Eletrobras, Brazil’s state power utility, saw shares fall significantly on Thursday after the business revealed weaker-than-expected financial results for the first quarter of 2025.
The shares dropped 4.49% to R$41.24, while ELET6 fell 4.16% to R$45.65.
The negative reaction came after a surprising net loss of R$354 million in Q1, compared to a profit of R$331 million in the same period the previous year.
According to local media outlet InfoMoney, the loss was primarily caused by an unexpected increase in exposure to the energy spot submarket.
The company reported an EBITDA of R$5.49 billion, a 3.7% decrease year on year. Adjusted EBITDA also fell 4.1% to R$5.38 billion.
Eletrobras noted lower transmission income and increased energy purchase costs as the key causes of the fall, which outweighed gains from power generation, fewer expenses, and better equity outcomes.
Analysts’ key insights on the loss
According to Infomoney, XP Investimentos expressed concerns about adjusted EBITDA falling short of projections, citing tight gross margins as the primary reason.
Genial Investimentos attributed the divergence from predictions to Eletrobras’ more aggressive sales strategy, in which the company sold more energy than it could create, resulting in a short position.
This compelled Eletrobras to meet its contractual obligations by purchasing electricity at higher spot market costs.
On the other hand, Bradesco BBI believes that the debate over Eletrobras will increasingly shift from spot market exposure to broader questions about long-term electricity price trajectories and the company’s ability to unlock value from its generation portfolio, especially given regional infrastructure constraints through 2028/2029.
Long-term outlook remains positive
Despite the quarterly setback, experts have a cautiously optimistic long-term prognosis. Bradesco BBI and Genial Investimentos retained their “buy” ratings, noting structural improvements and upside potential.
One notable transaction was the selling of various thermoelectric properties to the J&F company for R$2.9 billion. Regulatory approval for the Santa Cruz plant transaction is still pending.
XP also noticed a drop in Eletrobras’ energy balance exposures and a positive decrease in compulsory loan commitments during the quarter.
These factors, albeit overshadowed by the operating performance, show continued progress in operational efficiency and capital restructuring.
Furthermore, the recent conclusion of a constitutional issue over corporate voting rights, which ended tensions between Eletrobras and the federal government, ushers in a new era for the corporation.
Genial sees this development as critical to achieving governance flexibility and strategic clarity.
In conclusion, while Eletrobras’ first-quarter results sparked worries about near-term earnings stability, investors and analysts appear to be focused on the company’s broader structural reform and long-term potential in Brazil’s changing energy market.
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