Sabesp Q2 2026 revenue up 6.7%, margins shrink

Brazilian water and sewage utility Companhia de Saneamento Básico do Estado de São Paulo (Sabesp) reported second-quarter 2026 revenue growth of 6.7% year-over-year, according to preliminary slide deck data. The increase reflected higher tariffs and expanded service coverage in São Paulo state, though operating margins contracted due to elevated operational expenses and regulatory limits on price adjustments.

The company’s gross margin declined to 38.2% from 41.5% in the same period a year earlier, as costs for maintenance, energy and compliance rose faster than revenue growth. Sabesp attributed the margin squeeze to inflation-driven input costs and stricter environmental and quality standards imposed by regulators.

Net profit for the quarter is expected to fall 4.3% year-over-year to 1.2 billion reais, based on the slide deck, as higher depreciation and interest expenses offset revenue gains. The utility maintained its full-year 2026 guidance for revenue growth of 5-7% and net profit of 4.8-5.2 billion reais, signaling confidence despite near-term margin pressures.

Sabesp’s shares were little changed in pre-market trading following the release, reflecting a market that had already priced in moderate margin compression. Analysts noted that while revenue growth remains resilient, the sustainability of profitability hinges on cost control and regulatory clarity in the coming quarters.

The company’s leverage ratio stood at 2.8x net debt to EBITDA at the end of Q2 2026, unchanged from the prior quarter, indicating stable financial positioning despite margin headwinds.