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Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.

Yes ______ No ___X___

 

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	CIA. DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP
	Rui de Britto Álvares Affonso
	Chief Financial Officer and Investor Relations Officer
	Mario Azevedo de Arruda Sampaio
	Head of Capital Market and Investor Relations
	Phone: (5511) 3388-8664 / Fax: (5511) 3388-8669
	e-mail: maasampaio@sabesp.com.br

SABESP announces its first quarter 2006 results São Paulo, May 15, 2006 - SABESP – Cia. de Saneamento Básico do Estado de São Paulo – (NYSE: SBS; Bovespa: SBSP3), the largest water and sewage utility company in the Americas and the third largest in the world, according to its number of customers, announces today its results for the first quarter 2006 (1Q06). The Company’s operating and financial information, except when indicated otherwise, is shown in Brazilian Reais, in accordance with the Brazilian Corporate Law. All comparisons in this release, unless otherwise stated, refer to the first quarter of 2005. Highlights          • EBITDA margin recovery          •Increase in billed water and sewage volume

SBSP3: R$ 205.00/thousand shares SBS: US$ 23.63 (ADR=250 shares) Total shares: 28,480 million Market Values: R$ 5,383 million Closing Price:05/15//2006

 

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First Quarter 2006 Results
May 15, 2006
Page 2 of 11

Main Financial Highlights

1. 16.4% gross revenue increase and 24.3% EBITDA increase

		1Q05		1Q06		Change		%
(+) Gross Operating Revenue		1,252.0		1,456.8		204.8		16.4
(-) COFINS and PASEP		93.3		112.2		18.9		20.3
(+) Net Operating Revenue		1,158.7		1.344.6		185.9		16.0
(-) Costs and Expenses		744.9		795.9		51.0		6.8
(=) Earnings before financial expenses (EBIT*)		413.8		548.7		134.9		32.6
(+) Depreciation and Amortization		145.5		146.7		1.2		0.8
(=) EBITDA**		559.3		695.4		136.1		24.3
EBITDA Margin		48.3		51.7
Net income		151.4		327.9		176.5		116.6
Earnings per 1,000 shares in R$		5.32		11.51

(*)	Earnings before interest and taxes
(**)	Earnings before interest, taxes, depreciation and amortization

In 1Q06, Sabesp’s gross operating revenue totaled R$ 1,456.8 million and the EBITDA totaled R$ 695.4 million. The 16.4% increase in gross operating revenue was mostly due to the following factors:

• 4.6% increase in billed water and sewage volume;
• Tariff readjustment of 9% as of August, 2005;
• The migration of customers to higher tariff brackets also contributed to this result.

Net operating revenue for the period totaled R$ 1.3 billion, a R$ 185.9 million increase in comparison to the same period of 2005. EBIT recorded a substantial growth of 32.6% due to the lower increase in costs and

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First Quarter 2006 Results
May 15, 2006
Page 3 of 11

expenses in comparison to the gross operating revenue. EBITDA grew from R$ 559.3 million in 1Q05, to R$ 695.4 million in 1Q06, and EBITDA margin grew from 48.3% to 51.7% .

The R$ 327.9 million net income was R$ 176.5 million higher than recorded in the same period of 2005, resulting mainly from the increase in sales and the appreciation of the Real in the period.

2. Billed volume

The following tables show billed water and sewage volume per customer category and region in 1Q05 and 1Q06.

VOLUME OF WATER AND SEWAGE BILLED** PER CUSTOMER CATEGORY – million m3
		Water				%		Sewage				%		Water + Sewage				%
		1Q05		1Q06		Chg.		1Q05		1Q06		Chg.		1Q05		1Q06		Chg.
Residential		318.1		333.0		4.7		247.2		259.6		5.0		565.3		592.6		4.8
Commercial		35.5		37.0		4.2		32.0		33.5		4.7		67.5		70.5		4.4
Industrial		8.0		8.6		7.5		7.7		8.1		5.2		15.7		16.7		6.4
Public		10.6		10.9		2.8		8.3		8.7		4.8		18.9		19.6		3.7
Total Retail		372.2		389.5		4.6		295.2		309.9		5.0		667.4		699.4		4.8
Wholesale		63.6		65.1		2.4								63.6		65.1		2.4
Total		435.8		454.6		4.3		295.2		309.9		5.0		731.0		764.5		4.6

