Companhia de Saneamento do Paraná - SANEPAR (SAPR4) Q2 2024 earnings summary

Executive summary

• Net revenue grew 8.5% in Q2 and 12.5% in the first half of 2024 year-over-year, while net profit rose 1.8% in the first half but fell 11% in Q2 compared to 2023.

• Achieved 15,000–15,900 new water and 22,900 new sewage connections in the first half, with sewage service coverage at 80.5% and 100% of collected sewage treated.

• Recognized for ESG and water management excellence, including the Global Water Awards 2024 and top ranking by Instituto Trata Brasil.

• Operational expansion included a 0.8% increase in water and 2.7% in sewage connections year-over-year.

• Cost pressures, especially in personnel and third-party services, impacted profitability.

Financial highlights

• Net revenue reached BRL 3.362 billion in the first half, up 10.5% year-over-year; Q2 net revenue was BRL 1.664 billion, up 8.4%.

• EBITDA was BRL 1.418 billion in 1H24, up 6.9%, but Q2 EBITDA fell 2.9% year-over-year; net profit for 1H24 was BRL 755 million, up 1.8%.

• Cash generation increased 20.3% to BRL 1.233 billion, with an 87% conversion rate.

• Net debt rose to BRL 4.95–5.15 billion in 1H24, with net debt/EBITDA at 1.69–1.7x.

• CapEx for 1H24 was BRL 871 million, nearly flat year-over-year, with 56% allocated to sewage and 36–42% to water.

Outlook and guidance

• Targeting BRL 2.3 billion in investments for 2024 and BRL 11.2 billion for 2024–2028.

• Ongoing efforts to accelerate investments and maintain service excellence.

• Expectation of future cost reductions from migration to the free energy market, with projected annual savings of BRL 150 million.

• Price revision and 3rd tariff review process for 2025 underway, with focus on fair and balanced tariffs.

• Tariff adjustment of 2.96% effective from May 17, 2024, expected to support future revenue.