July 31, 2024
ENGIE ENERGÍA CHILE REPORTED EBITDA OF US$156 MILLION AND NET RESULTS OF US$104 MILLION IN THE SECOND QUARTER OF 2024.
EBITDA REACHED US$156.3 MILLION IN THE SECOND QUARTER OF 2024, A RECOVERY COMPARED TO THE SECOND QUARTER OF 2023. THIS QUARTER HAS BEEN MARKED BY BETTER AVAILABILITY OF OUR POWER GENERATION UNITS, LOWER MARGINAL COSTS, ACCOMPANIED BY REDUCED GENERATION COSTS DUE TO LOWER GLOBAL FUEL PRICES, RESULTING IN AN IMPROVED OPERATIONAL RESULT. THIS HAS CONTRIBUTED TO A RECOVERY IN LEVERAGE AND LIQUIDITY RATIOS THAT WILL IN TURN ALLOW THE COMPANY TO CONTINUE WITH ITS AMBITIOUS INVESTMENT PLANS AND DECARBONIZATION PROCESS.
- Operational revenues amounted to US$490.8 million in the second quarter of 2024, a 20% decrease compared to the second quarter of 2023 due to lower average monomic prices for both regulated and non-regulated customers.
- EBITDA for the second quarter of 2024 amounted to US$156.3 million. The main reasons behind the EBITDA recovery include the increase in physical energy sales, lower average supply costs, adequate availability of generation plants and lower generation costs explained by the decrease in global fuel prices.
- Net Results amounted to US$104.4 million in the second quarter, attributed to better operational performance and the accounting recognition of financial income on accounts receivable from distribution companies stemming from tariff stabilization laws and the delays in the date of issuance of the corresponding tariff decrees. It should be noted that the tariff stabilization laws affecting regulated customers, first approved in November 2019, have prevented generation companies from collecting the total amounts that should have been invoiced to regulated customers. As a consequence, cash flow and liquidity have been negatively impacted, driving the company to incur additional debt to finance its operations and investment in renewable assets.
Financial Highlights (in US$ millions)
2Q23 | 2Q24 | Var % | 6M23 | 6M24 | Var% | |
Total operating revenues | 616.2 | 490.8 | -20% | 1,204.0 | 933.5 | -22% |
Operating income | 40.6 | 118.7 | 192% | 97.9 | 222.0 | 127% |
EBITDA | 87.1 | 156.3 | 80% | 189.0 | 294.6 | 56% |
EBITDA margin | 14.1% | 31.8% | 125% | 15.7% | 31.6% | (9.8pp) |
Total non-operating results | (43.7) | 27.6 | n.a | (74.0) | (12.3) | -83% |
Net income attributed to controlling shareholders | 7.1 | 104.4 | 1364% | 26.8 | 150.5 | 461% |
Earnings per share (US$/share) | 0.7% | 9913.8% | 2.5% | 14286.3% | ||
Total energy sales (GWh) | 3,005 | 3,143 | 5% | 5,943 | 6,285 | 6% |
Total net generation (GWh) | 1,641 | 1,343 | -18% | 3,196 | 2,583 | -19% |
Energy purchases on the spot market (GWh) | 697 | 1,049 | 51% | 1,249 | 1,984 | 59% |
Energy purchases - back up (GWh) | 724 | 799 | 10% | 1,523 | 1,785 | 17% |
ENGIE ENERGÍA CHILE S.A. ("ECL") is engaged in the generation, transmission and supply of electricity and the transportation of natural gas in Chile. ECL is the fourth largest electricity generation company in Chile and one of the largest electricity generation companies in the northern segment of the SEN national grid (formerly known as SING). As of June 30, 2024, ECL accounted for 7% of the SEN's installed capacity. ECL primarily supplies electricity to large mining and industrial customers, and it also supplies electricity to distribution companies throughout Chile. ECL is currently 59.99% indirectly owned by the French company, ENGIE LATAM. The remaining 40.01% of ECL's shares are publicly traded on the Santiago stock exchange. For more information, please refer to www.engie-energia.cl.
