Comp En De Mn Cemig ADS Q2 Earnings Call Highlights

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Fri, August 14, 2026 at 6:05 PM GMT+3 6 min read

CIG-C +3.56%

Key Points

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Cemig reported solid second-quarter results: recurring EBITDA rose 9.3% year over year to BRL 2.5 billion, while recurring net income increased 15.6%.
The company is maintaining its investment program, planning BRL 6.7 billion in 2026 capital expenditures and spending BRL 3.3 billion during the first half, primarily on distribution infrastructure ahead of the 2028 tariff review.
Performance varied by business: distribution and transmission EBITDA grew, but trading posted negative recurring EBITDA of BRL 180 million due largely to an arbitration provision and energy-purchase costs. Management expects trading conditions to improve in the second half.

Comp En De Mn Cemig ADS (NYSE:CIG) reported recurring EBITDA of BRL 2.5 billion for the second quarter of 2026, with recurring EBITDA rising 9.3% from a year earlier and recurring net income increasing 15.6%, according to management during the company's earnings call.

Chief Executive Officer Alexandre Ramos Peixoto, speaking on his first earnings call in the role, emphasized continuity in the company's strategy, financial discipline and investment program. He said service quality would remain central to Cemig's priorities as it serves more than 9.5 million consuming units.

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"We have a sound company. We deliver consistent results, and we know how to execute," Peixoto said. He highlighted the company's integrated operations and said Cemig is positioning its network and businesses for changes in Brazil's electricity market, including the expected full opening of the power market in November 2028.

Investment program remains on track

CFO and Investor Relations Officer Leonardo George de Magalhães said Cemig plans to invest BRL 6.7 billion in 2026 and had deployed BRL 3.3 billion through the first six months of the year, or 49% of the annual target.

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Distribution accounted for the bulk of investment, with BRL 2.6 billion spent during the first half. Cemig Geração e Transmissão received BRL 275 million, while gas distributor Gasmig invested BRL 227 million, including work associated with its Midwest project and 33.5 kilometers of network construction during the quarter.

Management said the investments are intended to improve service quality, modernize and strengthen the distribution system, and expand the company's regulatory asset base ahead of Cemig Distribution's tariff review scheduled for May 2028. The company said it has more than BRL 22 billion planned for the tariff-review cycle through May 2028.

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In transmission, investments completed during the quarter added BRL 36 million in annual permitted revenue, or RAP, according to the company.

Planned 2026 capital expenditures: BRL 6.7 billion
First-half capital expenditures: BRL 3.3 billion
First-half distribution investments: BRL 2.6 billion
Second-quarter funding raised: BRL 4.6 billion
Interest on capital declared: BRL 631 million, or BRL 0.22 per share

Costs, debt and shareholder remuneration

Consolidated costs and expenses increased 15.5% in the quarter. Magalhães attributed the increase partly to seasonal effects and spending related to network-quality improvements, while stating that the company expects the quarterly effect not to persist in the same way over a 12-month comparison.

The company recorded a BRL 191 million provision related to an arbitration involving a free-market customer and contract clauses. Management said the provision did not have an immediate cash effect. Cemig also reported a BRL 232 million reversal of expected credit losses after adjusting its criteria in line with Brazil's electricity regulator, ANEEL, and market benchmarks.

Cemig's leverage stood at 2.58 times at the end of the second quarter. Magalhães said the company expects leverage to rise through 2027 as it funds its investment plan, before declining after the 2028 distribution tariff review. He said Cemig holds AAA ratings from two agencies and an AA+ rating from S&P Global.

Operating cash generation was close to BRL 4 billion in the first half, management said. The company reiterated that its bylaws require a minimum dividend payout of 50% of net income. Magalhães said Cemig expects shareholder returns to remain relevant in 2026 and 2027 despite higher financing expenses and a more challenging market environment.

Distribution gains offset by trading pressure

Cemig Distribution's EBITDA rose 21% from the prior-year quarter, while recurring net income declined 8.9%, which management attributed to higher financial expenses tied to interest rates and debt used to support investments.

The distributor's average tariff adjustment was 6.5%, including a 4.9% adjustment in Portion B. Its energy market declined 1.6%, while captive-market demand fell 3.8% as large customers migrated away from the distribution network. Residential consumption increased 2.7%, while rural consumption fell 11%, which management linked to heavier rainfall.

Management said Cemig Distribution's operating expenses were BRL 416 million below the regulatory limit during the first quarter of 2026. The company also cited service-quality metrics below regulatory thresholds, including FEC of 4.86 compared with a 5.37 regulatory limit.

Cemig Geração e Transmissão posted EBITDA growth of 10.6%, while recurring net income declined 11.4% due to higher financial expenses. The generation business benefited from improved hydrological conditions and a better average generation scaling factor, or GSF, compared with 2025. Transmission EBITDA rose 50% year over year, supported by added RAP and regulatory assets.

The trading business reported negative recurring EBITDA of BRL 180 million, primarily reflecting the BRL 191 million arbitration provision and energy-purchase costs associated with settled positions. Chief Trading Officer Sergio Lopes Cabral said management expected a more favorable second half as positions are settled and hydrological conditions improve. He also said the company has reduced its positions for 2027 and 2028.

Gasmig's EBITDA and recurring net income declined as customers migrated to the free market and distributed volume fell 17%. Management said it expects a tariff review by year-end and expressed optimism about the business's future contribution.

El Niño preparation and strategic opportunities

Chief Distribution Officer Ernando Antunes Braga said Cemig has prepared maintenance and contingency plans for potential El Niño effects and does not expect an impact on its budget. Chief Generation and Transmission Officer Demétrio Alexandre Ferreira said the company's existing risk-based asset-management, maintenance and weather-monitoring processes were sufficient for its generation and transmission operations.

Management also said it continues to evaluate transmission auctions, battery opportunities and potential data-center-related energy sales, but stressed that participation would depend on expected returns and capital-allocation discipline.

Regarding generation concessions approaching expiration, Magalhães said Cemig has received a favorable note from ANEEL for three concessions due to mature in 2026 and 2027, including Sá Carvalho. The matter is now under discussion at Brazil's Ministry of Mines and Energy, and management said it is optimistic while awaiting approval from the granting authority.

About Comp En De Mn Cemig ADS (NYSE:CIG)

Companhia Energética de Minas Gerais SA (Cemig ADS) is a leading Brazilian energy company primarily engaged in the generation, transmission, distribution and commercialization of electric power. Headquartered in Belo Horizonte, the company operates as a vertically integrated utility, serving residential, commercial and industrial customers across its concession areas. In addition to its core electricity business, Cemig maintains interests in natural gas distribution and distinct energy-related ventures, including renewable sources and infrastructure projects.

In its generation segment, Cemig manages a diversified portfolio that includes hydroelectric, photovoltaic and wind power plants.

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