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 critical component of Mexico’s energy sector, CFE plays a significant role in ensuring the nation’s power supply and maintaining grid stability.
Financial Performance in 2024
In its annual audited financial statements for 2024, CFE reported total revenues of 667,244 million pesos (mdp), marking a 4.3% increase compared to the previous year.
Revenue Growth
- Energy sales revenue reached 510,801 mdp, reflecting a 4.1% growth compared to the same period in 2023.
- The domestic and commercial sectors experienced notable increases of 7.6% and 5.1%, respectively, driven by high electricity demand in Mexico.
Cost Reduction
Operating costs decreased by 0.7% in 2024, with energy costs falling by 11.7%. This reduction was primarily due to lower natural gas prices, which averaged a 24.0% decrease compared to the previous year.
Operational Utility and EBITDA
The combination of increased revenues and reduced operating costs led to a historic operational utility improvement of 24.4% for CFE, reaching 157,038 mdp in 2024 – the highest level ever recorded. This success is also reflected in the EBITDA, which measures the company’s cash flow generation capability from operations. The EBITDA stood at 245,280 mdp, marking a 20.5% increase compared to the previous year.
Impact of External Factors
The financial results were influenced by external factors, such as currency fluctuations. 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 mdp impact due to the revaluation of foreign currency obligations. This adjustment does not affect CFE’s actual cash flow, as it is merely an accounting effect.
Net Result
The Net Result was negative at 271,574 mdp, primarily due to two factors: the effects of currency exchange rates on lease obligations under International Financial Reporting Standards (IFRS) and the change in CFE’s tax regime. Starting November 1, 2024, CFE transitioned from a Title II tax regime to Title III as a Public State Enterprise. This legal change resulted in a one-time impact on the net result due to deferred income tax cancellation amounting to 174,954 mdp. These accounting provisions do not affect CFE’s cash flow.
Financial Position
CFE’s total assets stood at 2,651,006 mdp, up 14.0%, driven by the recognition of usage rights and increased investments in power plants, facilities, 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 the nation’s power supply and maintaining grid stability.
- What were CFE’s financial achievements in 2024? CFE reported a total revenue of 667,244 mdp (a 4.3% increase), with energy sales revenue growing by 4.1%. Operating costs decreased by 0.7%, and the operational utility improved by 24.4% to reach 157,038 mdp – the highest level in its history. EBITDA also increased by 20.5% to 245,280 mdp.
- What external factors affected CFE’s financial results? Currency fluctuations, specifically the depreciation of the Mexican peso against the US dollar, resulted in a 169,115 mdp impact on CFE’s financial position due to revaluation of foreign currency obligations. However, this adjustment does not affect the company’s actual cash flow.
- What led to the negative Net Result in 2024? The negative Net Result of 271,574 mdp was primarily due to two factors: the effects of currency exchange rates on lease obligations under IFRS and CFE’s change in tax regime from Title II to Title III as a Public State Enterprise. This transition resulted in a one-time impact on the net result due to deferred income tax cancellation amounting to 174,954 mdp. These accounting provisions do not affect CFE’s cash flow.
