Enel Americas SA
SGO:ENELAM
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
86.76
102.9
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CLP.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
You don't have any saved screeners yet
Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2020 Enel Americas' Results Conference Call. [Operator Instructions] Rafael de la Haza will be in charge of taking questions.
Thank you, Gigi. Good morning, ladies and gentlemen,
[Foreign Language], and welcome to our First Quarter 2020 Results Presentation. I'm Rafael de la Haza, Head of Investor Relations. And here with me is Aurelio Bustilho, CFO of the company.
First of all, we hope you are all and your families are safe and well during this time. Let me remind you that this presentation will follow the slides that have been already uploaded into the company's website. Following the presentation, we will have the usual Q&A session that in this opportunity, the questions we will only receive through the chat of the webcast. Now let me hand over the call to Aurelio, our CFO, who will start by outlining the main highlights of the period in Slide #2. Please, Aurelio.
Thank you, Rafael. Hello, everybody. [Foreign Language]. As you all know, the world is going through difficult times at this moment due to the COVID-19 virus. Our company is completely focused on developing the best possible measures to face the situation, and we are rapidly reacted in order to protect our people and help our community. In the coming slides, you'll see more detail about this topic.
Going to our operational highlights. Enel Americas' EBITDA for this period reached USD 848 million, a decrease of 7% compared to the same period of last year. This is mainly explained by a negative currency devaluation impact, which reduced our results by USD 147 million. Without this negative effect, EBITDA would have increased by 9%. Group net income increased by 2%, reached $208 million. This is explained by lower financial expenses due to the payment of Enel Brazil's debt on August last year, that we were able to do with the proceeds of the capital increase. Regarding the potential impact coming from COVID-19 situation, our company is well prepared to face any working capital needs that we may have during this period. We have more than $2.5 billion of available liquidity and our net debt-to-EBITDA ratio is below 1x at this moment. And rating agencies had us confirmed our ratings.
Finally, in terms of ESG, we were recognized with bronze class for being part of the ranking of top-performing companies of SAM's annual Corporate Sustainability Assessment that was published in the beginning of 2020.
On the following slides, we'll see a summary of how we are facing COVID-19 situation. We have taken timely preventive measures to make sure our employees are safe during the COVID-19 emergency. Around 50% of the total workforce are working remotely, and all personnel that can work remotely is currently doing so. We have also taken steps to ensure the safety of our employees on the field, providing them with protective equipment during work hours as well, everyone in Enel Americas is covered by the insurance policy, which was entered by an Enel SPA and was implemented worldwide, the first ever of its kind.
In relation to our clients, we have put our focus on increasing digitalization efforts. We have redesigned the websites of our subsidiaries with the clients' experience and focus on communication and payment channels such as e-mails, task manager messages and payment apps. On the coming slide, we'll see the engagements with our operations and stakeholders. Regarding operations, our infrastructure is fully operational and reinforcing a critical infrastructure is a key concern on these difficult times and safety and security protocols have been reinforced. Some of our companies in Brazil have notified their counterparts for first major clause, which has been done as a preventative measure to negotiate with suppliers, looking to mitigate the impact of the current conditions. We have also committed efforts on all the countries we operate in, doing donations to health institutions, purchase of medical materials and preventive measures in communities.
Now let's see the main government measures in the countries where we have operations. On the topic of regulation, government and local regulators have taken a variety of measures, looking to curb the impact of the virus on population and the economy. Argentina, Colombia and Peru are in mandatory quarantine till May; and cities in Brazil, like São Paulo, are doing the same. All 4 countries have implemented some for form of wafer on payments to low-income clients as well as closing commercial offices, which has a negative effect on collection. We went to -- want to highlight measures like the [Foreign Language] 950 in Brazil, which are aimed to bring liquidity relief on distribution companies that are the most affected by the current situation with the decrease on collection. On a similar vein, liquidity lines for company were implemented in Colombia with the same objective.
Let's analyze the CapEx on the following slides. Total CapEx for the period amounted to $301 million, a decrease of 6.6% compared to the same period of last year. This reduction, however, is mainly explained by the devaluation of local currency. Without these, our CapEx would increase by 11%. Our investments were mainly devoted to maintenance CapEx and focus in distribution business like we announced. From a geographical point of view, 60% of our investments [ were ] need on our [ vision ] in Brazil with a significant increase in Enel Goiás, Enel Ceara and Enel Rio.
