SAO PAULO--Brazilian utility Companhia Energetica de Minas
Gerais (CMIG4.BR, CIG) reported Thursday a 37% jump in
first-quarter profit as higher spot-market electric prices offset a
cut in revenue coming from contractual customers.
Cemig, as the company is known, reported first-quarter profit of
865 million Brazilian reais ($427 million), up from net income of
BRL631 million in the year earlier quarter. Revenue climbed 15% to
BRL3.68 billion, from BRL3.19 billion a year earlier.
Brazil last year pushed through cuts in electricity prices in
exchange for a government renewal of expiring generation and
transmission licenses. Cemig agreed to renew part of its licenses,
and cut prices by about 18% to customers it has supply contracts
with, the company said in a regulatory filing. Overall volume sold
to customers fell 1.8%, in part the result of slowing demand from
industrial customers as Brazil's manufacturers struggle to compete
in global markets.
That drop in revenue was offset by a jump in prices at which the
company sells energy on the spot market. Unusually dry weather at
the end of last year led to a drop in reservoir levels at the
country's hydroelectric dams. Because Brazil is overwhelmingly
dependent on hydroelectric power, the government was forced to turn
on more costly thermoelectric plants--fired by natural gas and
other fossil fuels--to make up for the drop in hydroelectric
generation. The resulting rise in spot market prices boosted
Cemig's revenue from spot market sales by 21%, to BRL467.7 million,
the company said.
Thanks to the better spot prices, earnings before interest,
taxes, depreciation and amortization, or Ebitda, rose 28% to
BRL1.59 billion.
Write to Paulo Winterstein at paulo.winterstein@dowjones.com