ISA Energia inflates profit with accounting gain in the 3rd quarter; pro forma adjustment marks high of 14%
Participations linked to Axia generate a gain on the balance sheet that multiplies the profit by more than three; Discounting this effect, the advance drops to 14%, reaching R$625 million.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM INFOMONEY · 2 MIN
According to InfoMoney, ISA Energia's net profit in the third quarter totaled R$1.9 billion, a value that exceeds the amount from a year earlier by more than three times. The central reason, according to the same source, is of an accounting nature: there was the undoing of the crossing of shares with Axia Energia.
The company itself classifies the movement as an accounting gain. According to Exame, this revenue does not flow through the transmitter's cash flow and, by determination of the company, was left out of the dividend calculation. For those who monitor cash generation, the difference is relevant, because the full profit number does not, in itself, represent resources available for distribution to shareholders.
Discounting the effect, pro-forma profit increased 14%, reaching R$625 million. Ebitda reached R$3.19 billion, a jump of 259% compared to the same previous period, and, in the pro-forma reading, the indicator grew 41%, up to R$1.25 billion. The two sets of numbers tell different stories, and it's worth looking at both before drawing conclusions.
When explaining the recurring performance, executives cited new lines and substations in operation, the consolidation of a large asset, the tariff adjustment and cost control, according to Money Times. The company's numbers were presented by executives to Reuters, according to InfoMoney.
There is still a disagreement over the trading code. InfoMoney cites the ISAE3 paper, while Money Times and Exame cite ISAE4. Before making any conclusion, it is worth confirming which action corresponds to the data disclosed.
What changes for the investor
The result reinforces care with isolated accounting profit. Gains of this type distort the comparison with previous quarters and do not necessarily indicate greater strength in the operation. To evaluate the recurring trend, the most useful data tends to be the pro forma, which shows growth of 14% in profit and 41% in adjusted EBITDA. As the gain was outside the dividend account, the income reading also needs to separate what is cash from what is an accounting effect. How the market will interpret this difference, and whether this will be reflected in prices, is an open question, and this report does not provide price expectations.
Automatically translated from Portuguese.