VOLUME OF WATER AND SEWAGE BILLED** PER REGION – million m3
		Water						Sewage						Water + Sewage
Per Region		1Q05		1Q06		% Chg.		1Q05		1Q06		% Chg.		1Q05		1Q06		% Chg.
Metropolitan		243.6		256.9		5.5		197.2		208.4		5.7		440.8		465.3		5.6
Regional Systems*		128.6		132.7		3.2		98.0		101.4		3.5		226.6		234.1		3.3
Total Retail		372.2		389.6		4.7		295.2		309.8		4.9		667.4		699.4		4.8
Wholesale		63.6		65.1		2.4								63.6		65.1		2.4
Total		435.8		454.7		4.3		295.2		309.8		4.9		731.0		764.5		4.6

*	Non-metropolitan and coastal regions.
**	Figures not reviewed by the independent auditors.

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First Quarter 2006 Results
May 15, 2006
Page 4 of 11

3. Costs, administrative and selling expenses

In 1Q06, product and service costs, administrative and selling expenses, increased by R$ 51.0 million or 6.8% .

								(R$ million)
		1Q05		1Q06		Chg.		%
Salaries and payroll		254.1		277.9		23.8		9.4
General supplies		24.2		28.2		4.0		16.5
Treatment supplies		31.0		32.5		1.5		4.8
Third-party services		101.6		107.3		5.7		5.6
Electric power		98.0		105.3		7.3		7.4
General expenses		38.2		21.9		(16.3)		(42.7)
Depreciation and amortization		145.5		146.7		1.2		0.8
Credit write-offs		45.9		68.2		22.3		48.6
Tax expenses		6.4		7.9		1.5		23.4
Costs, administrative and selling expenses		744.9		795.9		51.0		6.8

3.1. Salaries and payroll

The Company expanded its services in 1Q06 and productivity per employee rose 4.3% . The number of connections per employee grew from 632 in 1Q05 to 659 in 1Q06.

Salary and payroll expenses moved up by R$ 23.8 million, or 9.4%, due to the following factors:

• A 7.9% wage increase (IPC-FIPE index) as of May/05 and a 2% rise in the Performance Evaluation as of June/05;
• During the period head count reduced 1.7% from 17,669 employees in March, 2005 to 17,364 employees in March, 2006.

3.2. General supplies

In 1Q06, the figure moved up R$ 4.0 million, or 16.5%, primarily due to the following changes:

• R$ 1.2 million, with vehicle fuel and lubricants, or 23.8%, mainly due to price readjustments;
• R$ 0.8 million with network maintenance;
• R$ 0.5 million with residential connections maintenances;

3.3. Treatment supplies

The R$1.5 million increase, or 4.8%, was due to a greater volume of water treatment.

3.4. Third-party services

In 1Q06 third-party services showed an increase of R$ 5.7 million, or 5.6%, going from R$ 101.6 million to R$ 107.3 million. The main highlights were:

• Increase in residential connection maintenance in the amount of R$ 2.2 million with water distribution and sewage collection systems in the São Paulo Metropolitan Region;
• R$ 1.5 million increase with systems maintenance in the São Paulo Metropolitan Region and R$ 1.5 million in Handset meter-reading and invoicing.

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First Quarter 2006 Results
May 15, 2006
Page 5 of 11

3.5. Electric power

In 1Q06, showed a R$7.3 million increase, or 7.4%, in comparison to 1Q05, from R$ 98.0 million to R$ 105.3 million, as described bellow:

• 1.15% increase in energy consumption, due to the increase of the produced volume;
• 9.9% decrease of the captive market expenses. Although a 10.4% weighted average tariff increase in this market, costs reduced once 19.6% of the consumed energy in this segment migrated to free market.
• Due to the migration from the captive market to the free market, there was a 48.1% increase in the free market consumption that, together with the 17.9% readjustment in tariffs, resulted in a 74.6% increase in these expenses;
• ECE (Emergency Capacity Charge) tariff dismissal, as from December 2005, led to a 2.2% savings with total expenses in 1Q06
  3.6. General expenses

