Earnings call transcript: Engie Brasil Energia sees revenue surge in Q3 2025

Engie Brasil Energia (EGIE3) reported a robust financial performance in its Q3 2025 earnings call, with a significant increase in revenue and EBITDA, despite challenges such as increased depreciation and higher interest rates. The company’s stock remained stable, reflecting investor confidence in its strategic initiatives and future outlook.

Key Takeaways

• Revenue increased by 31.8%, driven by strong operational performance.
• EBITDA grew by 12.54% quarter-over-quarter, indicating robust business health.
• Net recurring income saw an 8.4% decline due to higher depreciation and interest rates.
• Engie completed major projects like the Azulua Wind Complex and acquired additional hydroelectric power capacity.

Company Performance

Engie Brasil Energia demonstrated strong performance in Q3 2025, with substantial growth in revenue and EBITDA. The company capitalized on its diversified energy portfolio, which now includes significant contributions from wind, solar, and hydroelectric sources. Despite some financial pressures from increased asset depreciation and interest rates, the company’s strategic acquisitions and project completions have positioned it well for future growth.

Financial Highlights

• Revenue: Increased by 31.8% year-over-year.
• EBITDA: Grew by 12.54% quarter-over-quarter.
• Net recurring income: Decreased by 8.4% due to higher depreciation and interest rates.
• Net income: Rose from BRL 666 million to BRL 738 million, a 10% increase.

Outlook & Guidance

Engie Brasil Energia is planning a capital expenditure of BRL 6 billion in 2025, with a focus on expanding its renewable energy portfolio. The company is cautious about new greenfield investments due to curtailment issues but remains committed to strategic growth through acquisitions and development of battery technology.

Executive Commentary

• Keller, Trading Executive, emphasized the company’s strategy of gradual uncontracting and tactical adjustments to navigate market conditions.
• Pierre, an Executive, mentioned the decision to put new greenfield projects on hold, reflecting a cautious approach to expansion.
• Keller reiterated the company’s commitment to gradually contracting future energy, aligning with its long-term vision.

Risks and Challenges

• Curtailment in renewable energy generation poses a challenge, with potential impacts on future investments.
• Higher interest rates and increased depreciation expenses could pressure profitability.
• Regulatory adjustments from ANEEL and the National Integration System are awaited, which may affect operational efficiency.

Q&A

During the Q&A session, analysts inquired about the company’s capital increase through bonus shares and the challenges posed by curtailment. Executives confirmed there are no immediate plans for a partial sale of CAG and discussed their strategy for gradually contracting energy to mitigate market risks.

Engie Brasil Energia’s strong financial performance and strategic initiatives underscore its resilience in the face of market challenges, positioning it well for sustained growth in the evolving energy landscape.

Full transcript - TRACTEBEL ON NM (EGIE3) Q3 2025:

Moderator, Engie Brasil Energia: I’d like to give the floor to Pierre to begin the presentation.

Pierre, Executive (likely CEO or CFO), Engie Brasil Energia: Okay, hello. Good morning, everyone. I will do it in English, so I hope it will be fine for everyone. Thanks for joining us during this hour. Always a very, very important moment for us to meet you and to explain to you the financial results and the main highlights for the last quarter, 2025. If we start with the highlights, the main achievement we realized during this quarter are the following. First of all, regarding our project Azulua and Azul Sol, we now almost complete the physical phases, and we are starting the commercial operations. We are on time, and it is a very, very great achievement for us. We also complete the acquisition and the integration in our portfolio of the two hydroelectric power plants, Santo Antônio do Jari and Cachoeira Caldeirão. Now.

The two assets are fully embedded in our portfolio management. Since mid-August, they are starting to contribute in our EBITDA. We won for the 15th time the Trophy of Transparency in Accounting, ANEFAC, which recognizes the transparency and the quality of our financial statements. It is a very, very great job from our marine teams and our accounting team. We also be certified as the best place to work according to the GPTW, Great Place to Work, Brazil. Good company and good achievement from our HR team. I have to mention that there is a subsequent event from Q3. This is an increase of our social capital. We decided because we need to comply with the law, and our profit reserve was above our social capital in late 2024. We need to increase our capital through the profit reserve incorporation.