Now on the following slide, let's see our main ESG indicators. As we have said in the past, ESG is part -- important part of our strategy. In that sense, we continue with our focus on contributing with the United Nations Sustainability development dose. We have been supported our community through Goals 4, 7 and 8, where almost 5.5 million people have -- has been benefited with our actions. We also have contributed to SDGs 9 and 11 related to build a sustainable industry, infrastructure and cities. In this way, Enel Américas relies on its low carbon value-added products and services, where the smart meters and Enel X business are relevant to the development of urban areas and improve the quality of life in these areas. In addition, in order to prevent cybersecurity incidents, we cover all of our web application exposed to Internet with advanced cybersecurity solutions. Enel Américas has contributed to fight against climate change by generating 58% of its energy with hydroelectric assets during this period. As mentioned before, Enel Américas was included in the sustainability in peer book of RobecoSAM and obtained Bronze Category. These recognitions confirm the good work that we are doing and the relevance that sustainability has on our strategy.
Now let's analyze our financial performance in the coming slides. As mentioned before, reported EBITDA reached USD 848 million, a 6.7% decrease compared to the same period of last year. However, we -- if we exclude the FX variation, which amounted $147 million, a negative effect, the EBITDA would have increased by 9%. Group net income increased by 1.6%, reaching $208 million. This is mainly explained by lower financial expenses due to the debt payment in Enel Brazil made with the proceeds coming from last year's capital increase. FFO reached $127 million, an increase of 87% compared to last year, while net debt decreased by 11%, reached USD 3.8 billion. We will analyze in detail cash flow and that's ahead on the presentation.
On the coming slides, we'll see EBITDA evolution and its breakdown. Starting from USD 909 million of EBITDA from first quarter of last year, we can see that distribution and large idle businesses contributed with an important increase, while analysis also showed an improvement. On the other hand, thermal generation have an important decrease in EBITDA, mainly explained by Fortaleza, one-off adjustments made in last year EBITDA of this company. Retail businesses also shows a small reduction and the currency devaluation in the 4 countries where we operate had a negative impact of USD 138 million, which mostly explains the 7% reduction of consolidated EBITDA. In terms of business lines, distribution represents 49% of our EBITDA, while generation contributes with 43%, from which 33% is large hydro. Retail and Enel X represent 6% and 1%, respectively. It is important to highlight that 89% of our EBITDA is generated by zero direct donations activity.
Let's now analyze our operation highlight operating highlights in the following slides. On generation business, our installed capacity remained basically the same as last year, reaching 11.3 gigawatts, from which 55% are hydro. Net production reached 10.6 terawatt hour, an increase of 3% compared to last year. From the total generation, 58% correspond to hydro generation, which increased by 200-megawatt hours. Our energy sales decreased by 9%, reaching 16.6 terawatt hour. This is explained by a reduction in trading activity in Brazil.
Let's analyze distribution business in the coming slide. Distributed energy remained substantially flat compared to last year, reaching 30.2 terawatt hour, mainly driven by a lower demand in Enel Sao Paulo due to a weather condition in the city -- in the state of Sao Paulo; and in Peru, due to a decrease in economic activity as a consequence of COVID-19 situations. This is partially offset by a small increase in Codensa, Edesur and Enel Ceara. Regarding number of customers, we had an increase of around 157,000, mainly explained by increases in Enel Sao Paulo, Codensa and Goiás. Quality indicators improved in all subsidiaries except for Enel Ceara, where we suffered a severe rainy season and also suffering damage on our networks caused by an increase in the level of social violence and complexity during the second half of last year.
On the following slide, you'll see Enel X and retail businesses. Enel X business, you can see that [ trends in ] e-City, public lighting points, slightly decreased, reached 396,000. Photovoltaic panels installed also decreased from 0.4 megawatts 2.2 megawatts. Regarding financial services, we had a significant increase in credit card business, which reached 882,000 active credit cards. While in e-Home, the level of contracts of micro insurance was in line with the last year. Finally, in e-mobility, the number of charging stations increased from 100 to 589, mainly explained by Colombia and Argentina.
Regarding retail business, the number of delivery points increased by 10%, reaching 3,069 and the energy sold amounted to 4 terawatt hours, in line with 2019.
Let's move to country-by-country analysis on the coming slides, beginning with Argentina. EBITDA in Argentina decreased by 11% or $80 million, reaching $63 million. In operational terms, EBITDA increased by $32 million. But these results was offset by a negative FX impact of $39 million. In the generation business, we suffered the certification of tariffs during February and EBITDA decreased by 10%, reaching $56 billion. If we don't consider the FX effect, EBITDA would have increased by $34 million or 36%. This is mainly explained by a higher capacity payment in nominal terms and by higher sales, partially offset by a lower full margin and higher costs. In the distribution business, EBITDA decreased by $2 million, mainly due to FX effects. In operational terms, EBITDA increased by $9 million, mainly due to a higher tariff due to the inflation tariff adjustment of March last year and higher social tariff. Demand in our concession area was 1.7% higher compared to the same period last year. This is important to mention that we are going to -- we are doing a big effort to sustain the operation in a very diverse scenario. The sharp drop in our revenues was a result of the country's financial and economic situation and frozen tariffs for more than 12 months have caused significant losses in the company, as you can see. Despite these losses, our commitment is to guarantee quality services -- continuing quality services passion during their COVID-19 [ provisions]. CapEx in Argentina decreased by $19 million compared to last year. Most of this decrease was due to FX effect. In operational terms, CapEx decreased by only $3 million.
