Background on the Comisión Federal de Electricidad (CFE)
The Comisión Federal de Electricidad (CFE) is Mexico’s state-owned electric utility company, responsible for generating, transmitting, and distributing electricity across the country. As a crucial part of Mexico’s energy sector, CFE plays an essential role in ensuring a stable power supply for both residential and commercial sectors.
CFE’s Financial Performance in 2024
In its annual audited financial statements for 2024, CFE reported total revenues of 667,244 million pesos, marking a 4.3% increase compared to the previous year.
However, CFE’s net result turned negative at 271,574 million pesos due to the effects of exchange rate fluctuations on lease recognitions under International Financial Reporting Standards (IFRS) and the impact of changing the company’s tax regime from Title II to Title III, effective November 1, 2024. This change in law resulted in a one-time impact on net result due to deferred income tax cancellation amounting to 174,954 million pesos.
CFE clarified that these accounting provisions do not affect the company’s cash flow.
Energy Sales and Costs
High electricity demand in Mexico led to a 4.1% increase in sales, with notable growth in the domestic and commercial sectors at 7.6% and 5.1%, respectively.
On the other hand, operational costs totaled 510,206 million pesos by the end of 2024, representing a 0.7% decrease compared to the same period in the previous year.
The most significant reduction was observed in energy costs, which fell by 11.7% due primarily to lower fuel prices, especially natural gas, which averaged a 24.0% decrease compared to the previous year.
Improved Financial Indicators
The growth in revenues and reduction in operational costs led to a 24.4% improvement in CFE’s Operational Profit, reaching 157,038 million pesos in 2024 – the highest level ever recorded.
This improvement is associated with the EBITDA indicator, which measures the company’s cash flow generation from operations. The EBITDA stood at 245,280 million pesos, reflecting a 20.5% increase compared to the same period in 2023.
The revenue margin reached a historical maximum of 36.8%.
Impact of Exchange Rate Volatility
The CFE’s Integrated Financing Result was primarily affected by exchange rate volatility. The Mexican peso depreciated from 16.92 pesos per US dollar in December 2023 to 20.27 pesos by the end of 2024, resulting in a 169,115 million pesos impact due to the revaluation of foreign currency obligations.
It’s essential to note that this amount does not represent an actual cash outflow; it is merely a accounting effect due to exchange rate fluctuations.
Asset Valuation
The total value of CFE’s assets stood at 2,651,006 million pesos by the end of 2024, marking a 14.0% increase driven by the recognition of assets for usage rights and increased investments in power plants, installations, and equipment.
Key Questions and Answers
- What is the CFE, and why is it important? The Comisión Federal de Electricidad (CFE) is Mexico’s state-owned electric utility company, responsible for generating, transmitting, and distributing electricity. It plays a crucial role in ensuring a stable power supply for residential and commercial sectors.
- What led to CFE’s increased net loss in 2024? The increased net loss was primarily due to exchange rate fluctuations affecting lease recognitions under IFRS and the impact of changing CFE’s tax regime from Title II to Title III.
- How did CFE’s revenues and costs perform in 2024? CFE reported a 4.3% increase in total revenues, while operational costs decreased by 0.7%. Energy cost reductions contributed significantly to this improvement.
- What financial indicators showed positive changes for CFE in 2024? Operational profit improved by 24.4%, and the EBITDA indicator grew by 20.5%. The revenue margin reached a historical maximum of 36.8%.
- How did exchange rate volatility affect CFE’s finances? Exchange rate fluctuations resulted in a 169,115 million pesos impact on CFE’s finances due to the revaluation of foreign currency obligations. However, this amount does not represent an actual cash outflow.
- What changes were observed in CFE’s asset valuation? CFE’s total assets increased by 14.0% due to the recognition of usage rights and higher investments in power plants, installations, and equipment.
