Rumo SA

BOVESPA:RAIL3

Earnings Call Transcript 2019-Q4

[Operator]

Good afternoon, ladies and gentlemen. At this time, we would like to welcome everyone to Rumo's Fourth Quarter 2019 Results Conference Call, which will be led by Mr. Ricardo Lewin, Chief Financial and Investor Relations Officer, after Mr. Beto Abreu, Rumo's CEO, gives his message.

We would like to inform you that this event is recorded. [Operator Instructions] After Rumo's remarks, there will be a question-and-answer session for investors and industry analysts conducted by Mr. Ricardo Lewin. [Operator Instructions] The audio and slide show of this presentation are available through live webcast at ir.rumolog.com. The slides can also be downloaded from the webcast platform.

Before proceeding, let me mention that forward-looking statements will be made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Rumo's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and, therefore, depend on circumstances that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Rumo and could cause results to differ materially from those expressed in such forward-looking statements.

Now I'll turn the conference over to Mr. Beto Abreu to give his statements, followed then by Mr. Ricardo Lewin. Mr. Beto, you may please begin the conference.

[João Alberto de Abreu, executive]

Dear investors and stakeholders, it is with great pleasure that I share with you my review on Rumo's 2019 performance as well as our path going forward. In 2019, we achieved great results. Our volume grew 6,6% and our EBITDA grew 10%. Net income was roughly 3x higher than 2018 and we generated BRL 688 million cash before funding and amortization.

We also had important achievements in 2019. We won the bid for Norte Sul Railway and closed an operational deal with Ferroeste, initiatives that expand even more our influence area. The early renewal of Malha Paulista, that sustain our long-term strategy, also advanced with the approval from TCU, Brazil's Audit Court. We find that our double-stack railcar operations started in the container segment. This was my first year as Rumo's CEO. Now is the time to look forward at all the opportunities that we still have to improve our efficiency and increase our business competitiveness. I will explore this in our next Cosan Day, when we will present details to the market on our growth strategy for the upcoming years.

In 2020, uncertainties regarding the international demand for grains may create greater market volatility in the short term. However, the long-term fundamentals of our business remain unchanged. We believe in Brazil's agribusiness potential and in the increase of the demand for grains in the global market. Recovery of economic activity in Brazil and the expansion of our operations in the State of Goiás and the west region of Paraná allows volume growth and cargo diversification. We remain focused on safety, executing our investment plan with extremely capital discipline, seeking for creating even more value for our shareholders.

I conclude by renewing my commitment, alongside with Rumo's team, to build a better logistics industry for the country in order to foster the development of domestic production and to approach areas with different levels of industrialization. All in all, we are Brazil in motion!

Now I turn the floor over to Ricardo Lewin, who will conduct our earnings presentation. Thank you.

[Ricardo Lewin, executive]

Thank you, Beto. Good afternoon, everyone, and thank you for joining us. First, I'd like to point out that, likewise, previous quarter, 2018 results presented in our earnings release refer to the pro forma figures, reflecting the impact of IFRS 16 to guarantee a fair comparison.

On Page 3 of the release, the impact on each line item of our income statement is summarized. As per in Slide #3, our consolidated results, consider the effects of the Central Network, new name for the North-South Railway. The effects of its consolidation on 2019 results are stated on Page 4 of our release and comprise BRL 2.8 billion, referring to the accounting for the auction amount as a right-of-use to be restated in accordance with contractual parameters and BRL 2.7 billion as lease liabilities. BRL 27 million reduction in EBITDA due to the operating expenses and BRL 121 million reduction in net income, since besides cost, we have depreciation and financial expenses over concession amounts.

To facilitate the comparison of figures, Page 4 shows a chart that considers fourth quarter '19 and 2019 figures, excluding the Central Network effect. It's worth mentioning that all other sections of release with all the figures including the Central Network consolidation.

On the next slide, I'd like to share the current status of the Central Network. As previously mentioned, the Central Network brings opportunities to diversify cargo and expands our operations. We already, out of the works required to make the Central Network operational. As foreseen in our long-term guidance, investments in 2020 will increase compared to 2019, mainly due to investments in this network. We are advancing with trade negotiations to transport grains after the conclusion of terminals, which should occur during 2021. Also, even before that, we will start to operate with containers to run miles.

