Brazilian power company AES Eletropaulo (ELPL6.BR) posted a 21.4% drop in second-quarter earnings due to operational costs such as pension and legal fees.

AES Eletropaulo registered a second-quarter net profit of 154.9 million Brazilian reals ($85.1 million), down from BRL197 million in the year-ago quarter.

Eletropaulo registered costs of BRL190.3 million in pensions and other work-related overhead, up 55.2% from the same period in 2008.

The company, a subsidiary of North American energy major AES Corp. (AES), recorded revenue of BRL1.89 billion in the second quarter, up 3.7% from BRL1.8 billion in the second quarter of 2008 and also slightly higher than the first quarter.

The adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, in the second quarter were BRL430 million, down 13.7% on the year but up from the BRL356 million in the preceding quarter.

Ebitda margin, a key indicator of profitability, rose on the quarter to 18% but is down from the year-ago period, when Ebitda margin at Eletropaulo was 21.6%.

Energy consumption in the second quarter actually declined somewhat on the year, by 0.4% to 10,213 gigawatt hours, but rose by 5.4% when compared with the first quarter. The higher demand is an indicator that Brazil's industrial users of electric power slowly are climbing out of the hole they fell in back in September 2008, when the world's markets were eyeing the possibility of a severe economic depression.

-By Kenneth Rapoza, Dow Jones Newswires, 5511-2847-4541, kenneth.rapoza@dowjones.com