We will do it during November months, and we will do it through bonus shares. Q3 results in terms of finance is a very, very—next slide, please—is a very, very good, robust, and solid result. As you can see on the slide, our EBITDA grew by almost 12.54% compared to last quarter 2024, which is a good result. If we look at year-to-date EBITDA, of course, on a recurring basis, we increased our EBITDA in 2025 by 6.4%. It is a little bit less true regarding the net recurring results because you can see that we decreased in year-to-date by 8.4% our net income due to mainly three factors. First of all, we see an increase of our depreciation of assets because we do have, compared to last year, three big assets now in operation, like Cozero, Cachoeira, and Jari. We also have.

An increase of our financial expenses linked to the high interest rate in Brazil in 2025, much higher than in 2024. We do have an increase in our taxing expenses also. Overall, very good results, robust. We deliver what we say, so Engie Brasil Energia is an elected company on that. Regarding the ESG KPIs, well-oriented, to be fair, all of them, except maybe, and unfortunately, we have to deplore four accidents during the last quarter, 2025, four accidents with workstop days, some workstop days. We are still paying a lot of attention, a lot of focus on that. We also support a lot the increase of the women in our leadership team. We are on track. We are on the good way to achieve our results. We increase the percentage of women in our leadership team. We continue to invest in innovation and in.

Responsibility, social responsibility, even if we decrease a little bit our contribution on that. Now, time to leave the floor to Guy Hermé in order for him to present the operation in renewables.

Bom dia a todos. Estou trazendo um pouco aqui de mais de o que está por trás desses números.

Moderator, Engie Brasil Energia: Very well. I’m going to explain what underlies these figures. Here we have the availability of our wind, solar, and electric assets. Our performance continues to improve, especially in wind and photovoltaic. We have a team that works closely with our suppliers so that we can have greater availability in our equipment. This is the effort of our team, of course, with the help of investment, always seeking good performance of our assets. Now, the performance has been significant in these two technologies. In energy, we’re subject to seasonality, but we’re also following a very good availability standard in transmission. Also a very high availability. Of course, these are assets that are more predictable in terms of operation, except for unforeseen things, but we’re doing well in transmission as well. Now, regarding curtailment, the hot topic in the sector of renewable energy, it has been significantly impacting our generation.

The impact is on wind, solar assets, and very much aligned with what is happening in the system. We attempt, of course, to minimize this, optimize everything with maintenance, management of these curtailments. We hope that a solution for curtailment will come in the fourth quarter with operational adjustments that should come from ANEEL and the National Integration System. Now, another important point that has already been mentioned by Pierre is the acquisition of Cachoeira Caldeirão and Santo Antônio do Jari. I think you can go on to the next slide. No, perhaps not. If you could go back. Therefore, the organic growth in this quarter, where we added 680 megawatts additionally from Serrado, Azulua, and Azul Sol, and additionally the two hydroelectric plants mentioned by Pierre, Cachoeira Caldeirão and Santo Antônio do Jari, with 612 megawatts. Next slide, please. As has already been mentioned.

We see a growth in generation. This comes from our organic growth and from the M&A operation we have just carried out. Once again, it is organic growth and an enhancement in performance. This year, the wind situation was above what we had expected, helping us to minimize the issue of curtailment. Operational enhancement, better natural resources, both solar and wind, all of these are helping us have an increase in power generation. Next slide. Keller, you have the floor. Good morning to everybody. I think this slide summarizes our trading activity for the quarter. It was an excellent quarter. In the graph to the right, you can observe that we had very good sales during the quarter. This is a comment we made in the call of last quarter that some operations that were under negotiation are still not reflected in our balance.