Contents | |
HIGHLIGHTS: | 3 |
SECOND QUARTER OF 2024 | 3 |
FIRST QUARTER OF 2024 | 4 |
INDUSTRY OVERVIEW | 4 |
Marginal Costs | 5 |
Fuel prices | 5 |
Generation | 5 |
Management's Discussion and Analysis of Financial Results | 7 |
Second quarter of 2024 compared to second quarter of 2023 and first quarter of 2024 | 7 |
Operating Revenues | 7 |
Operating Costs | 8 |
Electricity Margin | 9 |
Operating Results | 10 |
Financial Results | 10 |
1H2024 compared to 1H2023 | 11 |
Operating Revenues | 11 |
Operating Costs | 12 |
Operating results | 13 |
Financial Results | 14 |
Liquidity and Capital Resources | 15 |
Cash Flow from Operating Activities | 15 |
Cash Flow Used in Investing Activities | 16 |
Cash Flow from Financing Activities | 16 |
Contractual Obligations | 16 |
Dividend Policy | 19 |
Risk management policy | 20 |
OWNERSHIP STRUCTURE AS OF JUNE 30, 2024 | 21 |
Number of shareholders: 1,746 | 21 |
APPENDIX 1 | 22 |
PHYSICAL DATA AND SUMMARIZED QUARTERLY FINANCIAL STATEMENTS | 22 |
Physical Sales | 22 |
Quarterly Income Statement | 23 |
Quarterly Balance Sheet | 24 |
Main Balance Sheet Variations | 24 |
APPENDIX 2 | 27 |
Financial information | 27 |
Financial Ratios | 27 |
CONFERENCE CALL 2Q24 | 29 |
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HIGHLIGHTS:
SECOND QUARTER OF 2024
- Annual Ordinary Shareholders' Meeting: On Tuesday, April 30, 2024, the Company's shareholders agreed on the following:
- Dividend Policy: No final dividends will be distributed on account of 2023's net results given the reported losses in the period.
- Board of Directors: The appointment of the following persons as members of the Board of Directors:
Primary Board Member | Deputy Board Member | Type |
Frédéric Halkin | Guilherme Ferrari | |
Mireille van Staeyen | Matías Niebuhr | |
Pascal Renaud | Bernard Esselinckx | |
Felisa Ros | César Cornejo | |
María Carolina Schmidt Zaldívar | Juan Enrique Allard Serrano | Independent |
Cristián Eyzaguirre Johnston | Ricardo Fisher Abeliuk | Independent |
Joanna Davidovich Gleiser | Daniel Vercelli Baladrón | Independent |
- Auditors: The appointment of EY Servicios Profesionales de Auditoría y Asesorías SpA as the Company's external audit firm.
The new Board of Directors, in its April 30 session, agreed to appoint (a) Pascal Renaud as Chairman of the Board, and (b) the independent board members, María Carolina Schmidt Zaldívar, Cristián Eyzaguirre Johnston and Joanna Davidovich Gleiser, as members of the Directors Committee according to Article 50- bis of Law 18,046.
- Financing: On April 17th, EECL completed a bond issuance in the international markets for a total amount of USD 500.000.000. This issuance was carried out in accordance with the rules 144-A and Regulation S (Reg S) of the United States Securities Act of 1933. The bonds have a 10-year maturity and a 6.375% p.a. coupon interest rate. Interest payments will be made semi-annually, starting on October 17th, 2024 and the principal will be amortized in one single final payment ("bullet") on April 17th, 2034. The obligations arising from these bonds are not secured by any guarantees. Additionally, in compliance with applicable regulations, the bonds will not be registered with the Securities and Exchange Commission of the United States or with the CMF (Chilean Market Commission), and therefore, they will not be subject to public offering in either the United States or the Republic of Chile. This is ENGIE Chile´s first green bond issuance in the international markets, to finance renewable energy and storage projects.
- Early redemption of 144-A/RegSbond: On April 8, 2024, EECL launched an Any-and-All tender offer for the 4.5%, US$350 million senior notes due January 2025. The offer was accepted by 61.28% of the bondholders; therefore, with proceeds of the new issue the company prepaid US$214,471,000 plus accrued interest, leaving a balance of US$135,529,000 to be repaid at maturity on January 29, 2025.
