Brazil Eletrobras profit slumps on currency gains
Date: 01-Apr-04
Country: BRAZIL
Government-owned Centrais Eletricas Brasileiras, or Eletrobras, that accounts for about 60 percent of all electricity generated in Brazil, reported a net profit of 323 million reais ($110 million) for last year after 1.1 billion reais in 2002.
Still, operating revenues rose to 19.5 billion reais from 17.7 billion a year earlier, Eletrobras said in a statement.
Eletrobras groups government-run companies such as Chesf, Eletronorte, Eletrosul, and Furnas, the nuclear energy unit Eletronuclear and holds a 50 percent stake in the world's biggest hydroelectric plant Itaipu on the Paraguay border.
The company also acts as a financing institution for electricity market agents and companies.
Most of the repayments the company receives on its loans are dollar-indexed, which means that Eletrobras gains when the national currency weakens and loses out when it firms.
In 2003, the real (BRBY: Quote, Profile, Research) gained 22 percent against the greenback.
The fall in profits came despite slight improvements in the ailing electricity sector over 2003.
In 2002, the sector still suffered from power rationing, but last year electricity usage recovered slightly and the government allowed companies to raise their prices to compensate them for some of rationing-linked losses.
Eletrobras stocks finished nearly 0.5 percent higher on Monday, while the broader Brazilian stock market finished in negative territory.
