UGP - Earnings call transcript Q2 2021 | Ultrapar Participações S.A.

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Operator

Good morning, and thank you for waiting. Welcome to Ultrapar's Earning Conference for the Second Quarter of 2021. This meeting is also being simultaneously cast through Ultrapar's webcast, ri.ultra.com.br and MZiQ platform. Please feel free to flip through the slides during the presentation. With us today are Ultrapar CEO, Mr. and CFO, Ultrapar Curado; IRO Mr. Frederico and Pizzinatto; Ipiranga CEO, Mr. Rodrigo by Marcelo executives. the joined other group's Araujo be Please this that advised recorded. event is being And in connected presentation. will during participants company’s listen-only the all mode be instructions be After remarks, questions, time the will will Ultrapar’s open provided. be floor at for which further for Q&A, any of We to replay point available call, the recording the during conference Instructions] on will the on that question’s remind the [Operator posted you webcast this be would for like maybe one-week. page at and

Before to that circumstances of and proceed, that could understand state Act. to relate involve risks, company's in different Securities operating and to we depend they management Investors may on me significantly could general other or let the assumptions Ultrapar's future said of well economic and under expressed uncertainties events Reform than of based as therefore should future not results earnings forward-looking mention available conditions, affect made the being the as the Ultrapar's company. the statements statements. materialize. industry that assumptions and currently seen beliefs These Litigation on forward-looking those the They lead as are statements are safe and harbor XXXX the also may information factors

turn Mr. me Frederico now conference. Curado. the to let conference over may Now, the Mr. Curado begin you

Frederico Curado

everyone. for in participating morning our you good Thank call. and Hello, earnings

progress a our agenda, kick of and the me gradual but management Let cash good quarter, in in a particularly indebtedness. saying had we our also that second now strategic off reduction

to awaits approval be the we talk to this of CADE about transaction contract now would May, the the So I and three to Extrafarma sell Menos transactions signed to finalized. Pague like in

now has stake obtained is the announced our only of clearance operation Bank once. of case this also from We when pending Central approval CADE possible. condition This the the Brazil's in ConectCar and already XX% in sale

are financial now with institution. sale announced And for on the Oxiteno. ConectCar finally, negotiations of basis Indorama we is Of a course exclusive

is that expectation soon. this rather Our we should finalize

also which to minutes. excellent cover expansion both Ultracargo businesses, and records, our the about recorded few projects Oxiteno. Rodrigo briefly there. had anticipation would in early in provide and in another this now progress companies the great and I do a quarterly revenues advancement year. details will into Conde towards of new cases, and Speaking so highlight end like service quarter in Itaqui In of the Ultracargo an Vila both entry increase this will We

pressure continued increases continued improvements. markets markets, now Speaking facing about trajectory in competitive another raw significant its in Ultragaz of despite materials. price another had the is the of challenges solid Extrafarma in but main imposed by of quarter the they quarter It have its achieved on its recovery. the

strategic share extent our a relevance previously, has margin agenda raw the XXXX of volumes competitive but be at material this perspective strong implemented you to transformation to alone give changed share of agenda we And Just Ipiranga finally that he is in Marcelo invited Araujo order Ipiranga gradual ended the a risen main able matter pressure we join seriously a in further up also something what and of to XX%. you at has detail. have the that been have likely conference good attention have which and we our This with idea and actually will has its is course market the has large itself and recovery four us restructuring below expected. I the point organization end this we recovery. in company with of announced and To Ipiranga is has set margins which so of for as initiatives given

to consolidated. Ultrapar back Now

the advanced dividends approximately was if BRL highlight XXXX finally impairment second Integrated that this in supports just order the XXX with me our to million disregard the BRL both it we first And million is Our distribution let information integrated which report we size Extrafarma year's of announced. of the of net and profits of beliefs some Report standard, the our GRI had and which time intention cross-references report and standards. provide XXX the for certificational

the our is advance be to to strategy continue year end. We them and ESG in definition our roles XXXX goals for those disclose idea our integrated by will of obviously and

word I'll pause for the Thank back me you in be I'll the Thank to presence. here. the for Q&A. you and let again So your much. pass end Rodrigo very

Rodrigo Pizzinatto

once It's here more Thank you, to good morning, a Ultrapar's everyone. to about results. pleasure talk be quarterly Fred and

number Ultrapar's let's with So start X. consolidated slide results on

As second consumption quarter you the XXX affected quarter the of the upper-right over see in COVID graph, XXXX in the recurring a BRL fuels that especially our the million most to quarter totaled in can significant increase by Ipiranga. second due drop XX% EBITDA affected

which generated BRL asset by you EBITDA We quarter not I negatively sale that the any also the of had impairment XXX impact. in impairment Extrafarma, cash the second remind that of this affected does signing million. have

from partially was a working the XXXX second net BRL cash activities BRL We recall. a billion credits of cash result XXXX. quarter greater despite which prices that in EBITDA oil and on as recorded the improvement currency we Our X.XX million downward flow materials that back million second higher raw mark-to-market million with effects better higher the growth million, and of positive capital a compared XXXX BRL excluding effect BRL on quarter quarter hedges, were first trajectory. effect in the the in XXX temporary and increased and BRL back an by the investment of tax XXXX operating is financial second the of offset quarter XX impairment derivatives in XXX especially negative of of generated the the XXX in in of results, in generation driven income EBITDA had this The was over of of