- Monetization of PEC-2documents: In May 2024, the Company monetized payment documents issued by the Treasury of the Republic under the second law of price stabilization for regulated customers (MPC law or "PEC-2"), following mechanisms agreed upon with the Inter-American Development Bank, for a value of USD 38.4 million.
- New energy storage project: In April, Engie Energía Chile announced its fifth storage project called
"BESS Tocopilla". This project will have an installed capacity of 116 MW/660 MWh. The initiative will
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be located where former coal and fuel oil units operated, giving new life to the site, while contributing to the flexibility and security of supply of both the National Electric System (SEN) and ENGIE's portfolio.
- Environmental approval: In June 2024, Engie Energía Chile received environmental approval for its first transmission project in the community of Rengo in the O'Higgins region, south of Santiago. The project consists of a sectioning substation called Totihue, which includes the construction of a new sectioning substation and sectioning of the 2x220 kV Candelaria - Puente Negro transmission line. It also considers the installation of a new 66 kV double-circuit transmission line connecting the CGE-owned Rosario substation and the new Totihue sectioning substation.
FIRST QUARTER OF 2024
- BESS Coya commercial operation: The BESS Coya storage project received authorization from the National Electric Coordinator to begin operations during the first quarter. This battery storage system has a 139 MW/638 MWh installed capacity and allows for the storage of energy generated by the Coya Solar Plant, located in María Elena, Antofagasta region. It is currently the largest energy storage battery park in Latin America. BESS Coya consists of 232 containers, evenly distributed across the 58 inverters of the solar plant. It can supply energy for up to 5 hours, equivalent to an average annual delivery of 200 GWh. Additionally, it plays a crucial role in the environment by providing green energy to approximately 100,000 households, avoiding the emission of 65,642 tons of CO2, annually.
- Monetization of PEC-2documents: In January 2024, the Company monetized payment documents issued by the Treasury of the Republic under the second law of price stabilization for regulated customers (MPC law or "PEC-2"), following mechanisms agreed upon with the Inter-American Development Bank, for a value of USD 9.6 million.
INDUSTRY OVERVIEW
The SING and SIC power grids operated independently until November 24, 2017, when the interconnection of both grids was perfected through EECL's 50%-owned TEN project, giving birth to the SEN ("Sistema Eléctrico Nacional"). Currently, the company's generation assets are predominantly located in the northern segment of the SEN, in the area that used to be covered by the so-called SING Grid ("Sistema Interconectado del Norte Grande"), which serves a major portion of the country's mining industry. Given local conditions, the northern segment of the SEN is predominantly a thermoelectric system, with generation based on coal and LNG, with growing penetration of renewable sources, including wind, solar, geothermal, and storage systems, which allow to cope with the renewable energy generation intermittence, decoupling and curtailment. In 2018, EECL began its geographical diversification with the acquisition of renewable generation assets in other regions of the country and with the start of supply under PPAs awarded with distribution companies in the center-south region. The interconnection of the grids and the entry into operations of the Cardones-Polpaico Interconnection Project of InterChile, on May 30, 2019, allowed for the coupling of transmission bars in the different substations of the system, reducing the curtailment of renewable energy supply due to the insufficiency of the transmission infrastructure. However, the accelerated installation of renewable energy projects in recent years has exceeded the capacity of the transmission infrastructure, making it necessary to expand it to prevent renewable energy losses.
