Auren Energia (AURE3), controlled by Votorantim and CPP Investments, has shared its financial results for the fourth quarter of 2024, marking significant developments following the acquisition of AES Brasil. The integration of AES has positioned Auren as Brazil’s third-largest energy generator, yet the company reported a net loss of R$ 363.6 million for the quarter, reversing its profit of R$ 220.2 million from the same period last year.
The disappointing financial performance is primarily attributed to initial costs linked to the integration of AES Brasil, part of a R$ 7 billion transaction. Over the course of the year, Auren registered a net loss of R$ 32.6 million, contrasting with the previous year's profit of R$ 15.6 million. Despite these setbacks, key metrics did show some growth, with adjusted EBITDA for 4Q24 amounting to R$ 889.8 million, down 12.7% from the previous year. Overall, the adjusted EBITDA for 2024 totaled R$ 3.31 billion, reflecting a decline of 5% year-over-year.
According to Auren executives, the company has made substantial progress just two months after completing the AES acquisition. They highlighted operational advancements, including a savings of R$ 43.5 million on administrative and operational costs. CEO Fábio Zanfelice pointed out the restoration of 37 idled wind turbines from the acquired AES parks as another positive step. "Our forecast is to have much of the synergies consolidated by the end of 2025, and this has been expedited compared to our initial business plan," he stated.
Adding to the operational enhancements, Auren announced the construction of the Cajuína 3 wind complex. Expected to add 112 megawatts (MW) to the existing infrastructure located in Rio Grande do Norte, the project is set to capitalize on local resources, reducing transmission costs and ensuring attractive returns even amid tough market conditions for renewable energy projects. Zanfelice shared optimism about the project, describing it as showing "a highly interesting return."
Despite these positive indicators, Auren's financials were also impacted by regulatory cuts to renewable generation imposed by the National Electric System Operator (ONS) during 2024. Zanfelice noted this cut had a net impact of approximately R$ 120 million on Auren's finances, even after accounting for any reimbursement for unaffiliated production and gains from other operational adjustments. He expressed hope for 2025, anticipating fewer concentrated generation cuts, offering more stability to the sector moving forward.
The financial performance metrics reflect not just the integration challenges but also the environment under which Auren operates. With current debt ratios reaching 5.7x Net Debt/Adjusted EBITDA, concern about leverage remains high. The company's performance amid the higher Selic rate of 13.25% per annum, compounded by projected climbs to around 14.5% annually, adds to these concerns. Nevertheless, credit rating agencies maintain stable outlooks which provide some reassurance to investors.
Alongside this performance, Auren's financial reporting indicates significant operational volume growth, with pro forma net revenue of R$ 3.6 billion for 4Q24—a 35% increase year-over-year. This surge is tied to heightened energy sales and the commencement of operations for several new projects. Nevertheless, cost pressures also mounted, particularly with energy purchases resulting in R$ 2.3 billion—an 88% rise year-over-year as the company worked to fulfill its commitments under energy sales contracts.
Despite the operational challenges and financial setbacks, Auren's diversified portfolio—comprising 54% hydropower, 36% wind energy, and 10% solar energy—positions it well to mitigate risks and maximize returns under favorable pricing conditions. Executives are confident about the strategic direction the company is headed, emphasizing effective management of operational efficiencies and synergy capture as keys to future performance improvements.
With Auren Energia working diligently to stabilize and strengthen its financial footing following the AES acquisition, stakeholders remain alert to the potential benefits of these initiatives. The company is optimistic about unlocking synergies as it continues its integration process, which could lead to enhanced performance figures down the line. Moving forward, Auren's ability to navigate the financial and operational challenges will be imperative for securing its standing as a leading energy provider within Brazil.