Let's continue with Brazil in the following slides. In Brazil, overall EBITDA in the period decreased by 13% or $53 million, including $64 million of negative impact coming from the FX effect. Without this negative effect, EBITDA would have increased by 3%. EBITDA in the generation business decreased by 37% or $45 million, which explained by worse result in Fortaleza as a consequence of lower energy sales and higher cost of gas. I explained at the beginning, it was an one-off positive adjustment or result in 2019. EBITDA in the distribution business decreased by 5% or USD 16 million. If we don't consider the FX effect, EBITDA increased by $34 million, mainly due to the São Paulo tariff resets and higher loss recognition, partially offset by lower energy sales. CapEx in Brazil increased by 5% compared to last year, reaching $182 million. If we don't consider the effect CapEx increased by $42 million.
Let's move to Colombia on the following slide. EBITDA in Colombia increased by $12 million or 4% compared to the same period last year. This result was obtained despite the negative impact of USD 41 million due to the currency devaluation. If we don't consider the FX effect, EBITDA would have increased by 17%. In the generation business, EBITDA increased by 4% or $8 million. If we don't consider the FX effect, we had an increase of 18% or $32 million. This was mainly due to higher spot price, higher prices in the contracts and an increase in energy sales. In the distribution business, EBITDA increased by 3% or $4 million. In operational terms, EBITDA increased by $21 million, mainly explained by higher tariffs, higher energy sales, lower losses and a better quality of services. CapEx in Colombia decreased by 18%, explained by in equal parts by the FX effect and lower investment in distribution business.
Now let's analyze Peru in the -- on the Slide 18. EBITDA in Peru reached $132 million, which means a decrease of 80% of -- or $11 million compared to the same period of last year. In the generation business, EBITDA increased by 7% or $5 million. This was mainly due to lower energy purchase costs and lower fuel costs, partially offset by lower revenues due to lower energy sales. In distribution business, EBITDA decreased by 21% or $15 million. This was mainly due to lower distributed energy and to higher energy purchase costs. Sales decreased by 5% compared to last year, mainly due to the COVID-19 effect. Total CapEx increased by 4% compared to last year.
Let me now analyze our P&L main indicators in the coming slides. Starting from $848 million EBITDA of the first quarter of 2020, the company registered depreciation and amortization for an amount of $303 million, 5.8% higher than the same period last year as a result of a larger asset based in Argentina and Colombia, reaching an EBIT of $545 million. Net financial results amounted to minus $140 million, which represents a lower cost of $36 million compared to the same period last year. This is mainly due to lower financial costs, financial expenses in Enel Brazil due to the payment of the debt in connection with the purchase of Enel São Paulo.
Income tax registered in the period was $132 million, which is 21.6% lower than the last year, mainly as a consequence of lower earnings. Total net income amounted to $310 million, while attributable net income reached $208 million, a 1.6% increase compared to the previous year results.
With all these elements, let's analyze the cash flow in the next slide. Slide 21. First from operations amounted to $127 million, starting from an EBITDA of $848 million. This result includes a negative net working capital in the period for an amount of $498 million, mainly in Brazil. Tax base during the period amounted to $122 million, while net financial expenses amounted to $101 million. Net cash flow amounted to minus $219 million during the period after invested $183 million in maintenance and growth CapEx, as indicated in the previous slides.
Dividends paid by the company amounted to $162 million, as you can see. Extraordinary operations amounted to $15 million due to a leasing in Colombia and due to operation in e-Mobility. With all this effect, total net debt increased by $490 million compared with last year.
Let me give you a quick update on the use of receipts of the last capital increase in the next 8 slides. As you know, February of this year of 2020, we announced our intention to make a capital -- sorry, February of last year of 2019, we announced our intention to make a capital increase of USD 3.5 billion. After many meetings with most of our shareholders and having heard the market opinion, we decided to reduce the amount of USD 3 billion. We announced that the use of proceeds would be dedicated to the payment of debt in connection with Eletropaulo, Enel São Paulo acquisition and to start the restructuring process to the pension funds in Enel São Paulo. April last year, this operation, as you know, was approved with an extra ordination shareholders' meeting. In August, after the first Preemptive Rights Period, Enel Américas paid the acquisition debt of Enel São Paulo for an amount of USD 2.5 billion.
