Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hidrovias DO Brasil SA (BSP:HBSA3, Financial) reported normalized navigation conditions in both the north and south corridors, contributing to improved operational efficiency.
- The company achieved a positive tariff adjustment, which helped offset the drop in volume due to a delayed soybean harvest.
- Significant progress in dredging and rock removal activities has enhanced navigability, particularly in the southern corridor.
- The company announced the sale of its coastal navigation for bauxite, optimizing its portfolio and allowing a focus on more strategic issues.
- Hidrovias DO Brasil SA (BSP:HBSA3) improved its CDP score from C in 2023 to B in 2024, reflecting strengthened environmental and climate management efforts.
Negative Points
- The company experienced an 11% decrease in volume moved in the north corridor due to a delay in the soybean harvest.
- Recurring adjusted EBITDA in the north corridor was 62.6% less than in the first quarter of 2024.
- Leverage remains high at 5.9 times net debt, despite improvements, due to carryover from challenging results in 2024.
- Recurring EBITDA for the coastal navigation segment saw a reduction of 13% compared to the same period last year.
- The company faced challenges in ramping up operations at the Santos port, resulting in a 22% reduction in recurring EBITDA compared to the first quarter of 2024.
Q & A Highlights
Q: Can you provide more details on the North Corridor expansion project and any plans for capital recycling following the sale of coastal navigation assets?
A: (CEO, Fabio Schettino) We are resuming our expansion agenda for the North Corridor with a well-adjusted capital structure. We are at the end of our capital increase, which will allow us to conduct more balanced studies for future projects. Currently, we are not disclosing specific project details, but we will present them to the market in due time. Regarding capital recycling, the sale of our cabotage asset is expected to close by mid-year, which will enhance our fleet for other operations. No other asset sales are planned at this time.
Q: Could you elaborate on the operational expectations for the North and South Corridors, particularly regarding navigation conditions and potential EBITDA levels?
A: (CFO, Andrea Hashem) For the South Corridor, we have improved navigation conditions due to dredging and rock removal, which should continue to enhance operations. We don't provide annual guidance, but we expect more stable navigation. In the North Corridor, water levels have normalized, and we anticipate better volume and tariff conditions. The first quarter results reflect these improvements, and we aim to minimize water volatility impacts.
Q: Will the dredging and other works in the South Corridor lead to normalized or improved margins? Also, what is driving the higher tariffs in this corridor?
A: (CFO, Andrea Hashem) The dredging and rock removal efforts have improved navigation, which should help normalize margins. The higher tariffs are not due to product mix changes but rather the improved navigation conditions and operational efficiencies. The interventions have allowed for better navigation compared to previous years.
Q: How does the company plan to manage its capital structure and leverage following recent financial adjustments?
A: (CFO, Andrea Hashem) We have completed a significant capital restructuring, including a capital increase of up to 1.2 billion. This will reduce leverage and align our capital structure with growth opportunities. The improved financial position will support our strategic initiatives and enhance shareholder value.
Q: What are the key factors contributing to the improved results in the South Corridor, and how sustainable are these improvements?
A: (CEO, Fabio Schettino) The key factors include successful dredging and rock removal, which have improved navigability. These efforts are part of a long-term strategy to reduce water volatility impacts. While the improvements are ongoing, the results this quarter demonstrate the effectiveness of our initiatives, and we expect continued progress.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
