CEMIG's new CEO leans on resilience as trading losses and El Niño test its record investment cycle
Brazilian utility posts consistent EBITDA, but a BRL 191M provision and a hard half for its trading arm frame the risks ahead of the 2028 tariff review.
CIG · Earnings Call · 2026-08-14
A change in tone, not in strategy
When Alexandre Ramos Peixoto took the microphone for his first CEMIG earnings call as CEO, he led with a promise of continuity. “We have a sound company. We deliver consistent results, and we know how to execute... The message I would like to convey to all of you in this first earnings call is of confidence and continuity of the implementation and the success strategy in the long-term view.” — Alexandre Ramos Peixoto, Executive (likely senior management) · 2026-08-14 That consistent result narrative is familiar to anyone who has followed the Minas Gerais utility, but the backdrop is not. The company is mid-cycle of its biggest distribution capex push, positioning for the tariff review in May 2028 and the full opening of Brazil's free market. The tension is between a cash generation machine that keeps paying and the risk of El Niño, trading losses, and rising debt.The trading hole is real, but contained
The quarter's most visible blemish is the trading company, which posted negative recurring EBITDA of BRL 180 million. CFO Leonardo George de Magalhães was candid. “This is a one-time off result, stems from a specific action related to a major industrial client... This does not have a cash effect as of now... We understand that the trading company results in the second half of the year will have positive results compared to the first half of the year” — Leonardo George de Magalhães, Executive (likely CEO or similar senior executive) · 2026-08-14 Trading chief Sergio Lopes echoed that in Q&A, pointing to the detachment of the south sub-market and the fact that the group offset the damage internally. “Although we posted negative results in the trading company, it became positive in the generation company. The final impact was zero.” — Sérgio Lopes Cabral, Executive (likely senior management, possibly related to trading or commercial area) · 2026-08-14 That kind of hedging story has been a recurring theme—in past calls the company repeatedly said it was closing positions rather than opening new ones (see the prior-year Q&A). What's new is the magnitude and the explicit provision of BRL 191 million for a client arbitration. The trading hit is the headline, but the more structural story is the trading company reset. The company has built a position for 2028-2027, but it has already said it expects "significant results" for 2028 in that unit, so this quarter's loss is a calendar issue, not a strategy reversal.El Niño: a new risk to an old plan
The other fresh theme, and one that spans the whole Americas utility complex, is El Niño. Global keyword momentum has been rising on the theme. The distribution officer boasted about the largest maintenance plan in history.That is a prepared statement, but it underscores that the company is spending real money on resilience—something that also shows up as higher costs and a 15.5% increase in consolidated costs. The generation/transmission side is less worried. Demétrio Alexandre Ferreira said they run periodic tests and don't need more elaborate contingency plans for large plants, only reviewing plans for smaller ones. “In our point of view, we do not need contingency plans that are just more elaborated than the ones that we already have to our large plants and reservoirs.” — Demétrio Alexandre Ferreira, Chief Generation and Transmission Officer · 2026-08-14 That's an important nuance: El Niño is a real risk for the distribution grid because of storms, but for hydro generation the company is relatively comfortable.Considering that we have the largest investment plan in history, we are executing our maintenance plan, also the largest one in history, our OPEX. We have AMI meters, automation, the electric system. For the second half of 2026, we are fully prepared for El Niño impacts.
The investment cycle and the data center allure
The most compelling part of the call is the forward-looking capital story. The company is making BRL 6.7 billion in planned investments this year, with 49% already deployed in the first six months. CFO Leonardo stressed that a "relevant cycle of investments" is underway, especially in distribution, to prepare the grid for the 2028 tariff review and the arrival of open-market customers. Investment program is a term that shows up repeatedly in the company's own keyword trajectory, but it now has a new dimension: data centers. Sergio Lopes, the trading officer, acknowledged the company is talking to players in the data center segment. “We understand that there is an opportunity in the market, but it has to be analyzed cautiously... We want to extract the best and the greatest value of this opportunity” — Sérgio Lopes Cabral, Executive (likely senior management, possibly related to trading or commercial area) · 2026-08-14 That's a shift from the past, where the company rarely talked about data centers. Global keyword momentum for data centers is high, and other reporters in the recent earnings season (e.g., 4324.T, 0001.HK, 99.CI) are also mentioning them. CEMIG is clearly trying to ride that wave without overpaying. The data center theme is still nascent for CEMIG, but it's a new angle on the old idea of energy demand.Financing, leverage, and shareholder returns
The company raised BRL 4.6 billion in funding during the quarter to support the capex. Leverage is at 2.58x, which the CFO says is "adequate" given the investment plan and the expectation that the 2028 tariff review will bring it down. Meanwhile, interest on capital paid to shareholders was BRL 631 million. The CEO repeated the line about paying a 50% minimum dividend payout from net income. “We believe that we will keep on bringing positive dividend yields, whether now or in the next few years.” — Leonardo George de Magalhães, Executive (likely CEO or similar senior executive) · 2026-08-14 That combination—heavy investment, moderate leverage uptick, and a full dividend—is the classic regulated-utility pattern. The risk is if the trading loss or El Niño damages cash flow. The company's own quality indicators are improving (FEC and DEC below regulatory limits), which gives some comfort that the capex is producing tangible service improvements.What changed, really?
In the end, the most meaningful change is the CEO. Alexandre Peixoto's message is about consistency and confidence, but under him the company is also signaling through its actions that it wants to be a bigger player in transmission auctions, battery auctions, and data centers, while keeping a strict capital allocation discipline. The trading loss is a hiccup, not a trend. The El Niño commentary is mostly operational. And the 2028 tariff review remains the cornerstone of the bull case. The stock may not be a screaming buy, but the company is doing the right things. Prior calls repeatedly mentioned concession renewals, pension fund, healthcare plan, and trading. This quarter the focus is on the new CEO, the investment program, and a one-off trading hit. Nothing suggests a strategic pivot, but the tone is more confident, and the data center ambition is new.That may be the most accurate summary of the quarter: the company is betting on the same winning hand, but the new CEO has added a dash of growth optionality.This strategy is already bringing results to the company. This is a winning strategy... We thank our investors for their trust, and we are very optimistic about the strategy for the continuity of implementation