Enel Americas SA
SGO:ENELAM
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[Audio Gap] This presentation contains statements that could constitute forward-looking statements. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of Enel Américas and its management with respect to, among other things, Enel Américas business plans, Enel Américas cost reduction plans, trends affecting Enel Americas financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere, supervision and regulation of the electricity sector in Chile or elsewhere and the future effect of any changes in the laws and regulations applicable to Enel Américas or its subsidiaries.
Such forward-looking statements reflect only our current expectations, are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in the equity capital markets, an increase in the market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere and other factors described in Enel Americas integrated annual report.
Readers are cautioned not to place undue reliance on those forward-looking statements, which state only as of their date. Enel Américas undertakes no obligation to release publicly the results of any revisions to these forward-looking statements, except as required by law. Now it's my pleasure to turn the call to Mr. Rafael de la Haza.
Thank you, Carmen. Good morning, [Foreign Language] ladies and gentlemen, and welcome to our first quarter 2023 results presentation. I'm Rafael de la Haza, Investor Relations of Enel Américas. In the coming slides, our CFO, Aurelio Bustilho, will be presenting the key figures of this period.
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. [Operator Instructions]
Now let me hand over the call to Aurelio who will start by outlining the main highlights of the period in Slide #3. Aurelio, the floor is yours.
Thank you, Rafael. Good morning, everybody. Let me begin this presentation by mentioning that starting this quarter, all our Peruvian distribution and Peruvian generation assets are considered assets held for sale and the corresponding results as discontinued operations. The latter means that these results are recognized below reported EBITDA level.
Due to this, EBITDA numbers shown on this presentation for 2022 and 2023 are excluding Peruvian operations except when mentioned that it is an adjusted EBITDA. The same in the case of debt Peruvian assets are not included for 2023 figures. For operational and other financial indicators such as CapEx Peruvian operations are included. During the first quarter of this year, net production increased by 1% despite the disposals of the thermal generation assets of Enel Fortaleza and Costanera.
Excluding these assets and the recently sold Dock Sud, our net production increased by 14%. In grids, our sales increased by more than 5% in homogeneous perimeter. This means without consider Enel Goiás in 2022. In addition to this, we recently concluded the tariff revision process in Rio and Enel Ceará, which were in line with our expectations.
Regarding Enel X and retail businesses, we saw a solid increase in all our indicators, including results from Peru and without consider Enel Fortaleza and Enel Goiás in 2022 as we do not consolidate those asset companies anymore, and excluding also FX effect, adjusted EBITDA increased by 12%, mainly due to better results in Enel Sao Paulo and Enel Ceará and renewables in Brazil.
In terms of funds from operations, we had a solid improvement, thanks to the better net working capital. As of the quarter, 82% of total capacity is renewable capacity and 79% of our production is from renewable sources. We currently have 2.2 gigawatts of new renewable capacity under construction. We are glad to announce that our integrated annual report and our sustainability report are available on our corporate website, including ESG information of our company.
Along with this, we are preparing on -- we're participating on the Blue Dot Network projects that we will explain ahead on this presentation. Finally, in terms of corporate simplification, we concluded the sale of thermal generation assets in Argentina and recently announced the sale of distribution assets in Peru. The remaining sale processes announced on our strategic plan are well on track.
Let me highlight that a few days ago, the merger between Enel Generación Perú and EGP Peru was approved. Let's move to the following slide to see the main macro indicators. As shown on the left page during this quarter, currencies in Argentina, Colombia and Guatemala devaluated against U.S. dollars. Peru and Brazil were basically flat while Costa Rica appreciated.
In terms of inflation, we can see that during this quarter, inflation rate increases in Argentina, Colombia, Peru and Guatemala, while it decreased in Brazil, Costa Rica and Panama, following similar trends to Q4 2022. Regarding electricity distributed during the first 3 months, we saw an [ important ] increase in Argentina, Peru and Brazil and a slight increase in Colombia. We'll see this in more detail later on in the part of distribution.
Finally, regarding interest rates, we saw an important increase in Selic rate in Brazil and especially the IBR rate in Colombia. Now let's have a look at our investments for the deal in the coming slide. During the first quarter of this year, our CapEx increased by 11% compared to the same period of last year reaching USD 622 million despite that we do not have Enel Fortaleza and Enel Goiás in our territory.
If we exclude those 2 companies from the numbers of last year, CapEx would have increased by 38%. This is mainly explained by higher investments in Enel Colombia renewables in Brazil and in Sao Paulo and Enel Ceará. From the total amount, 68% were invested in Brazil, while in terms of business, 55% were devoted to grids and 38% to renewables.
