Companhia de Saneamento de Minas Gerais (CSMG3) Q2 2024 earnings summary

Executive summary

• Net revenue for Q2 2024 rose 10.7% year-over-year to BRL 1.74 billion, driven by tariff adjustments and increased water and sewage volumes.

• Adjusted EBITDA increased 12.1% to BRL 726 million, with margin improving to 41.4% from 40.4% in Q2 2023.

• Net income surged 30.4% year-over-year to BRL 325 million, reflecting operational efficiency and lower extraordinary expenses.

• Total costs and expenses decreased 3.6% year-over-year, reflecting efficiency initiatives and cost controls.

• Regular and extraordinary dividends declared in 1H24 totaled BRL 618.3 million.

Financial highlights

• Water segment net revenue grew 10.6% year-over-year; sewage up 10.9%; solid waste revenue increased but remains a small share.

• Manageable costs fell 7.8% year-over-year, while non-manageable costs decreased 3.6%.

• Net financial result was negative BRL 119 million, mainly due to higher financial expenses and FX impact from euro-denominated debt.

• Net debt reached BRL 4.54 billion, with Net Debt/EBITDA at 1.6x as of June 2024.

• Delinquency rate dropped to 2.97%, the lowest in 7 years.

Outlook and guidance

• 2024 investment program set at BRL 1.67 billion for the parent company, with BRL 901 million invested in 1H24 (+33.2% YoY).

• Multi-year investment plan (2024–2028) totals BRL 9.8 billion, with annual CAPEX projected at BRL 1.97 billion.

• Dividend payout set at 50% of adjusted net income for 2024, with regular and extraordinary dividends declared.

• Positive outlook for H2 2024, expecting higher volumes due to weather and ongoing commercial improvements.

• Tariff review process initiated for new rates effective January 2026.