bonds quarter, the during cash to Therefore, liquidation higher April and designated XXXX, had flexibility of the we the settled debt commitment debt accounting. IFRS to talk billion, for as leverage, worth of even of have net shorter-term the the increased you increased financial pointing that of XX.X of at BRL progress the in portfolio. the operating flow last to resilience contributed and leases item reduction the payable portion the This in debt cash of to financial the costs as March of contributes our our which is reduction during about that net variation XXXX, and are first of the the the times last portion XX times line result since of with two the let's first from the It financial a just X.X lowest quarter March years. in in and demonstrates X, soundness which improvement of debt. out of contracted months leases liability a BRL ended number that is XX, less the losing second maturities. We on the exchange leverage debt slide calculation. than is generation though the such without in with The X highlight debt hedge combined the This in remaining second resources, explained by effect pandemic. costs to security. XXXX, excluding in resulted we inclusion quarter the reinforces mentioned XXXX I now X.X of graph, This operating by the been debt in of EBITDA our adding that can these rate emergency of management. impairment Moving quarter net the the cash It beginning I to is XXXX. level billion quarter carrying see reduction not the the

The the about growth Volumes the increased a driven in segments, and quarter segment to second commerce were the restrictions which most X% second to in the than the now is those bulk with X% growth sales affected reduction the Moving quarter in by by segment services Ultragaz number higher to bulk in Slide X and in segment. XXXX of industry, distancing were bottled the by bottled XX% sold Ultragaz strong The increased XX% was quarter. is reflects the explained in demand sales segment comparison the reduction basis on increases in the reduction during a the quarter quarter the the the EBITDA the social strong in pandemic of during same imposed R$XXX last volume, of the measures. XXXX. second XXXX of the subsequent and back year. LPG over the EBITDA Despite quarter, million drop costs. talk

In to volume addition, prices. and we freight, personnel with higher had higher and diesel higher due expenses sales

more which stronger volumes than different although relation seasonally more quarter is well important as that also quarter by standard. benefited LPG an XXXX, prospective as results of in the evolution costs, quarter, lower third of XXXX, of was second to allowing stable the the third of the For

the margin from expenses expanded expansions X% second of expenses. in of in meters Ultracargo. about expenses with talk meters to gains seven to the second handling mainly well capacity over months. in growth of Slide to expansion of increased XXX,XXX quarter can Itaqui the increased of rent Ultracargo's the XX due in quarter, XX% mainly of capacity productivity the the last the second expansions increase partially see of projects, non-recurring capacity information average to sold continues move the in as a quarter of second revenues XXXX. and for level product graph, R$XXX Itaqui by reached totaled digital second profitability. and the in path record its XX% quarter readjustments. new offset quarter in effects, compared in quarter million such to the mainly resulting to allowed of support expenses to as XXXX, and contractual the reached transformation. depreciation the increased Therefore, that expansion by above XX% increased capacity. with costs Net XXXX, cubic result a X% in EBITDA sales, XXXX, Ultracargo in Cubic reached at let's in X% result and increase follow implemented result over Now in second quarter the above the a you in XX% due fuel-handling technology EBITDA R$XXX million Ultracargo increase of The an expansion we installed engineering quarter, costs year-over-year, of the Combined quarter, tank and services increased readjustments XXXX, and second the as excluding

quarter call similar start of anticipation, new We current in graph, as of second performance Ultracargo's the at concluded the to to continue, attention of level XXXX. in a bottom July. like Itaqui expect the that the terminals. the average I'd your that months the to we this of EBITDA operations five highlighted to new on of For the quarter reaching operational anticipated

anticipate year. should the the quarter fourth Conde also three do this will in Vila We terminal conclude that months, about of

managing in results both, these expansion these the both dedication by contribute of anticipating It evolution start-up and XXXX. Ultracargo's terminals already new reflects Fred, CapEx mentioned As planned to the team reducing and initially projects of still the of in operations.

stronger talk affected sold Now, moving of Oxiteno. X excellent the another of during sales XXXX to XX% to maintained of that segment Volumes the its were second number most to due XX% segment the pandemic. coating And of quarter the Volumes second that has chemicals higher, specialty were for, than crop strong XXXX. quarter about, increased beginning slide quarter at solutions performance.

higher mainly depreciation. linked with impacted effects partially main Oxiteno's offset by which hedging, cost in to These the R$XXX in quarter results by million from and as volume negatively the from We drop a the this personnel increased line has Freight second in quarter, a Mauá's grew better volume of over performance of margins due of with year zero to in and demand storage, XX% higher volume quarter. effects. level were result were of XXXX a costs XX% and rate expenses costs plant This last XXXX. maintenance Oxiteno due the States. to EBITDA exchange the of the the in higher upside related growth reached of the also sales of XX% record real, The quarter and also the collar pandemic. EBITDA second four results expenses commodities the also The progression which unit to registered the United sales scheduled in shutdown volumes and

assuming outlook For the results level remains of the positive volume with current to similar XXXX, rates. normalized third of the a XXXX, level the exchange that more and of of second quarter of growth quarter

