ENGIE Brasil Energia reported a net operating revenue of R$ 3.208 billion in the third quarter 2020, a growth of 28.7% (R$ 714.7 million) compared with the amount recorded in the same period for 2019. In the energy generation and sales segment, the increase in revenue reflected a 3.8% higher sales price, an improved result for short-term operations conducted across the CCEE (Electric Energy Trade Board) and thirdly energy exports. These factors were partially attenuated by reduced sales volume, mainly, due to lower consumption by clients. In the transmission segment, revenue recorded a significant increase due to the application of the specific accounting rule involving the construction of transmission assets in the light of progress of work on the Gralha Azul and Novo Estado transmission systems

“In the third quarter of 2020, ENGIE Brasil Energia continued apace with its operations, reaping the rewards of business diverisifcation, without however losing sight of concern for the impacts of the Covid-19 pandemic which is still having having repercussions on the world economy” Eduardo Sattamini, the Company’s Chief Executive and Investor Relations Officer points out.

Ebitda reported R$ 1.432 billion in 3Q20, a reduction of 9.4% (R$ 148.6 million) compared with 3Q19, driven in large part by a non-recurring gain of R$ 321 million booked to the accounts in the third quarter of 2019. Excluding this gain, EBITDA would have increased by R$ 172 million, that is a 13.7% rise. Net income reached R$ 490 million in the third quarter of 2020 (R$ 0.6002/share), 34% (R$ 252.7 million) down on the same quarter in 2019, again in part an effect of the non-recurring item mentioned above of R$ 211.8 million. Excluding this effect, net income would have been R$ 41 million lower. This decline was due to the variation in monetary restatement on concessions payable, in turn a reflection of the variation in the IGPM of 9.3% in 3Q20.

The average contract selling price, net of tax on revenue and from the trading operations, was R$ 196.5/MWh in the period, 3.8% higher than reported for 3Q19. Price increases were largely driven by the updating of monetary restatement on existing  agreements and the effect of favorable energy export prices in 3Q20.

“Energy volumes sold in 3Q20 posted a reduction of 4.3% compared with the same period in 2019, the consequence of the reduction in energy consumption in the light of the Covid-19 outbreak. When comparing 2Q20, energy sales rose by 6.9%, underscoring the tendency towards a market recovery from the impacts of the pandemic ”, says Sattamini.

Electric enregy output from the plants operated by ENGIE Brasil Energia was 12,274 GWh (5,559 average MW) from July to September 2020, a 6.7% increase in relation to the same time interval  in 2019. The increase in total generation from the hydroelectric plants is due partially to more favorable meteorological conditions in the hydrographic basins where the Company’s plants are sited with a greater impact coming from the southern subsystem in addition to the full resumption of total load in the National Interconnected System (SIN) following the peak of the Covid-19 sanitary crisis.

Investments

ENGIE Brasil Energia’s investments amounted to R$ 1.147 billion from July to September 2020, of which R$ 327.2 million relates to the acquisition of a corporate stake in Transportadora Associada de Gás S.A. (TAG), and R$ 797.7 million allocated to the construction of the new projects: R$ 343.3 million to the Novo Estado Transmissora de Energia transmission line, R$ 299.6 million to the Gralha Azul Transmission Line with a further R$ 136.5 million expended on the Campo Largo Wind Complex– Phase II, and R$ 17.3 million injected into the Pampa Sul Thermoelectric Plant.

 Other 3^rd quarter highlights

The indirect subsidiaries, Novo Estado Participações S.A. (NEP) and Novo Estado Transmissora de Energia S.A. signed an Investment Agreement with Itaú Unibanco, via a NEP preferred share subscription of R$ 500 million for investments in transmission line construction in the states of Pará and Tocantins.

On September 8, the Law recognizing the right to compensation of the hydroelectric generators for the financial effects arising from exogenous  factors which had worsened the effects of the GSF (hydrological risk) over the past few years. The final amounts of compensation involved have still to be published by the National Electric Energy Agency (Aneel).

ENGIE Brasil Energia, for the 11^th time, was awarded the Transparency Trophy organized by Anefac, Fipecafi and Serasa Experian. The award evaluates transparency practices and quality of the financial statements. ENGIE was also elected champion  in the best company in the energy sector category in the 2020 edition of the Época Negócios 360º year book.

The Company’s investment  in efforts to tackle the effects of Covid-19 on society since the beginning of the pandemic has totaled R$ 6.2 million. The key initiatives were dedicated to the support of the “Stimulus 2020” Program, a movement which offers training and financial backing so that small entrepreneurs are able to maintain their activities during the pandemic. Support was also given to the BNDES’ “Saving Lives” campaign for providing help in the acquisition  of materials, inputs and equipment for protecting the doctors, nurses and other healthcare professionals in hospitals. ENGIE also made donations to rest homes and hospitals as well as for acquisition of tests and basic basket of goods for  the communities surrounding its  operational assets.