Hidrovias do Brasil (HBSA3) Q3 2024 earnings summary

Executive summary

• Q3 2024 results were impacted by severe navigation and draft restrictions, especially in the South Corridor, leading to a halt in iron ore transport and significant operational challenges, while other corridors and segments like Coastal Navigation and Santos showed resilience and EBITDA growth.

• Despite lower volumes, the company achieved growth in average tariffs, maintained robust margins in some segments, and approved a capital increase of BRL 1.2–1.5 billion to support growth and strengthen its capital structure.

• Net loss of R$49 million in 3Q24 and R$176 million in 9M24, compared to net profits in the previous year.

• Continued progress on ESG initiatives, including a technical cooperation agreement with SEMAS in Pará to support riverside communities and sustainable fishing.

Financial highlights

• Net operating revenue for Q3 2024 was R$488 million, down 10% year-over-year, mainly due to lower South Corridor volumes; 9M24 revenue was R$1,484 million, down 6%.

• Adjusted EBITDA + JVs in Q3 2024 was R$175 million, down 33% year-over-year; 9M24 was R$610 million, down 21%.

• Adjusted EBITDA margin in Q3 2024 was 36%, down 12.7 p.p. year-over-year.

• Southern corridor saw a 74% drop in iron ore volume, leading to adjusted EBITDA of R$11 million for the quarter and margin of 8%.

• Coastal navigation operations delivered R$31 million in adjusted EBITDA for Q3, up 62% year-over-year, with a 49% margin.

Outlook and guidance

• Management expects slightly better results in the North operation for Q4 2024 due to operational lessons learned, despite continued draft restrictions.

• 2025 is expected to be a transition year with dredging projects, aiming for normalized navigation and improved results by 2026.

• No early debt maturity or short-term pressure; main debt amortization scheduled for 2031.

• Capital increase aims to enable growth and value generation for shareholders.