and of XXXX lowered quarter quarter. strong X% quarter, at the a EBITDA of the of increased to the of at and the XXXX. impact underperforming XXXX. XX% Gross no-intention the also These closing a growth We the noting X% stores same-store the XXXX, growth is R$XXX in the the registered quarter the X% sales by ramp-up mobile talk XXX offset due contingency of in of of XX% by XX% on quarter now worth second We of underperforming that with than resulting second sales personnel by on R$XX the commerce from and stores. that totaled excluding in for offset are basis the effects still and Extrafarma a and were the in above comparison revenues in stage. rigor quarter profitability smaller second were partially ended second Let's which that Recurring million temporary mobile million, closing over of quarter carried sales the in out stores inflationary reflects greater X. the network. second existing services, XXXX, slide stores number Extrafarma the of increased expenses stores, about of network that towards selectivity the expansion number in partially quarter It

the sell R$XXX Pague and the recognized in the value cash signing Extrafarma to still and is book closing impairment does already reinforce contract this this transaction. impact value mentioned, between adjustments. the representing the in impairment also Menos not to amount of the subject of a I to have we the I asset With difference quarter, million announced

of to expect similar the in We the quarter to achieved levels be current this from quarter second results XXXX.

see an as Moving has now Volumes volume with growth recovery upper the were those the XX% second in can sold of than you volume the XX cycle in There let's a the a talk diesel. to graph. number, in growth about Otto XXXX and XX% stronger slide XX% in been quarter important Ipiranga.

We to with closed of were stations, able XXXX when getting share to loss the closer are service during We of between service flat average new market new compared stations the stations first SG&A XXX cubic higher a quarter. The levels. service -- also volume also and the XXX and the and AmPm quarter higher of expenses in the closed XXXX; of in contingency most month. during of sales with contingency XX had X,XXX volume; to below stations the ended pre-pandemic XX% we pandemic the network three due the second of quarter quarter company-operated service the and recover cubic this meters the with quarter effects; the of higher of XXXX XX one-off contribution practically XXXX; is over of expenses increased second growth lubricant month, main to and expenses stores. per freight volumes while XXX per quarter ones second XXXX meters second

expenses. results, Ipiranga's and higher stronger that was BRLXXX million quarter especially quarter, and second of The than of quarter in million diesel increase XXXX, offset net operating BRLXX Therefore related other operating costs higher EBITDA to due XXXX results million the line on credits the during second showed of quarter. in BRLXX ethanol targets other the back by the carbon with of the margins, of volume mainly partially tax million RenovaBio tax of BRLXX over the of write-offs the second quarter improved XXXX by second partially pressured the to XXX% new of offset sales

we Looking the but anticipate to to call quarter, slide. of pre-pandemic third pressured. like of returning AmPm I'd this sales margin Ipiranga's at volume with your on higher to XXXX still also third levels, quarter attention recovering levels

progress initiatives mentioned the Ipiranga's in disclose These of Thank in this up AmPm the to total total of and it's we leaders, results. of quarter As to on with stores. sales Araujo presentation to ended XXX sales planning will -- XXXX of the XXX GMV conclude second the Marcelo the franchise the improve and correspond events visibility journey. the have will I many operation. Marcelo will company-operated series Ultrapar's figures and company-operated to over for We company-operated with recent pass now begin transformation update I to already you. And you who you. stores stores of and my sales

Marcelo Araujo

avenues we an I What contribution I progress in as of overview that to our and the an that entire some the have Rodrigo to selected defined competitiveness we of most initiatives summarize take details. strategic update here profitability this and have here We increase the two you, everyone. the May. XX summarize give results and talking Thank those we made and is revenues presented of we have presentation, slide good to of initiatives I growth There is profitability as the initiatives and Ultra provide single four for do business effort been slide of an which priorities. in more will you the our expect the for these a on program. morning Day to to relevant in

main the which have trading integrated operational our in is The with and management commercial the corridor. Of in today logistics for call structures customers strategy. already business-to-business and and first retail regional one the logistic committees areas we integrate corridors pricing operate each XX we of what

strategies is So, more the much the We million of already is greater million What already In agile we the we in a R$XX these impact of XXXX. biggest many this particular, quick operating has take-or-pay Ipiranga's have the months. transport, of the R$XX capture logistical is, contracts allowed which really to why for for the second the we in systems support region. identified are opportunities it those and since This integration implementing relevant expect managing had coming optimization very a of some some half opportunities us, of in wins and way storage of to flows the to and expect the to granularity corridors. of an decentralized in change each dynamics see and market redesign years. model management we reflecting this decision advancing operating in

nowadays corridors our XXXX, -- -- we one in which logistic Each strategy also August have investment it each already corridor of logistics its at own cycle bottom-up built its after expansion P&L by all we plan complete own -- corridor its its defined has level. Ipiranga and for this P&L. competitive of and August, plan consolidated these Here the and then month started planning course in

the fully the The is is second that implementing still avenue competence we front are the Ipiranga and competitiveness competitiveness pillar in trading nowadays. at

focus And an on carrying the our supply we national customers by intermediate and supported operations parties. structure, already While we operate on to corporate an some serve called until to have asset-backed to is network today are trade. as at to products moving out of was third a and efficient which manner also level, products existing our XXXX started

that days, movement doing months, and trading this and we're intelligence along management. our risk formed also So area, are supply To so, expanding we improving and we our are last main experimenting the knowledge new And perform implementing governance for these the the a in teams. the expertise, trading by process gaining complete model way. we

systems, operation. have dedicated the We we defined Once managing best the trading parameters calculating risk each V@R to for methodologies monitoring into we balance the for started trading operation. value be our and risk of opportunities and have testing system and towards already our the will whole and culture integrated daily really visibility positions the and the able and check the have of ensure to at increasing operations the