On the next slide, we will take a look at our operational results in 2019. In 2019, our volumes grew 6.6%, reaching 60 million RTKs, of which we highlight: fertilizer volume grew 90%, boosted by Norte operation volumes, container transport grew by 20% and corn volume rose by 19% offsetting soybean drop.

2019 presented a typical seasonality because of market conditions and operational constraints, which restricted our ability to capture additional volumes. In the first half of the year, we were impacted by operational constraints due to landslides at Santos downhill as well as a favorable scenario for soybean demand, which reflected the global supply and demand dynamics.

In the second half of the year, the anticipated corn harvest ensured positive volumes already in June and allowed good performance for Rumo until November. However, market performance in the period exceeded our capacity gain, thus resulting in market share loss and low corn availability in December.

Moving to the next slide, we will discuss our financial performance. Core EBITDA, excluding Central Network, rose 10.1% in 2019 to BRL 3.85 billion, and the consolidated margin stood at 54.2%, 1 percentage point higher than in 2018, reflecting the company's positive operating leverage. Consolidated yield rose 1%, highlighting the 5.5% yield increase in South Operation. This result reflects the effect of seasonality seen throughout the year, with drought anticipated in January, which resulted in lower soybean volumes in April and May and operational constraints which restricted volumes in February and March, most of which historically record better yields.

Variable costs increased in line with net revenues, driven by gains of 5.5% of fuel consumption, offsetting higher costs with terminals and the payment of the take-or-pay fees in February. Fixed costs rose only 1.2% as a result of the company's scalability and cost management efforts.

We will now take a look at the financial results and net income. In 2019, we recorded a net financial expense of BRL 1.2 billion, 12.4% lower than in 2018. A reduced average cost of debt and the continuous inventory management process contributed to these results. On the other hand, charges over leasing increased due to the inclusion of interest rates on concession installments of the Central Network. The net income totaled BRL 786 million in 2019. Excluding the Central Network, net income more than tripled and reached BRL 907 million in 2019. Cash generation before funding and amortizations totaled BRL 688 million in 2019, reflecting EBITDA increase added to improved financial results.

On the next slide, we will take a look at our debt. Rumo's indebtedness came in line at 1.8x broad net debt to EBITDA.

Now moving on to the next slide, let's discuss the ESG aspects in 2019. In 2019, we improved our energy efficiency, reducing our unit emission by 7%. In addition, due to our increased capacity, we prevented cargoes from being carried by trucks, our transportation mode which emits on average 5x more carbon dioxide than the railway. We're now composed on B3, the Brazilian Stock Exchange,[ still through ] index portfolio, an indicator of companies with good management practices in GHG emission. And also, we'll report to the Carbon Disclosure Project, CDP, the global organization that leads the reporting system of environmental information.

In 2020, our challenge is to advance our engagement with the Dow Jones Sustainability Index and ISE, B3 Sustainability Index. In the social aspects, as our railway runs over 500 Brazilian municipalities, who is aware of its relevant role in the communities where it operates. In 2019, we won the Social Responsibility Award from IstoÉ Dinheiro magazine. And the ESG stands for the projects [ curtailed ] for the year that positively impacted the communities surrounding our railway tracks.

Concerning governance, Rumo complies with the B3 practices. Also, in 2019, we reviewed our Code of Ethics, which was [ instead a true fault ] at the employees by training hours.

Moving on to the next slide, we'll take a look at the soybean market perspectives. 2020 soybean perspective in Brazil according to CONAB and AgRural indicate our record production with 9% increase. Recent data from USDA point a raise of 2 million tons on Brazil exports. On the other hand, other forecasts indicate a reduction mainly due to market uncertainties, which contributes to a volatile soybean scenario. As per USDA, the raise on China imports reflects a better consumption due to the recovery of the swine herd in China. In the U.S., soybean crop should decrease by [ roofing ] 23 million tons what should limit the raise on exports, even with the evolving on trade deal.

Considering the scenario, we believe that with higher logistics capacity and improved operational performance, the beginning of the harvest may result in good volumes when the commodity price increases and there's a positive demand for efficient logistics.

