Sabesp, Latin America’s biggest water utility, expects to be able to supply clients until the rainy season in Brazil ends during the worst drought in at least four decades in Sao Paulo state, an executive said.
Last month the company began offering 30 percent discounts to customers who reduce consumption by at least 20 percent of their 12-month average. Sabesp yesterday began to draw water from the technical reserve of the Cantareira basin, which is at a level of 26.7 percent. The basin supplies almost half of the 20 million residents of metropolitan Sao Paulo.
“Even considering a scenario that’s worse than the worst we have already had, the measures we are adopting should be able to get us to March,” Rui Affonso, the utility’s chief financial officer, said today on an earnings conference call with analysts and journalists. “Rationing is always a bad solution, because of the problems it imposes on clients. This is what the company and its controlling shareholder think.”
Brazil’s rainy season runs from October to March. The state of Sao Paulo has a stake of 50.3 percent in Sabesp, which is formally known as Cia. de Saneamento Basico do Estado de Sao Paulo.
Sabesp’s adjusted net income in the first quarter was 477.6 million reais ($216 million), according to data compiled by Bloomberg after the utility reported earnings late yesterday. That beat the average estimate of three analysts surveyed by Bloomberg for a profit of 366 million reais.
The stock climbed 3.9 percent to 21.97 reais at 1:45 p.m. in Sao Paulo, its biggest intraday advance since May 2.