Gross CapEx reached USD 281 million and was mainly devoted to renewables with 78%. Let's now analyze our operating on the next slide.
In generation business, during the first quarter of 2022, we added close to 90 megawatts of new renewable capacities in Brazil and Colombia. With the sale of Costanera, we now have 14 gigawatts of installed capacity, of which 82% is renewable. If we do not consider Dock Sud in Argentina, which has already been sold, renewal capacity represents 88% of our total capacity.
Net production in the first quarter reached 13.2 terawatt hour, an increase of 1% compared to the same period of last year, explained by higher generation in Brazil, Colombia and Peru, partially offset by Argentina. From our total production, 79% is emission-free, a significant growth compared to the 70% of the same period last year.
Energy sales decreased by 14% during this quarter, reaching 19.6 terawatt hours, mainly due to lower trading activity in Brazil and lower sales in Costanera as we consolidated that company only for around 1.5 months in 2023.
On Slide 7, we'll focus on our development of renewable capacity. During this quarter, we invested $0.2 billion in renewable energy, mainly located in Brazil and Colombia.
We are currently working on additional 2.2 gigawatts of capacity under construction, also located mainly in Brazil and Colombia, 0.9 gigawatts our wind projects and 1.3 gigawatts are solar projects. During 2023, around 1.2 gigawatts will be in operations while on 1 gigawatts will enter in 2024.
Regarding our pipeline, we are considering 59 gigawatts of potential new capacity. From this amount, 32 gigawatts are in early stage and 25 gigawatts are in mature states. In addition to this, we have around 1 gigawatts of battery energy storage system, and we are also considering the 2.2 gigawatts of projects under construction already mentioned.
Let's continue with brief operational highlights on Slide 8. Electricity distributed reached 28.3 terawatt hours in the first quarter, which represents an increase of 5% compared to the same period last year in homogenous perimeter, explained by higher sales in all our distribution companies, especially in Argentina due to higher temperatures.
Regarding number of customers without considering the customers of Enel Goiás last year, we had an increase of around 420,000 in the last 12 months, reaching 23.4 million customers. Smart meters increased by more than 2x, reaching 341,000 in this quarter, mainly due to the deployment in Sao Paulo.
In terms of quality indicators, both SAIDI and SAIFI improved as an average, explained by better performance in Colombia and Brazil. In Argentina, we saw a deterioration of our quality indicators due to the extreme temperatures during the summer, while in Peru, we saw an increase in SAIDI explained by changes in calculation criteria compared to last year.
Finally, in terms of energy losses, it improved in Brazil and Peru remained flat in Colombia and slightly decreased in Argentina. In the coming slides, one -- in the coming slides, I will show a summary of tariff revision process concluded in Enel Rio and Enel Ceará. In March, Enel published the final report of Enel Rio's tariff revision process which concluded with a tariff increase of 3.28% as an average to our final customers.
Net RAB was a set of BRL 8.9 billion and regulatory losses slightly increased compared to the previous one. However, there is still work to do in order to better recognize the real situation of energy losses in our concession area.
Regarding Enel Ceará, the process concluded with an average tariff increase of 3.06% and net RAB of BRL 7.2 billion. The new tariffs were -- are applied as of April -- from the April 22. We are comfortable with both process as they are in line with our previous expectations.
Finally, regarding Enel Sao Paulo tariff processes is moving ahead as expected, and we should have the final tariff report during early July. On Slide 10, we'll see Enel X and retail businesses. Enel X, we have -- in Enel X, we have a solid growth in all our businesses, especially in charging points, electric buses and maintenance and repair contracts.
Regarding retail, the number of the delivery points increased by 8%, which is more than 5,200 points and the energy sold amounted to 6.5 terawatt hours in the first quarter, which means 11% increase compared to same period of last year. On the following slide, we will discuss our ongoing corporate simplification.
During the last few months, we concluded the sale processes of our thermal generation assets in Argentina, Costanera and Dock Sud. In addition to this, we recently announced the sale of Enel Distribution Peru. This transaction was signed for an equity value of USD 2.9 billion for our 83.2% ownership, which implies an EV of USD 4 billion in an EV/EBITDA ratio of almost 15x. This operation still has to be approved by the Peruvian anti-trust authorities and by Chinese outbound direct investment authorities. Expected impact of net income level is USD 1.65 billion after tax.
Now we will continue moving forward in the remaining disposal process already announced on our strategic plan, which are Edesur and El Chocón in Argentina, Enel Ceará in Brazil, and Enel generation assets in Peru. At the same time, we continue looking for investment partners to develop our stewardship model.