This is the case of this quarter where they are reflected. The variation is due to the accounting of new productions with high production levels, and we are showing the availability of new contracts for all the years until 2029. We have good volumes, as you can see. Besides these good production volumes, you can see the number of our consumers. We have a good evolution in that figure of consumers when compared with the same quarter last year, 17.6% increase of consumers. We have 2,056 at the close of the quarter and a growth of 24% in consumer units served in the third quarter of 2025 until the end. Once again, very positive figures in energy sold, volume sold, as well as in our consumer portfolio with a lower ticket perhaps, but with higher margin. We can see the.

Position of our resources available until 2030 going forward. This means that we continue with that strategy of contracting through time, of fine-tuning, tactical adjustments, gradual growth, guaranteeing revenues, and the predictability of our results. I think this is what I wanted to say regarding that slide, and I am at your disposal during Q&A. To go back to the projects that are under implementation, the Azulua Wind Complex, as Pierre mentioned, the physical progress has been concluded. It is 100% operational. We’re waiting for ANEEL dispatch to enter commercial operations of 100% of this complex. We’re waiting for the decision of ONS that has created new procedures to obtain the license and to test these assets. It’s worth highlighting that the Azulua Wind Complex, as you already know, has quite a bit of supply, and the performance has been much above what is expected.

It surprises us in terms of its performance. It’s the largest wind complex in Brazil and also the park with the best performance throughout Brazil. This project was delivered within the forcing budget, within the right timeline, with health and security fully complied with, and we’re in the final stage of execution. The environmental part, the recovery of degraded areas, and investment in social areas surrounding the asset. Location. Next slide, please. Azul Sol. We have concluded it. We are progressing in installation activities, and because of this new procedure of the ONS, we’re waiting to signal all of the procedures to be able to enter commercial activity. This is an asset with very good performance, top-line performance. Now, in terms of CAPEX, it’s all according to what has been scheduled. It is in accordance to our scheduling, and the same holds true for health and security.

We have a recovery plan for the degraded areas. These are activities that tend to take longer, but within what is foreseen and as part of the social work that we carry out. Next slide, please. O nosso primeiro projeto aqui de. Our first transmission project in this presentation is Azab Branca. The first stretch is between Shop Sales 2 and Porção S3. It is about to be concluded. This should happen in the fourth quarter. Now, at the end of this year, we will have 33% of the project wrap, a relevant amount compared to what we expected in the auction. Now, the second stretch is awaiting the license for the continuation. This should take a few weeks, and this should begin the coming year. The final stretch of the project will only come into operation at the end of 2027.

In Graúna, this comes from a recent auction at the end of 2024. It is still in the environmental phase, but going according to plan. Now, that red line that you see, the brown field on the map. At the beginning of July, we began to operate that line. We have 5% of the total wrap, not that much, but an important framework for it. It is the first brown field that we take on with our own operation, not with third parties. Of course, this is important for Engie. Regarding Geral, if anybody would like to add something, please do. No great updates compared to the last quarter. We are fully mapping everything out in the graph that you see. Regarding the transfer, which is a frequent question that we receive, we are still awaiting the stance of the controller, and there is nothing new this quarter regarding that topic.

The last one, Guilherme, who will speak about expansion, where there is nothing that novel. Nothing new here. We continue to maintain our project pipeline. We are awaiting, and the market is reacting, of course. There are real demands. We hope this will not be impacted by curtailment. We continue to keep these in our portfolio, especially the wind assets, so that we can follow on with their development. Expansions are always marginal, but highly welcome. As part of this context, we have the possibility of the auction for capacity the coming year. We have two of our assets, Santiago and others, that will participate, but we will be able to take part in this auction. Another important point refers to the batteries.