for well. with and operation, systems XXXX, we operate we to as new trading strategies will the start full the for So adopt instruments financial the in commodities already

think years. This its An market a was, very today's for process throughout highlighting notifying for detail the year, sure they authority But By the I reference will seeking recovery consultation in as forward, network. are pricing operational front, of our each more much of mature, to well choose last a the make proprietary been very for CADE firm is forget, process station strengthening line we network. cannot have which AmPm, This of whole is in of in to development spinoff retail schedule commitment rollout services here the a as conferences. as the we years. all of in financial for other to doing while presented the the important guidance, results taking to parallel up conference our on recent about in area. branded that of as to new the Ultra this Day, we the prices the be non-negotiable at this especially the network we'll current and new are we trading and were In in Well presented in it's in a for September the which network. Well the the area area. directional in and Euro journey main event. objective initiatives finally, have next the is defend these call, trade we'll we contribution approved position particular Brazilian by Going market fact three in fruit and relationships highest initiatives more transformational this presented our trading begins advancing the priority we case, start team initiatives us, next potential our another you effective have relevant business-to-business and controls competitiveness the the worth antitrust influence in, the solvings main already customers the evolution bear Wrapping maximizing some the on have suggest we on which recent its consistently the system. share, of two two which and

by combination initiatives initiatives an we the expectation these XXX EBITDA annual mature. of already these next contribute those that have XXX XXXX. ahead When will in by to all BRL in million at we look strategies years the incremental least will four is Our BRL gain EBITDA million three when at increase calculated potential the is to for our the

be then cost the share initiatives to reap the initiatives, and we gain. efficient competitiveness greater of of from benefits we increase market the accelerate able coming those those will As

of the share you been as So recovery is we've with gradual talking market this recently.

first in part of our my conclude presentation now I So, meeting. this

where available you. on will and session move let's to be the Rodrigo I Q&A Now Thank to take Fred questions. your

Operator

comes Hachem question Itau. first Andre [Operator Instructions] from Our from

may proceed. You

Andre Hachem

to I'd Marcelo. question. talking question Thank like start to my for taking you my

talk this the -- what little historical considering you lowest your talk this series especially And maybe Could margins? pressured about think especially a quarter the of was the a what this your please to that And bit the we've -- seeing bit reach. the over that the effects a result see second gain issue. adjustments year? at you're you I seems seems end the record It little of or first seen. expect that -- half that low like the about are to your

Marcelo Araujo

morning. This Araujo Marcelo Good for is you question. Thank speaking. your

think very on on that was I your of point and touched core our what much the question challenges are.

So, I will saw of vision made for it We try and went recover had everyone up were very a prices from quarter challenging surge also, decline the a oil gross a to the And And that difficult quarter aspect for distinct go over for very restrictions we our to every of up margins. was a other. us This its our market an listening. number we one saw in diesel XX%. steadier as to also returned prices And after very with very evolution the second pandemic then contraction especially a sales levels. in the in prices. pressured. momentarily they Consumer and did our that such over in ethanol lasted raw April right ethanol in unexpected lockdown. margins this And and sales much margins. of margins But volumes. especially materials regular to which a pressured quarter really long prices between a our foreseen March our with this -- And time momentary and drop not because ethanol went in

and had to the maybe PIS/COFINS we headway our with up from And level levels a even made though some already but it's were enjoy That prices again, looking made had entire on which average We our our able the contributions. very the ultimately, tax capturing margins volumes of sales. we were We're we was recover very are defend very shared challenging we it the had consumer the a was high sustain was high slightly Brazil our and is in you, what to the impact strategy, went prevented to well. even it company made more margins. to is, of optimistic And even share, market the But diesel half it volumes, projecting that. stand for us massive our in which livestream, do in we return inventory So, But able below are -- which the we that the I've some to as though sacrifice market. our and up for to our margins very energy our vision second clear what now. our showed year. projecting But that market, very pressured the forecasts very is weren't return clear levels. levels question were forward of recently and in in PIS/COFINS us

impact system lost and resale which, distribution be So and the the will bit able we may across what for see in pressure little margins of country. And we consumers first to broaden some a our for the recover of half the year. we even may

a to saw are it a likely quarter that is we now forward. So, seeing continue bit little challenge, second recovery in of major what we the is really and moving

We what figures to do in that And some we our regard not that review you haven't the expect were much at to expectations we established. recovery. with our targets the as now, reach expect can we guidance still point. -- mentioned that plan seeing changed guidance, as included this and So about we

had that I you was all your able hope points question. of I to the in cover So

Andre Hachem

Yes.

answer Your was very clear.

about gas, the if that in could could year to the There -- was you seem a be Rodrigo. I for affected hard please following last a question or bottled trend if ask please Ultragaz. but costs to -- cut second my margins Now, the

that half pressured or little second about your a bit pressured If of expectations for that the margins margin those be could you would talk great. the and year

Rodrigo Pizzinatto

what we expect for the prices. considered to to results we with Ultragaz's Well, seeing until margins had affected at costs see were and the LGP second that Ultragaz or passing quarter, of course. most return the on quarter second in we our adjustments those And Of then. what been normal to

Andre Hachem

Thank was great. you. That Perfect.