Now moving on to the next slide, we'll take a look at the corn market. Preliminary figures of CONAB and AgRural indicate a slightly lower corn production, with exports also shrinking due to higher domestic consumption. It's worth mentioning that despite reduce in exports versus 2019, the figure projected is much higher than in 2018.

Considering that this year, the soybean harvest began in a regular period, corn exports should be concentrated between July and December. Thus, with higher railway capacity and corn volumes concentrated in the second half of the year, there should be room to regain the market share lost in the second half of 2019, thus enabling to higher volume levels.

To conclude my presentation, on the next slide, I would like to present our 2020 guidance. For 2020, due to a scenario of greater volatility, we increased our guidance ranges. Thus, Rumo forecast a raise of 15% on EBITDA, considering the average point of BRL 4.4 billion, which includes Central Network costs totaling BRL 90 million; 10% on volumes, also considering the average point of 66 billion RTKs; investments from BRL 2.6 billion to BRL 3.4 billion, in line with our long-term plan and considering the investments required to finish the work at the Central Network in order to make it operational.

This concludes my presentation. I thank you all for participating in our conference call. I remain at your disposal for the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from Josh Milberg, Morgan Stanley.

[Joshua Milberg, analyst]

I wanted to ask if you could comment a little on how you're seeing the 2020 yield scenario? And on to what degree, if any, the paving of BR-163 is a factor there? When we had spoken to you earlier in the year, I think your message had been that something on the order of 5% increase could be achievable this year, helped by more soybeans and a better distribution of volume. So I just wanted to see if that type of scenario still makes sense. And also if you could touch on how you're progressing and closing the take-or-pay contracts, too? That would be great.

[Ricardo Lewin, executive]

Josh, thank you very much for participating of the call. There's a bunch of questions here. Let me try to organize a bit. Let's start with the BR-163 here. And the payment of BR-163 clearly allowed increase of capacity in the North parts, okay? Our investors are asking us if there is evidence that this price of truck transportation fell because of the 163. And I think these are very important points when people talk about the payment. And in our opinion, if you compare prices, during the year -- for previous year, there's no event that the freight cost went down because of the payment, okay? Usually, what we see in the market is that truck drivers, they price their transportation based on market opportunity, okay, instead of on the bigger than their costs, okay? So -- as well as prices went down in the fourth quarter for the 163, it happened the same thing in December, okay, for Santos. Why? Because the market was getting weaker in December.

And an additional information that's important here is that Enel data suggest that the freight prices are already going up in January, even before the peak of the harvest, which expected to be February. So a summary of all the information that I gave you is that, okay, the capacity increase is clear, okay, going north. But there is no -- for this year, 2020, first thing, there's no indication that the freights are going down because of the payment.

Another thing that's important about BR-163 and the North Arch is that there was a -- one moment, please -- and the North Arch is that the North Arch last year exported something around 34 million tons of grains, okay? If you take into consideration the grains that left Mato Grosso for North Arch, the volumes increased from 16 million to 22 million tons, okay? And splitting these volumes -- not on the volumes, but the reason what's happened for soybean and corn, it's important to clarify that Rumo did not lose market share for soybean, okay? We could have been better because of operational constraints, but we haven't lose market share.

And for corn, what happened was that Rumo lost market share, not only for -- not for the North Arch, but for the other logistics providers. And we did our job in corn. We increased 21% our transported volumes. But what happened is that corn exports grew a lot. And the 21% that we did was not enough to catch up with the market, okay? So this is a good summary of the effects of the payment was 163, and the North Arch. If you have more doubt, you can ask. I will try to go through the other points here.

2020 yields. Usually, we do not disclose the yields. However, I think from our guidance, you can take some conclusions here. We are saying in our guidance that if you consider the midpoint of EBITDA and volume, we are saying that EBITDA, it's increasing 16%, while our volumes are increasing 10%. We are, every single year, reducing our main variable costs between 3% and 5%, that's fuels. And as you can see in our results, we are increasing fixed costs much less than installation. So by here, you can conclude that, yes, there will be some big improvement, but a huge part of our gains are focused on increasing competitiveness that we want to have. And we do have, as I always tell the sell-side and the investors, we are a scale business. So we are, every single year, reducing variable costs by gaining efficiency and diluting fixed costs. And from this that we will improve our results.