In September, we successfully concluded the capital increase with a remarkable 99.5% level subscription. Finally, in March of this year, the Brazilian pension fund regulators approved the annual distribution São Paulo Pension Funds project, which includes the remaining of USD 504 million in order to implement the contribution benefit migration plan.
Let me now analyze the debt of our company in the following slides. Gross debt amounted to $5.47 billion, a decrease of 13% versus December 2019. The FX effect accounts for a debt reduction of more than $1 billion. This is mainly explained by the fact that most of our debt is in local currency and by the fact that these currencies suffered an important devaluation during the period, especially in Brazil.
In terms of currency, almost half of our debt is located in Brazil and in local currency, as you can see on the charts.
Finally, regarding the cost of debt, we can see a reduction for this period going from 7.1% in 2019 to 5.9% for first quarter of 2020. This is mainly explained by a decrease in the weight of the debt coming from acquisition of Electropaulo, a lower variable interest rate in Brazil, better conditions to refinance debt in Brazil and Colombia and historical -- Brazil and Colombia, and historical reduction of Brazilian inflation rate.
Now let me show you how our company is well prepared to any potential liquidity needs, thanks to the -- our solid financial situation and position. Our liquidity and balance sheet remained strong. We had around USD 2.6 billion of availability liquidity as of March 31. Cash and cash equivalents accounted for 64% of the total, while committed credit lines account for the remaining 36%. In a context of global pressure on metrics as a consequence of the coronavirus pandemic and despite the slowdown in the economic activity and the lower electricity demand in the region, Moody's and Standard and Poor's recently confirmed Enel Américas as an investment-grade company. Our strong liquidity and credit profile give us confidence to support our financial strategy during this difficult period.
Let's move to Slide 25. As you can see here, for this year, we have maturities for around USD 1.15 billion, along with the liquidity position showed on the previous slide. We have also important leverage capacity to face these maturities. Our net debt-to-EBITDA ratio is slightly below 1x, which gives us the possibility to issue new debts for up to USD 6 billion without putting in risk our investment grade.
Let me conclude this presentation with some closing remarks. Enel Américas is well prepared to face the economic consequence of the pandemic, and we will continue to strengthen our attention to all our stakeholders during the COVID-19 emergency. Once we exclude the current devaluation effects, our business showed a solid performance during the first quarter with strong results compared to the same period last year. Despite the crisis situation, the company significantly increased its CapEx in local currency, especially in the distribution business and in Brazil. Our solid financial structure endorsed by the rating guidance, this allows the company to confirm the emergency situation is move way and to attend the financial and operational needs in the short-term without major issues.
Enel Américas is actively supporting initiatives to mitigate the impact of the pandemic in the communities where you -- where we operate.
Let me just tell you that we feel that this is the same -- the first time that we do it this way, this presentation. Hope the next time will be in a better condition and hope you are safe and well.
Let me lend to Rafa to complete the Q&A session.
Well, thank you very much, Aurelio. Very clear. We will now begin our Q&A session, and I would like to remind you that the questions will come from the chat of the company. We have some questions. The first question received in the chat comes from [ balance ] Ezequiel Fernandez. And the first question is the following one. What protective measures have each country implemented regarding the current time period non payment, payment in installments, provision of service cutoff, et cetera.
And the second question from [ balance ] is, the pressure on working capital and collection is at 100% by distribution companies in extended to the rest of the chain, generation and transmission. In an official manner, be a regulation or in an informal manner, unilateral extension of the term of monetary transfer of the energy transmission and components.
Okay. Thank you, Rafa. [Foreign Language] Ezequiel. Thank you for your questions. Well, in Argentina, we have mandatory quarantine extended into May, the 10th. That's the latest information that we have. We closed all the commercial offices and only personnel needed to continue of services in the network can be mobilized. Yes, we are in the streets with this priority to keep the lights on. Of course, with the safety and very -- lots of attention in the safety condition of our people.
And also in Argentina, we have limited to disconnect or to suspension basic services for 6 months for users who use it with social tariffs or subsidies. In Brazil, quarantine is not mandatory at a country level. Sao Paulo -- well, Sao Paulo is the region that we have the biggest effect of the crisis. The crisis in Brazil is the [ state of the highest level ]. Sao Paulo has declared a mandatory quarantine until May 10.
[indiscernible] of this year prohibits the suspension of supply for 90 days during this period for, let's say, non-payments during these 90 days, all right? Previous delinquency, yes, we can disconnect. But for this period, no. We measure to preserve the provision, of course, of the public electric distribution services, which is maintained.
Well, the [Foreign Language] 950 of this year increased to 100%, the discount, to consumers, benefited by social rate, let's say, a consumption up to 220 kilowatt hour -- sorry, kilowatt month.
