Eletropaulo Declines After Loss on Higher Costs: Sao Paulo Mover

Eletropaulo Metropolitana SA, Brazil’s largest electricity distributor, fell to a record after it reported a fourth-quarter loss that was made worse by higher power costs.

The AES Corp. (AES) unit’s shares slid 4.5 percent to 12.08 reais at 3:02 p.m. in Sao Paulo. A close at that level would be the lowest since the stock started trading in September 2006. It was the worst performance on the benchmark Bovespa index, which rose 0.5 percent.

Eletropaulo said in a regulatory filing yesterday the cost of the power it distributes rose 29 percent to 1.5 billion reais ($758.8 million) in the fourth quarter while losses excluding interest, taxes, depreciation and amortization were 14.5 million reais. The average estimate of five analysts surveyed by Bloomberg was for a profit of 92.8 million by the same measure.

Banco Espirito Santo SA (BES) had estimated Eletropaulo’s Ebitda would be 133 million reais. Analyst Oswaldo Alcantara Telles Filho said that the higher costs were driven primarily by a lack of rain that forced the company to buy more expensive power from thermal plants because less hydropower was available.

“Were it not for this extraordinary effect, the results would have been nearly in line with our forecasts,” he wrote in a note to clients published today.

Eletropaulo has declined 28 percent this year, the steepest drop on the Brazil Electrical Energy Index (IBOVIEE), which slid 5.9 percent.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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