Hidrovias do Brasil (HBSA3) Q2 2024 earnings summary

Executive summary

• Q2 2024 was marked by operational challenges in the South due to low water levels, while the North Corridor achieved record EBITDA driven by higher tariffs and operational flexibility.

• Coastal Navigation benefited from strong bauxite growth, positive FX effects, and improved cost structure.

• Santos operations expanded with new fertilizer and salt rail programs, contributing to revenue and volume growth.

• The company is entering a new growth phase under a new controlling shareholder and Board, emphasizing long-term value, operational consolidation, and ESG commitments.

• Net loss of R$56.2 million in 2Q24, compared to net income of R$117.9 million in 2Q23, driven by operational and tax effects.

Financial highlights

• Consolidated net operating revenue for 2Q24 was BRL 995.9 million, down 4.3% year-over-year, with North Corridor revenue up 14.9% and South Corridor down 25.4%.

• Adjusted EBITDA for 2Q24 reached BRL 435.5 million, a 12.8% decrease from 2Q23, with margin dropping by 5.0 p.p. to 43.7%.

• Net loss of R$56.2 million in 2Q24, compared to net income of R$117.9 million in 2Q23.

• Cash and equivalents increased to BRL 848.0 million at the end of 2Q24, up 13.9% year-over-year.

• Depreciation and amortization rose 16.1% year-over-year in 2Q24 due to fleet expansion.

Outlook and guidance

• Expansion plans include new transshipment equipment in the North Corridor to add 1.5 million tons capacity by 2026.

• Investments are focused on short-term capacity expansion and rail projects in Santos.

• Management anticipates a more stable mid- to long-term scenario if climate risks are managed and infrastructure concessions proceed.

• New ESG targets set for 2024-2025, including carbon neutrality and increased diversity.

• Leverage increase is considered punctual and not reflective of installed capacity.