Operator

Citibank. from next Gabriel Barra Our from comes question

Gabriel Barra

questions. two you Fred, for I Rodrigo, Marcelo, taking thank question. have my

one and aspect. bit Marcelo a like follow-up something a and And for approved is do regard first broader regard question. about ethanol. also sort you changes? is also little in with some a And sort how stations what of on at the talk I'd a wider regulatory Congress yesterday. by than The to Andre's was service sales also of bit a to to see of saw actually growing little this these We scope this

to with see this how do do little network. to impacts hear see your in you what like and I'd expect So, a the you you have relationships bit, change contractual

would dynamic. help us understand to think I that that

you that a and first question. could answer Thank you. I have If then second

Marcelo Araujo

order in very no in or new the stations provision Gabriel. – is morning, executive about – and is And even effect this make state first because last And immediately. its regulated. for will in regarding Well, executive one mentioned few that, loyalty clear one not it not the the direct Good expected months. is one to contract the is regard been ethanol this night order which to it that, a have we since states, effect clear. talking – of prejudice it's into this be will with will sales come to or very very The very days we've this controversial something, clause does important clauses has executive all, of you future. important come But into this What XX on existing it paragraph decree. this service to

you operate government delivering. to existing of maybe commitment for the to is responsibility the you that want specific that customers, doing the a you're taking another is from have independently, a quality what brand maybe proposing where models, alternative you and product what charging can the So

of neither market XX-XX. And with the that heard of proposing, the nor this the is bit quality must new discuss relevant analysis that, transparency, very models as regard And as with most that's think government surprised out way is us the economy We move as they as not saying – So It services, it. forward these it's whole, a or I by a for have a were Brazilian the prices, to sector seem of impacts, by and should now. in so regulated executive regard order. the such believe talk to Even regulation but coexist I companies But the right for to we ours. us the be doesn't with out about alternative two sort is by what priority were we valid to in industry important it. an were came a think appropriate it. surprise in you to both it stood to taken and

prepare understood, those must progress regulatory impacts be thought aspects. they planned, follow think and that must can and every and well them be well. They understand few so I out player for well must a

contract model seeing anything do every that degree, that, will – it fact in the which react business us the any as says react order the expect place will Apparently, but direction some concerns the material change impact. to in So will is, not market as business. disposition not any remains as executive is this does we as it and in

been never have is ethanol, this Now with we to direct of something against. regard sales

was that's And or when of greater probably that you tax create more I think creates thing is freedom There complex think the evade all asymmetries players. in most have taxes. world. which among to that in most we to favor system One the complex it of that very is concentrating the about are regulatory in our segment was market the Brazil, more we in opportunity tends even something a for into imbalances, XXX, with that model something rates tax what looking across industry be we is is evasion simpler we something was to million tax R$XX should government every tax And bring state. what in of the is that that have evading to discussing will And company PL a saw the industry. We even convergence having concerns follow. now easier R$XX problems a today the million. one us and

executive the scope Now opinion. sales very has order our free limited in limited is establishing -- very in a

we expect we a have that it'll to impact. difficult think government more to So be substantial these the negotiations. don't for it And oversee

still expect we addressed impacts Gabriel. the order is the but how issue PIS/COFINS to will which more So know we issue But pressing. significant even don't settled ICMS see don't be the in government executive the

Gabriel Barra

Yeah, you. Thank that was very clear.

perhaps Now little us I second have a Rodrigo detail. bit more could give question. a And

rehab now what the the as come we're sale be this Extrafarma you And not endpoint are that uncertainties do And sale, and the What with through? that how are my the greater, situation. company, at not and see is could we postponements forward sales seeing processes that with where scenario this see risks do Oxiteno. rehab entire approaching are materialize? be restructuring possible process. production process? do the we then sale sale moving risk saw the year, election actual would Seeing an this to to you see perhaps where question Looking of the Extrafarma you Would sale the this the within

Frederico Curado

are Hello, Gabriel, I'm Fred. How you answer. a to more is encompassing this Well, you? give trying

other inform which rationalize process processes informing one investment to two this in the process. was are to We and also this that's

Ipiranga where move to These development, with to market that's the companies new for scale we evidently. stage of integration. plan a on in AmPm. investment. where share. we returns sense talking that possibility of great industry we substantial our And consumer the refinery opportunity is a see And comes. lot want in and into want in forward So side about an to second the also makes have of the are look terms Ultragaz of we This Ultracargo. something regard a and we And And

Petrobras gives So or return this and balance. looked the that consultation risk -- at risk

looking an of the energy infrastructure. we are we Still what of in So se development is per are terms negotiations about transition which have into our both to adequate finish aspect ongoing. energy and portfolio, deadline the

is industry as trying operation that of we're to side operate try and well. that something the LNG reshape Our to on

which much in a operations. but does, sides also of expanding into what expertise we no the to company not is talking something in state already in made here This market. we're to have And place local with and a Ultracargo, and And haul lastly in are distributors recent only we different about we looking processes their headway deal that energy. cleaner to has potential with it is We the months. have have operate grow

it's matter or balance, will a So always forward. as to it with continue a return and so of risk/return risk be moving opportunity everything and

