Transportadora de Gas del Sur SA (TGS) Q2 2025 Earnings Call Highlights: Navigating Challenges ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Transportadora de Gas del Sur SA (NYSE:TGS) successfully completed a five-year tariff revision, with monthly inflation adjustments now in place, potentially stabilizing revenue streams.
The company managed to resume normal operations at its processing plant by early May after a severe storm in March, showcasing effective crisis management.
TGS is the sole bidder for the expansion of the Perito Moreno pipeline, which could lead to a significant increase in transportation capacity and future revenue.
The national executive power extended TGS's license for another 20 years, ensuring long-term operational stability.
A dividend payment of 200 billion pesos was approved and paid, reflecting strong shareholder returns.
Negative Points
TGS reported a significant decline in total net income from 119.7 billion pesos in Q2 2024 to 40.3 billion pesos in Q2 2025, primarily due to lower financial yields.
The natural gas transportation segment saw a substantial EBITDA decrease due to insufficient tariff adjustments to offset high inflation.
The liquids business segment experienced a more than 50% drop in EBITDA, impacted by extraordinary expenses from a flood and reduced sales volumes.
Financial results were negatively affected by a 76 billion peso variation, driven by lower yields on domestic financial investments and higher foreign exchange losses.
Cash position decreased by 33% during the quarter, indicating potential liquidity challenges.
Q & A Highlights
Warning! GuruFocus has detected 7 Warning Signs with TGS.
Q: Can you confirm the impairment in the second quarter related to the climate events? A: The impact on the quarter was 16.6 billion pesos due to extraordinary expenses incurred from the flood. - Alejandro Vasso, Chief Financial Officer
Q: Can you share any update on the timeline regarding the NCL project? A: We are currently evaluating the cost and waiting for certain bids related to the assembling cost of the plants involved in the project. We expect to have results by the end of September. - Alejandro Vasso, Chief Financial Officer
Q: Is the current level of EBITDA emissions sustainable at current levels? A: This quarter, we had a very good EBITDA in the midstream services, and we expect these businesses to continue to grow in the future. - Alejandro Vasso, Chief Financial Officer
Q: What is the status of the insurance related to the incident at the complex, covering both damages and loss of income? A: The insurance team has reviewed the damages, and we expect them to provide numbers in 2-3 months. Our insurance covers all expenses above $1 million, but business interruption was just the 17 months deductible, so we do not expect significant recovery in that regard. - Alejandro Vasso, Chief Financial Officer
Q: What is the outlook for the regulated transportation segment in the third quarter of 2025, considering the lagging tariff update? A: We currently have monthly inflation adjustments, and revenues will depend on the level of adjustment, which is 50% IPC CPI and 50% wholesale price index. The level of expenses is higher now due to the tariff revision process. - Alejandro Vasso, Chief Financial Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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