Now I will highlight our efforts in best practice and certifications in Page 12. First, let me mention that our 2022 integrated report was published at the end of March 2023, 1 month before our Annual Shareholders' Meeting. Taking into consideration the best practice at local and international level, including the financial and non-financial information for 2022 period that we presented.
Our 2022 sustainability report is also available on our website, which offers a big dive on ESG matters. Both reports are aligned with TCFD, GRI and SASB standards and are available on our website in the investor sector -- sections. Also, we would like to invite you to visit the new interactive version of the integrated report, given different views for different stakeholders. Please feel free to send us your feedback to our Investor Relations teams.
Enel Américas participated in the Blue Dot Network certification pilot projects defined by Organization for Economic Cooperation and Development, OECD in collaboration with the government of the United States, Japan and Australia, which seeks to ensure the quality of infrastructure as a whole. Enel Américas together with the companies worldwide, was part of the first pilot among -- and among the first to complete. The company participated in this pilot with its Lagoa Dos Ventos wind farm in Brazil.
This plant was selected both for its size and for the numerous sustainability activities it has carried out in recent years. Blue Dot Network certification will serve as a globally symbol recognized of market-driven transparent, Paris Agreement-aligned and financially, socially and environmentally sustainable infrastructure projects.
Finally, our company was recognized by a [ third party ] of its compliance on tax sustainability matters related to 4 key GRI indicators ranking first among of its IPSA peers. Now I will comment on the financial results of the period in the coming slides.
EBITDA in the first quarter reached USD 945 million, 6% lower than the same period of last year. However, this reduction is fully explained by the fact that we do not consolidate in Fortaleza and Enel Goiás this year. If we exclude this effect and also includes results in Peru and isolate the effects in Peru, we get to an adjusted EBITDA of USD 1,222 million, an increase of 11.7% compared to the same period of last year. Explained by better operational results in Brazil, Colombia and Peru.
OpEx decreased by 3.7%, mainly due to currency devaluation and the disconsolidation of Enel Goiás and Enel Fortaleza. Net financial results decreased by around 90% due to finance -- due to higher financial expenses [ going ] by higher variable rates and higher exchange rate differences. Group net income in the first quarter reached $307 million, a reduction of 16% compared to the first quarter of 2022, reflecting the effect of the higher net financial results mentioned.
Funds from operation in this period reached $552 million, while net debt decreased by 32%, reaching USD 4.7 billion. We will analyze in detail cash flow and debt later in this presentation. On Slide 15, we see EBITDA evolution and its breakdown. Starting from USD 1,006 million of EBITDA of first quarter of 2022. We have to exclude USD 72 million coming from Enel Fortaleza and Enel Goiás in order to make it compared to first Q of 2023. Then we see that we have positive operational results in term of generation, renewables and grid while Enel X and retail decreases, which -- with this, we get to an EBITDA of USD 1,038 million for the first Q 2023, which is 11% higher than last year. FX had a negative impact of $94 million, resulting in a reported EBITDA for this quarter of $945 million, 6% lower than reported EBITDA of the same period of 2022.
As mentioned at the beginning of this presentation, Peruvian assets are considered discontinued assets, meaning that its result is considered below EBITDA level. If we consider EBITDA coming from Peru, we get an EBITDA of $1,136 million, an increase of 11.7% compared to reported EBITDA of first Q 2022.
From this amount, 53% of EBITDA came from Brazil, 28% from Colombia, 16% from Peru and 3% from Central America. In terms of business line, grids represent 50% in our EBITDA and renewables 38%. Thermal generation, retail and Enel X contributed with 5%, 6% and 1%, respectively. Let's focus on generation and grids on the coming slides.
EBITDA in generation business increased by 2% compared to first Q of 2022 in homogeneous terms. This means excluding Enel Fortaleza for dividends to reaching $401 million. This result is mainly explained by higher results in Brazil due to growth in renewable generation and better results in Central America due to higher hydro generation in Panama. This was partially offset by lower EBITDA in Colombia due to FX devaluation, but excluding the FX devaluation in Colombia also saw an EBITDA expansion during this quarter.
On the right-side chart, we -- you can see that Colombia was the main contributor to total EBITDA with 49%, followed by Brazil and Central America with 37% and 10%, respectively. Argentina contributed with 4%. Let's see grids business in the next slide. EBITDA in grid business increased by 4% compared to first quarter of last year in homogeneous terms. This means excluding Enel Goiás, reaching $579 million. This better result is mainly explained by Brazil due to tariff adjustments that we had during 2022 and higher energy sales.
From our total EBITDA in grids, Brazil represents 78% and Colombia 22%, Argentina had a negative EBITDA contribution during the quarter.
