IMCO Reports on CFE’s Finances

CFE reported a net loss for the third year in a row in 4Q22, according to the Mexican Institute for Competitiveness (IMCO). The company's negative performance from Jan. 1 to Dec. 31, 2022 was MX$39.8 billion (US$2.11 billion). However, CFE did register a profit of MX$10.9 billion (US$577.21 million) from October to December 2022.

Despite the losses, CFE's revenues for the year reached their highest level in the past five years, amounting to MX$618.3 billion (US$32.74 billion), up by 9.1% from the MX$566.7 billion (US$29.98 billion) reported in 2021. The sale of electricity was the company's main source of income, accounting for 71.4% of its revenues, or MX$441.4 billion (US$23.37 billion).

On the other hand, CFE's costs surged to their highest point in five years, with selling costs increasing by 7.4% between 2021 and 2022, from MX$537.8 billion (US$28.48 billion) to MX$577.5 billion (US$30.58 billion). This occurred partly due to rising fuel prices, particularly natural gas.

For the second year in a row, CFE received direct transfers from the Mexican government to compensate for the company's losses from electricity rate subsidies. The transfers increased by 16.9% from MX$70.3 billion (US$3.72 billion) in 2021 to MX$82.2 billion (US$4.35 billion) in 2022.

Moody's was the only credit rating agency to downgrade CFE's credit rating in 2022, lowering the company's rating by one notch from Baa1 to Baa2 on July 12. However, three credit rating agencies, including Moody's (Baa2), Standard and Poor's (BBB), and Fitch Ratings (BBB-), maintained CFE's investment-grade credit rating. Nevertheless, Fitch Ratings rated CFE's credit just one notch above speculative grade.

In addition, CFE's short-term debt balance grew by 155.1% between Dec. 31, 2021 and the same date in 2022, rising from MX$37.3 billion (US$1.97 billion) to MX$95.1 billion (US$5.03 billion). Meanwhile, the company's long-term debt decreased by 0.4% during the same period, from MX$356.6 billion (US$18.88 billion) to MX$355.4 billion (US$18.82 billion). As of the end of 2022, CFE's total debt balance was MX$450.5 billion (US$23.86 billion), up by 14.4% or MX$56.6 billion (US$2.99 billion) from the balance reported on December 31, 2021, which was MX$393.9 billion (US$20.86 billion).