By Brazil Stock Guide – Axia Energia SA (B3: AXIA3, AXIA7) swung to a net profit of R$1.19 billion in the second quarter of 2026 from a loss of R$1.33 billion a year earlier, as stronger energy sales, improved equity-accounted results and lower provisions supported earnings, according to the company’s quarterly results release.
Net operating revenue rose 9.7% from a year earlier to R$11.19 billion. Reported earnings before interest, taxes, depreciation and amortization climbed to R$5.93 billion from R$1.26 billion, while the EBITDA margin widened to 53% from 12.3%.
Adjusted net income increased 9.5% to R$1.61 billion, compared with R$1.47 billion in the second quarter of 2025. Adjusted EBITDA rose 22.5% to R$6.31 billion.
On a sequential basis, adjusted net income fell 56.6% from the first quarter, while adjusted EBITDA declined 26.1%, reflecting the stronger energy-market conditions recorded at the start of the year.
First-Half Earnings Accelerate
Axia reported net income of R$3.82 billion for the first six months of 2026, reversing a R$1.68 billion loss in the same period last year.
Adjusted net income surged to R$5.32 billion from R$1.39 billion. First-half net revenue increased 15.9% to R$23.9 billion, while adjusted regulatory EBITDA rose 40.5% to R$15.28 billion.
The improved operating performance helped offset a deterioration in financial results. The adjusted financial loss widened 41.9% to R$3.37 billion in the quarter from R$2.38 billion a year earlier.
Generation Margins Drive EBITDA Growth
Adjusted regulatory EBITDA increased 21.5% to R$6.68 billion. The result reflected a 17.5% increase in the generation contribution margin, a 64% decline in operating provisions and stronger earnings from equity investments.
The generation contribution margin reached R$3.65 billion, up from R$3.11 billion a year earlier. Contributions from energy sold in the free market and settled in the short-term market jumped 52.2% to R$2.33 billion.
The unit margin on energy sold in those markets increased to R$96 per megawatt-hour from R$73 per megawatt-hour. Axia attributed the gain to higher energy availability, improved hydrological conditions and higher short-term prices in Brazil’s North, Northeast and South regions.
The Generation Scaling Factor, known as GSF, averaged 99.16%, compared with 95.64% in the second quarter of 2025. The average price in the free market increased 24.4% to R$191.11 per megawatt-hour.
Net generation rose 6.2% to 41.1 terawatt-hours. Total energy sales, however, fell 16.9% to 25.2 terawatt-hours across the regulated market, the free market and plants operating under Brazil’s quota system.
Transmission Margin Tops R$4 Billion
The transmission contribution margin rose 1.3% to R$4.03 billion from R$3.97 billion a year earlier.
Axia ended June with 74,829 kilometers of transmission lines, an increase of 1.4% from the previous year. Its network included 420 substations, with 301 owned by the company and 119 operated for third parties.
Annual Permitted Revenue associated with operating transmission assets declined 2.1% to R$16.84 billion. An improvement in tariff adjustment components partly offset other pressures on revenue.
Capital Spending Climbs 53%
Investment rose 52.6% to R$3.12 billion in the quarter. First-half spending increased 47.2% to R$4.47 billion.
Corporate transmission projects received R$1.72 billion. Spending on transmission expansion surged to R$636 million from R$85 million, while reinforcement and improvement projects received R$1.07 billion.
Axia also invested R$733 million in transmission special-purpose entities and R$297 million in its corporate generation operations.
The company’s large-scale transmission portfolio comprises 288 projects with estimated capital expenditure of R$15.5 billion. The assets are expected to add R$2 billion in Annual Permitted Revenue between 2026 and 2030, along with 2,332 kilometers of transmission lines and 20,616 megavolt-amperes of substation capacity.
Axia began commercial operations at the Chapecoense substation on Aug. 3, 17 months ahead of the regulatory deadline. The project is expected to add R$12.7 million in Annual Permitted Revenue.
The company also won lots 8, 9 and 10 in Brazil’s 01/2026 transmission auction on July 3. The projects require an estimated R$668 million in investment and are expected to generate R$50.8 million in annual revenue after becoming operational.
Net Debt Declines From First Quarter
Net debt stood at R$45.46 billion at the end of June, down R$585 million from the first quarter but R$5.34 billion higher than a year earlier.
Adjusted gross debt totaled R$72.83 billion. About 57.3% was linked to Brazil’s interbank deposit rate, or CDI, and 30% was indexed to inflation.
Net debt relative to adjusted regulatory EBITDA over the previous 12 months declined to 1.7 times from 1.8 times in March.
The average cost of debt improved to CDI minus 0.02% a year from CDI plus 0.58% a year in the second quarter of 2025. Average debt maturity shortened to 53.8 months from 56.5 months.
Axia had R$2.2 billion of debentures mature in April, while its northern subsidiary raised R$500 million in May through a two-year facility. In July, the company completed three debenture offerings totaling R$3.5 billion, with maturities of seven and 10 years.
Free Cash Flow Nearly Doubles
Operating cash flow increased 89.1% to R$7.79 billion, while free cash flow rose 94.4% to R$4.96 billion.
The increase was driven partly by a R$3.39 billion working-capital inflow related to proceeds from energy settled in the short-term market during the first quarter.
Higher capital expenditure, privatization-related charges and debt-servicing costs partly offset those gains. After debt transactions, litigation payments, equity investments and other movements, net cash flow was negative R$1.95 billion.
Litigation Provisions Fall
Provisions related to compulsory electricity loans declined to R$10.8 billion, falling R$1.3 billion from a year earlier and R$278 million from the first quarter.
Axia recorded a net reversal of R$98 million after reaching agreements and obtaining favorable court decisions. Monetary adjustments related to the litigation generated a financial expense of R$151 million in the quarter.
Since the third quarter of 2022, provisions related to the compulsory-loan cases have fallen by R$15.1 billion, despite R$3.3 billion in accumulated monetary adjustments. Agreements completed during the period also eliminated R$11.2 billion in judicial risks classified as possible or remote.
Portfolio Reshaping Continues
Axia’s board approved as much as R$3.7 billion in allocable capital based on second-quarter earnings. Combined with as much as R$4 billion approved after the first-quarter results, the total reached R$7.7 billion for the first half.
The company completed the sale of 49% minority stakes in transmission ventures to GEBBRAS Participações Ltda., receiving R$451.4 million.
Axia also paid R$256 million to acquire the remaining shares in Juno Participações e Investimentos SA, allowing it to fully consolidate the Três Irmãos hydroelectric plant.
In another transaction, the company sold its stake in IE Madeira and assumed full control of IE Garanhuns, receiving a net R$1.17 billion.
Axia completed its migration to B3’s Novo Mercado corporate-governance segment in June. Its capital structure now includes common shares traded under AXIA3 and Class C preferred shares under AXIA7, which may be fully converted or redeemed by 2031.
Greenhouse-gas emissions for the first half fell 73%, mainly because of the removal of coal-fired generation from the company’s power portfolio. The accident-frequency rate for employees involving lost work time rose to 0.75 from 0.48.
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