We’re beginning to look at these with greater attention, the development of batteries, to also take part in the auction that will take place the coming year. Thank you, Guilherme. We will go to see our financial performance, return on equity, and return on invested capital at satisfactory levels, showing how resilient we are. We invested more than BRL 38 million in the last years, which means that our asset base has increased. Of course, it is updated. The prices in the past were old. It seemed to be greater with this new updated base. The prices have dropped a bit, and some of these projects are not delivering 100% of their EBITDA. This will become more clear in 2026, Azulua and others delivering their full performance, and so the levels will be more recurrent. Now, for the nine months of 2025, we have a slightly higher.

Share of transmission vis-à-vis 2024 as part of our strategy of diversification. One-fourth comes from transmission, gas transportation, 75% from generation. Here we see. Our revenue changes. 31.8%. Most of this due to IFRS, BRL 22 million in transmission, but we do have an important organic effect in growth of revenue and volumes, inflation, and new assets coming into operation vis-à-vis the same period last year. If we look at EBITDA, this will become more clear. Now, to go to the results of TAG, that continues to deliver a very consistent performance, BRL 2 billion. BRL 300 million of NOR and a billion, almost a billion of profit this quarter of net income, very similar to the first quarter, somewhat below the second quarter, where we had a non-recurrent effect and doing very well. Here we have a more complex graph for this presentation.

Referring to EBITDA at one end, the accounting EBITDA that is published. Then we have the intermediate Rs that is adjusted EBITDA. This quarter, there were very few adjustments, as you can see, and in the middle, adjusted EBITDA and the effect of IFRS all have a similar growth between 10% and 13%. Transmission very stable. Equity income of TAG somewhat lower, so we’re left with generation with an increase of 287 that we have called performance. It’s price, volume, and expansion, and reductions due to costs associated to expansion, connection cables, material service, and sundry costs. This is a positive result coming from generation. Now, in the middle, we have a growth of 10.5%. Net income change, a very similar panorama. In the center, an increase of 10%. From 666 to 738.

Most comes from adjusted EBITDA, income taxes, negative variations due to depreciation, new assets, and partly due to financial results. Our indebtedness has increased a bit, and we have, of course, the interest rates that are higher than the third quarter last year, leading to a 10% increase. We will speak about our indebtedness, balanced debt. It is increasing, which is expected. BRL 3 billion for the acquisition of Jadian Cachoeira. We have BRL 600 million in debt, BRL 3 million impact on our debt. Only this acquisition changed the EBITDA. It was 2.7 times last year. It has now reached 3.2 times. This is still a satisfactory level that guarantees a triple A, which we would like to maintain. In gross debt, 3.8 times a well-balanced debt, as you can see. Of course, as of now, we need to be more cautious in our coming steps, but a healthy indebtedness.

Now, in this slide, we show you the debt profile and maturity, a very smooth schedule after 2030. Therefore, this profile is BRL 2 billion a year in terms of debt payment, fully under control. We continue to be triple A, one-third in CDI, and the rest in IPCA. The cost of the debt evidently has increased a bit. 6.4% on average compared to 5.6% in the same period last year. Of course, there is pressure from the financial conditions throughout the country. Regarding our CAPEX, no significant changes. A detachment year-on-year, almost BRL 10 billion year-on-year. This year, BRL 6 billion, which means the three from Jadian Cachoeira and the rest for the conclusion of Jadian, the transmission companies. That is where our CAPEX is going to. In 2026, 2027, everything at lower levels, we will be left with maintenance and the true two transmission companies.

Grau that extends to 2028 and Azab Branca till 2027. Finally, this slide, I believe, is the same as that of last quarter to show you our payment of dividend. 2021, 100%. Since 2023, we maintain this at 55% without significant changes. That is it. Adri will now lead the Q&A session for us. Thank you. We will now begin the Q&A session. Should you wish to pose a question, please send it to the Q&A icon on Zoom. Our first question is from Daniel Trabinski from Safra. He has two questions. I will pose the first question and put it together with another question from Juan, an individual investor, about the share bonuses. Could you explain the rationale to do that now? We have the question from Juan on the bonus and other models for the payout of dividends and shareholder capital.