General expenses decreased by R$ 16.3 million or 42.7%, in 1Q06 over 1Q05, from R$ 38.2 million to R$ 21.9 million, mainly due to:

• R$ 18.3 million decrease resulting from the lower provision needs for losses and judicial contingency (environmental and civil) in 1Q06;
• This quarter has accounted a R$ 1.6 million charge by the Brazilian Water Regulatory Agency (ANA – Agência Nacional de Águas) for the use of water resources from Capivari, Piracicaba and Jundiaí basins.
  3.7. Credit write-offs

Showed a R$ 22.3 million increase, or 4.8%, due to the increase in provision basis of the analyzed quarters, explained mainly by the 6.78% tariff readjustments in 2004, the 6.4% increase in consumption and progressive tariff increase.

3.8. Tax expenses

Tax expenses showed a R$ 1.5 million, or 22.8%, increase mainly due to CPMF (Provisional Financial Transaction Tax) payment resulting from a greater volume of financial investment.

4. Financial expenses and passive monetary variations

4.1.	Financial expenses

Financial expenses decreased by R$ 6.7 million, thanks to:

• Interest on domestic loans and financing, which increased by R$ 22.7 million, resulting from the entrance of the 7^th (March / 05) and 8^th (June / 05) debenture issues. This increase was offset by interest decrease on external loans and financing in the amount of R$ 26.5 million related to both the lower total debt balance in foreign currency and the Real appreciation versus US dollar;
• R$ 1.9 million increase, relating to the provision of interest and updates of new lawsuits;
• The decrease, in the amount of R$ 1.8 million, in banking fees expenses;
• R$ 2.5 million decrease regarding expenses charge on taxes, occurred in 2005 and non-recurring in 2006.

4.2. Passive monetary variation

Passive monetary variation recorded a R$ 80.2 million gain, specially resulting from the 7.2% appreciation of the Real versus the US dollar in 1Q06 in comparison to the 0.4% depreciation occurred in 1Q05 and from a lower total debt balance in foreign currency.

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First Quarter 2006 Results
May 15, 2006
Page 6 of 11

5. Non Operating Results

Presented a R$ 1.1 million, or 220.0%, growth being the main cause gains from the sale of land in the amount of R$ 1.0 million.

6. Financial Revenue

Presented a R$ 7.1 million, or 46.1%, growth, due to financial investments yield.

7. Operational indicators

The table below shows the continued improvement in the Company’s services.

Operational indicators		1Q05		1Q06		% Chg.
Water connections (1)		6,394		6,527		2.1
Sewage connections (1)		4,780		4,918		2.9
Population directly served - water (2)		22.4		22.6		0.9
Population directly served – sewage collection (2)		18.1		18.4		1.7
Number of employees		17,669		17,364		(-1.7)
Operational productivity (3)		632		659		4.3

Notes:

(1)	In 1,000 units at the end of the period
(2)	Million Inhabitants at the end of the period (does not include wholesale services)
(3)	Number of water and sewage connections per employee
(4)	Due to new projections by Fundação SEADE, the population with direct sewage collection in 1Q05 was adjusted to 18.1 million Inhabitants.

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First Quarter 2006 Results
May 15, 2006
Page 7 of 11

8. Loans and financing

At the beginning of April, the Company amortized the 2^nd tranche of the 1^st and 2^nd series of the 5^th Debentures Issuance in the amount of R$ 148.9 million. On April 19, 2006 in line with the Company’s debt management policy, management decided for the advanced redemption of the total outstanding balance of the 1^st series of the 5^th Issue, maturing in March 2007, in the amount of R$ 104.5 million.

(R$ million)
DEBT PROFILE
INSTITUTION		2006		2007		2008		2009		2010		2011		2012  and  onwards		TOTAL
DOMESTIC
Banco do Brasil		142		213		231		253		275		299		774		2,187
Caixa Econômica Federal		33		48		52		54		59		64		197		504
Debentures		224		381		-		747		289		350		-		1,991
FIDC – SABESP I		14		55		56		56		56		12		-		250
BNDS		24		31		31		31		31		31		28		207
Others		2		5		5		5		5		4		-		26
Interest and charges		123		2		-		-		-		-		-		125
Domestic Total		652		735		735		1,146		715		761		999		5,293
INTERNATIONAL
World Bank		9		5		-		-		-		-		-		14
Société Génerale		3		-		-		-		-		-		-		3
IDB		73		94		67		67		67		68		515		951
Eurobonds		-		-		489		-		-		-		-		489
JBIC		-		-		-		-		-		-		4		4
Interest and charges		30		-		-		-		-		-		-		30
International Total		115		99		556		67		67		68		519		1,491
Total		677		834		931		1,213		782		829		1,518		6,784