Now, if I'm not wrong, you asked about the take-or-pay, yes? This -- Josh, it's something that we don't disclose the percentage of volume under take-or-pay and I will disclose for strategic reasons, okay? One thing that I can tell you is that the percentage of take-or-pay is lower than the same period of previous year. And as you know, the uncertainty that I talked during the presentation on exported volumes increases the likelihood of paying take-or-pay, what makes the trading companies less willing to sign this kind of agreements, okay? So -- but it's not all about -- this is not that new for us. We -- I always say that we are not finding take-or-pay at any cost. We know about our competitiveness. So -- and what we see is that there is a possibility of a better market -- grain market exports. Although you've seen the market, people talking about volatility, this is true. But what you saw recently, about USDA talking about the volumes of export was a good number, okay? So volatility has the 2 sides, okay? So you have good opportunity here.

And more than this, Josh, there is an expect for this year of better seasonality for us with hopefully no operational constraint in the beginning of the year, okay, what we had in 2019. And this is a moment with higher prices that can help to offset any risk or volatility that we have in yields this year. So sorry for being a long answer here. Hopefully, I answered everything you asked me.

[Joshua Milberg, analyst]

Lewin that was a very thorough response. I have a few other doubts, but I'll go to the back of the line.

[Operator]

Our next question comes from Rogério Araújo, UBS.

[Rogério Araújo, analyst]

I have a couple of questions here. The first is on volume. So according to our estimates, this volume guidance, it implies a growth between 2 million and 4.5 million tons for 2020. And if you look at CONAB expectations for material production of grains, it expects it to increase by 1 million ton in '20. So if you could talk a little bit about how this extra volume -- where from this extra volume -- where this extra volume will come from? So if you're making fertilizer, how much is grain, how much is any other cargo, if there is any other relevant cargo to be transported? So this is the first question.

[Ricardo Lewin, executive]

Rogério, thank you very much for the questions, [ obviously ], by the presence here in the call. And thanks for the good question. There is clearly an improvement in market share of Mato Grosso compared -- not only Mato Grosso, but I'll explain here, but compared to 2019. A first point, very easy to understand. Remember that we had some capacity constraints, let's call, operational constraints in the first half of the year. Remember that we have the problem in the hills, in Santos, during the first quarter, and we lost capacity, as well as we had some problems in the second half of the year because the products -- our exports of corn grew much more than our capacity. And it was very concentrated in a [ multiple ] of the year, okay? So as I told you, hopefully, we'll not have these operational issues in the first semester doing the soybean, we can gain a relevant share here in volumes. And in the second half, we are -- what we are seeing is that we'll not have the anticipation of corn. So the seasonality seems to be better for corn and we invested last year. We have been investing every single year. We'll gain capacity and we'll be able to take a higher piece of this market. So this is the first point here that we are gaining volumes and market share, okay?

Also, you were talking about fertilizer. And we are increasing something around 50% in fertilizer for next year. In 2019, we did 1.6 million tons of fertilizer from Santos to Rondonopolis. We're increasing to 2.4 million tons along with what we have been promising during last years.

And finally, one other thing that's relevant, that -- it seems that the sugar market is improving. And we have something around 1.5 million to 2 million tons of sugar, additional to what we had previous year. So what we are talking is a clear gain of market share related when we compare to 2019.

[Rogério Araújo, analyst]

It's very, very clear. So my second question is on February volume. Any way that the coronavirus could impact the logistics to China, the shipping to China? So how do you see February volume? Is it already big gap, is soybean already started to be exported? And should we expect a normal month now? Or should we -- should anything -- should any one-off feedback have an effect here?

[Ricardo Lewin, executive]

Yes, Rogério, I [ also believe ] someone was asking about coronavirus, but it's very difficult to answer something really to coronavirus. We are not feeling any effect of coronavirus up to now in the business, okay? What you may see in the beginning of the year is a difference between the volumes exported compared to 2019, okay? Remember that, in 2019, the volumes were anticipated. And in 2020, the volumes will be exported in the regular -- in the usual casings, okay? But this is not related to coronavirus thing, but this is a comparison between 2019 and this year. So it's still very difficult to say if coronavirus has some impact in our year. And by the way, the same related to the commercial agreement between U.S. and China is everything very unclear, and we have not been feeling anything regarding these issues up to now.

