Federal Civil Service
CVM - Securities and Exchange Commission
ITR - Quarterly Information –
Commercial Companies, Industrial Companies, and others.
Corporate Legislation
Base Date: March 31, 1999
01444-3
43.776.517/0001-80
CIA. SANEAMENTO BÁSICO ESTADO SÃO PAULO
05.01 - COMMENTS ON THE QUARTERLY PERFORMANCE OF THE COMPANY
In the first quarter of 1999, SABESP presented earnings before financial expenses of R$ 317.4
million, a decrease of 5.2% over the same period in 1998.
Net operating revenue showed a decrease of 4.9% over the same period in 1998. This fall is
even sharper in the São Paulo metropolitan region, with a 6.7% drop in the physical quantity
(m3) of water and sewage.
This fall is associated with the conjunction of a series of factors when comparing the first quarter
of 1999 with that of 1998:
??
The serious crisis in the level of economic activity, with an 8.2% slowdown in industrial
production (Federation of Industries of São Paulo –FIESP);
??
Record 9.8% unemployment in the first quarter of 1999 in the metropolitan region,
compared to 9.5% in the first quarter of 1998, according to data from the Brazilian
Geographical and Statistical Institute (IBGE);
??
Higher rainfall index (+3.4%), reducing water use in watering gardens and washing
surfaces;
??
Reduced number of billing days: 92.65 days in the first quarter of 1998 compared to 90.55
days in the first quarter of 1999 (average accounting days per household);
??
Greater use of water from private artesian wells, especially for industry.
??
Continued transfer of industry out of the metropolitan region, also causing reduced industrial
use of electricity.
The reduced billed volumes are reflected more than proportionally in earnings, because of
progressive rates, causing shift from higher-average-rate upper consumption bands to loweraverage-rate lower consumption bands
05 JULY 1999 18:31:42
Page 1
Federal Civil Service
CVM - Securities and Exchange Commission
ITR - Quarterly Information –
Commercial Companies, Industrial Companies, and others.
Corporate Legislation
Base Date: March 31, 1999
01444-3
43.776.517/0001-80
CIA. SANEAMENTO BÁSICO ESTADO SÃO PAULO
05.01 - COMMENTS ON THE QUARTERLY PERFORMANCE OF THE COMPANY
In relation to costs, despite the 1.8% fall, we can verify that there was an increase in the
Depreciation item, to the value of R$ 19.6 million, due to the significant transfer from Works in
Progress to Fixed Assets – Operations in 1998 and 1999.
Operating Revenues after Financial Expenses showed a loss of R$ 668.5 million. The main
cause of this was the change in foreign exchange policy by the Brazilian Central Bank, which,
together with the devaluation of the real and the increased interest rates (from 22% to 45%),
caused a significant increase in the company’s financial expenses, as shown below.
1. Net Operating Revenue
2. Cost of Services Rendered
3. Gross Income
4. Selling Expenses
5. Administrative Expenses
6. Operating Revenues Before Financial
Expenses
7. Net Financial Expenses
8. Operating Income
9. Non-operating income
10. Income Tax and Social Contribution
11. Net Income for period
05 JULY 1999 18:31:42
Q1 1999
752.995
336.387
416.608
64.747
34.453
Q1 1998
791.403
342.445
448.958
54.944
59.087
VAR. %
(4,85)
(1,77)
(7,21)
17,84
(41,69)
317.408
334.927
(5,23)
985.931
(668.523)
1.973
11.817
(654.733)
191.682
143.245
592
(9.701)
134.136
414,36
(566,70)
233,16
221,81
(588,11)
Page 2
Federal Civil Service
CVM - Securities and Exchange Commission
ITR - Quarterly Information –
Commercial Companies, Industrial Companies, and others.
Corporate Legislation
Base Date: March 31, 1999
01444-3
43.776.517/0001-80
CIA. SANEAMENTO BÁSICO ESTADO SÃO PAULO
05.01 - COMMENTS ON THE QUARTERLY PERFORMANCE OF THE COMPANY
The possibility of these losses being recovered by the end of the year will depend, on the one
hand, on the foreign exchange market and the speed with which domestic interest rates are
reduced, and on the other, on the level of recovery of domestic economic activity.
05 JULY 1999 18:31:42
Page 3