the CPFL Piratininga market area, of 1.3 million customers.
9.2) Commercialization Segment
CONSOLIDATED INCOME STATEMENT - CPFL BRASIL (R$ Thousands) |
3Q06 | 3Q05 | Var. | |||
OPERATING REVENUES | 463,516 | 372,529 | 24.4% | |||
Net Operating Revenues | 398,865 | 321,145 | 24.2% | |||
EBITDA | 53,080 | 49,203 | 7.9% | |||
NET INCOME | 37,176 | 34,200 | 8.7% | |||
Operating Revenue
During the 3Q06, gross revenue was R$ 464 million, an increase 24.4% (R$ 91 million) compared to the same quarter of 2005. This increase is mainly due to the growth of 35.6% in volume sold.
EBITDA
During 3Q06, EBITDA was R$ 53 million, an increase of 7.9% (R$ 4 million) compared to the same period of 2005.
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Net Income
Net Income from 3Q06 was R$ 37 million, an increase of 8.7% (R$ 3 million) in relation to 3Q05.
9.3) Generating Segment
CONSOLIDATED INCOME STATEMENT - GENERATION (R$ Thousands) |
3Q06 | 3Q05 | Var. | |||
OPERATING REVENUES | 123,872 |
110,280 |
12.3% |
|||
Net Operating Revenues | 116,873 |
99,440 |
17.5% |
|||
Cost of Electric Energy | (2,691) |
(2,261) |
19.0% |
|||
Operating Cost/Expenses | (23,755) |
(16,725) |
42.0% |
|||
Income from Electric Energy Services | 90,427 |
80,454 |
12.4% |
|||
EBITDA | 99,935 |
88,944 |
12.4% |
|||
Financial Income (Expense) | (35,575) |
(29,074) |
22.4% |
|||
Operating Income | 54,852 |
51,380 |
6.8% |
|||
Income Before Taxes | 54,100 |
51,380 |
5.3% |
|||
NET INCOME | 34,129 |
31,821 |
7.3% |
|||
Operating Revenue
During 3Q06, gross revenue was R$ 124 million, an increase of 12.3% (R$ 14 million) compared to the same quarter of 2005. This increase is primarily due to the operational start-up of the Barra Grande Hydroelectric Facility, in November 2005, which contributed with R$ 19 million and 261 GWh.
Cost of Electric Energy Service
The cost of energy service in 3Q06 was R$ 3 million, up 19.0% (R$ 430 thousand) in comparison to the same period the previous year. This increase is mainly due to the operational start-up of the Barra Grande Hydroelectric Facility, in November 2005, which contributed with R$ 743 thousand.
Operating Costs
Operating costs during 3Q06 reached R$ 24 million, which represents an increase of 42.0% (R$ 7 million) in comparison to 3Q05. This increase is mainly due to the following PMSO variations: the increase of 58.0% (R$ 2 million) from additional personnel costs of Baesa (Barra Grande Hydroelectric Facility), resulting from their operational start-up and from the 72.4% (R$ 2 million) increase on outsourced spending.
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EBITDA
As a result of the factors described above, EBITDA, during 3Q06, reached R$ 100 million, an increase of 12.4% (R$ 11 million) in relation to 3Q05.
Financial Result
During the 3Q06, the financial result was negative by R$ 36 million, representing an increase on the 3Q05 of 22.4% (R$ 7 million), due mainly to the increase of 20.1% (R$ 7 million) on financial expenses, due mainly to the start of payments of financial expenses from the operational start-up, in November 2005, of Barra Grande Hydroelectric Facility.
Net Income
Net Income from 3Q06 was R$ 34 million, up 7.3% (R$ 2 million) in relation to the same period in 2005.
Status of Generation Projects
Campos Novos
Following up on the Explanatory Note on Campos Novos Hydroelectric Plant, released on June 20th 2006, CPFL Energia informs that repairs on the re-routing tunnels are in process of conclusion. The finalization of the works and the resumption of reservoir filling are forecast for beginning of December. The start-up of commercial operation of the undertaking is estimated to take place in the first quarter of 2007.
