HIDROVIAS DO BRASIL S.A. Earnings Release
São Paulo, May 11, 2023 - Hidrovias do Brasil (B3: HBSA3), an integrated logistics solutions company focusing on waterway transport, listed on B3's Novo Mercado corporate governance segment, announces today its results for the first quarter of 2023 (1Q23). The results presented in this report comply with Brazilian accounting standards and the International Financial Reporting Standards (IFRS), and except where stated otherwise, comparisons are with 1Q22.
Hidrovias do Brasil starts 2023 with record results, showing a reduction in leverage and Net Income of R$20.1 million.
Volume: The highest throughput ever in a first quarterever since the Company was founded, with double-digit growth in the two main logistics corridors, totaling 4.4 million tons in 1Q23 (+24.7% vs. 1Q22). The North Corridor stood out for its excellent performance, growing 23.0% on the strong comparison base of 1Q22, while the South Corridor continues to recover (+20.2% vs. 1Q22), after beginning to operate without navigation restrictions in February 2023.
Net Operating Revenue1: Increased 31.5% from 1Q22 to R$473.7 million, driven by higher throughput and increasing average tariffs in the Company's two main logistics corridors.
Adjusted EBITDA + Joint ventures2: Fifth straight quarter of growthcompared to the same periods in previous years, driven by the growth of the North and South corridors and the positive result from the fertilizer operation in Santos - whose throughput is still in its growth curve. Adjusted EBITDA, including the results of joint ventures, totaled R$211.3 million in 1Q23 (+34.8% vs. 1Q22), with Adjusted EBITDA margin, including the results of joint ventures, standing at 44.6% (+1.1 p.p. vs. 1Q22).
CAPEX: R$83.0 million in 1Q23, in line with plans for the period and went to conclude the projects related to the Company's first investment cycle.
Leverage: Deleverage of 0.89x compared to the same period last year and 0.30x in relation to the end of 2022, totaling 4.58x, mainly reflecting the best operating performance of the last 12 months.
Consolidated Result | 1Q23 | 1Q22 | Ch. % |
Volume (kt) | 4,375 | 3,509 | 24.7% |
Volume (South Corridor) | 1,265 | 1,052 | 20.2% |
Volume (North Corridor) | 2,014 | 1,638 | 23.0% |
Volume (Coastal Navigation) | 782 | 819 | -4.5% |
Volume (Santos) | 314 | - | - |
Net Operating Revenue¹ (BRL million) | 473.7 | 360.3 | 31.5% |
Net Operating Revenue (South Corridor) | 172.5 | 125.2 | 37.8% |
Net Operating Revenue (North Corridor) | 213.7 | 175.8 | 21.6% |
Net Operating Revenue (Coastal Navigation) | 59.8 | 59.3 | 0.9% |
Net Operating Revenue (Santos) | 27.6 | - | - |
Adjusted EBITDA + JVs2 (BRL million) | 211.3 | 156.8 | 34.8% |
Adjusted EBITDA (South Corridor + JV's) | 57.7 | 35.0 | 65.0% |
Adjusted EBITDA (North Corridor) | 136.2 | 108.2 | 25.8% |
Adjusted EBITDA (Coastal Navigation) | 29.6 | 33.5 | -11.6% |
Adjusted EBITDA (Santos) | 14.2 | (0.4) | - |
Adjusted EBITDA (Holding) | (26.4) | (19.5) | 35.4% |
CAPEX (BRL million) | 83.0 | 68.4 | 21.4% |
Leverage | 4,58x | 5,47x | -0,89x |
¹Net Operating Revenue excludes hedge accounting and intercompany effects between the Company's subsidiaries. ²Adjusted EBITDA + joint ventures is adjusted by hedge accounting, equity income (loss) and non-recurring or non-cash items and includes the result from the Company's interest in the Joint ventures Limday, TGM and Baden.
"The strong results in the first quarter of 2023 are now approaching the potential of Hidrovias do Brasil's installed capacity, as external challenges are being overcome and operations are returning to a normalized operational scenario.
Throughput was almost 4.4 million tons, driven by significant growth in the main logistics corridors and a strong operational startup at Santos, marked by record Net Operating Revenue and Adjusted EBITDA during the period: R$473.7 million and R$211.3 million, respectively.
We are gradually nearing the end of the first cycle of investments planned for the Company, which focused on rolling out innovative and special projects that consolidated our position as one of Brazil's - and South America's - preeminent logistics players in less than 13 years of operation.
In order to connect the South American continent efficiently and sustainably, we established new logistics corridors and started operating efficiently in waterway transport in an integrated manner, deploying modern assets that bring greater competitiveness to producers and lower the impact on the environment compared to other transport options commonly used across our continent.
Thanks to our team's tireless and resilient efforts in recent years, we are in a unique and strategic position in all corridors, and have become absolute leaders in grain exports in Barcarena (North Corridor) and iron ore transport in Corumbá (South Corridor).
Our focus is now squarely on operational excellence and on optimizing business results in order to capture the full cash generation potential starting from 2024, which will enable us to quickly deleverage and, subsequently, seize opportunities in the future, given that there still exists much untapped potential in the logistics sector across our continent through waterway transport, coastal navigation, port integration and/or customized solutions for prime clients."
