Auren Energia’s Q3 Profit Surge: R$270.8M Gain Reverses Previous Loss

Auren Energia, a prominent player in Brazil’s energy sector, has defied expectations with its third-quarter results for 2024.

The company reported a net profit of R$270.8 million ($48.4 million), marking a significant reversal from the R$838.1 million loss in the same period last year.

This impressive turnaround stems from several factors. Auren’s revenue reached R$2.046 billion ($365.4 million), a 25.8% increase year-over-year.

The company benefited from a 37.3% rise in energy trading volume. New solar projects, Sol do Piauí and Sol de Jaíba, also contributed to the improved performance.

Auren’s adjusted EBITDA grew by 6.9% to R$484.3 million ($86.5 million). This growth occurred despite challenges in the hydroelectric segment, where average prices declined due to the expiration of long-term contracts.

Auren Energia’s Q3 Profit Surge: R$270.8M Gain Reverses Previous Loss. (Photo Internet reproduction)

The company’s net debt stood at R$2.898 billion ($517.5 million) at the end of September, a 156.2% increase from the previous year.

Auren’s Financial Strategy and Growth Outlook

Auren’s leverage ratio, measured by net debt to adjusted EBITDA, rose to 1.60 times from 0.62 times a year earlier. Auren’s CEO, Fábio Zanfelice, expressed satisfaction with the results.

He highlighted the strong performance in energy trading and the company’s ability to capitalize on the recent drought conditions in Brazil.

Looking ahead, Auren faces both opportunities and challenges. The recent acquisition of AES Brasil will significantly expand its operational capacity.

Post-acquisition, Auren will become Brazil’s third-largest energy generating company, with 39 assets totaling 8.8 GW of installed capacity.

However, this growth comes at a cost. The company’s leverage is expected to increase substantially following the AES Brasil incorporation.

Auren made two issuances in October 2024 to finance the acquisition, which will likely push leverage higher in the coming quarters. As of Q3 2024, Auren had R$5.2 billion ($928.6 million) in cash.

Recent market fundraising has boosted this figure to approximately R$13 billion ($2.32 billion). If AES Brasil shareholders opt for cash payments, Auren may need to disburse up to R$7 billion ($1.25 billion).

Despite these challenges, Auren‘s management remains optimistic. The company estimates corporate synergies of R$1.2 billion ($214.3 million) from the AES Brasil acquisition, with additional operational and financial benefits expected in the future.

As Auren navigates these changes, investors and industry observers will closely monitor its ability to integrate AES Brasil’s assets, manage its increased debt load, and maintain its competitive position in Brazil’s evolving energy market.