Roland Berger highlighted Alupar, Engie, Equatorial and Enel Brasil in Brazil in survey with 201 listed firms around the world
07/13/2022
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Eletrobras’s power transmission towers — Foto: Custódio Coimbra/Agência O Globo
Alupar, Engie, Equatorial and Enel Brasil are among the 23 electrical companies with the world’s best performance, a study by Roland Berger shows.
The consultancy surveyed 201 power companies listed in the U.S., Canada, Europe, Asia and Latin America, with revenues exceeding $1 billion, and for which there is public performance data over the past 10 years.
Between 2016 and 2020, the segment saw shareholder value added rise, with a return on invested capital (ROIC) higher than the weighted average cost of capital (WACC) in all years except 2017. In the five-year period, value creation reached $210 billion.
Companies in Europe and the United States accounted for 96% of the value created, while Asia and Latin America changed their positions since the previous study.
“Asia destroyed $11 billion of value while Latin America built $20 billion of shareholder value,” says Jorge Pereira da Costa, Roland Berger’s managing partner, stressing that the perception of risk in Latin America is still very high.
In the same period, the Brazilian power industry created value in every year despite the pandemic, with over $12 billion in shareholder value added. This is the first time Brazilian power companies are among the global 23 Top Performers – the ones that proportionally grew the most in sales and offered better remuneration to shareholders and investors, the executive says. Alupar stands out in transmission, Engie in generation, Equatorial in distribution, and Enel for its efficiency in asset management.
“Despite the challenges in Brazil, these companies are capable of being among the best performers in the world using very specific levers. Alupar took advantage of a regulatory window to invest heavily in transmission and good execution capabilities. Equatorial has a regulatory strategy, knew how to take advantage of its asset base, operational efficiency and diversification. Engie is leaving the thermoelectric power plant market, and has invested in services and power commercialization as a growth lever. Enel, on the other hand, is a highlight due to growth, the purchase of Eletropaulo and the capacity to extract value from this asset,” he said.
Enel is not a listed company, but parent company Enel Americas is, Mr. Costa says. The study considered the contribution of Enel Brasil to Enel Americas. “There are 22 companies plus one,” he said. The use of these listed levers, he says, will shape the future of the power industry by better addressing the structural problems. These are included in Bill 4,141, which deals with the modernization of the industry.
Another finding of the survey is that the Brazilian power industry is impacted by the performance of state-owned companies, which have wiped out $1.8 billion in shareholder value. Eletrobras accounts for more than 80%, or $1.5 billion.
Alupar CEO Paulo Godoy says that the study proves the efficiency in the company’s capital allocation, the experience to identify and execute new projects, technical competence and the financial discipline, ensuring the profitability of the business.
Engie Brasil CEO Eduardo Sattamini says that 95.8% of the generation comes from renewable sources and that the performance in diverse and complementary segments creates synergy, increasing resilience to risks and driving opportunities that emerge from trends and challenges.
Equatorial CEO Augusto Miranda highlighted the financial discipline and capacity to allocate capital efficiently, with a focus on the long term, and the delivery of growth and results, which translates into shareholder return.
Enel’s country manager in Brazil, Nicola Cotugno, said that the result comes from the company’s commitment to energy transition in the country, which brings opportunities for competitors that operate in an integrated manner in the power industry.
*By Robson Rodrigues — São Paulo
Source: Valor International