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Investor Relations
Tel.: (55) (19) 3756-6083
Fax: (55) (19) 3756-6089
E-mail: ri@cpfl.com.br
Site: http://ri.cpfl.com.br
CPFL Energia is the largest private group in the Brazilian electricity sector operating in the distribution commercialization and generation segments. CPFL is the only publicly-held company in the Brazilian electric sector whose shares are simultaneously traded on the Novo Mercado Bovespa and the New York Stock Exchange as level III ADRs. The company strategy is focused on operational efficiency and synergy-driven business growth, grounded on financial discipline, sustainability, social responsibility and differentiated corporate governance practices.
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Statement of Assets
(R$ Thousands)
Consolidated | ||||
ASSETS | 09/30/06 | 06/30/06 | ||
CURRENT ASSETS | ||||
Cash and Banks | 436,076 | 478,211 | ||
Consumers, Concessionaries and Licensees | 1,995,924 | 1,900,445 | ||
Other Receivables | 40,579 | 48,938 | ||
Financial Investments | 27,401 | 40,168 | ||
Recoverable Taxes | 166,798 | 219,729 | ||
Allowance for Doubtful Accounts | (82,363) |
(69,350) |
||
Materials and Supplies | 14,016 | 12,050 | ||
Deferred Tariff Cost Variations | 343,149 | 320,265 | ||
Prepaid Expenses | 207,985 | 185,987 | ||
Derivative Contracts | 1,921 | 1,700 | ||
Other Credits | 112,820 | 103,152 | ||
3,264,306 | 3,241,295 | |||
NONCURRENT ASSETS | ||||
Consumers, Concessionaries and Licensees | 243,927 | 301,849 | ||
Other Reciavables | 56,800 | 56,516 | ||
Depósitos Judiciais | 207,215 | 197,981 | ||
Financial Investments | 105,311 | 106,646 | ||
Recoverable Taxes | 97,745 | 95,299 | ||
Deferred Taxes | 1,031,495 | 1,088,561 | ||
Deferred Tariff Cost Variations | 516,274 | 632,950 | ||
Prepaid Expenses | 25,286 | 29,836 | ||
Other Credits | 180,858 | 177,170 | ||
2,464,911 | 2,686,808 | |||
PERMANENT ASSETS | ||||
Investments | 3,054,577 | 3,121,529 | ||
Property, Plant and Equipment | 5,665,104 | 5,520,542 | ||
Special Obbligation Linked to Concession | (714,005) |
(703,244) | ||
Deferred Charges | 42,469 | 49,659 | ||
8,048,145 | 7,988,486 | |||
TOTAL ASSETS | 13,777,362 | 13,916,589 | ||
19
Statement of Liabilities
(R$ Thousands)
Consolidated | ||||
LIABILITIES | 09/30/06 |
06/30/06 | ||
CURRENT LIABILITIES | ||||
Suppliers | 820,785 | 775,216 | ||
Payroll | 4,507 | 3,937 | ||
Accrued Interest on Debts | 35,599 | 41,274 | ||
Accrued Interest on Debentures | 81,119 | 73,998 | ||
Loans and Financing | 680,664 | 774,154 | ||
Debentures | 508,287 | 500,793 | ||
Employee Pension Plans | 103,350 | 93,621 | ||
Regulatory Charges | 72,083 | 66,469 | ||
Taxes and Social Contribution Payable | 524,727 | 483,038 | ||
Employee Profit Sharing | 5,234 | 7,920 | ||
Dividends and Interest on Equity | 12,490 | 621,755 | ||
Due to Related Parties | - | 16,218 | ||
Accrued Liabilities | 45,692 | 37,683 | ||
Deferred Tariff Gains Variations | 129,914 | 120,027 | ||
Derivative Contracts | 52,002 | 55,448 | ||
Other Accounts Payable | 292,823 | 274,461 | ||
3,369,276 | 3,946,012 | |||