[Operator]

[Operator Instructions] Our next question comes from [indiscernible]

[Unknown Analyst]

I have 2 quick questions here. First, if you could remind us there is some more grain space left on the Southern trains of Norte-Sul? And secondly, can you give us an idea on the need for more rolling stocks for this year, please?

[Ricardo Lewin, executive]

I heard very well your second question that was the rolling stock, but I could not listen about the Norte-Sul. What you want to know about Norte-Sul?

[Unknown Analyst]

Yes. The first one was, if there is more grain space left on the Southern trains of Norte-Sul? Or [ we stay to be dupe ]?

[Ricardo Lewin, executive]

I'll answer, in terms of Norte-Sul, but anyway, let me answer how Norte-Sul is doing. If I don't answer your questions, please feel free to do again the question. But Norte-Sul is going very well, okay? We are -- remember that, we are starting the CapEx from the south is Goiás actually going north. We want to reach as soon as possible the south of Goiás and make this piece operational, okay, because it's where you find a lot of grains, a huge amount of grains.

Just giving you some idea here that the states of Goiás and Tocantins, these markets have potential today of about 15 million tons of grains. In some studies, we saw that in 2028, these 2 markets can reach to 25 million tons. So we are at full speed in CapEx, and we are working to really shape the transportation of grains and containers for the Norte as soon as possible.

There is another question. It's about rolling stock for 2020. You are not the first person to ask about the rolling stock for 2020. And we know that there was -- so something that [ mark ] people say that we canceled contracts on rolling stock. This is not true, okay? On the contrary, if you follow -- we didn't announce this because we don't think that, that's relevant. But if you follow Greenbrier calls, you will listen in the last call that they made with the market. They announced a long-term contract for rolling stock with them, okay? Their conditions are not [ verdict ], but there is a long-term contract with them that allow us to guarantee the production at very good prices. And we have a long-term contract also with former GE, [ current and water tank, that produces -- that supplies -- they supply for us our brand-new locomotives. So the [indiscernible] rolling stock is everything okay. There is no change in our long-term plans.

[Operator]

[Operator Instructions] Our next question comes from Josh Milberg, Morgan Stanley.

[Joshua Milberg, analyst]

Just one other area of questions I had was related to your costs. And if you could just give some color on some of the big cost movements that we saw in the quarter? One thing was a big move down in your G&A. And also in your fixed cost in the Northern operation and also a large reduction of your other operating costs, which was, I think, due in part to a sale of some service units. But really just wanted to understand how sustainable that move was. I mean, I think it's something that also is -- the response is partially embedded in your guidance. But if you could give some color there, that would be helpful.

[Ricardo Lewin, executive]

Okay. Just a brief overview on costs. You asked about generally fixed costs, but I would like to reinforce that every single year, we are reducing our variable cost also by increasing efficiency. Remember that, we have every new year BRL 1 billion in fuel consumption. And we have been able to reduce the unitary consumption of fuel by 3%, 4% -- 3% to 5% every single year, and we'll continue to do this.

Regarding fixed cost, you know those scenarios very well. We know that we have a huge discipline on costs. Fixed cost increased only by 1.2% this year, much less than inflation. And the doubt maybe here is that if this is -- will be recurrent. And my point here is that we, first of all, we have been doing investments that bring us consequence, the fixed cost reductions. This is one thing that's important, and the other is that we'll keep following our fixed cost very closely. So this is not a number that we disclose to the market, but be sure that you keep all quadrants to keep the growth of fixed cost much below the inflation. Repeating what I always tell investors in our meetings we are a scale business, and we need to keep diluted fixed costs because this make us more competitive. And for us, competitiveness, this is the name of the game, okay?

Finally, there is a last question about G&A in the fourth quarter. Although, the results were good in this year, in my opinion, so we increased 10% EBITDA, okay? That was below our internal strong growth. So there is a small reversion in terms of G&A that are, what we call, the PPR, the bonuses, internal bonuses of the management of the company.

