Localfrio restructures operations to compete in integrated logistics

Brazilian logistics operator Localfrio is implementing an ambitious restructuring plan for its operations. The company changed management, brought in Thomas Rittscher, former director of Wilson Sons Logística, and has raised R$ 100 million in Real Estate Receivables Certificates (CRI), which will be used to lengthen its short-term debt.

The company, which originally focused in refrigerated and bonded warehouses, now plans to expand its activities. It has signalled it will act as a complete logistics operator, offering integrated solutions for large and medium-sized companies.

The CRI was issued in an operation coordinated by BR Partners and involved two warehouses owned by Localfrio. The assets will form part of a portfolio of rents receivable over a period of 12 years, with securities traded at B3 stock exchange. At the end of the contract, the assets will be returned to Localfrio. The funds raised will be used to transfer and extend the company’s short-term debt of R$ 65 million and to support new investments.

Localfrio’s operations are located in São Paulo, Santa Catarina and Pernambuco. There are 6 operational units, 4 of which are bonded warehouses, covering a total of 430 thousand square meters. These locations are some of the main foreign trade maritime hubs in the country. In São Paulo, the company owns and operates the only refrigerated customs terminal, located in the Port of Santos.

Thanks to its history of cold chain storage, 35% of the cargoes stored by Localfrio are refrigerated foods, medicines and chemicals. Another 31% are consumer goods.

Localfrio now aims to reach R$ 1 billion in revenues over 5 years. The company closed 2019 with revenues of R$ 313.4 million, slightly higher than the R$ 312.6 million received in 2018.

Today, customs terminal services account for 70% of revenues and 30% come from transport and integrated logistics. “With the focus on more complex projects, we will increase the participation of integrated logistics and transport operations to 50% in 5 years”, said Rittscher.

Localfrio’s strategic changes began to take shape in late 2017 with the hiring of a consultancy specializing in company restructuring. In 2018, with the arrival of Rittscher, 70% of Localfrio’s management staff was replaced and the company began its plans to compete in the integrated logistics sector.

Early results have been good. After announcing Ebitda (earnings before taxes, interest and amortization) close to zero in 2017, it grew to R$ 29.8 million in 2018. This year, it is expected to reach R$ 31.5 million.

The Debt / Ebitda ratio also improved significantly, dropping from 2.56% in 2018 to 0.73% this year. “We are ready to start a growth cycle and complete the company’s repositioning”, says Rittscher.

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