Cemig (CIG) Q3 2026 earnings review
Cemig's power grid earns more, but its debt keeps climbing
Cemig, the power company serving Minas Gerais in Brazil, earned far more from its grid while its borrowing kept climbing. The grid unit's profit before interest, tax and depreciation, excluding one-offs, rose 50% after a higher tariff took effect in May. A reversed tax reserve lifted net income to R$1.7 billion, almost twice the R$923 million Cemig made excluding one-offs.
| Profit before interest, tax and depreciation, excluding one-offs | R$1.99 billion +31% from a year ago |
|---|---|
| Net income, excluding one-offs | R$922.8 million +18% from a year ago |
| Net debt to a year of operating profit | 2.43x 2.58x last quarter |
| 2026 investment plan | Unchanged R$6.7 billion; R$5.1 billion spent by September |
⚖️ Verdict: 🟢 Bullish
The story got better because the new tariff now shows up in grid profit, and the trading desk made money again. One caution: debt grew faster than earnings, and a new way of estimating unpaid bills supplies part of the grid gain.
The question now is whether earnings can keep up with debt while Cemig spends R$43.7 billion on its network by 2030. If tariffs and new assets lift profit quickly, the debt ratio levels off; if not, it keeps rising. Year-end cash flow and the debt ratio will give the first answer.
🐂 Bull Case
Higher Tariffs Lifted Grid Profit by Half
Cemig D, the group's distribution arm, sells power across Minas Gerais at prices that ANEEL, the national regulator, resets every year. In late May ANEEL approved an average tariff rise of 6.5%, so the third quarter was the first full one at the new prices.
The unit's EBITDA, its profit before interest, tax and depreciation, excluding one-offs, rose 50% to R$1.17 billion. Homes used more power because Cemig D gained customers and the weather was warmer. Group-wide, retiree benefit costs fell to 0.4% of revenue from 1.0%, after a court-ratified deal ended the retirees' health-plan obligation.
Cemig D also cut its bad-debt charge by R$32 million with a new estimating method. The release says the method aims at "improving the alignment of estimates with the actual recoverability of receivables". By our math, that change and the benefit savings explain about a fifth of the R$389 million gain. Tariffs and volume supply the rest.
What to watch: the unit's fourth-quarter EBITDA excluding one-offs, its second full quarter at the new tariff. A gain close to this quarter's would show that prices, not one-off savings, carry the increase.
Cemig's Trading Desk Made Money Again
Cemig also buys and sells power in bulk through a trading desk, which lost money a year ago and again last quarter, even excluding one-offs.
This quarter the desk made R$18 million of EBITDA, its profit before interest, tax and depreciation, excluding one-offs. Cemig credited "higher margins on operations and gains from purchasing energy at prices below those of previously signed contracts".
Group-wide, power bought for resale took 45.4% of revenue, against 48.6% a year ago. Spot purchases fell 31%, a drop the release ties to "favorable hydrological conditions". But Cemig cannot control rainfall, so the cheaper contracts are the part that can last.
What to watch: the trading result in the fourth quarter. A second profit would show that the cheaper contracts, not only low spot prices, drive the turnaround.
🐻 Bear Case
Debt Is Rising Faster Than Profit
Cemig opened its results with the words "Robust cash generation". It spends heavily on its grid because ANEEL, the national regulator, lets it earn a return on what it builds. Higher tariffs should repay the borrowing later, but the debt arrives first.
In September Cemig D, the grid unit, and Cemig GT, the generation and transmission arm, sold R$3 billion of new bonds. Gross debt reached R$25.1 billion, up 12% from June.
- Net debt: R$19.7 billion, up 17% since December
- Net debt a year ago: about R$13.1 billion by our math
- Net debt to a year of EBITDA: 2.43 times, from 1.76 a year earlier
- Interest on bonds: up R$94 million from a year ago
This cuts against the headline, because the release gives no cash flow figure for the quarter. In the first half, operating cash fell short of investment by R$1.28 billion, and Cemig filled the gap with debt. The ratio did ease from 2.58 last quarter, as grid profit climbed.
What to watch: the debt ratio at year-end, when Cemig also reports full-year cash flow. A ratio above last quarter's would mean borrowing still outpaces the tariff gains.
Factories Used Less Power From Cemig's Grid
Industrial customers take 44% of the power Cemig D, the grid unit, delivers. Most buy it on the free market, where they choose a supplier and pay Cemig D to carry it.