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Marginal Costs
2023 | |
Mes | Crucero 22 |
Ene | 96 |
Feb | 114 |
Mar | 106 |
Abr | 109 |
May | 106 |
Jun | 93 |
Jul | 60 |
Ago | 54 |
Sep | 53 |
Oct | 44 |
Nov | 41 |
Dec | 47 |
YTD | 77 |
Real (Monthly Average per Node) | 2024 | |||
Polpaico 220 | Charrúa 220 Pto. Montt 22Temuco 220 Mes | |||
94 | 91 | 197 | 89 | Jan |
114 | 110 | 215 | 107 | Feb |
133 | 132 | 207 | 128 | Mar |
133 | 132 | 160 | 130 | Abr |
123 | 123 | 138 | 118 | May |
104 | 102 | 90 | 88 | Jun |
59 | 56 | 48 | 47 | Jul |
52 | 48 | 36 | 36 | Aug |
50 | 46 | 32 | 33 | Sep |
41 | 33 | 35 | 27 | Oct |
33 | 25 | 20 | 20 | Nov |
41 | 34 | 49 | 28 | Dec |
81 | 78 | 102 | 71 | YTD |
Real (Monthly Average per Node) | ||||
Crucero | PAN DE AZUCAR Polpaico | Charrua | P. Montt | |
42 | 40 | 41 | 37 | 79 |
54 | 51 | 53 | 50 | 108 |
51 | 49 | 49 | 47 | 60 |
55 | 53 | 55 | 61 | 73 |
79 | 81 | 93 | 94 | 95 |
54 | 52 | 54 | 48 | 36 |
56 | 54 | 57 | 56 | 75 |
Source: Coordinador Eléctrico Nacional
In the first quarter of 2024, the average marginal cost of the system was 54 USD/MWh. In the northern zone, it was 49 USD/MWh, 47 USD/MWh in the center, and 84 USD/MWh in the southern region.
In the second quarter, the system marginal cost averaged 66 USD/MWh, with 49 USD/MWh in the north, 47 USD/MWh in the center and 83 USD/MWh in the south of the country.
In the first half of 2024, system marginal costs averaged 60 USD/MWh, a significant decrease compared to the first half of 2023, when marginal costs averaged 123 USD/MWh. The drop in marginal costs reflects lower fuel prices, an increase in generation explained by the entrance of new renewable assets into the system and the contribution of abundant rainfall in the first half of 2024, which favorably impacted hydraulic generation in the country.
Fuel prices
International Fuel Prices Index | ||||||||||||
WTI | Brent | Henry Hub | European coal (API 2) | |||||||||
(US$/Barrel) | (US$/Barrel) | (US$/MMBtu) | (US$/Ton) | |||||||||
2023 | 2024 % Variation | 2023 | 2024 % Variation | 2023 | 2024 % Variation | 2023 | 2024 % Variation | |||||
YoY | YoY | YoY | YoY | |||||||||
Jan | 78.1 | 74.1 | -5% | 82.2 | 80.2 | -2% | 3.18 | 3.17 | 0% | 167.5 | 106.1 | -37% |
Feb | 77.3 | 77.8 | 1% | 83.2 | 83.8 | 1% | 2.39 | 1.67 | -30% | 138.3 | 95.8 | -31% |
March | 72.5 | 81.3 | 12% | 77.5 | 85.4 | 10% | 2.26 | 1.49 | -34% | 138.3 | 114.4 | -17% |
April | 79.6 | 85.7 | 8% | 83.9 | 90.1 | 7% | 2.16 | 1.51 | -30% | 140.3 | 118.8 | -15% |
May | 71.7 | 80.0 | 11% | 79.7 | 81.4 | 2% | 2.15 | 2.19 | 2% | 119.0 | 106.0 | -11% |
June | 70.4 | 79.8 | 13% | 79.5 | 82.2 | 3% | 2.12 | 2.54 | 20% | 115.6 | 109.7 | -5% |
July | 75.8 | 79.9 | 2.55 | 110.5 | ||||||||
August | 81.6 | 86.3 | 2.61 | 117.7 | ||||||||
September | 89.6 | 93.9 | 2.63 | 123.3 | ||||||||
October | 86.0 | 90.8 | 2.95 | 136.1 | ||||||||
November | 77.9 | 83.2 | 2.75 | 123.6 | ||||||||
December | 71.8 | 77.6 | 2.52 | 117.6 | ||||||||
As shown in the table above, when comparing 2024 to 2023, we can see a continued downward trend in international fuel prices.
Generation
The following graphs provide a breakdown of generation in the SEN by fuel type and by company for the first half of 2023 and 2024:
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6M23: Generation by source | 6M24: Generation by source | ||
Others | Coal | Others | Coal |
4% | 4% | ||
19% | 17% | ||
Gas | Gas | ||
26% | 18% | ||
41,579 GWh | 43,192 GWh | ||
Hydro | Renewable | Hydro | Renewable |
19% | 27% | ||
32% | 33% | ||
Source: Coordinador Eléctrico Nacional
During the first half of 2024, demand reached a maximum of 12,190.5 MWh/h on January 31st, 5.6% above the peak demand of 2023. Accumulated sales as of June 30, 2024, reached 40,251.9 GWh, with a 4.2% increase in unregulated customer sales and a 4.4% increase in the regulated client segment as compared to the same period in 2023.