Compliment if you want. Why we are doing that is just because, end of 2024, our profit reserve was above the social capital. To be compliant with the law, we need to increase our capital, social capital. This is the first point. The second point is we do have, we had space to increase our social capital until the authorized capital we do have. This authorized capital is today at BRL 7 billion. We take the opportunity to go up to the limit or close to the limit. We proposed to the board yesterday, and it was approved to increase the social capital up to BRL 6.9 billion. It will be done through a bonus action. Why? Just because we wanted also to have a better liquidity of our shares in the stocks. Through these mechanisms, we will.

Increase the liquidity of our shares without any financial impact at short term for our minority interest shareholders. Depende if you want to complement or not. Up to you. No, perfect, Pierre. No, that was perfect, Pierre. Simply to complement, the remuneration model besides the shareholder equity payment. In the future, we can alter the company’s stock. I do not think this will be done in the short term. This is a model that will be analyzed to see if there is any advantage in doing that. Thank you. The second part of the question refers to your vision on the solution proposed for the curtailment in Provisional measure 384. This is also part of Juan’s question, who asks about curtailment and how to deal with it in the medium term. I would like to begin the answer. Then I will give the floor to Guilherme or Keller.

This provisional measure 304 was approved but not sanctioned. We have to wait for it to be sanctioned. We need to understand the regulation better. Perhaps Guilherme would like to comment on what is included in this provisional measure. This is simply to add information. We’re faced with several uncertainties in terms of the real impact, which will be the reimbursement. We still have doubts if there will be reimbursement regarding power or if there will not be reimbursement. There’s an issue that we already mentioned, regulatory issues that could make investments in generation have a different technical condition to the ones we have presently, creating another obstacle to the incredible growth of generation companies. All of this strongly impacts our curtailment projections going forward. I don’t have very much to add. Everything has been said.

We would have to see the final version of provisional measure 304. There are two articles that we need to analyze before we can estimate what will be subject to reimbursement and those articles that refer to us. The impact, the effect that this causes on physical distribution and distributed distribution, these are points that need to be further assessed at the end of this legislation. Now, there is a positive point in the midterm, and it is interesting for the long term. Better conditions to insert batteries into the system, this will help us overcome several difficulties that we face at present. Physical curtailment can be mitigated if we make good use of these batteries. In the coming months and years, we will see how this plays out. To complete that topic and others, we’re going to approach this in great detail in.

NG Day that will be held in São Paulo at the end of November. If you can’t be with us, we will record the session. Thank you very much. Our next question is from Joaquin. The question is, will the company think of similar acquisitions compared to the assets recently acquired? Will this go in detriment of new assets in the renewable sector? I will begin and then depend on Keller. Please feel at ease to add your comments. Now, evidently, the market with this oversupply ended up thinking greenfield made no sense. With curtailment massively impacting the results, greenfield has been put aside. Now, this is a factor that will make us postpone our decision to invest in greenfield. When we look at M&A for wind and solar operations, the curtailment factor is a fundamental assumption. Of course, the seller will try to insist on curtailment.

The buyer will insist on a more realistic curtailment. This leads to a great difference in values. Potential M&As for renewable wind and solar energy will have to wait until we have a clear vision of the impact of provisional measure 304 and the regulation that will come about to work with distributed generation. Now, M&As in hydro plants, this is not only our desire but that of other players, but it is scarce in the market. There are few opportunities. Whenever an opportunity arises, we will look at it, of course, following the line that we followed for Cachoeira Caldeirão and Santo Antônio do Jari. We will see the quality of the assets, labor. I think labor qualification is fundamental. That was a positive point in these two assets.

