SBSP3 after 2Q26: Revenue up 14% while adjusted profit falls 41% — construction mix, cost inflation, and a heavier financial line
How to read Sabesp's second-quarter package — R$10.21bn net revenue (+13.9%), R$6.01bn adjusted sanitation revenue (+6.7%), R$3.50bn adjusted EBITDA (−3.2%, 58% margin), R$1.15bn adjusted net income (−41.2%), R$34bn net debt, R$3.73bn capex, and operating costs up roughly 25%.
SBSP3 after 2Q26: Revenue up 14% while adjusted profit falls 41% — construction mix, cost inflation, and a heavier financial line
In August 2026, Sabesp (B3: SBSP3; NYSE: SBS) published 2Q26 results (reference 30 June 2026). Net revenue reached R$ 10.21 billion, up 13.9% year on year — yet adjusted net income fell 41.2% to R$ 1.15 billion, and adjusted earnings per share dropped to R$ 0.33 from R$ 0.57 in 2Q25 (figures reflect the 1-for-5 stock split approved at the 28 April 2026 extraordinary general meeting).
The quarter illustrates a common pattern in Brazilian water utilities under heavy investment: tariff-linked sanitation revenue and construction pass-through lift the top line, while operating cost inflation, transformation spending, and a much larger net financial result compress bottom-line earnings. Readers who focus only on revenue growth or only on the profit drop will miss how reported EBITDA can look stable while adjusted sanitation EBITDA already softens.
What the earnings package shows
Figures below follow Sabesp's 2Q26 earnings release (consolidated, Brazilian reais):
| Metric (2Q26) | Result | vs 2Q25 / note |
|---|---|---|
| Net revenue (incl. construction) | R$ 10.21 bn | +13.9% |
| Adjusted net sanitation revenue | R$ 6.01 bn | +6.7% |
| Construction revenue | R$ 3.62 bn | +17.3% |
| Reported EBITDA | R$ 3.91 bn | ~flat (+0.4%) |
| Reported EBITDA margin | 38% | −5.1 pp (43%) |
| Adjusted EBITDA | R$ 3.50 bn | −3.2% |
| Adjusted EBITDA margin | 58% | −6 pp (64%) |
| Adjusted net income | R$ 1.15 bn | −41.2% |
| Reported net income | R$ 1.46 bn | −31.4% |
| Net financial result | −R$ 1.02 bn | vs −R$ 118 m |
| Capex | R$ 3.73 bn | +3.6% |
| Net debt (30 Jun) | R$ 34.0 bn | vs R$ 23.0 bn |
| Net debt / EBITDA | 2.5× | vs 2.4× prior quarter |
| ROE | 15.2% | stable (per release commentary) |
Management framed the period as continued execution of Sabesp's transformation agenda — customer experience, digital channels, operational reliability, and universalization capex — while acknowledging that several of those initiatives raised near-term operating costs.
Revenue — tariffs, connections, and construction
Adjusted net sanitation revenue rose 6.7% to R$ 6.01 billion. The release attributed the move to an 8.7% increase in net tariff price (including the regulatory reset), 1.0% from new connections, partly offset by milder weather (lower consumption) and a customer mix shift toward social tariffs as access expanded.
Construction revenue jumped 17.3% to R$ 3.62 billion, driving much of the 13.9% headline revenue growth. Construction is economically different from recurring sanitation fees: it expands the asset base but often travels with matched construction costs in the P&L. That is why reported EBITDA can remain near R$ 3.91 billion while adjusted sanitation EBITDA already declines.
Costs — chemicals, service, and comparison effects
Sabesp reported operating costs and expenses up about 24.5% year on year in the narrative (the consolidated cost line in the release tables shows a 35.7% increase on a narrower subtotal — readers should use the release reconciliation, not a single line, for attribution).
Management highlighted three pressure points:
| Driver | Comment in release |
|---|---|
| Customer service & digital | Higher spending on platforms, support, and proactive communication |
| General & administrative | Tougher comparison after prior-year legal gains and case closures (~R$ 200 million benefit in 2Q25) |
| Treatment materials | Inflation on key inputs (e.g., chemicals) in a volatile commodity backdrop |
Depreciation and amortization rose 35.9% to R$ 738 million, consistent with a larger asset base under construction and capitalization.
Below EBITDA — financial result and leverage
The net financial result worsened to −R$ 1.02 billion from −R$ 118 million a year earlier — the dominant swing in attributable profit. Sabesp linked the line to higher net debt: R$ 34.0 billion at 30 June 2026 versus R$ 23.0 billion a year before.
Credit metrics in the release included:
| Item | 2Q26 |
|---|---|
| Average funding cost | CDI + 0.15% |
| Weighted average maturity | 6.1 years |
| Debt maturing from 2031 | 62% of total |
| Cash & securities | R$ 17.4 bn — coverage of more than four years of amortization (company metric) |
Net debt / EBITDA closed at 2.5× versus 2.4× in the immediately prior quarter. Leverage is rising while the company maintains a ~R$ 20 billion full-year capex target tied to universalization and service quality.
Free cash flow from operations in the quarter was R$ 3.37 billion versus R$ 3.18 billion in 2Q25 — operating cash generation remained strong even as net income fell, underscoring the gap between accrued earnings and cash in a capital-intensive utility.
Limits of this reading
- Reported versus adjusted metrics serve different purposes; margin on adjusted EBITDA uses the sanitation revenue base, not total construction-inclusive revenue.
- Construction revenue is not the same economic series as tariff revenue — headline growth mixes both.
- Financial expense reflects the June balance sheet debt stock; tariff resets and capex phasing can move future quarters independently.
- Weather and social-tariff mix effects on volume are quarter-specific.
- Stock-split adjusted EPS must be read against the April 2026 corporate action.
Where to view in the explorer
Sources
- Sabesp, August 2026 — 2Q26 earnings release (revenue, adjusted and reported EBITDA, costs, financial result, debt, capex, ROE)
- Estadão E-Investidor, 08/2026 — summary of adjusted profit, EBITDA, tariff drivers, and leverage
- Brazil Stock Guide, 12/08/2026 — English recap of the same release (construction revenue, adjusted margins, 1H context)
- SBSP3 on the explorer — CVM filings and company page
Disclaimer
This article is for informational and educational purposes only. It is not investment advice. Adjusted sanitation metrics, construction pass-through, and consolidated reported figures are distinct layers; when in doubt, official CVM filings prevail. Refer to those documents and, if needed, a licensed professional.
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