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First Quarter 2006 Results
May 15, 2006
Page 8 of 11

9. Conference Calls and Webcast Details

Portuguese:		May 18, 2006
		09:00 am – US EST
		Phone #: (55 11) 2101-1490
		Conference call code: Sabesp
English:		May 18, 2006
		12:00 pm – US EST
		Phone #: +1 (973) 935-8599
		Conference call code: 7394149

For additional information please contact the Investor Relations Department: Mario Sampaio ((5511) 3388-8664 / maasampaio@sabesp.com.br) or Angela Beatriz Airoldi ((5511) 3388-8793 / abairoldi@sabesp.com.br)

Statements contained in this press release may contain information that is forward-looking and reflects management's current view and estimates of future economic circumstances, industry conditions, SABESP performance, and financial results. Any statements, expectations, capabilities, plans and assumptions contained in this press release that do not describe historical facts, such as statements regarding the declaration or payment of dividends, the direction of future operations, the implementation of principal operating and financing strategies and capital expenditure plans, the factors or trends affecting financial condition, liquidity or results of operations are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. There is no guarantee that these results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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First Quarter 2006 Results
May 15, 2006
Page 9 of 11

Income Statement

Brazilian Corporate Law		R$ thousand
		1Q06		1Q05		%
Sales/Services Gross Revenues		1,456,757		1,252,008		16.4
Water Supply - Retail		760,485		652,077		16.6
Water Supply - Wholesale		64,135		57,730		11.1
Sewage Collection and Treatment		609,116		521,632		16.8
Other Services		23,021		20,569		11.9
Gross Revenue Deductions (Cofins/Pasep)		(112,163)		(93,339)		20.2
Net Sales		1,344,594		1,158,669		16.0
Cost of Goods and/or Services Sold		(599,465)		(557,305)		7.6
Gross Profit		745,129		601,364		23.9
Selling Expenses		(135,743)		(113,011)		20.1
General & Administrative Expenses		(60,728)		(74,564)		(18.6)
Net Interest Income (Expense)		(90,744)		(182,979)		(50.4)
Operating Result		457,914		230,810		98.4
Non Operating Expenses (Income)		603		(518)		(216.4)
Income Before Taxes		458,517		230,292		99.1
Provivision for Income Tax/Social Contribution		(116,324)		(78,589)		48.0
Provivision for Deferred Income Tax/Social Contribution		(5,497)		8,447		(165.1)
Extraordinary Item Net of IT and SC		(8,780)		(8,780)		-
Net Income		327,916		151,370		116.6
Shares Outstanding (1000 shares)		28,479,577		28,479,577		-
EPS (R$/1000 shares)		11.51		5.32		116.6
Depreciation and Amortization		(146,714)		(145,460)		0.9
EBITDA		695,372		559,249		24.3
% of net sales		51.7%		48.3%		-

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First Quarter 2006 Results
May 15, 2006
Page 10 of 11