LONG-TERM LIABILITIES | ||||
Suppliers | 132,116 | 141,604 | ||
Loans and Financing | 2,173,096 | 2,016,992 | ||
Debentures | 1,619,281 | 1,615,644 | ||
Employee Pension Plans | 782,728 | 799,248 | ||
Taxes and Social Contribution Payable | 41,423 | 40,014 | ||
Reserve for Contingencies | 226,547 | 327,601 | ||
Deferred Tariff Gains Variations | 59,925 | 102,676 | ||
Derivative Contracts | 619 | 1,298 | ||
Other Accounts Payable | 127,335 | 127,311 | ||
5,163,070 | 5,172,388 | |||
NON-CONTROLLING SHAREHOLDERS' INTEREST | 2,183 | 2,117 | ||
SHAREHOLDERS EQUITY | ||||
Capital | 4,734,790 | 4,734,790 | ||
Capital Reserves | 16 | 16 | ||
Profit Reserves | 61,266 | 61,266 | ||
Retained Earnings | 446,761 | - | ||
5,242,833 | 4,796,072 | |||
TOTAL LIABILITIES | 13,777,362 | 13,916,589 | ||
20
Annual Income Statement
(R$ Thousands)
Consolidated | Variation | |||||||
3Q06 | 3Q05 | |||||||
OPERATING REVENUES | ||||||||
Eletricity Sales to Final Consumers | 2,864,350 | 2,492,844 | 371,506 | 14.90% | ||||
Eletricity Sales to Distributors | 138,888 | 109,906 | 28,982 | 26.37% | ||||
Other Operating Revenues | 216,598 | 160,280 | 56,318 | 35.14% | ||||
3,219,836 | 2,763,030 | 456,806 | 16.53% | |||||
DEDUCTIONS FROM OPERATING REVENUES | (876,027) | (806,607) | (69,420) | 8.61% | ||||
NET OPERATING REVENUES | 2,343,809 | 1,956,423 | 387,386 | 19.80% | ||||
COST OF ELETRIC ENERGY SERVICES | ||||||||
Eletricity Purchased for Resale | (902,661) | (820,256) | (82,405) | 10.05% | ||||
Eletricity Network Usage Charges | ||||||||
(202,992) | (175,515) | (27,477) | 15.66% | |||||
(1,105,653) | (995,771) | (109,882) | 11.03% | |||||
Operating Costs/Expenses | ||||||||
Personnel | (94,870) | (81,321) | (13,549) | 16.66% | ||||
Material | (18,282) | (14,087) | (4,195) | 29.78% | ||||
Outsourced Services | (77,034) | (64,130) | (12,904) | 20.12% | ||||
Other Operating Costs | (67,075) | (46,687) | (20,388) | 43.67% | ||||
Fuel Consumption Account - CCC | (148,938) | (105,104) | (43,834) | 41.71% | ||||
Energy Development Account - CDE | (100,976) | (68,849) | (32,127) | 46.66% | ||||
Employee Pension Plans | 1,991 | (22,409) | 24,400 | -108.88% | ||||
Depreciation and Amortization | (82,960) | (75,460) | (7,500) | 9.94% | ||||
Merged Goodwill Amortization | (3,756) | (2,036) | (1,720) | 84.48% | ||||
(591,900) | (480,083) | (111,817) | 23.29% | |||||
EBITDA | 791,627 | 570,141 | 221,486 | 38.85% | ||||
INCOME FROM ELETRIC ENERGY SERVICE | 646,256 | 480,569 | 165,687 | 34.48% | ||||
FINANCIAL INCOME (EXPENSE) | ||||||||
Financial Income | 218,489 | 123,905 | 94,584 | 76.34% | ||||
Financial Expenses | (217,414) | (195,275) | (22,139) | 11.34% | ||||
Interest on Equity | - | - | - | |||||
1,075 | (71,370) | 72,445 | -101.51% | |||||
OPERATING INCOME | 647,331 | 409,199 | 238,132 | 58.19% | ||||
NONOPERATING INCOME (EXPENSE) | ||||||||
Nonoperating Income | 69,663 | 4,406 | 65,257 | 1481.09% | ||||
Nonoperating Expenses | (8,953) | (3,942) | (5,011) | 127.12% | ||||
60,710 | 464 | 60,246 | 12984.05% | |||||
INCOME BEFORE TAXES ON INCOME | 708,041 | 409,663 | 298,378 | 72.84% | ||||
