Santos Brasil’s Strong Operational Performance Boosts Q2 Financial Results

Santos Brasil delivered exceptional operational performance in the second quarter of 2024 (2Q24), driving significant growth in the Company’s economic and financial indicators. The Company reported a net income of R$171.7 million, reflecting an 81.9% year-over-year increase, with a net margin of 24%, up 5.8 percentage points from the previous year. Recurring EBITDA totaled R$348.3 million, a 56.7% increase year-over-year, with a 5.7 percentage point gain in the EBITDA margin, which reached 49.6%. Consolidated Net Revenue for the quarter was R$702.8 million, marking a 38.6% increase year-over-year. In the first half of the year, Net Revenue reached R$1.3 billion, up 44.3% compared to the first half of 2023.

Santos Brasil’s container terminals handled 369,401 box units, a 23.4% increase from the same period last year. Long-haul volumes rose by 23.0%, accounting for 79.0% of the total handled in the quarter (compared to 79.3% in 2Q23). This growth was driven by a 36.1% increase in imports and a 25.8% increase in exports. Cabotage also saw a significant rise, growing 25.2% compared to the same period in 2023.

The increase in volume was accompanied by a marked improvement in the operational mix of full containers, which made up 75.1% of the total handled, up from 68.8% in 2Q23, with imports growing by 35.1% year-over-year.

Tecon Santos, the Company’s primary asset, had a container throughput of 323,983 containers, a 24.4% year-over-year increase, with long-haul volumes up by 33.8%. Notable export increases included coffee, sugar, cotton, and frozen meat, while imports saw significant growth in chemicals, capital goods, plastics, and consumer goods. Cabotage grew by an impressive 45.7% in the quarter, benefiting from increased transshipment activity at the Port of Santos and the concentration of operations in the Santos port system, partly due to operational constraints at ports in the South region.

A testament to this growth is that in June, Tecon Santos set a new record by handling 117,000 containers in a single month, a milestone surpassed in July with 121,800 units handled.

Tecon Imbituba (SC) saw 23,225 containers in 2Q24, a 58.9% increase year-over-year, benefiting from a new long-haul service that began operating at the terminal in February 2024. However, cabotage volumes declined by 10% in the quarter due to lower bottled beverages and rice shipments. Tecon Vila do Conde (PA) handled 22,193 containers, an 8.4% decrease year-over-year, due to the omission of six long-haul vessels that skipped the terminal because of congestion at other ports in the country and a drop in cabotage shipments in the Port of Vila do Conde’s area of influence.

Santos Brasil Logística reported a 16.6% year-over-year increase in containers stored at its Customs Logistics and Industrial Centers (CLIAs Santos and Guarujá) during the quarter, driven by the higher volume of imports at the Port of Santos. On the other hand, pallet movement in the Distribution Centers saw a 55.2% year-over-year decline due to reduced demand from customers in the automotive sector.

Meanwhile, the TEV—the vehicle Terminal located in the Port of Santos—continued to experience a drop in volumes, primarily due to lower light vehicle exports to Mercosur countries.

The Liquid Bulk Terminals of Itaqui (MA) recorded a 2.8% year-over-year increase in the volume of stored fuel, driven by increased tank turnover and the conversion of spot contracts into long-term contracts.

Outlook

Daniel Pedreira Dorea, Santos Brasil’s Economic-Financial and Investor Relations Director, expects volumes to remain robust in the second half of the year, particularly due to the typical seasonality of the sector, which peaks between July and October as companies replenish stock for year-end sales. Dorea emphasized that the Company’s terminals are well-equipped to absorb market growth, especially at the Port of Santos. “In 2024 alone, we plan to invest between R$720 and R$800 million in our assets, with just over R$400 million allocated to Tecon Santos alone. This will increase its capacity from the current 2.4 million TEUs to 2.6 million in 2025 and further to 3 million TEUs by 2026. Over the past five years, we have invested more than R$1.2 billion in this asset, ensuring capacity for the Port of Santos and a high level of service for our customers.”

As part of Santos Brasil’s capital allocation strategy, R$304 million was distributed to the Company’s shareholders, equivalent to R$0.35 per share and representing a payout of 100% of the distributable net profit for the first half of 2024. Additionally, the Company’s Management has proposed a capital reduction of R$1.6 billion, which will be deliberated at an Extraordinary General Meeting on August 14.

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