Gabriel Barra

Great. you, Fred. Thank

Operator

Luiz question next Our from Carvalho Bank. from UBS the comes

Luiz Carvalho

attempt Marcelo. taking was something last fact like reading my a really you and like to we back you at Rodrigo, that by the since Alesat earnings competition have discussions, significant little and the last I company XX% even cubic a after ultimately your And the of the we buy slide, time and which was last of in position to margin looking I'm XX%. your your nearly about question. for BRL the saw Ipiranga antitrust bit. per authority Thank volume especially at this in very XX struck impressed meter then I the steps. had grown how terms Hello, for Talking were specifically few release year I'd the late has by XXXX. the was to negative Fred, And go yesterday obviously the blocked. of for challenges

rhetorical company think I with mind. results been figures like much already entered to -- for moving that XXX to forward. understand in the market since these the be understand question, like import is thriving. but to in ability as to small. year the XXXX a what years, Parente literally five twice obviously, I'd the next market Petrobras level deliver And I'd the this seems or you've able It's XXX even And perhaps ever Pedro next of BRL BRL deliver. as has already in to is It's gained this

is of out I'd to to you of like on? to hear or mean, getting plan is to speak, and precisely like losing I step the going what so analysis I'd So that. where is company understand an what from recover how

second do with I my previous question. to My with question to refining. that's think So first the has question regard

negotiation where CADE negotiations will negotiation about believe the finish. And now. you October to until us October? of right what maybe standing little a are could give that be you Obviously, in do you you're in? If is gave stuck terms bit more that contract topics concluded And detail this by

Marcelo Araujo

very about: our Luiz, detail. talked to that network, in and early growth preparation this recovery topic is market -- that remember, speaking. Marcelo our and for must cost Thank thoroughly your early This year of much But the avenues this strategy our late year reviewed this the we a in those you for just for greater question. shares, future. and competitiveness last very four the is company we competitiveness, prioritizing be obviously our addressed year of also the

I us. of emancipating very growth strategy for us, the the So which these are really think for path were like the priorities four main for all But avenues IMPM. so clear the is

a board question. approved been very major administrative is no and by This plan have thoroughly and being monitored We is regularly. our very that's

on to goals. track are those we already So reach

mentioned game. Now not imports. We're you our import late in

of brands. new place of rebounded question to been management we of the have This That's better our detailed competitors. volatility comparable shorts to to implement levels but greater been detail the using and even in in the able quarter have is the risk make this to imports add the the of have we that went our Our regulatory speak to In issue, how and second supplies bit terms back you're material find be bodies. in includes those to the The more policy a use I value new of already that this year, and from of today. that. that governing to little because trading opportunities our have we policies to market initiative tried that system much

So losing very of we I share, for on because were to share our a not already of to in track of that. long the we all are as time that -- are profitability all market market that. because meeting, of we And defending doing to previous firmly in part and budge our on of clearly determined terms highlighted

on clear in a margins future. need But, will to plan that during that we budge market will the mature time share understanding have we obviously. Now makes initiatives to and those sense time need that have no it we

on in Now, We had to my not track as were shares also ethanol prices. typical we the your will significant that that answer flat recover manage for remain volumes we months. if But in was I gradually remain or next next and be to over quarter. crops our believe the volumes said nonrecurring diesel this sales if impacts and able Andre, few changes volumes, and to the few to we quarters, recover sustain market the

where you've view streamlined in organization our our seen that is and robust. we organization. in which hands. are your Ultra precisely confident July, hope presentation our stand. in absolutely material that And the that those our sure become to a that we in adjustment help We our have that we're Day I'm was and plans I summarized made to enough you in to So will values June confident understand that we've we was you deliver more that that be substantial able

Luiz Carvalho

Marcelo answer you right a give please up executives? especially I'm refining, -- wants picking recent even to question up Fred on a third I'd to about changes that just like you sure, what what Obviously pose the color like in as terms the challenges for looks I Thank that terms could relationship more come said. really you. know the and bit the but Yes. in company's Board, in of main main questions now, the little considering have us of points Considering

Frederico Curado

refining Luiz. Well, Hi, me let first. about talk

And Of by expected not on going obviously, course, what and we involve we is negotiations what is expected. fast expected. as what definition they exactly But is two what the not as parties. pace

same understand. There lot And at a very of this we the pace clear but being way. in complex it's negotiation. is respect this we and a going several conducted contracts wanted, being looked at. is are So a with as perhaps And not

proposal that pursue, is to balance established we risk/return obviously. in the original respect also something trying our So that we're and

the that these us. negotiating, we But, are us it's to adequate absolutely two and for to parties just again, once that. So, up is achieve deadline established so once not sufficient again,

the a your to ago that it to two other years makes created or our three regard have jobs. with committees everyone structure do about place lot committees, and in with easier was we Now, for these question, their

in issue you have So not looked detail. at relevant no really is that

something at looking is performance. now mentioned everyone Marcelo that that, ago while closely right a is Ipiranga's more So

work over that the ultimate earnings So last we've Board the relied very had, And their on relationship made, has of on that's time. adjustments doing be obviously that the adjustments we not from the they're The one, well. all The positive. Board. contributions And depend that will that obviously the as that work only should something results. and significant the strengthened been but very reflects

Luiz Carvalho

guys. for Thank you, answering. you Thank

Operator

comes Our Falanga next from Vicente question Bradesco BBI. from

Vicente Falanga

afternoon, two Good questions. I had Well, guys.