Regarding renewable energy, solar generation increased by 13.3%, while wind generation rose by 6.8% as compared to 2023. As of June 30, 2024, the National Electricity System (SEN) reported total gross installed capacity of 35,370 MW, including 17,066 MW, or 48.2%, qualifying as non-conventional renewable energy capacity, as defined by Law #20,257.
In terms of hydraulic generation for the SEN, as of the end of June, the estimated probability of exceedance for the April 2024-March 2025 hydrological year was 53.1% (medium-dry year).
Electricity production in the SEN grid, broken down by company, was as follows:
6M23: Generation by company | 6M24: Generation by company | |||
ENGIE | ENGIE | |||
6% | ||||
Colbún | Others | Colbún | 6% | Others |
16% | 15% | |||
44% | ||||
41% | ||||
41,579 GWh | 43,192 GWh | |||
AES | AES | |||
12% | 8% | |||
Enel | Enel | |||
25% | 27% |
Source: Coordinador Eléctrico Nacional
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
The following discussion is based on our unaudited consolidated financial statements for the six-month periods ended June 30, 2024, and June 30, 2023. These financial statements have been prepared in U.S. dollars in accordance with IFRS and should be read in conjunction with the financial statements and the notes thereto published by the Comisión para el Mercado Financiero (www.cmfchile.cl).
Second quarter of 2024 compared to second quarter of 2023 and first quarter of 2024
Operating Revenues
Quarterly Information (In US$ millions) | ||||||||
2Q23 | 1Q24 | 2Q24 | % Variation | |||||
Operating Revenues | Amount | % of total | Amount | % of total | Amount | % of total | QoQ | YoY |
Unregulated customers sales………………….. | 223.2 | 40% | 194.4 | 48% | 203.3 | 47% | 5% | -9% |
Regulated customers sales……………………. | 222.7 | 40% | 190.6 | 47% | 211.7 | 49% | 11% | -5% |
Spot market sales……………………………….. | 106.5 | 19% | 17.3 | 4% | 19.7 | 5% | 14% | -82% |
Total revenues from energy and capacity sales | 552.3 | 90% | 402.2 | 91% | 434.8 | 89% | 8% | -21% |
Gas sales………………………….. | 29.6 | 5% | 7.2 | 2% | 6.9 | 1% | -5% | -77% |
Other operating revenue………………………. | 34.3 | 6% | 33.3 | 8% | 49.2 | 10% | 48% | 43% |
Total operating revenues…………………. | 616.2 | 100% | 442.7 | 100% | 490.8 | 100% | 11% | -20% |
Physical Data (in GWh) | ||||||||
Sales of energy to unregulated customers (1)…… | 1,739 | 58% | 1,745 | 56% | 1,744 | 55% | 0% | 0% |
Sales of energy regulated customers…… | 1,249 | 42% | 1,374 | 44% | 1,399 | 45% | 2% | 12% |
Sales of energy to the spot market……………. | 17 | 1% | 22 | 1% | - | 0% | -100% | -100% |
Total energy sales…………………………. | 3,005 | 100% | 3,142 | 100% | 3,143 | 100% | 0% | 5% |
Average monomic price unregulated | ||||||||
customers(U.S.$/MWh)(2) | 128.3 | 111.4 | 116.6 | 5% | -9% | |||
Average monomic price regulated customers | ||||||||
(U.S.$/MWh)(3) | 178.2 | 138.7 | 151.3 | 9% | -15% |
Energy and capacity sales reached US$434.8 million in the second quarter of 2024, representing a 21% decrease (US$117.5 million), compared to the same quarter of the previous year. This decline can be attributed to lower average monomic prices for both regulated and unregulated customers.
The drop in tariffs is a result of decreases in inflation rates and fuel prices used in the indexation formulas of the contracts.