Well, there is also allocating CDE, the account of the subsidy, obviously the service resources to cover these measures. So the company -- distribution company would pay less CDE. Of course, we are refining this number to see the impact in our companies.
In Colombia, there is a mandatory current time extended until May 11. Liquidity line for the company, voluntary contribution and transfer of non-reconciled values of subset by the Ministry of Energy. Transitional measures to -- for payments of energy builds. Well, there is a definition of payment period of 36 months for social structure 1 and 2. 12 -- 24 months for social structure 3 and 4 and for other regulated uses as agreed between the pipes. Of course, the regulator will act as, let's say, as a mediator.
In Peru, mandatory point time extend until May 10 as well. Well, there is a state of emergency restructuring mobility of all cities, except for those working on essential services. And of course, our field activities is considered essential services, certainly. Postponement of payments of contribution to Osinergmin, which is the regulator as of -- up to the last day of April 2020.
Well, that's more or less this. Of course, we showed that the slide that presented the measures. So you can you can see. If you hear more doubts, we are -- we have a pleasure to complete the answer.
The other question was regarding net working capital in collection. Well, lower collection is associated with 2 concepts. The closure, of course -- the closure of our collegial channels. Having in mind that before the crisis, we have -- the major part of our collection do that's being done in the physical agencies. And now with the digitalization processes and now we are -- our platformization improving the digital channels, we reduced this, let's say, this dependency. We used to have 60% and now it's 40% in all the regions, which was a very good advancement. So -- but of course, this is something that we are more exposed because people cannot go to the physical places in some areas. And of course, the benefits for low-income customers. As I explained, people are -- has, let's say, a delay in these payments allowed by regulatory measures.
Well, the -- as I told you, the first one, we are in fighting this with digitalization. And the second one, regulatory issues. Of course, it's -- there's lots of discussions advancing, and I'm confident that we'll have a solution in the coming weeks to cover the financial and economic exposure, especially in Brazil. Well, we -- at a certain point, we declared and we informed our energy providers that we may be enforce major in terms of cash collection. Of course, we are confident that we'll have a regulatory solution for this in order to, let's say, to have all the value chains of electric sector in -- very well balanced.
Rafa?
Okay. Well, thank you, Aurelio and thank you once again for the questions.
Now let's move to Banco Santander [Technical Difficulty]
Rafa? Rafa?
Pardon me, Rafael, please check and see if your line is on mute.
Rafa. Can you hear me?
Yes, Aurelio.
This is Aurelio. Can you hear me?
Yes, we can hear you.
Yes Rafael is here.
Okay the first question, Aurelio, comes from Santander. What you see effects -- have you seen effects on demand and delinquencies so far in your distribution companies, which countries have been the most affected? This is the first question from Banco Santander.
The second question, have you received any contract renegotiation request for the regeneration business? Which countries have received the most?
Third question from Banco Santander. In relation to Argentina, how much have the payments been to CAMMESA? Was there any agreement between the generators and CAMMESA? And the last one, if Enel Américas is going to change, is going to modify the strategy for 2020, taking into consideration the carbon scenario? Thank you.
Rafa, just to clarify who sent this question. I'm sorry, I didn't get you because it...
Murilo Dos Santos from Banco Santander.
Okay. Okay. Thank you, Murilo, for your question. Well, demand in delinquency for distribution companies. Of course, there is -- we are following -- tailing this issue. After safety, after, of course, maintaining the milestone of our clients, this is the priority of the financial side. We are following and managing them on a daily basis. What we are seeing is that we are the most effective countries are Peru and Brazil, right? What -- of course, it's a day-to-day learning process because this started in our region in March 15. And of course, we are seeing some improvements during this process. So it's right now, it's very difficult to predict how it will move into the coming months. But what we are seeing is that Peru and Brazil is the major effect. In Brazil, well, we see that in the beginning, we had a delinquency in the beginning of 25%, but now we are around in accumulated basis of 5%.
If you see during this -- the last days, we are around 50% and improving. Why is that? Because in the beginning, was difficult to -- we are in the learning process how to also take the mitigates to the care customers and so on. But taking advantage of our platform and our digital channels, we've been improving during this period.
In terms of generation renegotiation, yes, let me tell you that we are more -- let's say, we have seen a better picture in terms of the generation and commercialization business in terms of negotiation compared to the regulatory market. Why is that? Because we are taking an advantage of our approach in terms of trading and commercialization activities. We also been -- have had this approach of not selling commodities. But selling services, selling -- and solving problems of generation and of consumption of our clients. So this helps us to be very proactive from our side and also for the client side, understanding and being flexible, having a flexible negotiation process in order to accommodate to their production capacity.