[Joshua Milberg, analyst]

Okay, Lewin. That was good color. And I can take some of my questions off-line. I can -- we can speak afterward. But are you able to disclose -- and I don't think it's a big item, but are you able to disclose the exact impact of the sale of the unprofitable service units in your container business?

[Ricardo Lewin, executive]

Yes. Yes, it is quite relevant, Josh, for -- in terms of value, okay? But let's see if I have -- let's take exactly the value here. Let's see if you have other questions, I can take it -- this for you.

[Operator]

[Operator Instructions] Our next question comes from Alexandre Falcao, HSBC.

[Alexandre Falcao, analyst]

Sorry, if it's -- the discussions earlier had some trouble. There had been some questions. But here, it's fine. I just wanted to comment on now that BR-163 is finished, do you think you could see any sort of price competition there or volume competition? Or there's something that there's really -- there's something that you're not really competing for the same volumes? And second one is related to safrinha. You're beginning to see that [indiscernible] and the pointing was not really ideal here and we could see an increase in yields. Can you elaborate both of them and how the both reconnect with your guidance?

[Ricardo Lewin, executive]

Falcao, thank you for the questions. You lost my beautiful speech on BR-163. I can repeat it like the first time, but I will do it. I will try my best here. Yes...

[Alexandre Falcao, analyst]

No, it's all good. No, it sounds good.

[Ricardo Lewin, executive]

No, I'm just kidding, Falcao. I just kidding. I just kidding. Let me talk of BR-163. We know that BR-163 brought additional capacity and increase the capacity from March -- to North Arch, okay? But what I told you some time was that people are asking a lot if this decrease in prices for our truck price logistics was because of the paying 163. And what I said before is that there is no evidence that the cost went down because of the payment. But because, usually what happens, the truck drivers, they don't care about your cost, but they feel very quickly changes in the market. So prices go up and prices go down depending on their sensitivity if the market is good or bad or market opportunity to bring higher or lower prices, okay? So prices went down. And we give usually -- I will give an idea of prices from Sorisso to [ Menetetuba ] went down to 140. It was a small price, but was the trend that happen every single year, where at the end of the year, the market -- the logistic market is weak. So prices go down. Even now in January, we are seeing an improvement of truck prices, even before the peak of the harvest, okay? But we -- 163 is already bringing -- is more, for sure, more capacity. And what I also provided, Falcao, in the first answer, was that people are asking if the 163 payment that improved the North Arch market share at the end of 2019. And what I told was that the volumes of grain that went from Mato Grosso to the North Arch through 163 or the [ waves ] increased 7 million tons from 15 million to 22 million tons, okay?

But why this happened? First, if you talk about soybean, we, Rumo, did not lose market share for the North Arch, okay? So we could have done better. Remember, we had some capacity constraints in the first half of the year. But we didn't lose market share for the North Arch for soybean.

For corn, we did lose market share, but it was not for the North Arch, it was for the rest of logistics providers because we are at the top of our capacity, even though we increased 21% in volumes, okay? But what happened that the market -- the corn market was big and concentrated, the exports were concentrated in few months, and we didn't have capacity to catch up with the market. So this is a review about 163 and the North Arch, okay?

What is expected to happen in 2020 regarding the 163 in 2020, 163, the export through the North Arch and our capacity, it's basically that 2020, which do provide more capacity because of our investments, okay? The grain exports will not grow as much as last year by what we are seeing, okay? So the market we have the opportunity to choose logistic solutions based on competitiveness and not based on our availability. And it was the case of last year because we are at the top of our capacity. So this is what will happen in 2020.

The second question, could you repeat the second question, Falco, please?

[Alexandre Falcao, analyst]

Yes, it is regarding safrinha. There is -- there are reports that the planting was not optimal. And if you compare to last year, whereas the data they had, planting and harvesting, everything was perfect. Is there concern at all that you can see lower volumes from safrinha and I just wanted to know if it's something that -- that's presumably later?

[Ricardo Lewin, executive]

Falcao, When you talk about soybean, we have, at this point of the year, we have much more view. It's better because the harvest is each year. However, when we talk about corn, it's much more difficult to foresee at this time of the year, okay? Anyway, the expectations that we have that were brought by our -- by the consultancy companies that we hire is that it will be quite similar, as I talked in the presentation, through previous year. But remember that, previous year was our, by far, the best harvest that we -- the best crop we have in the year -- in the history actually in Brazilian corn crop, while it was 60% -- more than 60% higher than 2018. So if you compare to 2019, it can be flat but compare to 2018 and the history is much, much higher, okay? So -- but again it's always too early to talk about corn.