Industrial volume fell 2.5%. Ferroalloy makers used 15% less, and fertilizer plants cut back after "supply chain disruptions caused by geopolitical conditions", the release said. Captive industrial sales, where Cemig D still supplies the power itself, dropped 27% as plants left for the free market.
Customers who generate their own power, such as with solar panels, also take volume: their credits against bills rose 19%. So total delivery outside those credits grew only 1%.
What to watch: industrial volume in the fourth quarter. Another decline would leave homes and shops as the only source of growth on the grid.
Two Large Dams' Licences Expire in 2027
Cemig GT, the group's generation and transmission arm, runs hydroelectric dams under government licences called concessions. Its two largest plants, Emborcação and Nova Ponte, reach the end of their concessions in May and August 2027.
By our math, the pair supplies 34% of the group's firm energy, the output each plant can reliably sell. In August the ministry renewed the smaller Sá Carvalho plant for 30 years "under the quota regime". The release gives no plan for the larger dams.
This matters because generation already lags: its EBITDA, profit before interest, tax and depreciation, excluding one-offs, fell 8%. Losing the two dams, or renewing them on lower-priced terms, would cut that result further.
What to watch: a ministry decision on Emborcação, whose concession ends first, and the terms attached to it. Renewal on market terms would keep this output in Cemig's hands.
👓 Other Themes
Cemig Sim Signs Solar Deal With the State
Cemig Sim, the group's solar unit, signed an agreement with the Minas Gerais government "to supply subscription-based solar energy" to about 6,700 state buildings, including schools and police stations. The unit started 21 solar plants this year, reaching 213 megawatts of peak capacity. The release gives no revenue figure for the contract yet.
A Tax Dispute Reversal Added R$775 Million
Cemig released reserves it held for a dispute over social security charges on staff profit-sharing payments made from 1999 to 2016. It moved its view of the likely loss "from probable to possible", so it no longer holds the reserve. The reversal added R$775 million to net income, and Cemig left it out of profit excluding one-offs.
💲 Other KPIs
Losses, the power that leaks from wires or goes unbilled through theft, edged down again. They have eased for three quarters and sit 0.11 percentage points under the regulator's allowance. Cemig ran 271,000 inspections this year to find illegal connections.
Outage time rose slightly from last quarter but stays under the limit: 8.61 hours a year per customer, against 9.26 allowed. It had fallen in each period since 2024. Cemig spent 9% more on outside services, including tree trimming, to cut interruptions.
Gasmig, the group's piped-gas distributor, earned 3.6% less EBITDA (profit before interest, tax and depreciation) than a year ago, a milder drop than the second quarter's 15%. Industrial customers keep moving to the free gas market, which carries a lower margin. For the next tariff cycle, the state regulator cut Gasmig's allowed after-tax return to 8.25% from 8.71%.
🔮 Guidance
Unchanged. Cemig still plans to invest about R$6.7 billion this year, mostly in the distribution grid. It spent R$5.1 billion through September, so by our math about R$1.6 billion remains for the fourth quarter. That would sit 14% below the same quarter last year. Spending already slipped in the third quarter, after a fast first half.
Unchanged. The plan still totals R$43.7 billion, slightly below the R$44 billion that Cemig approved a year ago. By our math, it leaves about R$9.2 billion a year for the rest of the plan. That pace runs well above this year's spending, so borrowing needs rise unless tariffs keep up.
New. Cemig plans to install 400,000 smart meters this year to cut power losses. The losses section reports about 157,000 through September. By our math, that leaves 243,000 for the fourth quarter, far above the pace so far. The release's own quarterly table shows 251,679 instead, so the two counts disagree.
❓ Key Questions
Will Cemig keep Emborcação and Nova Ponte after 2027?
The two dams supply about a third of the group's firm energy, and their concessions end in May and August 2027. The release names no renewal path or terms.
How much cash did operations generate this quarter?
The release headline cites strong cash generation but prints no cash flow statement. In the first half, investment exceeded operating cash by R$1.28 billion, and net debt kept climbing.
How much grid profit comes from the new bad-debt method?
Cemig changed the method in the second quarter, and it cut this quarter's charge. A full-year figure would separate tariff gains from accounting effects until the change laps in mid-2027.
How many smart meters has Cemig installed this year?
One section of the release says about 157,000; its quarterly table adds up to 251,679. The answer decides whether the 400,000 target for 2026 is within reach.
How much exposure remains in the profit-sharing tax case?
Cemig now rates a loss as possible rather than probable and released the reserve. A size for the remaining possible loss would show what could return if courts rule against it.