Eletrobras (ELET3) wants to move forward with changes after capitalization and sees spending optimization as a priority

Eletrobras (ELET3) wants to move forward with changes after capitalization and sees spending optimization as a priority

Eletrobras (ELET3; ELET6) held its earnings call on Monday (15), after it released its second-quarter balance sheet last Friday. The meeting with analysts and investors was the last for Rodrigo Limp as CEO (CEO), as the company’s former president, Wilson Ferreira Jr., will resume his position in September, to continue changes after the company’s capitalization.

According to Limp, the company will continue to focus on changing its structure, with cost optimization and expense reduction as strategic priorities. Some analysts have identified Eletrobras’ management expenses, which are up significantly year-over-year, as one of the negative points on the balance sheet.

The director of the former state-owned company, for example, stated that in the coming years the company might have a better dynamism regarding its workforce – which until then followed the civil service model.

“We have changed our work and salary policy, through merit policy and also focus on talent retention. By 2023 we should separate retirees and retirees without good reason. He commented that from the second year of capitalization, the company will be able to change up to 20 % of employees who were present in April 2023.

The company also plans to cut its expenses with contingent liabilities, which also hurt the second-quarter result. “We have large sums allocated, with 25 billion Brazilian reais in mandatory deposits, for example, and we have gained flexibility to deal with these numbers by ceasing to be state-owned,” he explained.

Still facing changes, Eletrobras has also stated that it is updating a series of points in its platform and that it should continue to advance on those points.

According to Limp, the capitalization meeting has already introduced improvements, and the company is now working on new changes to the holding company and subsidiaries, removing state-owned rules from these documents. “We’ve made progress on some points as we’re moving forward, which makes it more similar to the governance of a private company. Wilson’s arrival should bring new discussions, which will be the responsibility of the new management,” he points out.

The former state-owned company is still preparing to gradually leave the quota system and sees that next year it must face a major challenge on the energy marketing front. “We already have a relevant amount of energy traded in the free market, but now we have to add new knowledge, with more volume to sell and a market term to improve,” the CEO noted.

Company executives highlighted that Eletrobras was operating more in the free market even before capitalization, with important operations already completed. Of the generation business, 47.3% of the energy produced in 2022 was allocated to quotas, 13.6% to the regulated contracting environment (ACR) and 36.9% to the free market.

“We are in the process of finalizing the incorporation of an integrated system, adjusting the client portfolio and working on a long-term strategy.

Pedro Gatoba, Generation Manager at Eletrobras, explained that we expect to have the first results in the coming months and in 2023 we will have all the elements ready to implement this strategy.

The company’s executives preferred not to indicate whether, under the new management, there were studies to make new investments or divestments.

We have to check stock availability for sale for example. Some were given as collateral and we’re looking to release it, something we’re making a lot of progress on, making us a lot faster in the process,” the CEO commented. It is obstetrics and transmission.

Eletrobras are involved in several electrical utilities such as ISA Cteep (TRPL4), AES (AESB3) and Auren (AURE3).

On the buy side, after capitalization, the CEO mentioned that there are studies to check whether or not it makes sense to increase participation in strategic assets in which the company already has a suitable position. “Belo Monte is one that naturally gets to be evaluated,” Limp said. “It’s one of the biggest factories, but on the other hand it has high debts and it will increase our exposure to the water source.”

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