By Brazil Stock Guide – Axia Energia SA (B3: AXIA3; NYSE: AXIA) reported a third-quarter net profit of R$1.113 billion, reversing a R$5.448 billion loss a year earlier, as the impact of extraordinary charges tied to asset disposals diminished. Adjusted net income, however, declined 19.1% to R$1.759 billion, highlighting a weaker performance on a comparable basis.
The Brazilian electricity producer and transmission operator posted net revenue of R$10.037 billion for the July-to-September period, up 0.3% from R$10.003 billion a year earlier, according to its quarterly earnings release.
Gross revenue increased 0.8% to R$11.817 billion, while earnings before interest, taxes, depreciation and amortization under International Financial Reporting Standards (IFRS) reached R$3.793 billion, compared with a negative R$1.495 billion in the third quarter of 2025.
The year-earlier loss was heavily affected by R$7.071 billion in charges associated with asset disposals. The corresponding negative impact narrowed to R$98 million in the latest quarter, helping drive the recovery in reported profitability.
Adjusted IFRS Ebitda fell 23% to R$4.533 billion from R$5.890 billion a year earlier.
On a regulatory adjusted basis, however, Ebitda rose 8.4% to R$6.915 billion, supported by stronger margins in electricity generation and transmission, lower operating expenses and improved earnings from equity investments.
Generation and Transmission Margins Improve
Axia Energia’s electricity generation contribution margin increased 9.1% to R$3.071 billion, compared with R$2.815 billion a year earlier.
The improvement was supported by higher electricity prices in Brazil’s free contracting market, lower energy procurement costs and greater availability of power for commercialization.
The average electricity selling price in the free market climbed 18.6% to R$195.60 per megawatt-hour, from R$164.89 in the third quarter of 2025.
Net electricity generation rose 13.5% to 27.8 terawatt-hours, compared with 24.5 terawatt-hours a year earlier. Total electricity sales, however, declined 11.2% to 26.1 terawatt-hours.
The transmission business also delivered stronger results. Its contribution margin increased 8.3% to R$4.533 billion from R$4.187 billion, reflecting higher regulated revenue from infrastructure assets.
The company’s approved annual permitted revenue, known as RAP, increased from R$4.134 billion to R$4.451 billion on a quarterly basis, benefiting from the completion of transmission investments and lower regulatory adjustment deductions.
Operating Costs Decline as Equity Earnings Rise
Adjusted personnel, materials, services and other operating expenses under IFRS declined 10.4% to R$1.381 billion from R$1.542 billion.
The reduction reflected lower personnel expenses and savings on consulting, legal services and maintenance contracts.
Regulatory adjusted earnings from equity investments increased 48.8% to R$709 million, compared with R$476 million a year earlier.
The improvement included contributions from ISA Energia Brasil (B3: ISAE4), the recovery in results at the Jirau hydroelectric plant and the disposal of Axia Energia’s minority stake in IE Madeira.
Adjusted net financial expenses under IFRS narrowed to R$1.589 billion from R$2.385 billion, a reduction of approximately 33.4%.
Capital Spending Rises 28% in Nine Months
Axia Energia invested R$2.855 billion during the third quarter, an increase of 5.7% from R$2.701 billion a year earlier.
Capital expenditure for the first nine months of 2026 reached R$7.327 billion, up 27.7% from R$5.739 billion in the corresponding period of 2025.
Transmission accounted for a significant share of spending. Corporate investments in the segment climbed 66.8% to R$2.006 billion in the quarter.
Investment in transmission expansion rose to R$681 million from R$135 million, while spending on reinforcement and improvement projects increased 19.9% to R$1.272 billion.
Axia Energia has 269 large-scale transmission projects under development, representing estimated investments of R$15.2 billion.
The company expects these projects to generate approximately R$2 billion in additional annual permitted revenue between 2026 and 2030.
In generation, corporate capital expenditure totaled R$331 million, including R$315 million allocated to maintaining and modernizing existing facilities.
Major investments included the Tucuruí, Santo Antônio, Luiz Gonzaga and Paulo Afonso IV hydroelectric plants.
Net Debt Climbs to R$47.6 Billion
Axia Energia’s net debt increased 11.7% to R$47.568 billion at the end of September, compared with R$42.577 billion a year earlier.
The figure was also R$2.107 billion higher than at the end of June, when net debt stood at R$45.461 billion.
Despite the increase in borrowing, the company lowered its average debt cost to CDI plus 0.19% annually, from CDI plus 0.64% in the third quarter of 2025.
Average debt maturity extended to 56.3 months.
Between July and October, the company completed R$14.3 billion in financing and debt renewal transactions, including approximately R$6.6 billion in debenture issuances.
In September, Axia Energia secured R$1.9 billion in long-term financing from Brazil’s development bank, BNDES, with 20-year maturities.
Of that amount, R$1.4 billion was allocated to the Coxilha Negra wind farm, while another R$500 million came through the Climate Fund.
The company also signed a mandate letter with IDB Invest in October to structure potential financing of up to R$680 million for transmission projects.
Shareholder Capital Allocation Reaches R$11.7 Billion
Axia Energia’s board approved up to R$4 billion in capital allocation to shareholders in September, related to partial second-half 2026 earnings.
Combined with the R$7.7 billion previously authorized for the first half, total approved shareholder capital allocation reached as much as R$11.7 billion for the year.
The company also announced a R$3.48 billion redemption or conversion operation involving its Class C preferred shares, with redemption payments scheduled for November 6.
Meanwhile, provisions related to compulsory electricity loan litigation declined to approximately R$10.6 billion, a reduction of R$1.1 billion from the third quarter of 2025.
Nine-Month Adjusted Earnings Nearly Double
Despite the decline in quarterly adjusted profitability, Axia Energia reported strong earnings growth for the first nine months of 2026.
Adjusted IFRS net income rose 98.3% to R$7.071 billion, compared with R$3.565 billion in the same period last year.
Reported IFRS net income reached R$4.934 billion, reversing a R$7.127 billion loss in the first nine months of 2025.
Net operating revenue increased 10.8% to R$33.937 billion, while regulatory adjusted Ebitda grew 28.6% to R$22.198 billion from R$17.260 billion.
At the end of September, Axia Energia operated a generation portfolio of 44,430 megawatts across 81 hydroelectric, wind and solar plants. Its transmission network extended across 72,090 kilometers, with 422 substations, including company-owned and third-party facilities.
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