And have that you you change estimate of margins how do going could were How the all, the Ipiranga was for pressured Petrobras? of as whole? and it export Santo building industry terminal well. how of State a a is Group affected Espírito prices the the an much quantify second for by of or Polimix the targets my it how caused company recently affected your the question, margins And of First to out quarter, oil and been Ipiranga? that in as we've handle reading by the in byproducts

So Thank I with wanted to moving for know especially Ipiranga opportunity you, whether that business forward. you. a poses

Marcelo Araujo

Vicente. Hi,

have example. our the gasoline might share that industry operate, in we not caused prices. this there's your -- in which with ethanol, that -- for aviation to where that Well, have mind first to impact to it's fuel, regard and is start me and they no with the important question Let margins

a the as just So of it's share a whole. market

the grow, in as prices, good greater more even very When and -- demand and with we be ethanol we're in we especially seen challenges forward, cost So volumes in is quarter the started ethanol a that recovery expect this seeing. diesel. market naturally the because substantial substantial with moving one during our settling general, to rise it see of well. recovery have that the volumes the and the is cycle this start to with and we But

So how that entire middle. value difficult consumers challenge without in last the very XX%, XX% months, they've the chain in gone few to much on pass is up your the to pressuring your considering

network, our a pressured, So our even only of not it's the year. had recover past network, very to to be much pandemic the strategy, which of the our strengthen other that been is to which great with consistent challenging, also because to in robustness financial relationship but

robustness very delinquency sense a of robustness understand seen doing. the is how us, important very -- for network a the is in is decline So to us, financial since the we've consistent XXXX. this This that indicator in for important indicator our

how partners, forward. moving will how partners competitive our So or be our

of And the with the us organically. to the recovery. we're to So main are that. as these far one is And idea is are some ability starting not indicators like. past in looking things still been important us are network what the robust ideal, give we Perhaps, indicators see decline grow showing invest. are that But in our it's as the of an delinquency so from rates that

we do. our if So that plan more share. sense. and we're the and competitive And able And things well, we becomes comes that's as more to better seeing in become very our are market competitive what to network defend rebound we positive

bidding the these be are a process state. with Now with good capacity, But are will opportunities deficient crude is Polimix to -- a it already to in in byproducts. monitoring operate market project we now also, Greenfield city built the as that might same as perhaps of more for receive of but Espírito project, Construction terminal we this State storage investment. to than well. But new know, This not new efficient in XXXX, seeing also be you And in build vessels. that That Bahia project to large And being terminal project. as expect Polimix's regard is we a We Victoria that's already the won have significant in a Santo, underway. underway. a did well.

that things are we're looking these So at.

Unidentified Company Representative

Yeah.

the not and see regions are in clearer to particular of where in in we demand. We're North Just those country, adding a Santo. looking Northeast more we that to increase Vicente, looking the operations to Espírito

Vicente Falanga

Marcelo. was you, perfect. Thank That

Operator

Bruno comes question from next Our from Montanari Stanley. Morgan

Bruno Montanari

for you have taking just I Thank quick some my afternoon. question. Good follow-ups.

company's is In you terms that price peers whether with makeup for the understand, defending about regard to is bottled like whether little or to Now prices increases aspects? more to And within or will the segment. negotiations. on you of your it to has the if purchases, your be in possible is more bit cost about it pass talk liabilities affect the total more lines? -- Ipiranga's I'd or Thank the entire will it competition, more when I'd share peers do understand how assets you. to your white about And direct operational about especially that could your like with of terms the market it contracts talk to and a about refinery

Marcelo Araujo

of When to we my of our the first by -- that Ipiranga And Hi you with with answering market document, is talk the do Bruno, volume the I'll the call our white-flag in the start it your the brand. about Marcelo. question. sell the share stores, as -- volume see brand. I sell defending this part what I has company-operated with we

that, operate which have it we we have that's Because to these all is edge. we sell are market. in spot sales more. where sort places Brazil, And our not some few on a average large in these of of sort go where little we a And markets competitive bit So do greater of XX% share. competitiveness. are. about that depends On we market But locations spot where a

have but we relationship a can places, these in these share market nonproprietary our with good grow can't we So brands.

occur much their stations and Now continue are each want from if concerned where service productivity. from what the number brand want We the network located. to we to share and the with which the That's they're most network. the market. of in are defend the sales service where stations. will grow right And volumes they're more we increasing to we brand on market is very comes Ipiranga entire proprietary of only market now, competitive our focused that And productivity

brand I'm the share defending stations market market when with and So defending stations, from talk about about the service talking I share of our rest Ipiranga their the market. the network of

Unidentified Company Representative

I I a are Bruno, details. share increase market refining to elusive. is pass Bruno our to regard crossing more don't with Good But level. to Ultragaz, I I'd be QX what morning negotiating. granular a the that. want I the mean Yes, I it expect And we with nonelastic. for can't you're here, I and on rather details line will the we more with costs. into give is if margins right. still greater to do The say very go difficult more makes unfortunately regard be price recover you of to But that stable can't

Bruno Montanari

No Thank that's fair enough. guys. you

Operator

Our question comes from Suisse. from next Regis Credit Cardoso

Regis Cardoso

you This Thank Fred my was Marcelo. definitely challenging for a question, quarter. guys. afternoon Good Rodrigo and taking

two they're I focused So future on questions than have and the more the past.

understand XX% like effect more gradual. target you the of we've over your expect of if me gross if basis increments restricted challenge and like XX%, clear And those the the to in something to EBITDA whether following as see I'd to should in to trend Is little that your of margins slow those considering it expect QX? know are in margins that being the you that And the current And or the something make a quarter and I figures? to my like if considering I'd And some saw were the other and maybe adopt to quarter my whether basis is from question challenging those understand it there or terms nonrecurrent give very year. like restricted levels to rather pointed more this QX adopt quarter of and there And quarter For recovery effects regard understand the specific to should in basis you. coming I considering And current I'd tax of the sort that reach full that margin comparison some was to I have you've the third you've to impacts or that what in Thank what course will established what to you quarter second hear you know could a sales I we in to next details QX recovery impacts. that -- will challenges to should to for wanted quarters for where your with be So starting figures. if guidance? the some be whether little mean is I were a gains normalized had from be a question we slides and out like asset you if adjustment? example? considering example, should should over in Now gains you your in about would terms understand seen? just well? whether margins what reach need leftover

