SAO PAULO, Aug 14 (Reuters) - Cia Energética de Minas Gerais SA missed second-quarter profit estimates as some costs rose faster than revenue and income from financial investments slumped, probably reflecting a decline in domestic borrowing costs.
Net income was 138.11 million reais ($43 million) in the quarter, down 32 percent from the same period a year ago, Cemig said in a securities filing late on Friday. The number missed the average consensus estimate of 341.51 million reais compiled by Thomson Reuters.
Financial income slumped 56 percent in the three months through June, after securities investments dropped 21 percent and currency hedging produced smaller gains than in the year-earlier period.
Annual inflation is now the lowest in 18 years, triggering a drop in interest rates and stifling returns on the fixed-income securities that form part of Cemig’s investment portfolio.
Earnings before interest, tax, depreciation and amortization rose 9 percent to 739.64 million reais, topping consensus estimates of 717 million reais. The indication, known as EBITDA, slipped to 14.2 percent of revenue in the second quarter from 14.3 percent a year earlier.
The numbers come as the utility, controlled by the debt-laden Brazilian state of Minas Gerais, figures out how to refinance about 4.1 billion reais of debt maturing this year.
Cemig, Brazil’s most leveraged major power utility, is cutting capital spending this year after losing the licensing rights for several hydropower dams.
Cemig’s net debt came in at 12.544 billion reais as of June, compared with 13.139 billion reais in December last year and a Thomson Reuters consensus estimate of 12.790 billion reais.
Of that, 4 billion reais mature throughout 2018. The utility is also seeking to sell several assets, including those of subsidiaries like Renova Energia SA and Light SA , to cut debt-servicing costs.
Management plans to discuss second-quarter results at a conference call on Wednesday.
$1 = 3.1924 reais Reporting by Guillermo Parra-Bernal; Editing by Bernadette Baum