Balance Sheet

Brazilian Corporate Law		R$ thousand
ASSETS		03/31/2006		03/31/2005
Cash and Cash Equivalents		644,140		452,222
Accounts Receivable, net		1,227,224		1,041,174
Accounts Receivable from Shareholders		185,701		115,722
Inventory		30,733		24,540
Taxes and contributions		12,990		30,321
Other Receivables		37,202		47,163
Total Current Assets		2,137,990		1,711,142
Accounts Receivable, net		271,220		287,717
Accounts Receivable from Shareholders		813,015		754,403
Indemnities Receivable		148,794		148,794
Judicial Deposits		33,555		16,168
Taxes and contributions		307,549		267,512
Other Receivables		47,234		28,870
Total Long-Term Assets		1,621,367		1,503,464
Investments		740		5,100
Permanent Assets		14,097,316		14,008,471
Deferred Assets		18,314		37,164
Total Permanent Assets		14,116,370		14,050,735
Total Assets		17,875,727		17,265,341
LIABILITIES		03/31/2006		03/31/2005
Suppliers and Constructors		39,011		35,899
Loans and Financing		788,547		1,532,353
Salaries and Payroll Charges		142,105		132,158
Provivion for Judicial Pendencies		27,288		30,684
Interest on Own Capital Payable		529,921		179,751
Taxes and contributions payable		116,179		111,961
Taxes and contributions		70,015		70,745
Other Payables		94,425		82,948
Total Current Liabilities		1,807,491		2,176,499
Loans and Financing		5,995,728		5,801,212
Taxes and contributions payable		250,721		268,861
Taxes and Contributions		135,752		130,971
Provision for Contingencies		593,771		491,256
Pension Fund Obligations		287,824		235,963
Other Payables		109,635		93,815
Total Long-Term Liabilities		7,373,431		7,022,078
Capital Stock		3,403,688		3,403,688
Capital Reserves		92,743		67,297
Revaluation Reserves		2,506,024		2,596,914
Profit Reserves		2,470,269		1,863,389
Retained Earnings		222,081		135,476
Shareholder's Equity		8,694,805		8,066,764
Total Liabilities and Shareholder's Equity		17,875,727		17,265,341

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First Quarter 2006 Results
May 15, 2006
Page 11 of 11

Cash Flow

Brazilian Corporate Law		R$ thousand
Description		Jan-mar/06		Jan-mar/05
Cash flow from operating activities
Net income for the period		327,916		151,370
Adjustments for reconciliation of net income
Deferred income tax and social contribution		3,227		(10,588)
Provisions for contingencies		15,437		31,336
Liabilities related to pension plans		14,991		17,125
Loss in the wirte-off of property, plant and equipment		1,365		884
(ganho) na venda de imobilizado		(1,007)		-
Depreciation and Amortization		146,714		145,460
Interest calculated on loans and financing payable		162,529		167,152
Foreign exchange loss on loans and financing		(69,279)		11,100
Monetary exchange loss on interest on own capital		-		715
Passive monetary exchange variation and interest		5,289		6,503
Active monetary exchange variation and interest		(4,879)		(6,397)
Provisions for bad debt		68,222		45,862
Adjusted Net Income		670,525		560,522
(Increase) decrease in assets
Clients		(74,153)		(113,041)
Accounts receivable from shareholders		(3,970)		12,813
Inventories		5,337		5,064
Other accounts receivable		(13,179)		(13,874)
Clients – long term		(33,907)		(33,857)
Accounts receivable from shareholders		(22,917)		(55,314)
Judicial deposits		(9,698)		21
Other long term receivables		(14,314)		(895)
		(166,801)		(199,083)
Increase (decrease) in liabilities
Accounts payable to suppliers and contractors		(38,770)		(15,679)
Salaries and payroll charges		24,816		24,930
Taxes and contributions		(634)		(13,138)
Other accounts payable		(25,152)		(852)
Pension plan		(3,724)		(3,338)
Other accounts payable - long term		(1,561)		1,127
		(45,025)		(6,950)
Net cash from operating activities		458,699		354,489
Cash flow from investing activities
Acquisition of property, plant and equipment		(127,289)		(101,131)
Sale of property, plant and equipment		2,188		-
Increase in Deferred Assets		(27)		(25)
Net cash used in investing activities		(125,128)		(101,156)
Cash flow from financing activities
Loans and Financing - long term
Funding		291,263		347,571
Payments		(251,481)		(251,712)
Interest on own capital payment		(9,386)		(2,527)
Net cash used in financing activities		30,396		93,332
Net increase (decrease) in cash equivalents		363,967		346,665
Cash and cash equivalents at the beginning of the period		280,173		105,557
Cash and cash equivalents at the end of the period		644,140		452,222
Change in Cash		363,967		346,665
Additional information on cash flow:
Juros e taxas pagos de empréstimos e financiamentos		140,160		157,047
Capitalization of interest and financial charges		(12,978)		8,799
Payable income tax and social contribution		120,641		52,631
Property, plant and equip. received as donations and/or paid in stocks		13,922		2,006
COFINS and PASEP taxes payable		75,221		83,901
Balancing accounts		-		(715)

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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