Aguas Andinas S A : Consolidated Earnings Release for Aguas Andinas as of September 30 2021







Earnings Release Aguas Andinas

Period ended September 30, 2021

1. Summary of the period

Aguas Andinas is focused on the management and mitigation of climate change impacts

Due to the extreme drought situation that the region has been experiencing for more than a decade, the Company has continued to manage the water scarcity through the purchase of water and deeper groundwater catchment, maintaining security levels of the El Yeso reservoir, this has resulted in the storage of 169.5 hm3 at the end of September 2021, which represents a 59% increase compared to the 106.5 hm3 stored at the end of September 2020.

It should be noted that investments have been made and several projects are underway to strengthen security of supply in the face of this extreme drought scenario. In this regard, in August of this year, a historic collaboration agreement was signed with the Irrigation Associations of the First Section of the Maipo River, which establishes a series of measures to lay the foundations for a solution that will reinforce the water supply to the population and, at the same time, the use necessary to sustain the agri-food industry, improving the water efficiency of the basin.

Undoubtedly, the climate crisis, whose main manifestation has been the profound water scarcity affecting the central zone of the country, poses us important challenges in a context in which there is a significant imbalance in the balance of supply and demand. In view of this, it is essential to add new sources, to have greater redundancy in infrastructure and to increase the resilience of the system to provide an increasingly robust supply in the face of climate change. And we must continue working along these lines.

In order to face this emergency, the Company has continued executing the investment plan, investing $101,276 million at the end of September 2021.

Management of the Pandemic:

At the end of September 2021 we have continued to experience the direct and indirect impacts derived from the exceptional situation due to Covid-19.

This context requires us to continue to make a great effort to adapt in order to continue supplying the public with water, an essential resource for life, for which we continue to deploy an intense preventive strategy. In view of this, at Aguas Andinas we continue to have all the economic, technical and human resources available to ensure the continuity of the operation, ensuring a safe supply at a crucial time, protecting together the health of our workers, their families and the community.

Complementing the above, an overall impact of $23,014 million is estimated for the direct and indirect effects derived from the exceptional situation caused by COVID compared to a normal year without pandemic, associated with lower non-residential consumption (-18Hm3;-4.3%), higher expenses for uncollectible (% uncollectible on revenues 3.0% vs. 0.8% in the pre-pandemic period) and direct preventive expenses (gels, masks, meters, transportation).

1

Global context and operating costs:

  1. In the current context of extreme drought, increased raw material and labor costs, the Company has experienced higher operating costs at the end of September 2021, mainly associated with the purchase of water due to the effects of the drought, and maintenance of networks and operating equipment as a result of the significant increase in customer requirements and work volume, together with higher prices due to the increase in labor and construction material costs.

Net income as of September 30, 2021, amounted to $79,747 million, which represents an increase of 5.1%, regarding the same period last year. The main changes are shown in the following chart:

Net income (Million $)

  1. Higher regulated revenues mainly associated with higher average tariffs of $10,782 million due to the latest tariff indexations together with higher sales volumes of $3,981 million, mainly explained by higher sales to Residential customers of 1.8%, which is partially offset by lower sales to non- residential customers of 0.8%.
  1. Higher non-regulated revenues of $5,560 million, mainly due to higher activity in home services to customers, agreements with developers, modifications to sanitary infrastructure, technical advisory services for rural potable water, extraordinary revenues associated with the Trebal-Mapocho Biofactory and higher activity in non-regulated subsidiaries.
    This is partially offset by non-recurring revenues in 2020 associated with compensation generated by contractual agreements, triggered by the extension of the start-up of projects developed by third parties.

