Companhia Energética de Minas Gerais - CEMIG (CMIG4) Investor Day 2024 summary

Strategic direction and transformation

• Executing the largest CapEx plan in company history, with BRL 49.2 billion allocated for 2024–2028, focused on regulated sectors and core business in Minas Gerais, and divesting non-core holdings to recover over BRL 13 billion in cash.

• Investments are concentrated in distribution, transmission, natural gas, and distributed solar, with 100% of new investments in Minas Gerais, aiming to modernize infrastructure and support economic development.

• Customer-centric strategy underpins all operations, with digitalization, automation, and smart meters to enhance efficiency, reduce losses, and improve satisfaction.

• Privatization remains a long-term goal, supported by the controlling shareholder, with ongoing alignment between management and state government to unlock further value.

• Targeting leadership in the free and retail energy market, and a proactive role in the energy transition, with a dedicated committee guiding decarbonization and innovation.

Financial performance and capital allocation

• Achieved consistent improvement in EBITDA and net income since 2018, with net debt/EBITDA reduced from 3.24 in 2018 to 1.02 in 2023, and recurring dividend payments positioning the company as a leading dividend payer.

• Market value increased from BRL 10.6 billion in August 2018 to BRL 35.3 billion in August 2024; share prices appreciated over 390% for CMIG4 and 450% for CMIG3.

• Operating cash generation reached BRL 1.9 billion in Q2 2024, with annual cash generation between BRL 7–8 billion, supporting robust investment and dividend capacity.

• Net debt/EBITDA ratio reduced from 3.2x to 1x, with plans to ramp up leverage to 2.5x by 2027 to fund investments while maintaining attractive shareholder returns.

• Paid BRL 12.7 billion in dividends since 2019, including additional dividends scheduled for August 2024.

Operational excellence and growth initiatives

• Distribution network modernization includes BRL 23 billion investment (2024–2028), expansion to 615 substations, 577,000 km of network, and 1.8 million smart meters by 2028.

• Collection improvements yielded an additional R$3.24 billion over 2021–24, with digital channels now accounting for 69% of collections, saving R$25 million since 2021.

• Energy losses in distribution have remained below regulatory limits since 2021, generating a gain of R$1.17 billion.

• Major rural and agribusiness network expansions underway, with R$2.98 billion invested in rural three-phase networks and R$5 billion in new substations by 2027.

• Trading arm maintains market leadership, with long-term contracts secured for 2025–2027 and a diversified approach to manage market risks and margins.