[Alexandre Falcao, analyst]

Okay, okay. But just confirming your guidance, you're using more or less same volume like last year? Or you have a reduction for corn specifically?

[Ricardo Lewin, executive]

The point here that what we foresee for our guidance that we have less exports of corn, okay? However, this is not the seasonal -- the seasonality of exports will be better for us. Why? Because we will not have the anticipation of corn and it will be more -- better distributed by the second half of the year, as usually it is, okay? So this will allow us to transport a bit more without any constraint of cost capacity, that is foreseen in our guidance.

[Operator]

Our next question comes from Bruno Amorim, Goldman Sachs.

[Bruno Amorim, analyst]

So I have 2 questions, if I may. First of all, very quickly on concession renewal. Any update you can provide us with on the timing. I know this is something that it's, to some extent, out of your control. But any update would be welcome.

And second, on the prospects for volumes from a long-term perspective. We have been discussing a lot of short-term issues, the coronavirus, the [ signing ] of BR-163, but we live in a country where we lack infrastructure and then more medium, long term, correct me if I'm wrong, but I think that the main reason why you are so positive, and you have a guidance for close to 10% volume growth for the next few years. So what are the key metrics you look at to get comfortable with this being -- with this lack of infrastructure that we have in Brazil, connecting the region where we produce the grains and the main ports. So could you please share your rationale behind the 10% CAGR for the upcoming years? That would be the second question.

[Ricardo Lewin, executive]

Bruno, thank you for both questions. I was missing the first one. So let me try to interpret here. As always, it's very difficult to come up with an accurate deadline for the final signature. You saw our secretary of transportation saying that very soon, we will be able to sign. But as Rumo, I cannot give you a date for signature. What I can tell that there is -- we are very close, and entity is doing a very good job advancing with the adjustment in the concession agreement. And both parties are working very hard to have it as soon as possible.

Regarding the second question is about the long-term volumes despite of all issues that we have. I understand what you are saying. What we could -- our long term and this is not only about guidance, it's our long-term view of this sector on the agriculture in Brazil, on the consumption of the world isn't changing, okay? We think that all these issues in China. Coronavirus is still unclear, I think, for everybody. This swine fever, as you know, it's the consequence of swine fever for consumption of soybean seems to be positive as it will improve the consumption of -- the way they are feeding their porks, the pigs, will improve. So that's very positive view for us.

So in some ways, we do have positive views on the future of consumption of grains in the world. Regarding supply, Brazil is, for sure, the [ local ] that will feed this growth of protein in China and the rest of the world and mainly Mato Grosso is the right place to be and the place where you still have growth of area to be planted and efficiency in the growth of grains.

But I think why you want to reach -- in what we are basing the 10% growth? And basically, there are 2 points here. We'll have growth of the crop. We foresee this. And yes, we will have growth in market share from Rumo in the next years, okay? We are not disclosing how much this is grow. But I think that you can -- by the public numbers that you have from CONAB, from USDA and our long-term guidance, I think you can easily reach to this growth of market share, okay? So these are the 2 drivers of growth of transportation. And what we've said, the poor infrastructure in Brazil is something that help us in increasing the -- our volumes transported.

[Operator]

That concludes the question-and-answer session for investors and analysts. Now I'd like to turn the floor over to Mr. Ricardo Lewin for his final considerations.

[Ricardo Lewin, executive]

Well, in the name of Rumo team, I would like to thank the presence of all the investors and the analysts in this call. And we are working hard in the company to have a very good year for us and for our employees and for our investors. And don't forget that in March, we will have Cosan Day both in Brazil, the 9 of March in Brazil and 13 in New York, which you can hear about all the company sponsors and group and about Rumo. At Cosan Day, Rumo will be able to give more details in the project and hopefully, come with more news. Okay. Thank you very much to all.

[Operator]

That concludes Rumo's Fourth Quarter Results Conference Call. Thank you.