AXIA Energia S.A. Q1 FY2025 earnings call

• Conciliation with the federal government was approved by the general shareholders assembly and a new collective bargaining agreement was reached.
• High availability of generation and transmission equipment was achieved this quarter.
• Partial sale of gas supply plants occurred, with generation moving to 100% based on water, sun, and wind.
• Conclusion of the Coxilha plant and advances in Manaus-Boa Vista transmission work, with expectation of second-semester 2025 completion.
• Investments made for the conclusion of the Angra nuclear plant, with no need to generate or invest in Angra dos Reis Park, and pursuit of selling stake in the nuclear plant.
• Pursuing a recurrent PMSO figure for 2025, with progress in training and serving more customers.
• Launched 2024 sustainability report, partnership with Estapar for electric cars, agreement with Antaq for decarbonization, and social/environmental commitments like national museum reconstruction and Amazonian manatee calf birth.

Adjusted results showed a loss of R$81 million, with the main impact from regulatory remeasurement of Chesf for transmission. Revenue grew 16%. Energy trading saw a 35% year-on-year increase in the free market. Partial sale of Amazon thermal plants brought in R$2 billion in cash. Operational costs were reduced, with a 28% drop from the fourth quarter 2024 and 8% year-on-year, saving R$143 million in personnel. PMSO optimization had a 28% drop from the fourth quarter and 8% year-on-year, with a 15% drop in personnel costs. Compulsory loan saw a reduction of R$400 million in the first quarter, and a further R$336 million reduction in possible and remote settlements.

• Pursuing a recurrent PMSO figure for 2025.
• Energy trading balance in 2025 between 0 and 2.5 gigawatts, with sales to be enhanced in 2026-2027.
• Strategy to hedge risks in the first quarter due to price dynamics, with different approach from second quarter onwards to negotiate energy when prices reflect reality.
• Vision of a balanced market division portfolio with 50% resources in South and Southeast, one fourth in Northeast and North.

• Submarket risk, particularly between North/Northeast and Southeast regions, which can cause mismatches in energy prices and trading strategies.
• Volatility in energy prices impacting trading decisions and financial results.
• Regulatory uncertainties related to tariff remeasurement and capacity auctions.

Q: Follow-up on hedging and liquidity impact from first quarter submarket mismatch.

A: In first quarter, hedging was done due to price risks, but second quarter approach changed as prices were wrong, and portfolio is balanced with 50% in South/Southeast and one fourth in Northeast/North, with risk mitigation strategies like swap operations considered.

Q: About CapEx not accelerating year-on-year and tariff remeasurement downward.

A: First quarter is usually slower for CapEx, and tariff remeasurement for Chesf was due to a legal redress resolved in assembly, resulting in R$2.9 billion and nearly R$1 billion net remuneration.

Q: Speak about free contracting market and energy allocation differences.

A: Energy allocation has regional differences, with mismatches between North and Southeast, but expecting similar prices between regions in November, and monitoring risks and generating reports for management decisions.

Q: Priority agenda for 2025 and regulatory auctions update.

A: Priority on management focus, investment in assets with environmental licenses, market expansion, sale of nuclear plant stake, cost reduction, and participation in capacity auctions foreseen in 2025 with broad portfolio to add production.

Q: Share buyback vs dividend and destination of thermal plant sale funds.

A: Preference for share buyback currently, with sale of thermal plants part of capital allocation plan, having paid additional R$1.8 billion in dividends in fourth quarter, and monitoring cash flow, investments, and auctions for optimal shareholder return.

Q: Submarket impact in second quarter and beyond.

A: Mismatch impact in second quarter is lower than first, with lower exposure in Southeast, and normal volatility in market scenarios, but monitoring price behavior and market learning to deal with submarket risks.