When compared to the immediately preceding quarter, energy and capacity sales increased by 8% (US$32.6 million) due to higher physical sales to regulated customers and higher average monomic prices on sales to both unregulated and regulated customers. The latter were affected by the recognition of an US$18 million inflation adjustment on the balances owed by distribution companies pursuant to tariff stabilization laws, as stipulated by the Average Node Price Decree January 2024 published in the Official Gazette on July 5, 2024.
In 2023 energy sales in the spot market included energy injections from the Kelar Power Plant operated by BHP under a tolling agreement with fuel provided by EECL. This explained the increase in this category for that period. In the first and second quarters of 2024, however, there was no tolling agreement, which explains the reduction in physical sales to the spot market in 2024.
In the second quarter of 2024 gas sales remained at similar levels as those reported in the first quarter, although they decreased as compared to the second quarter of 2023. The most relevant items in the 'Other operating revenue' account are sub-transmission tolls and regulatory transmission revenues, which starting 2018 include a
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single charge called "cargo único", as well as port and maintenance services. A US$17.8 million insurance recovery from a past loss at the CTA plant also explains the increase in this account in the second quarter of 2024.
Operating Costs
Quarterly Information (In US$ millions)
Operating Costs Fuel and lubricants………………………………
Energy and capacity purchases on the spot market……………………………
Depreciation and amortization attributable to cost of goods sold…………………………….
Other costs of goods sold…………………….
Total cost of goods sold………………..
Selling, general and administrative expenses… Depreciation and amortization in selling, general and administrative expenses…………
Other operating revenue/costs……………………….
Total operating costs….……………….
Physical Data (in GWh) Gross electricity generation Coal………………………………………….
Gas…………………………………………..
Diesel Oil and Fuel Oil…………………….
Hydro/Solar/Wind……………………………….
Bess
Total gross generation………………….
Minus Own consumption………………..
Total net generation…………………….
Energy purchases on the spot market………..
Energy purchases- bridge………..
Total energy available for sale before transmission losses………………………
2Q23 | 1Q24 | 2Q24 | % Variation | ||||
Amount | % of total | Amount | % of total | Amount | % of total | QoQ | YoY |
(194.2) | 34% | (81.6) | 24% | (83.2) | 22% | 2% | -57% |
(224.3) | 39% | (157.6) | 46% | (173.3) | 47% | 10% | -23% |
(45.1) | 8% | (34.1) | 10% | (36.7) | 10% | 8% | -19% |
(104.5) | 18% | (59.8) | 18% | (69.2) | 19% | 16% | -34% |
(568.0) | 99% | (333.1) | 98% | (362.3) | 97% | 9% | -36% |
(11.6) | 2% | (10.6) | 3% | (12.9) | 3% | 22% | 10% |
(1.4) | 0% | (0.9) | 0% | (0.9) | 0% | -1% | -36% |
5.5 | -1% | 5.1 | -2% | 3.9 | -1% | ||
(575.6) | 100% | (339.4) | 100% | (372.1) | 100% | 10% | -35% |
379 | 22% | 495 | 38% | 527 | 37% | 6% | 39% |
910 | 53% | 413 | 32% | 492 | 35% | 19% | -46% |
3 | 0% | 0 | 0% | - | 0% | -100% | -100% |
412 | 24% | 343 | 26% | 339 | 24% | -1% | -18% |
- | - | 51 | 4% | 51 | 4% | - | - |
1,705 | 100% | 1,303 | 100% | 1,409 | 100% | 8% | -17% |
(64) | -4% | (63) | -5% | (66) | -5% | 4% | 3% |
1,641 | 54% | 1,240 | 39% | 1,343 | 42% | 8% | -18% |
697 | 23% | 935 | 30% | 1,049 | 33% | 12% | 51% |
724 | 24% | 986 | 31% | 799 | 25% | -19% | 10% |
3,062 | 100% | 3,161 | 100% | 3,192 | 100% | 1% | 4% |
Gross electricity generation decreased by 17%, compared to the same quarter of 2023, and increased by 8% compared to the previous quarter. The increase in coal-based generation is explained primarily by higher dispatch priority. Gas generation increased by 19% compared to the previous quarter, but decreased 46% compared to the second quarter of 2023, given greater gas availability at that time used for generation at the Kelar plant. Generation with renewables decreased compared to both the second quarter of 2023 and the first quarter of 2024 due to climatic conditions and generation curtailment related to transmission restrictions. Generation associated with our BESS projects accounted for 4% of our net generation during the second quarter.