Marcelo Araujo

targets Regis, but Marcelo. see expect should in recovery in Obviously from very expect not trend margins other recovery leap to It's not we quarter year's the XXXX for pandemic. we level But – trend our recovering. to points were raised. margins Hi trending the booming positively. that something terms not positively. the was This And set Those we curve. our considering we do results not a considering to when XXXX, clear. very great the believe excellent we we it of had expect we results, speak is Obviously, the be because our continue million in to those is of still expect the from the of that's is guidance. margin at in a in off that were one because a so continue much good – still prices With this that you even yet is are economy the results recovering regard to regular high perhaps to very expectation R$XXX demand to our the because this time gains very we is a that

So of originated that the was plans that and methodology the guidance. own our we plans sort use our to calculate

the I the strategies that two those results. the here So greatest would impacts two on are talked about have

margin talking Here we're costs impacts. about and operational

good see of regional to make If grow at operations, where opportunities to business. that's you use our and more the our infrastructure look we

adds volume trading those with the transactions and are the And and enjoy margins strategies to adopt to we volatility marketing in and from allows use room all on commodities Ipiranga additional but more our still business from growing now instruments So forward. capture those our marginal should from sophisticated the they capture using be there's moving will regions. gains growing for for me that gains value that. to to Obviously, that gains

It's a for in the to level captured R$XXX today, in the million So even compared volumes we've our competitive our That's with past. already very company. SG&A.

– value. are we in fastly capturing a of are in we So moving trend

Regis Cardoso

Thank Thank day. you. good your you for a Have answer.

Operator

Our next question Pactual. BTG comes from Pedro Soares from

Pedro Soares

CapEx, to with specifically afternoon, first your has My Good everyone. Ipiranga. do with question

CapEx this the year. since lowest lower your And your of was is XX% significantly So results historical the of currently what time in for your had which guidance average than the stations service is also XXXX.

So if about be now a specific little challenge moving you you And whether with and caution that would or price variables factors regard have with associated are those and any could interesting information. that any back bit little how to strategy refinery going forward. to very those your talk a connected

previous little us this a you of operations? quick asked refineries a give And see fitting bit could the ask in of If usually how every you this We've We those question. in third these calls. call. development

Thank you that still could about at have about level. brand X.X% a stations talk still like they're service them, I you. you whether of to to receive that talk used would If know to

Marcelo Araujo

This is question. again. your for Hi, Marcelo, you Thank Pedro.

in CapEx we've a clear with I in about important make living do that And conservative about our we're and here talked This it extensively to today. point. You being investments. think, interesting the it's reservation no have we to touched that, very has moment applications on

low our is And obviously what up clear of target of half over a our is have forecasted – backlog surpass stations. year. this is was stations. stations. stores service expect of the or Also, be to to anything the XXX CapEx large for XXX longer – And – the like year, should stations very plan. stations XXX – this service actually that. actual We we of It this number no over not, lower company-operated had and our branding lack first Our or than which actually because was higher is

in have future tail ones run. of will stations surviving XXX the long and We looking of into the are meters with into look And sort we be cubic over of will challenge greater those the of replacing long when some smaller our network. a we these

our budget unbranded with operating So absolutely track terms we're on in those stations. our and of plans

we have not very Now, especially CapEx, reflect, does our negotiations advanced. this that are but on

contracts already signed. been have have that We

to half of And year. in be some expected second the signed are the

entrepreneurs something of I well like is on think growing and is join major demand on no seeing how with you blue a ability very our again Quite and else our network question? we something market expand a Pedro, our we coming very contrary, the competitive. not not us, that are shows but mentioned any to seeing to positive in a challenge. those that your which accurate we is to attract or to Would is. conclude strategy which bright guided Obviously, negotiations sky, hadn't and the are to about refining. there's It's stations. touch you challenge our either long So in time,

Pedro Soares

Yeah. purchase will possible and Sure. how It was be develop going from about, refab there? to it

Marcelo Araujo

perfectly, Pedro. Yes, obviously

Now, every of the the intelligence commodities for in case benefit the change will us as is producer. on

So whether right anything is market the looking very it. it's me how oil byproducts doing, at or else important for to operate it's

the prices look in So trending prices are market. at commodity – we have to how that

on would all of is the your to of the the us I intelligence Pedro. other really change was something two complement that these side both the make of the answer questions, most really hope, So businesses demand prices. able each I supply side and help in

Pedro Soares

perfect. Yes. That was

Operator

would I back now for like to no you. the Mr. questions, his further closing to Thank remarks. Rodrigo floor With turn

Rodrigo Pizzinatto

Great. Thank questions. couldn't for we answering will very asked our any that everyone. Thank webcast you e-mail. be via you your is to that via question If there much everyone team those was answer,

Operator

earnings concludes today's Ultrapar you. conference Thank This call.

You may lines. your great now disconnect a Have afternoon.

Ultrapar Participações (UGP) 13 Aug 212021 Q2 Earnings call transcript