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Introduction & Market Context
Chilean energy company Colbun released its second quarter 2025 earnings presentation in August, revealing a 22% year-over-year decline in net income amid challenging market conditions and ongoing investments in renewable energy projects. The company continues to expand its renewable energy portfolio while navigating different market dynamics in its core Chilean and Peruvian operations.
Market conditions varied significantly between Colbun’s two operating regions. In Chile, electricity demand contracted by 1.0% compared to Q2 2024, with marginal costs at 82 US$/MWh. Meanwhile, Peru showed stronger demand growth of 3.0%, with significantly lower marginal costs at 24 US$/MWh.
As shown in the following market update slide:
Quarterly Performance Highlights
Colbun reported consolidated operating income of $403 million for Q2 2025, representing a 5% decrease compared to the same period last year. This decline was driven primarily by reduced generation across both markets, with total generation in Chile falling 15% year-over-year and Peruvian generation dropping 23%.
The company’s sales mix showed significant shifts, with regulated client sales increasing substantially in both markets while spot market sales declined dramatically. In Chile, sales to regulated clients jumped 51% while spot market sales fell to zero from 674 GWh in Q2 2024. Similarly, in Peru, regulated client sales increased 36% while spot market sales declined 61%.
The detailed breakdown of physical sales and operating income is illustrated here:
The company’s generation mix also underwent notable changes, particularly in Chile where hydraulic generation decreased 16% and thermal generation fell 40% year-over-year. These declines were partially offset by a significant increase in variable renewable energy (VRE) generation. In Peru, thermal gas generation decreased by 23% compared to Q2 2024.
The following slide details these generation changes and associated costs:
Detailed Financial Analysis
Colbun’s consolidated EBITDA declined 8% year-over-year to $141 million in Q2 2025. The waterfall chart shows various factors affecting EBITDA, with spot market balance, transmission tolls, and fuel consumption changes having significant impacts on the final figure.
The EBITDA comparison is visualized in this waterfall chart:
Net income fell more sharply than EBITDA, declining 22% year-over-year to $48 million. This steeper decline was primarily driven by an 85% increase in non-operating losses, which reached $23 million compared to $12 million in Q2 2024. While income tax expenses decreased by 56%, this wasn’t enough to offset the decline in operating performance and increased non-operating losses.
The detailed breakdown of consolidated net income is shown here:
From a balance sheet perspective, Colbun maintained a relatively stable financial position with gross debt of $2.3 billion and financial investments of $0.8 billion. The company’s leverage ratio stood at 2.3x net debt to EBITDA, with an average interest rate of 4.5% and average debt life of 4.4 years.
The company’s debt amortization schedule shows significant maturities in 2027 ($668 million), 2029 ($360 million), 2030 ($500 million), and 2032 ($600 million), as illustrated in this debt position slide:
Strategic Initiatives
Despite the financial challenges, Colbun continued to advance several strategic initiatives during the quarter. The company signed power purchase agreements (PPAs) with 39 clients in Chile for an annual volume of 357 GWh and was awarded supply contracts with 11 clients in Peru for 30.6 MW per year.
Colbun made progress on several renewable energy projects, including receiving environmental approval for the Horizonte Wind Farm Expansion and advancing its battery energy storage system (BESS) projects. The company also signed a significant 15-year agreement with Atlas Renewable Energy to purchase energy from a BESS project with 230 MW of installed capacity and 920 MWh of daily storage capacity.
These key business developments are summarized in the following slide:
In a significant corporate development, Colbun received approval from Peru’s competition authority (INDECOPI) to acquire the remaining 41.379% stake in Fenix Power Peru, giving it 100% ownership of the subsidiary. This acquisition will be financed through a combination of Colbún Peru’s cash reserves and a $50 million term loan.
The company also distributed a final dividend of $27 million, which, combined with previous payments of $100 million, represents 50% of Colbun’s 2024 net income.
Forward-Looking Statements
Looking ahead, Colbun faces several operational challenges, including the continued outage of its Santa Maria Thermal Plant, which has been out of service since March 23 due to turbine damage. The company expects the plant to resume operations during Q3 2025.
Additionally, an incident occurred at Unit No.1 of the Rucúe Hydroelectric Plant (178 MW) after the quarter ended, involving a gas leak that caused a fire during maintenance work. The impact of this incident on future operations was not fully detailed in the presentation.
The company’s focus on expanding its renewable energy portfolio and battery storage capabilities indicates a strategic shift toward cleaner energy sources, in line with global industry trends. However, the financial performance suggests that this transition period presents challenges as the company balances investments in future growth with current operational performance.
Colbun’s stock closed at $148.50 following the earnings release, reflecting a slight decline as investors processed the mixed results and ongoing strategic initiatives.
Full presentation:
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