Let me tell you that if it's more than 5% that I see problems, it would be huge comparing to the scenario that -- in the current scenario. So we are -- the major part of our sales, it's been well addressed with our clients. Of course, there will be some situations that cannot be solved and so on. But it's a minimum -- I can observe -- and I can observe, and I can tell you that's a minimal part of our sales. It's not relevant right now. And again, this is based to a very good strategy initiated 2 years ago in our trading commercialization activities to be part of their solution, not only selling commodities, but selling with these approaches of services, okay?
Well, in relation to Argentina, yes, we are delaying the payments of CAMMESA. Nothing new in this field. Of course, we've -- in Argentina, we have this strategy. We have delays in readjustments, delays in the collection generated by the regulatory measures and the government measures as we compensate our cash flow with the [ company ]. It's not something that we can say that's new. We've been -- we did this in the past, and of course, we are doing it now.
In terms of agreement between generators and CAMMESA, of course, we are having a very good space to discuss the issues, to discuss with government, with the CAMMESA, with the issues. But until now, we don't have a formal agreement with the regulator and the generation companies. I think it's a process. But anyway, we always consider Argentina in this sense of neutral cash flow will not increase that in Argentina, if we don't -- if we have delays, we have some issues with the collection and the readjustment, of course, will compensate with our investment and costs in the country, right? So
That's, in general, what -- nothing new. That's what we'll be doing and we are doing in Argentina right now.
Thank you.
Thank you, Aurelio. We have a questions from MainFirst, Enrico Bartoli. Good evening, Enrico. Thank you very much for your questions. The first one is, our outlook for working capital evolution in
[ Technical Difficulty ]
with the regulator for possible recovery of unpaid bills.
And the last one, expected impact on EBITDA from Argentina for the year 2020 due to the tariff rise in distribution and specification of generation business.
Okay. Thank you, Enrico, for your questions or participation. Well, as I was telling you, it's difficult to predict right now the impact in terms of net working capital, especially in terms of collection, right? Which is the first line of our cash flow. Why is that? Let me tell you that in the beginning, we firstly saw a -- we firstly saw a very negative prediction, right? Well, especially in Brazil, it was announced that it would be around 30% of delinquency and so on of a reduction in cash-in of distribution companies and so on. We are not seeing this figure right now. We are seeing, in terms of demand, reduction around 12.9%. But right now, not in the first quarter, right, in the country level, the government shows a reduction in Brazil of 0.2% of demand March -- versus March of last year. So of course, we are seeing a reduction, but not accordingly these news that was in the beginning of the pandemic crisis.
We are, as I was explaining, we are improving our collection. We are giving alternatives to our clients. It was very important our financial businesses, especially in Colombia, which helps us to have a better channels for collection. So right now, we don't have this figure yet. It's a day-to-day learning process. And it's very important that also the government, especially in Brazil, which is the major part, is considering measures to compensate the depths in the distribution. So my answer is that we don't have this figure right now. We'll have probably after all these implementations of the measures from the government, right? And we'll properly allow to -- and tell you what the -- what will be exactly the impact. What can I say -- what I can tell you is that we've been improving during this -- the last month. And we expect to keep on maintaining our cash in during the coming weeks.
In terms of FX, yes, there is a -- I will not deny that it's a huge impact in terms of effect. It's a simple calculation. If you see the effects in -- especially in Brazil and Colombia, we see a huge variation. It's a simple calculation. And you can calculate by the best consensus that you want to use and until to see the effects for the coming -- for the year-end.
In terms of Argentina, well, the specification effects -- well, we saw it in the beginning of March, it is around $10 million to $15 million estimated by this year. But again, we need to see a complex or a complete situation with all the measures that we are implementing for the next quarter.
Rafa, I don't know if I answer all the questions for Enrico? Please help me.
Yes. I think so. Thank you, Enrico, and thank you, Aurelio.
Now let's move to Bloomberg Intelligence, Elchin Mammadov.
And he is asking for the following question. Can you please clarify if you are still comfortable with your EBITDA and net income guidance 2020, given the decline in power demand and devaluation of currencies in LatAm?
Well, this is Elchin, right? Thank you very much for your question. Well, the major impact is the effect. Of course, the effect -- I don't have the figure. There's a lot of variation in the consensus. But the effects will impact the EBITDA net income of the company, especially the EBITDA, right? If you do a rough calculation with our consensus and our concesus or our assumption. And the situation that we have right now in terms of the real devaluation. And in terms of Colombia -- and especially Colombia pesos, you'll see that we'll have a huge impact. And this is the major impact. We still don't have the impact -- the calculated, the total impact of COVID-19, right? But I can tell you in advance that the major impact -- I mean, 80% or 90% of the impact will be and is being due to the FX impacts, right? For example, the real is -- it was BRL 5.7, BRL 5.3 right now. So you see a huge devaluation in that sense because the real is generated in the EBITDA, and net income generated in Brazil are in real. Local currency, so translating into U.S. dollar. If you get the current effects of current currency BRL to U.S. dollar, you see a huge variation. It's not difficult to calculate. We are talking about more or less $600 million to $800 million of FX impact in terms of EBITDA.
