ALL AMERICA LATINA LOGISTICA SA Operations, (ii) Brado Logística, (iii) Ritmo Logística and (iv) Vetria Mineração.
ALL HOLDING
ALL´s Consolidated EBITDA increased 0.2% in 2Q14 against 2Q13 due to (i) a flat performance in Rail Operations
EBITDA, (ii) a 39.8% increase in Brado Logística EBITDA and (iii) a 51.3% decrease in Ritmo Logística EBITDA.
Table 1 | ALL Rail Operations 2Q14 2Q13 D | Brado 2Q14 2Q13 D | Ritmo 2Q14 2Q13 D | ALL Consolidated 2Q14 2Q13 D |
Vol ume (RTK mm) Vol ume (Thous and Contai ner) Vol ume (Dri ven Km mm) EBITDA (R$ Mi l l i on) | 11,370 11,264 0.9% - - - - - - 560.5 560.2 0.1% | - - - 18.6 15.7 17.9% - - - 15.5 11.1 39.8% | - - - - - - 14.0 21.2 -33.9% 3.4 7.1 -51.3% | 11,370 11,264 0.9% 18.6 15.7 17.9% 14.0 21.2 -33.9% 579.5 578.4 0.2% |
1H14 | 1H13 | D | 1H14 | 1H13 | D | 1H14 | 1H13 | D | 1H14 | 1H13 | D | |
Vol ume (RTK mm) | 21,411 | 21,189 | 1.0% | - | - | - | - | - | - | 21,411 | 21,189 | 1.0% |
Vol ume (Thous and Contai ner) | - | - | - | 34.9 |
ALL Rail Operations 2Q14 results were weaker than initially expected. In spite of a better operational scenario at the Port of Santos when compared to the 2Q13 - when two accidents at the main grain terminals in June of
2013 impacted our rail unloading capacity at the port -, we faced a very tough demand scenario in 2Q14, which affected transported volumes and yields throughout our rail network. Moreover, excessive rainfalls in June of
2014 interrupted several rail segments in the South Region of Brazil, which restrained operations to the Port of
Paranaguá and São Francisco and interrupted the route from São Paulo to Rio Grande do Sul for about 10 days.
Along the quarter, China reduced abruptly its demand for grain imports, cancelling in April grain vessels which were expected to dock at our main ports - Santos and Paranaguá - in May and June. The Chinese decision impacted land freight transportation market already in April, shrinking transportation demand and spot freight prices. The market shortage was felt in grain exports data mainly in May and June, due to the lags involved in exports decisions, harvest transportation and grain shipments at the ports. According to MDIC (Ministry of Development, Industry, and Foreign Trade) the exportations of grains and sugar at Port of Paranaguá increased
13.0% in April, but dropped 10.2% in May and 12.7% in June, and at Port of Santos decreased 1.3% in April,
17.8% in May and 13.6% in June.
With lower demand for agricultural commodities transportation, spot market freight prices declined abruptly when compared to February and March and were below the levels registered at 2Q13 in nominal terms. Spot market freight prices decreased approximately 13% in Wide Gauge corridor (from Mato Grosso to Santos), 21% in Paraná corridor and 7% in Rio Grande do Sul corridor - which are the three main agricultural corridors that
we operate -, when compared to the same period of last year. With prices in our take-or-pay contracts running above spot market prices, a large portion of our clients decided to operate on the inferior limits of our take-or- pay agreements, which usually represents 90% of the contracted volumes.
In Wide Gauge Corridor (from Mato Grosso to Santos), agricultural commodities volumes increased 3.9% in spite of: (i) transportation demand drop on the quarter, (ii) clients decision to operate at the inferior limits of our take-or-pay agreements and (iii) 32.7% year-over-year volume increase in sugar from São Paulo to Santos, which reduces average productivity and transportation capacity at the Wide Gauge rail system (as sugar routes in São Paulo typically have shorter distance and lower productivity at rail and at the port). The transported volume was benefited by the operation of the Rondonópolis terminal and by the improvement in operations at the Port of Santos when compared to 2Q13 (in the absence of the problems that impacted our operations last year).
In the Metric Gauge rail system, agricultural volumes decreased 8.6% when compared to 2Q13 mainly driven by (i) the transportation demand drop on the quarter, (ii) the clients decision to operate at the inferior limits of our take-or-pay agreements, (iii) the drop of about 40% in sugar exportations in the port of Paranaguá, which represents our second most important cargo in this rail system and (iv) excessive rainfalls in June, which restrained operations to the Port of Paranaguá and São Francisco.