Fabio Schettino
CEO of Hidrovias do Brasil
South Corridor
Volume (kt) | 1Q23 | 1Q22 | Ch. % |
South Corridor | 1,265 | 1,052 | 20.2% |
Iron Ore | 728 | 644 | 13.0% |
Grains | 155 | 145 | 6.9% |
Fertilizers | 54 | 8 | >100% |
Other | 82 | - | - |
Total before JVs | 1,019 | 797 | 27.9% |
Participation in JV's1 | 246 | 255 | -3.7% |
1Interest in joint ventures: volume proportional to the Company's interest in TGM, Limday and Baden, whose results are booked under the equity method of accounting.
We started 2023 with significant operational restrictions in the South Corridor caused by the delay in summer rains, which occurred only in late January. Nevertheless, rainfall in the first quarter was heavier than estimates for the period and enabled us to operate regularly during most of February and March, partially offsetting the January situation.
We handled 1.3 million tons in 1Q23 (+20.2% vs. 1Q22), mainly driven by the strong iron ore volume, which totaled 728,000 tons (+13.0% vs. 1Q22), under a long-term agreement with MCR (controlled by J&F) and the spot volume contracted with other mining companies in the Corumbá region.
This volume consolidates Hidrovias do Brasil's position as the principal logistics player for transporting iron ore produced in Corumbá, ending 1Q23 with 52% market share.
Grain throughput increased 6.9% from 1Q22 to 155,000 tons, reflecting the recovery of grain production in Paraguay (one year after the country's worst ever crop shortfall).
Navigation conditions on the Paraná-Paraguay Waterway (HPP) remain within normal parameters and on a positive trend, giving us greater assurance that the atypical and non-recurring challenges observed in recent years are being overcome and, consequently, we
can optimize the operations in this region, gaining scale and diluting fixed and variable costs in order to deliver results closer to the full potential of this corridor in 2023.
It is always worth noting that the Company has more flexible assets in the South Corridor, which give it greater competitive and strategic advantage vis-à-vis its clients, consolidating its leadership position also in grain transport (~15% market share) and, consequently, retaining its absolute leadership in the Paraná-Paraguay Waterway as a whole (37% market share).
South Corridor (BRL million) | 1Q23 | 1Q22 | Ch. % |
Net Revenue1 | 181.8 | 226.3 | -19.7% |
Operating Net Revenue | 172.5 | 125.2 | 37.8% |
Hedge Accounting 2 | 9.3 | 101.1 | -90.8% |
Operating Costs | (106.0) | (88.1) | 20.3% |
Operating Costs | (106.0) | (88.1) | 20.3% |
Operating Expenses (Revenue) | (12.2) | (8.4) | 45.3% |
AFRMM, Tax Credits and Other | 0.2 | 0.3 | -31.0% |
Equity Accounting | (0.2) | 1.8 | - |
EBITDA | 63.6 | 131.9 | -51.8% |
EBITDA Margin % | 36.9% | 105.4% | - 68.5 p.p |
Hedge Accounting 2 | (9.3) | (101.1) | -90.8% |
Equity Accounting | 0.2 | (1.8) | - |
Adjusted EBITDA | 54.6 | 29.0 | 87.9% |
Adjusted EBITDA Margin % | 31.6% | 23.2% | 8.4 p.p |
JV's | 3.1 | 5.9 | -47.4% |
Adjusted EBITDA + JV's | 57.7 | 35.0 | 65.0% |
Adjusted EBITDA Margin + JV's % | 33.4% | 27.9% | 5.5 p.p. |
¹Net Revenue excludes the Intercompany effect for a better understanding of the results. 2Hedge Accounting: the Company's functional currency is the Brazilian real. However, South Corridor agreements are denominated in U.S. dollar. Therefore, hedge accounting was used to mitigate foreign exchange exposure, with the existing dollar-denominated debt hedging a part of long-term agreements in foreign currency. This procedure is non-cash.
Net Operating Revenue: Increased 37.8% from 1Q22 to R$172.5 million, mainly due to higher throughput in the period and higher average tariff in the system. There was little impact from exchange rate variation, since average U.S. dollar remained practically stable in both periods (5.19 in 1Q23 vs. 5.23 in 1Q22) and NOR in U.S. dollar in 1Q23 was US$33.2 million, compared to US$23.9 million in 1Q22 (+38.9%).
Operating Costs: Increased 20.3% in relation to 1Q22 to R$106.0 million - lagging revenue growth and, thus, reflecting greater dilution of fixed costs and economies of scale as the operation returns to normality.
Operating Expenses: Totaled R$12.2 million in 1Q23 (+45.3% vs. 1Q22), due to the rebuilding of teams for a scenario of more regular operations and higher withholding taxes compared to the same period last year (IVA).
Adjusted EBITDA + Joint ventures: Better navigation conditions along the Paraná-Paraguay Waterway resulted in the highest adjusted EBITDA ever registered by the Company in a first quarter,even though January was less than ideal, totaling R$57.7 million (+65.0% vs. 1Q22). Adjusted EBITDA margin + Joint ventures was 33.4% (+5.5 p.p. vs. 1Q22), still below the corridor's full potential, but is already showing the trend of continuous improvement (+9.5 p.p. vs. 4Q22).
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Hidrovias do Brasil SA published this content on 11 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 May 2023 01:21:04 UTC.
