Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rumo SA (BSP:RAIL3, Financial) achieved a 48% increase in adjusted EBITDA, reaching BRL2.1 billion.
- Adjusted net income surged to BRL721 million, more than four times the previous year's figure.
- The company successfully reduced its financial leverage to 1.5 times by the end of the quarter.
- Rumo SA (BSP:RAIL3) saw a 32% increase in yields, contributing significantly to its strong performance.
- The company expanded its market share in key operations, particularly in Mato Grosso and the Port of Santos.
Negative Points
- Extreme weather events in Rio Grande do Sul led to a provision for impairment totaling BRL2.6 billion.
- The South Operation experienced a drop in volumes due to the shutdown of the Tronco Sul railway stretch.
- Fixed costs increased by 20%, reflecting the company's growth in new businesses.
- The company faces challenges in the South Network, including complex structural damages and ongoing negotiations for renewal.
- There was a slight reduction in volume levels, particularly in the North Operation, which grew below expectations.
Q & A Highlights
Q: Could you comment on the outlook for your CapEx over the next two years?
A: Rafael Bergman, Chief Financial and Investor Relations Officer: We have a clear and well-defined investment pipeline, including the Paulista obligations, Mato Grosso extension project, and recurring investments for operational efficiency and safety. The recent partnership with CHS for a new port facility in Santos is a testament to our capital discipline.
Q: Could you explain the difference between fixed and variable costs in the quarter?
A: Gustavo Marder Da Rosa, Investor Relations and Treasury Director: Fixed costs increased due to structural enhancements for growth, while variable costs decreased due to more efficient use of our logistics for sugar transportation, reducing reliance on third-party solutions.
Q: Can you provide more details on the new terminals and partnership with CHS at the Port of Santos?
A: Rafael Bergman, Chief Financial and Investor Relations Officer: We are increasing capacity at the port, including the Outeirinhos stretch and the DPW terminal with CHS. The STS11 terminal will add 11 million tons of capacity, and the DPW terminal will handle 8 million tons of grains and 3 million tons of fertilizers.
Q: Could you explain the impairment in the South network and its impact on future negotiations?
A: Rafael Bergman, Chief Financial and Investor Relations Officer: The impairment reflects the complexity of potential reconstruction due to extreme weather events. This accounting adjustment does not affect our interest in renewing the network or ongoing negotiations.
Q: What is your strategy for the current cash position and potential investments?
A: Rafael Bergman, Chief Financial and Investor Relations Officer: Our strategy is to maintain a robust cash position for commitments and risk management. We are focused on delivering announced projects and exploring partnerships to add value. The current leverage ratio does not change our investment priorities.
Q: How do you see the relationship between EBITDA and volume in the updated guidance?
A: Gustavo Marder Da Rosa, Investor Relations and Treasury Director: The volume guidance reflects the impact of the South network issues, while the EBITDA guidance considers better-than-expected yields and profitability from our operations.
Q: What are the implications if the Tapajós River dries up again this year?
A: Gustavo Marder Da Rosa, Investor Relations and Treasury Director: We see a short market for logistics over the next few years, supporting a positive outlook for transportation. Client decisions on logistics solutions will determine the impact.
Q: Are the investments in the Port of Santos on track?
A: Rafael Bergman, Chief Financial and Investor Relations Officer: Yes, the investments, including the loop line for the new terminal with COFCO, are on track and progressing as planned.
Q: What were the main drivers for the volume reported in July?
A: Gustavo Marder Da Rosa, Investor Relations and Treasury Director: The transition from soybean to corn and terminal readiness affected volumes. This is a normal seasonal transition and should not continue looking forward.
Q: How do you see the cost dynamics for the next few quarters?
A: Gustavo Marder Da Rosa, Investor Relations and Treasury Director: The positive margins from efficient logistics will continue. The company can switch between transporting grains and sugar to optimize margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
