The 50% increase in profits posted by Brazil's São Paulo state water utility Sabesp (Bovespa: SBSP3, NYSE: SBS) in the second quarter was largely due to extraordinary factors, CFO Rui de Britto Affonso said during a conference call on Wednesday (Aug 17).
"If these factors hadn't been considered, our net profit would have been up 9.8% instead of 50.1%," Affonso said.
Sabesp posted net income of 480mn reais (US$298mn) in Q2, compared with 320mn reais during 2Q10.
Among the factors were payments from the small claims court (Jesp) related to Sabesp's exclusivity contracts with federal savings banks Caixa Econômica Federal (CEF) and Banco do Brasil (BB) from 2007-2014.
Sabesp has received 63mn reais from BB, of which 47mn reais were applied in Q2.
In addition, the company's deductible expenses for Q2 were 55mn reais higher than in the same quarter last year.
Finally, Sabesp was among the many Brazilian companies benefiting from a favorable exchange rate, which led the utility to come out ahead by 74mn reais, according to the executive.
Sabesp is Brazil's largest water company, serving more than 27mn clients in 364 municipalities of São Paulo.