We were able to maintain all of the employees that were already working there, bringing in the knowledge since the phase of conception until the beginning of operation. We are adding NG’s knowledge to enhance the quality of these assets. We have to carry out an in-house analysis. As I said, these assets are scarce in the market. There are not very many opportunities. Thank you, Guilherme. The next question comes from Bruno Oliveira, sell-side analyst. Two questions. Any planning on CAG, a possible partial sale in the horizon? As part of your investment project, any outlook for a dividend payout of 100%, or is it too early for this discussion? Nothing planned. In the very, very short term, or short term or medium term for CAG. Depine, maybe you can take the second one. Obrigado, Pierre. Sobre dividendos.

Regarding the dividends, for the time being, no, our indebtedness continues to grow somewhat above three at present and will further increase because of the two projects under construction until mid-2026. I think Bruno asked about this. It does not make sense for the time being to go back to 100% of payout with indebtedness above three. I think we had already referred to this in the second quarter as well. Very good, thank you. To continue with the next question from Victor Burg, sell-side analyst for JP Morgan. Any update in the revision of tariffs in the Northeast, CAG? From CAG and the regulator itself, we have heard that this tariff revision should happen in the first half of the coming year. The last information is that this review will be carried out in two stages. They are going to work on work and the asset base.

This process will be displaced to June, perhaps will be concluded in June. This is the last statement we heard from the regulator. We should not expect anything very concrete in the short term. Very well, our next question comes from Bruno Vidal, a sell-side analyst from XP Investments. Does the company have an outlook on participation in BP, and which would be the modality, capital stock increase or increase of indebtedness? We are still studying this opportunity to prepare our UBP topic. We are waiting for the ANEEL calculation, and then we will have until the beginning of December to discuss with ANEEL. Then ANEEL will give us, if we are interested, to prepare the deadline to do the cash out, how we will do it. It will be probably now in 2026, not in 2025. It is still under discussion inside the EBE.

We do have a lot of different options. Increase of capital may be one, but it’s not the only one. We will take and choose the best option for EBE to finance. The prepayment if we decide to do it. I hope that, as Depine said earlier, I hope that at the end of December, during our investor day in São Paulo, we could give you more and more detail on that. Perfect, Pierre. Another follow-up. Thank you very much. Our calculation in the timeline, the payment should be until the end of March or the beginning of April. We have the first quarter of 2026 to discuss these options. Thank you. Our next question is from Lorena, sell-side analyst from Itaú BBA, our trading strategy, which is the outlook of maintaining part of the portfolio uncontracted considering the price of energy in the coming years.

I can answer that if you could tell me the first part. Our trading strategy, which is the outlook of maintaining part of the portfolio uncontracted considering our viewpoint on energy in coming years. We continue with that vision, with that strategy of having gradual uncontracting, and we make tactical adjustments. In terms of sales, this is the best for a company that is capital-intensive and works with generation. We give ourselves the opportunity to make the most of higher prices in that long arm. Now we’re thinking of year plus one, year plus two. We have future prices that are higher than years further ahead. So there is space for that long arm while the market prices react in the upward position. It’s important to make the most of contracting and not move away from this now. There’s also a limit in liquidity in the market.

We cannot contract everything on the spot with this very volatile price model. We know there are scenarios where the price will be much too low, and spot prices will be low. We have to counterbalance our vision that there is room for future prices to improve vis-à-vis the risk in the short term, not allowing huge volumes for the short term because we will end up in the spot market. This is a bet, of course. Our profile is to have an appropriate management between results, our revenues, and the risks that we take on. To summarize, we are going to continue following our broader strategy of gradually contracting future energy. Thank you. Thank you very much. At this point, we would like to end the question and answer session. I will return the floor to our officers and Mr. Depine for their closing remarks.

I would like to thank all of you for your attendance, and we hope to see you at our next events. We’ll meet at our event at the end of November, and we hope to have a better vision of the impacts of PM304. Thank you all very much. Have a good day, and we hope to see you in our next event. Thank you all. See you on late November in São Paulo. Obrigada a todos a participação de todos aqui hoje. Thank all of you for your attendance, the energy, video conference, and here. Have a very good afternoon.

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