So in terms of demand, it's something that we're still waiting to see more develop. One important thing is that if you see all the regulator, especially, the planner for the countries, the official planner, they are planning more or less a recover in the countries in the second half. Nobody can assure this, not us and not even -- but working with this assumption of the government with this recovery, maybe the impact will be lower or -- so it's very recent to see the impact and again, take in mind that especially in Brazil, which is a major impact, we have the compensation being worked by the regulator and all the distribution companies in Brazil in order to compensate this negative impact of demand.
And let me remind you that in Colombia, we have a revenue cap methodology, which is -- which provides or which make at least the economic impact in the distribution companies recovered. So more or less, just as a summary, effects will be the major impact, not difficult to calculate. And the demand is still to see, especially the recovery of economic activities in our countries. As I said, the planner or the government in each country, more or less, they are estimating, the recover starting to improve in July, August, okay?
P
Okay. Thank you, Elchin, thank you, Aurelio.
The following questions come from Mediobanca, Sara Pecini. [Foreign Language] Sara, [Foreign Language].
We have 4 questions from Mediobanca. The first question is the following one. Could you please provide more details on the USD 498 million working capital impact. And if this will be reabsorbed through the year?
Second question is the following one. How much is the financial support that the company is receiving from the countries in which it operates? And could this mitigate the impact on working capital.
The third question, would you consider M&A given your fire power?
And the final one from Mediobanca is, how much would be the impact of COVID-19 in terms of EBITDA, net of FX, that you estimate in your numbers in 2020?
Thank you, Mediobanca. Well, let me tell you that we have, let's say, a space or a liquidity. We have very well -- a very good position in terms of credit lines, right? To support this period. We have a liquidity of $2.6 billion in terms of cash and cash equivalents and credit lines. So we are prepared. Of course, what we are facing is something that we never predicted. Of course, we didn't do -- we didn't do the capital raise for this purpose. But it helps in terms of balance sheet to pass-through this situation. Of course, we will not -- and we are not considering -- we do not want to use our fire power to this crisis. But it's better to have this -- to face this situation with balance sheet position.
In terms of M&A, yes, we still maintain our strategy to keep on growing in the region. Although right now, it's not our priority, of course, it's not our focus. We are focused in maintaining operations and so on. But we have a special team working and scouting opportunities and developing new possibilities and so on. But in general terms, it's not our priorities. Our priority right now is to maintain an operation, maintain our cash flow, maintain our financial stability and taking advantage of this financial position to maintain the life zone, which is the main position and the safety of our people.
Rafa, can you help me with other points? I'm sorry, I didn't get all of them.
Yes, Aurelio. There is a question about our M&A firepower, taking into consideration our net debt ratio in the company.
And the last one, is the impact of net of FX. Yes. Sorry...
No, no, no, follow-on -- just to follow, we can do it this way. Firepower, if you consider the limit that we have 2.5x net-debt-to-EBITDA, established by our credit agencies, we're talking about more or less USD 4 to billion USD 4.5 billion.
One thing that's very important on the pension fund, we got the approval to use the procedure to start the risk of the pension fund. It's something very important that we are working very hard and very assertively during this year in order to close the year with a major part of this debt, the pension fund debt of São Paulo in the major part of the risk, okay?
So Rafa, please? Sorry.
Yes. And the last question is how much will be the impact of COVID-19 in terms of EBITDA, net of FX for 2020? That has been partially answered before, no?
Yes. We do not have it calculated yet. We have lots of situations, but we prefer not to calculate because it's important to see the development of the behavior of our consumption and clients in our geography. But let me tell you that in the scenarios that we analyze it, the major part of effects -- of impacts of the COVID is related to the FX. I mean, 80% will be FX. And it's not difficult to make calculations and scenarios, considering that we publish our macro assumptions.
Okay. Perfect, Aurelio. [Foreign Language], Sara.
Now let's move to [indiscernible], 2 questions, CrediCorp. First question is the following one. Energy losses have increased during the first quarter 2020, is there a common explanation for that? Could you share more details? And what are you expecting regarding them for the year? And the second question is the following one. Related to your generation projects, any of them could be delayed because of COVID-19? Thank you. [ Aurelio? ]
Okay. In terms of delays in generation -- thank you very much for your question. In terms of delays in generation, well, we do not have any generation projects in Enel Américas perimeter, right? There's no -- there is only the current maintenance and major maintenance going on. We have some issues in some plants that we have 1 case of infection in terms of COVID-19, but it's already solved. So it's not relevant. So we are -- we maintain our major projects. Just repeating [indiscernible] it's related to maintenance, not to growth because we do not have any growth activities or projects in Enel Américas perimeters.
