Release Date: November 08, 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 record quarterly adjusted EBITDA of BRL2.2 billion, marking a 22% increase year-over-year.
- The company reported an adjusted net income of BRL794 million, the best quarterly result to date.
- Rumo SA successfully reduced its financial leverage ratio to 1.4 times, indicating a strong deleveraging trend.
- The Mato Grosso Greenfield Railway project is progressing well, with accelerated disbursements due to physical construction advancements.
- Rumo SA increased its market share in key regions, including Mato Grosso and Goiás, and ports such as Santos, Paranaguá, and São Francisco do Sul.
Negative Points
- The southern operation experienced a volume decline due to extreme weather events in May, impacting overall performance.
- The Tronco Sul railway segment remains indefinitely suspended, affecting operational capacity.
- Despite improvements, the transit time for the northern operation still stands at 82 hours, indicating room for further efficiency gains.
- The company faces challenges in fully executing its CapEx plans for the Lucas do Rio Verde project, with current execution levels not meeting past expectations.
- Rumo SA's operations are subject to fluctuations due to climate effects, which can impact project timelines and operational efficiency.
Q & A Highlights
Q: Should we consider the current CapEx level for the Lucas do Rio Verde project as full-speed execution, and what is the update on the project's progress?
A: Pedro Palma, CEO, explained that the current CapEx execution pace is expected to continue in the coming quarters, with full mobilization and work fronts advancing well. The project is on track to be completed by the end of 2026, with further advancements in terminal construction expected in 2025 and 2026.
Q: How are discussions with trading companies regarding take-or-pay contracts for next year, given the improved planting conditions in Mato Grosso?
A: Pedro Palma, CEO, expressed optimism about next year's production scenario, noting that the return of normal rain levels has positively impacted client appetite. He is confident that 2025 will be a strong year with fair prices for Rumo's services, although specific contract details were not disclosed.
Q: What is Rumo's strategy for the southern network, and how will the new executive focus impact it?
A: Pedro Palma, CEO, highlighted the decision to treat the southern network as an independent business, led by Daniel Rockenbach. The focus is on generating more value and preparing for potential concession renewal discussions with the government, leveraging the network's extensive operations and stakeholder integration.
Q: How will Rumo manage potential lower take-or-pay percentages in 2025, and what impact could this have on efficiency?
A: Pedro Palma, CEO, is optimistic about volume projections and highlighted the flexibility in Rumo's network to attract cargo from different segments and origins. This flexibility allows Rumo to maintain capacity and optimize pricing, ensuring the system operates efficiently even if take-or-pay percentages are lower.
Q: Can you provide an update on the progress of other projects, such as the Paulista Network and Santos Terminal expansion, and CapEx expectations for next year?
A: Rafael Bergman, CFO, stated that next year's CapEx guidance will be disclosed early next year. He noted ongoing investments in the Paulista Network and Port of Santos, with projects like the Mato Grosso expansion fully mobilized. The company is also preparing for construction at the port in partnership with CHS and DPW, with investments expected to ramp up next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