Social Contribution | (66,190) | (39,468) | (26,722) | 67.71% | ||||
Income Tax | (186,885) | (111,334) | (75,551) | 67.86% | ||||
INCOME BEFORE EXTRAORDINARY ITEM AND NON- | ||||||||
CONTROLLING SHAREHOLDERS' INTEREST | 454,966 | 258,861 | 196,105 | 75.76% | ||||
Non-Controlling Shareholders' Interest | (64) | (10,797) | 10,733 | -99.41% | ||||
Extraordinary Item net of Tax Effects | (8,141) | (8,100) | (41) | 0.51% | ||||
Reversal of Interest on Equity | - | - | - | |||||
NET INCOME (EXPENSE) | 446,761 | 239,964 | 206,797 | 86.18% | ||||
21
Income Statement Consolidated Distribution (Pro-forma)
(R$ Thousands)
Consolidated |
Variation |
|||||||
3Q06 |
3Q05 |
|||||||
OPERATING REVENUES | ||||||||
Eletricity Sales to Final Consumers | 2,726,403 |
2,396,322 |
330,081 |
13.77% | ||||
Eletricity Sales to Distributors | 17,104 |
8,863 |
8,241 |
92.98% | ||||
Other Operating Revenues | 208,871 |
153,664 |
55,207 |
35.93% | ||||
2,952,378 |
2,558,849 |
393,529 |
15.38% | |||||
DEDUCTIONS FROM OPERATING REVENUES | (833,361) |
(770,156) |
(63,205) |
8.21% | ||||
NET OPERATING REVENUES | 2,119,017 |
1,788,693 |
330,324 |
18.47% | ||||
COST OF ELETRIC ENERGY SERVICES | ||||||||
Eletricity Purchased for Resale | (857,420) |
(806,071) |
(51,349) |
6.37% | ||||
Eletricity Network Usage Charges | ||||||||
(201,033) |
(175,015) |
(26,018) |
14.87% | |||||
(1,058,453) |
(981,086) |
(77,367) |
7.89% | |||||
Operating Costs/Expenses | ||||||||
Personnel | (87,090) |
(76,314) |
(10,776) |
14.12% | ||||
Material | (16,180) |
(13,129) |
(3,051) |
23.24% | ||||
Outsourced Services | (64,428) |
(56,483) |
(7,945) |
14.07% | ||||
Other Operating Costs | (63,009) |
(43,610) |
(19,399) |
44.48% | ||||
Fuel Consumption Account - CCC | (148,938) |
(105,104) |
(43,834) |
41.71% | ||||
Energy Development Account - CDE | (100,976) |
(68,849) |
(32,127) |
46.66% | ||||
Employee Pension Plans | 1,944 |
(22,116) |
24,060 |
-108.79% | ||||
Depreciation and Amortization | (72,599) |
(67,239) |
(5,360) |
7.97% | ||||
Merged Goodwill Amortization | (3,756) |
(2,036) |
(1,720) |
84.48% | ||||
(555,032) |
(454,880) |
(100,152) |
22.02% | |||||
EBITDA | 571,950 |
443,376 |
128,574 |
29.00% | ||||
INCOME FROM ELETRIC ENERGY SERVICE | 505,532 |
352,727 |
152,805 |
43.32% | ||||
FINANCIAL INCOME (EXPENSE) | ||||||||
Financial Income | 200,291 |
100,049 |
100,242 |
100.19% | ||||
Financial Expenses | (148,153) |
(141,789) |
(6,364) |
4.49% | ||||
Interest on Equity | - |
- |
- |
|||||
52,138 |
(41,740) |
93,878 |
-224.91% | |||||
OPERATING INCOME | 557,670 |
310,987 |
246,683 |
79.32% | ||||
NONOPERATING INCOME (EXPENSE) | ||||||||
Nonoperating Income | 6,904 |
4,427 |
2,477 |
55.95% | ||||
Nonoperating Expenses | (6,035) |
(3,942) |
(2,093) |
53.09% | ||||
869 |
485 |
384 |
79.18% | |||||
INCOME BEFORE TAXES ON INCOME | 558,539 |
311,472 |
247,067 |
79.32% | ||||
Social Contribution | (51,650) |
(29,176) |
(22,474) |
77.03% | ||||
Income Tax | (143,808) |
(82,745) |
(61,063) |
73.80% | ||||
INCOME BEFORE EXTRAORDINARY ITEM AND NON- | ||||||||
CONTROLLING SHAREHOLDERS' INTEREST | 363,081 |
