Endesa announces 1Q14 results

According to the latests statement from Endesa, net earnings attributable to the company's controlling shareholders reached Ch$ 35,902 million, a decrease of 43% when compared to March 2013, mainly explained by a higher procurement and services cost and a greater negative exchange rate difference. Consolidated electricity sales declined by 7.2% to reach 12,905 GWh, mainly as a result of lower physical sales in Argentina and less non-regulated customer contracts in Chile.

Operating income reached Ch$ 136,012 million as of March 31, 2014, 8% less than the Ch$ 147,816 million recorded as of March 2013. This lower income was mainly explained by higher energy purchases for Ch$ 53,677 million, Ch$ 18,204 million higher transportation costs, and Ch$ 6,760 million higher other procurements and services costs. The above-mentioned was partially offset by higher operating revenues for Ch$ 31,293 million due to higher average energy sales price and by Ch$ 40,839 million of lower fuel costs.

Endesa Chile’s EBITDA or gross operating income, decreased by 6% when compared to the same period in 2013, reaching Ch$ 183,642 million, which does not include profit from the investment in Endesa Brasil, not consolidated in Endesa Chile, and therefore accounted for as share of profit (losses) of associates using the equity method, which reached Ch$ 31,523 million as of March, 2014.

Operations in Chile recorded a 70% decrease in operating income totaling Ch$ 10,704 million, whereas EBITDA decreased by 42% to reach Ch$ 33,833 million as of March 2014. This lower business performance in Chile was a consequence of higher energy purchases of Ch$ 59,454 million due to greater physical energy purchases in the spot market at a higher average purchase price, coupled with larger transportation costs for Ch$ 15,284 million. The above-mentioned was partially offset by higher operating revenues for Ch$ 51,024 million due to an increase of 26% in energy average sales prices. Finally, payroll expenses decreased by Ch$ 2,285 million.

In Argentina, operating income increased by Ch$ 5,185 million during this period, whereas EBITDA reached Ch$ 10,968 million as of March 2014, compared to Ch$ 6,002 million in the same previous period. These better results include Ch$ 13,171 million related to Endesa Costanera’s combined cycle availability contract, offset by lower energy sales mainly due to less physical sales.

Operating income in Colombia increased by Ch$ 4,741 million during the first quarter of 2014, whereas EBITDA grew by 5% to reach Ch$ 98,232 million, compared to Ch$ 93,754 million in the same period of 2013. These better results were mainly explained by Ch$ 4,047 million lower energy purchase cost due to lower physical purchases and a lower average energy purchase price in the spot market, coupled with Ch$ 5,480 million of lower fuel costs mostly due to less thermal generation.

Finally, operating in Peru income showed a 10% growth totaling Ch$ 30,448 million as of March 2014 compared to Ch$ 27,692 million as of March 2013. Peruvian Business EBITDA, or gross operating income, increased by 8% totaling Ch$ 40,609 million. Operating revenues increased by 19% to Ch$ 12,583 million, primarily due to a 30% increase in the average energy sales price.