2

  1. Higher raw water purchase costs for $1,548 million necessary to continue facing the extreme drought situation that the region has been experiencing for the last 12 years.
    It is important to note that the volume stored in the El Yeso reservoir as of September 2020 was 106.5 hm3 vs. 169.5 hm3 at the end of September 2021. Also, in August, a historic collaboration agreement was signed with the Irrigation Associations of the First Section of the Maipo River, which includes important new investments by the Company, an improvement to the current infrastructure based on an accurate, cooperative, and professional long-term diagnosis, the reuse of the resource with treated water from the Biofactories, and a more efficient master management plan so that future solutions come from different sectors.
  1. Higher costs of maintenance and repair of networks and operating equipment of $5,393 million were generated, due to the significant increase in customer requirements and volume of work, together with higher prices due to the increase in labor and construction material costs.
  1. Situation of Covid-19: Since March 2020, the Company maintains an action plan to ensure service continuity, implementing various measures to manage the exceptional situation resulting from the Coronavirus Pandemic.

It should be noted that at the end of September 2021, a provision for bad debts of $11,189 million is registered, generating a lower bad debt expense of $925 million compared to 2020.

At the non-operating level, a lower financial result of $14,005 million was presented, compared to the same period of the previous year, mainly associated with higher debt revaluation due to the variation of the Unidad de Fomento (3.5% in 2021 versus 1.4% in 2020).

In Other Gains (Losses) there is a higher result of $7,388 million, mainly explained by the fact that at the end of September 2021 a reversal of the contingency provision associated with the ESSAL sale contract for $10,750 million was recognized, due to the end of the expiration process of the Osorno concession. Additionally, non-recurring costs were recognized for $3,100 million associated with the Transformation Plan being implemented by the Company, with a vision of a new sustainable business model focused on mitigating risks, capturing efficiencies, prioritizing investments and incorporating technology, supported by a new organizational culture.

Generation and Position of Cash. At the end of September 2021, the balance of cash and cash equivalent increased by $47,942 million regarding end of June 2021, reaching $184,300 million. The increase in this item in the third quarter is mainly explained by a bank loan of $25,000 million together with higher operating flow, which is partially offset by investment payment. The balances of treasury allow the Company to have a clearance to cope with the uncertainties of the current environment.

3

Investments

At the end of September 2021, investments of $101,276 million were executed, detailed in the following graph:

The main projects developed at the end of September 2021 were the following:

Drilling and reinforcement of water supply system: It should be noted that work began on the Pozos de Cerro Negro – Lo Mena project, an infrastructure that will strengthen the potable water supply in the southern sector of the city, consisting of 15 wells for the extraction of groundwater, in addition to a 20,000 m3 tank, a lifting plant and a chlorination and fluoridation unit. This backup infrastructure will be activated only in emergencies and will have a flow rate of 1,500 l/s.

Renewal of wastewater and potable water networks

Nitrate Treatment at La Farfana and Mapocho-Trebal Biofactories

Replenishment of assets La Farfana and Mapocho-Trebal Biofactories

Renewal of starters and meters

Autonomy 12 hours Aguas Cordillera (San Antonio and San Enrique Tanks)

To face the effects of the Mega-drought, the Company has carried out investment works such as the Hydraulic Efficiency Plan to be able to reduce the losses of potable water in the network and the new Operational Control Center for the constant monitoring of the networks. In addition, a plan of future investments has been contemplated to ensure consumption by the inhabitants, such as new drillings in wells and reinforcements in the potable water supply system such as the expansion of the Padre Hurtado Potable Water Treatment Plant.

In addition, works to face extreme turbidity events for up to 48 hours are considered, as well as Aguas Andinas has committed new fundamental works to address drought and climate change, which have been requested and incorporated into the Company’s updated Development Plan, subject to approval by the SISS, including the following:

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Disclaimer

Aguas Andinas SA published this content on 25 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 November 2021 17:19:04 UTC.

Publicnow 2021

All news about AGUAS ANDINAS S.A.

Sales 2021 495 B
605 M
605 M
Net income 2021 112 B
136 M
136 M
Net cash 2021 911 B
1 113 M
1 113 M
P/E ratio 2021 9,70x
Yield 2021 5,75%
Capitalization 1 075 B
1 308 M
1 313 M
EV / Sales 2021 0,33x
EV / Sales 2022 0,20x
Nbr of Employees 1 717
Free-Float 41,5%

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Mean consensus BUY
Number of Analysts 5
Last Close Price
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Average target price
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Spread / Average Target 52,9%




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