199,551 |
163,530 |
81.95% | ||||
Non-Controlling Shareholders' Interest | (8,862) |
(1,227) |
(7,635) |
622.25% | ||||
Extraordinary Item net of Tax Effects | (8,079) |
(8,079) |
- |
100.00% | ||||
Reversal of Interest on Equity | - |
- |
- |
|||||
NET INCOME (EXPENSE) | 346,140 |
190,245 |
155,895 |
81.94% | ||||
22
Income Statement
(R$ Thousands)
Consolidated |
Variation |
|||||||
3Q06 |
3Q05 |
|||||||
OPERATING REVENUES | ||||||||
Eletricity Sales to Final Consumers | 785 | - | 785 | 100.00% | ||||
Eletricity Sales to Distributors | 121,746 | 109,126 | 12,620 | 11.56% | ||||
Other Operating Revenues | 1,341 | 1,154 | 187 | 16.20% | ||||
123,872 | 110,280 | 13,592 | 12.32% | |||||
DEDUCTIONS FROM OPERATING REVENUES | (6,999) | (10,840) | 3,841 | -35.43% | ||||
NET OPERATING REVENUES | 116,873 | 99,440 | 17,433 | 17.53% | ||||
COST OF ELETRIC ENERGY SERVICES | ||||||||
Eletricity Purchased for Resale | (8) | (1,761) | 1,753 | -99.55% | ||||
Eletricity Network Usage Charges | ||||||||
(2,683) | (500) | (2,183) | 436.49% | |||||
(2,691) | (2,261) | (430) | 19.00% | |||||
Operating Costs/Expenses | ||||||||
Personnel | (4,915) | (3,110) | (1,805) | 58.04% | ||||
Material | (389) | (150) | (239) | 159.33% | ||||
Outsourced Services | (5,683) | (3,297) | (2,386) | 72.37% | ||||
Other Operating Costs | (2,508) | (1,678) | (830) | 49.46% | ||||
Fuel Consumption Account - CCC | - | - | - | |||||
Energy Development Account - CDE | - | - | - | |||||
Employee Pension Plans | 47 | (293) | 340 | -116.04% | ||||
Depreciation and Amortization | (10,307) | (8,197) | (2,110) | 25.74% | ||||
Merged Goodwill Amortization | - | - | - | |||||
(23,755) | (16,725) | (7,030) | 42.03% | |||||
EBITDA | 99,935 | 88,944 | 10,991 | 12.36% | ||||
INCOME FROM ELETRIC ENERGY SERVICE | 90,427 | 80,454 | 9,973 | 12.40% | ||||
FINANCIAL INCOME (EXPENSE) | ||||||||
Financial Income | 4,934 | 4,653 | 281 | 6.04% | ||||
Financial Expenses | (40,509) | (33,727) | (6,782) | 20.11% | ||||
Interest on Equity | - | - | - | |||||
(35,575) | (29,074) | (6,501) | 22.36% | |||||
OPERATING INCOME | 54,852 | 51,380 | 3,472 | 6.76% | ||||
NONOPERATING INCOME (EXPENSE) | ||||||||
Nonoperating Income | 12 | - | 12 | 100.00% | ||||
Nonoperating Expenses | (764) | - | (764) | 100.00% | ||||
(752) | - | (752) | 100.00% | |||||
INCOME BEFORE TAXES ON INCOME | 54,100 | 51,380 | 2,720 | 5.29% | ||||
Social Contribution | (4,961) | (5,180) | 219 | -4.23% | ||||
Income Tax | (14,948) | (14,358) | (590) | 4.11% | ||||
INCOME BEFORE EXTRAORDINARY ITEM AND NON- | ||||||||
CONTROLLING SHAREHOLDERS' INTEREST | 34,191 | 31,842 | 2,349 | 7.38% | ||||
Non-Controlling Shareholders' Interest | - | - | - | |||||
Extraordinary Item net of Tax Effects | (62) | (21) | (41) | 195.24% | ||||
Reversal of Interest on Equity | - | - | - | |||||
NET INCOME (EXPENSE) | 34,129 | 31,821 | 2,308 | 7.25% | ||||
23
CPFL ENERGIA S.A. |
||
By: |
/S/ JOSÉ ANTONIO DE ALMEIDA FILIPPO
|
|
Name: José Antonio de Almeida Filippo
Title: Chief Financial Officer and Head of Investor Relations |
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.