On Slide 18, we'll focus on the cash flow of our company. Starting from an EBITDA of USD 945 million, we see that net working capital amounted to minus $269 million, a significant improvement compared to last year mainly explained by lower investments payments in Brazil indemnification due to the end of the concession agreement of Enel Gen and the recognition of financial accounts receivable from its first projects in Colombia. Tax paid in this -- during the period amounted to $86 million, while net financial expenses amounted to minus $38 million.
With this, funds from operation amounts to $552 million, a solid increase when compared to the negative FFO that we had last year in the same period. After investments for $579 million included $214 million of growth CapEx would get to a free cash flow of minus $27 million, a significant improvement compared to last year.
Let me now analyze the debt of our company in the coming slide. Gross debt amounted to $7.1 billion, a decrease of 11% compared to December 2022 mainly explained by the deconsolidation of assets available for sale in 2022. Isolating this effect, gross debt would have increased 3%. The net debt reached $4.7 billion, which considered free cash flow of minus $27 million. Extraordinary operations and financial receivables were $1.5 billion related to the sale of Goiás and Costanera. Net debt, disconsolidation of USD 913 million especially from Peru and FX effect for [ minus ] $165 million.
In terms of currency and country, we see that Brazil remains as the largest contributor, while the debt at holding level represents 11% of the total. Finally, regarding the cost of debt, we can see an increasing for this period going from 9.8% to 12.6%, mainly explained by higher interest rates in Brazil and in Colombia.
Now in Slide 20. Our liquidity amounts to USD 3.7 billion from which 66% corresponds to cash and cash equivalents and 34% to committed credit lines. The average maturity of our debt is 3.5 years. For 2022, we have maturities for USD 1.1 billion and most of our debt matures after 2025. Let me highlight that we continue having a solid credit profile reflected in current rating and outlook with 3 international rating agencies. Moody's, S&P and Fitch commented in April that the disposal of our Peruvian assets will not result in a change in our current rating.
This solid liquidity position allows us to comfortably support our growth strategy for the coming years. On the next slide, I will conclude this presentation with some closing remarks.
During the first quarter of 2023, we saw solid operational results across all businesses with a relevant increase in energy demand. We have a solid funds from operations generation during this period, solid cash flow generation despite we are executing a significant amount of CapEx. We are strongly delivering and executing new capacity coming from renewable sources in line with our strategy. Finally, we continue working in our corporate simplification, concluding sale process of non-strategic assets and moving ahead on coming disposals.
Thank you very much, Aurelio. [indiscernible] Now I pass the call to the operator for the Q&A session. Carmen, please proceed.
[Operator Instructions] Our first question comes from the line of Francisco Paz with Santander.
I just have a question regarding the announcement of the sale of the distribution assets in Peru. How do you see the risk of this agreement not being approved by the Indecopi and the Chinese authorities? Or the process taking longer than expected, this in the context that the noise that was generated in Peru after the announcement was made?
Francisco. Thank you for your question. We are very confident that the process will -- normally Indecopi is a very diligent and independent authority. The -- they always do a very good job analyzing the situation in the time. We don't think we'll have any problems with this.
We are confident and we are surely confident that the process will move in a very transparent way and very diligent way and observing, of course, all the regulation and audience trust regulation in Peru, and we are confident that we'll move ahead in a very solid and robust way.
And if I can make a second question is regarding Colombia. We saw this year an attempt from part of the question. It will stop [ Petro ] to close the tariff in the electric sector. Do you see any risk of another reform for the sector, specifically for the generators?
Electricity in general -- in Latin America, we see that all the framework, the regulatory framework, the institution of the check and balances that we have in the region works. And we are confident -- and this is also for Colombia. In our opinion, Colombia has one of the best regulations and own that one of the best institutions and also the check and balance is, I mean the [ Congress ] the justice -- it's not only a executive power.
And also we are confident that we'll have a balanced situation for the coming -- in the coming months. So we don't see until now any different scenarios regarding the new government, and we are confident in the Congress and also in the legal institutions, as I said, that the Colombia will maintain its very high level, if not the best regulation that we have in the region. So we don't see major issues. Of course, some adjustment, but not much usual in our opinion.
[Operator Instructions] I'm not showing any further questions in the queue. I will turn the call back to Rafael de la Haza for any final remarks.
Yes. Carmen, let's wait a couple of minutes and see if we can take more questions. Just a couple of minutes and then we will conclude.
[Operator Instructions]
So thank you very much. There are no more questions. We conclude the results conference call. As usual, let me remind you, our Investors relations team will be available for any doubt that you may have on the first quarter results. I hope you all have a nice weekend.
Thank you. You may now disconnect.