The 1% drop in renewable generation compared to the first quarter was explained by lower solar generation. ENGIE Chile's renewable portfolio includes the following additions: (i) Calama wind farm (151.2 MW) at the end of 2021, (ii) the Tamaya solar PV plant (114 MWac) which started its commercial operations in January 2022, (iii) the first injections of the Capricornio solar PV plant (88 MWac) starting April 2022, (iv) the Coya PV plant (180 MWac), operational since August 2022, although it obtained its COD as of March 2023, and (v) the incorporation of the San Pedro wind farms in mid-December 2022.
In the first quarter of 2024, BESS Coya obtained the authorization by the CEN to start its commercial operation. This battery energy storage system has a 139 MW/638 MWh installed capacity and allows for the storage of energy generated by the Coya photovoltaic plant located in María Elena in the Antofagasta region.
The fuel cost item showed a 57% decrease compared to the same quarter of the previous year as a result of lower fuel prices and lower own generation. Compared to the first quarter of 2024, fuel costs remained at similar levels, reporting a 2% increase. The cost of coal continued its reduction as compared to the levels shown in 2022 and the beginning of 2023 and also due to the gradual consumption of inventories purchased at higher prices in the second half of 2022
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The 'Cost of energy and capacity purchases in the spot market' decreased compared to the second quarter of 2023, mainly due to lower average spot prices, despite increased volumes of energy purchased in the spot market as well as through back-up contracts with other generators. Purchases under back-up supply contracts reached 799 GWh in the quarter compared to 724 GWh in the same quarter of the previous year. During the first quarter of 2024, there was a reduction in hydraulic supply as well as a drop in solar and wind generation. Spot energy purchases increased by 10% when compared with the first quarter, mainly due to a 12% increase in volume, as spot prices continued declining. Purchases under back-up supply contracts decreased 19% compared to the first quarter.
Other direct operating costs included, among others, transmission tolls, plant personnel salaries, operating and maintenance costs, insurance premiums and cost of fuels sold. These costs increased from the previous quarter, but decreased significantly compared to the same quarter of 2023.
SG&A expenses (excluding their depreciation) increased as compared to those in the second quarter of 2023 and the first quarter of 2024 due to higher advisory and third party services.
The Other operating revenue/cost item includes water sales as well as recoveries, single transmission charges ("cargo único") and provisions and other miscellaneous income. EECL's share in TEN's net income, which amounted to US$0.6 million in the second quarter, is also included in this item.
Electricity Margin
Quarterly Information (In US$ millions) | ||||||||
2023 | 2024 | |||||||
1Q23 | 2Q23 | 3Q23 | 4Q23 | 2023 | 1Q24 | 2Q24 | ||
Electricity Margin | ||||||||
Total revenues from energy and capacity sales……… | 531.8 | 552.3 | 469.5 | 432.4 | 1,986.0 | 402.2 | 434.8 | |
Fuel and lubricants………………….. | (177.3) | (194.2) | (120.7) | (99.1) | (591.3) | (81.6) | (83.2) | |
Energy and capacity purchases on the spot market…… | (219.4) | (224.3) | (189.2) | (182.7) | (815.6) | (157.6) | (173.3) | |
Gross Electricity Profit | ||||||||
135.1 | 133.8 | 159.6 | 150.6 | 579.1 | 163.0 | 178.4 | ||
Electricity Margin | 25% | 24% | 34% | 35% | 29% | 41% | 41% |
In the second quarter of 2024, the electricity margin, or gross profit from the electricity generation business, recovered, with a US$44.6 million increase when compared to the same quarter of the previous year, representing an increase from 24% to 41% of energy and capacity revenues. This was due to lower fuel costs and lower electricity purchase costs, which together reported a 39% decrease, while there was also a 21% decrease in revenues from energy and capacity sales.