The second question, Rafa?
The second question is about energy losses. There is an increase during the first quarter of 2020. Yes.
I'm sorry. I'm sorry for missing that. In terms of energy losses, well, the major impact was observed in Ceara. Why is that? Well, we have -- and in some part in Rio, we have a deterioration in some areas related to the -- to more, let's say, aggressive of the market and complexity of the market, social complexity. And also in Peru, right? In Peru, some areas in our distribution companies, we have an increase not relevant increase, but it's something that we are focused on to reduce with a more complexity in this market or low-income populated areas to come back or to fight these commercial losses, right? So we are implementing the measures to -- and realign the measures to -- in order to keep on this ratios control. And also in Argentina, the villas in Argentina, we had some deterioration in some part of the villas. Also due to the COVID-19, we had some restriction to not to enter to -- but to reconnect these issues, the issue that we are solving and recovering, and we are confident that we'll compensate during the following months.
In terms of working capital, why is the difference between the -- or what they explained the USD 498 million impact -- negative impact? Let me tell you that this is -- this will be compensated during the year, right? In order to -- as I told you to improve the CapEx, improve the automatization and digitalization in the region, we've been increasing, and thank God, we've been increasing these activities in the end of 2019. So what we are seeing right now is a part of payments of this CapEx to be compensated. The other part is related to effect in our spot payments in Brazil -- especially in Brazil, that will be compensated by the regulatory assets that we are having -- will have this -- from this year onwards. We've got the tariff readjustment in Rio and in Ceara. And right now, in the tariff, we are recovering this effect. So this is major related to the CapEx efforts in the end of 2019 and part of it -- and part of the effects of higher payments in the spot, let's say, not the spot market, but the spot prices to dispatch thermal plants, and it will be compensated during this year and finalize it in the first half of next year. Why is that? Because we have readjustments, in March of Rio, in April in Ceara and in São Paulo to be in July, and in Goiás to be in October. So the tariff year is not the same year of 2020. So it will be to move some parts to 2021, okay?
Thank you
Thank you, Aurelio. The following question comes from Scotiabank, [indiscernible]. And the question is the following. Can you please give the rate of collections in each of your countries in April? How that compares to the previous months?
Okay. Just one moment, please. Let me get the material right now. But let me tell you that -- I can tell you that we have, let's see, until January, we are recovering more than what we invoices, right? Let me tell you in the -- until January, we are recovering. If we invoice to 100%, we are recovering 101%, more or less, right? We started to feel the level of reduction by March which is around more or less. I can tell you the figure exactly the figure. But it will be a little bit lower of 100%. I mean, 98%, more or less.
As you can see in more detail [indiscernible].
Thank you, Aurelio. The last question comes from Charles Fishman from Morningstar.
And the question is the following. Has COVID-19 impacted on your 2020 -- 2022, capital spending plan of USD 5.3 billion, especially with the majority plan for Brazil networks?
Thank you, Charles, for your question. Well, we are not changing this plan, right? Why? Because it's very important to, first of all, to keep on improving the quality in our region, right? In our assets, the quality of supply of our clients. Let me remind you that 80% of this is related to the distribution assets. So it's very important to keep on maintaining the CapEx and to keep on investing in order to improve the quality and losses in our region. So we are maintaining the plan. Of course, this amount is a reference. 5.3% is in U.S. dollars, considering the CapEx and the scenario or the assumptions that we used to build the Capex. But having said that, we are not considering reduction in. But it's important to mention that we developed a very good capacity to be flexible in terms of CapEx. In the last 5 years, we did all the tariff resets and doing it very well and a very good recognition by regulator of our CapEx, which means that we've been very assertive and we learn in our very good learning process and improve our flexibility in terms of CapEx, which means that this gives us lots of confidence that in the short term, if we need to pay some CapEx investments, for example, related to demand increase or to new client increase or decrease or demand decrease we can adapt our CapEx in order to pass-through this crisis period.
So the most important message here is that we can be very flexible in terms of CapEx to adapt the pace, to adapt the timing. But in general terms, we are not reducing our targets in the region and maintaining our interest in South America and in Brazil. Thank you.
Thank you, Aurelio. Well, as there are no more questions, I conclude the results conference call. Let me remind you that as usual, the Investor Relations team is available for any doubt that you may have. Stay safe, and thank you for your attention.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.