Industrial products volumes increased 4.6% when compared to 2Q13 pushed by container and wood and paper segments. The industrial volumes were negatively impacted by the restrictions in the rail line from São Paulo to Rio Grande do Sul, due to the problems caused by the rainfalls in Paraná and Santa Catarina states throughout June.
Rail Operations EBITDA in 2Q14 were in line with the same period of the last year, as a result of a marginal volume increase, a yield growth below current inflation (due to the drop of spot market freight prices) and a worse mix of transported cargo.
For the 3Q14, we expect a much better demand scenario as compared to 2Q14, as grain exports should recover its normal course and sugar exports are expected to boost through Paranaguá Port. Operational scenario at the ports we serve also should improve when compared to the one we faced during 3Q13, especially in the grain segment, once the unloading restrictions we had at the main grain unloading terminals were solved. Moreover, our Rondonópolis terminal is ready to operate at full capacity, loading the major part of agricultural commodities volumes that were previously loaded in Alto Araguaia, increasing average transported distance. In industrial segment we should keep benefitting from (i) Brado´s volume, as it continues its ramp-up, and from (ii)
Eldorado´s volume.
Brado Logística continued its operational ramp-up during 2Q14 presenting a 17.9% volume growth in the period, from 15.7 thousand containers in 2Q13 to 18.6 thousand containers. In 1H14, volumes increased 13.0% against
1H13, reaching 34.9 thousand containers.
The increase in Brado´s transported volumes in 2Q14 was pushed by an increment of 36.2% in the Wide Gauge corridor and 36.5% in Paraná corridor - which were the corridors we added locomotives and railcars for 2014 - partially offset by Rio Grande and Mercosur corridors. In terms of RTK, Brado´s volumes grew 25.4% in 2Q14, from 435,4 million RTK in 2Q13 to 546,1 million RTK. The growth in RTK was a result of the (i) increase in the number of containers handled and (ii) improvement in average transportation distance, mainly pushed by the boost of operations in Rondonópolis terminal in the Wide Gauge corridor.
Table 3 - Brado Logística (Thousand Containers) | 2Q14 2Q13 D | 1H14 1H13 D |
Wi de Gauge Mercos ur Paraná Ri o Grande Brado Total Volume | 6.2 4.5 36.2% 2.5 2.6 -2.5% 7.0 5.2 36.5% 2.8 3.5 -18.6% 18.6 15.7 17.9% | 11.6 9.3 23.8% 4.9 5.3 -7.0% 12.7 9.5 33.6% 5.7 6.8 -15.2% 34.9 30.9 13.0% |
Brado´s EBITDA increased 39.8% in the quarter when compared to 2Q13, reaching R$15.5 million, and 40.6% in
1H14 achieving R$30.0 million. This significant growth was driven by the (i) increase in RTK, and (ii) expansions of Brado´s logistic complexes in Cambé (PR) and Cubatão (SP).
Ritmo Logística did not have a good quarter, as volumes dropped 33.9% in 2Q14 year-over-year, driven by the results of both Dedicated Solutions and Intermodal Business Units.
Table 4 - Ritmo Logística (million Driven km) | 2Q14 2Q13 D | 1H14 1H13 D |
Dedi ca ted Sol uti ons Automoti ve Genera l Ca rgo Speci a l i zed As s ets Intermoda l Ritmo Total Volume | 10.2 14.0 -27.6% 0.7 1.5 -53.8% 3.7 5.8 -36.2% 5.7 6.7 -14.0% 3.9 7.2 -46.2% 14.0 21.2 -33.9% | 21.0 26.8 -21.5% 1.4 2.6 -45.2% 7.9 11.0 -27.9% 11.7 13.2 -11.5% 7.4 11.7 -36.4% 28.5 38.5 -26.0% |
Dedicated Solutions volumes dropped 27.6% in 2Q14, driven by the decrease of (i) the Automotive segment, due to the lower demand and customs restrictions in Argentina, (ii) the General Cargo volumes, due to the discontinuation of low profitability operations in this segment and (iii) the Specialized Assets volumes, driven by the discontinuation of a chemical volume in 3Q13, impacting volumes since then.
In Intermodal Business Unit, volumes collapsed 46.2% in 2Q14 year-over-year, mainly driven by (i) the shortage in agricultural commodities transportation demand, shrinking margins due to the drop in spot market freight prices in the period, and (ii) the volume losses related to the redesign of an important client logistics in 4Q13, as it started to operate with its own trucks.
Ritmo´s EBITDA decreased 51.3% in 2Q14, to R$ 3.4 million, as transported volumes decreased in the quarter and the company lost operational leverage over its fixed costs.
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