Meanwhile, compared to the previous quarter, there was a US$15.4 million increase in the gross profit of the business, resulting in stable electricity margin of 41%. Revenues from energy and capacity sales increased by US$32.6 million due to higher average prices of energy sold to unregulated clients, as a result of an increase in the main tariff indexers (CPI and coal prices) and higher average prices to regulated clients, which reflect the inflation adjustment on accounts receivable related to price stabilization laws due to the delay in the publication of the respective tariff decrees. Additionally, there was an increase in costs, both for fuels (amounting to US$1.6 million), and for energy and capacity purchases in the spot market (US$15.7 million), primarily due to higher volumes of purchases from the system.
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Operating Results
Quarterly Information (in US$ millions) | ||||||||
EBITDA | 2Q23 | 1Q24 | 2Q24 | % Variation | ||||
Amount | % of total | Amount | % of total | Amount | % of total | QoQ | YoY | |
Total operating revenues……………………… | 616.2 | 100% | 442.7 | 100% | 490.8 | 100% | 11% | -20% |
Total cost of goods sold…………………… | (568.0) | -92% | (333.1) | -75% | (362.3) | -74% | 9% | -36% |
Gross income…………………………. | 48.1 | 8% | 109.6 | 25% | 128.5 | 26% | 17% | 167% |
Total selling, general and administrative expenses and | ||||||||
other operating income/(costs). | (7.6) | -1% | (6.3) | -1% | (9.8) | -2% | 56% | 30% |
Operating income….………………. | 40.6 | 7% | 103.3 | 23% | 118.7 | 24% | 15% | 192% |
Depreciation and amortization……...………… | 46.5 | 8% | 35.0 | 8% | 37.6 | 8% | 8% | -19% |
EBITDA…………….….………………. | 87.1 | 14.1% | 138.3 | 31.2% | 156.3 | 31.8% | 13% | 80% |
EBITDA for the second quarter of 2024 reached US$156.3 million, an 80% increase compared to the second quarter of 2023 and a 13% increase compared to previous quarter, mainly due to the recovery in the electricity margin explained in the previous paragraph.
Financial Results
Quarterly Information (In US$ millions) | ||||||||
2Q23 | 1Q24 | 2Q24 | % Variation | |||||
Non-operating results | Amount | % of total | Amount | % of total | Amount | % of total | QoQ | YoY |
Financial income………..……………………… | 4.9 | 1% | 4.1 | 1% | 57.0 | 9% | 1295% | 1068% |
Financial expense………….………………… | (42.5) | -9% | (33.7) | -5% | (31.0) | -5% | -8% | -27% |
Foreign exchange translation, net…………… | (0.4) | 0% | (10.3) | -2% | 1.0 | 0% | n.a. | n.a. |
Other non-operating income/(expense) net… | (5.7) | -1% | - | 0% | 0.6 | 0% | n.a. | n.a. |
Total non-operating results……………. | (43.7) | -9% | (39.9) | -6% | 27.6 | 4% | ||
Income before tax……………………. ……… | (3.1) | -1% | 63.4 | 10% | 146.3 | 24% | n.a. | -4771% |
Income tax……………………………………… | 10.3 | 2% | (17.3) | -3% | (41.8) | -7% | n.a. | -508% |
Net income from continuing operations after taxes | ||||||||
… | 7.1 | 1% | 46.1 | 7% | (46.1) | -7% | n.a. | n.a. |
Net income to EECL's shareholders | 7.1 | 1% | 46.1 | 7% | 104.4 | 17% | n.a. | n.a. |
Earnings per share…………………….. | 0.007 | 43.725 | 99.138 |
In the second quarter of 2024, interest expense decreased by US$11.5 million as compared to the second quarter of 2023. While the company had higher debt balances at higher interest rates during the second quarter of 2024, the corresponding increase in interest expense was partially offset by a US$3.5 million increase in capitalized interest associated with investment in generation and transmission projects. In the second quarter of 2023, a financial discount of US$12.6 million had been recorded as a result of the last sale of accounts receivable under the PEC-1 program. This explains most of the US$11.5 million reduction in interest expense. Compared to the first quarter of 2024, financial expenses decreased by US$2.7 million.
In the second quarter of 2024, financial income increased by US$52.9 million compared to the previous quarter and by US$52.1 million compared to the second quarter of 2023. This is primarily explained by the accounting recognition of US$50 million of interest generated by accounts receivable from distribution companies as a result of the tariff stabilization mechanisms and the delay in the date of publication of the tariff decrees. To a
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