Santos Brasil Participacoes SA

BOVESPA:STBP3

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Good morning, everyone, and thank you for holding. Welcome to Santos Brasil Second Quarter 2024 Conference Call. With us today, we have Antonio Carlos Sepulveda, the Chief Executive Officer; Daniel Pedreira Dorea, Chief Financial and Investor Relations Officer; and Ricardo dos Santos Buteri, Chief Commercial Officer. [Operator Instructions] I would like to remind you that the earnings release and presentation are available at the company's Investor Relations website. In addition to the rooms in Portuguese and English, simultaneous translation into Brazilian sign language is also available. Before proceeding, I emphasize that the forward-looking statements made on the forecasts and operational and financial goals are based on the beliefs and assumptions of the company management and on information currently available. These forward-looking statements involve risks and uncertainties as they relate to future events that may or may not occur. Investors and analysts should understand that overall conditions, industry conditions and other factors could also cause results to differ materially from those expressed in such forward-looking statements. I would now like to turn the floor over to Mr. Daniel Pedreira Dorea, who will begin the presentation. Mr. Dorea, you may proceed.

[Daniel Dorea, executive]

Good morning, and thank you for your attendance. I am Daniel Pedreira Dorea, the IRO and CFO from Santos Brasil. With me, Mr. Sepulveda, the CEO, and Ricardo Buteri, our Chief Commercial Officer. The second quarter of the year presented a strong pace of growth in the volumes operated by the company, something we had already observed in the first month of the year and that we trust will be maintained until the end of the year, which is a seasonally best quarter of the year. In July, we hit a record of handling in Brazil, where we reached 120,000 containers in Tecon Santos. This is thanks to the investments for the increase of capacity we carried out a year ago to service that volume with a high level of quality in the services we render to our customers. When we compare the results year-on-year, the operating performance of the company in the second quarter of '24 surpassed the second quarter of '23 in all of the business areas, with exception of the Vehicle Terminal that is still suffering because there is less demand for light vehicles in South America. The Tecon Santos terminal where we have a slight growth quarter-on-quarter of 1%. At Tecon Santos, we observe a growth of 24% in the number of containers handled in the second quarter of '24 when compared with the same period last year. In this context, it is important to highlight the quality of the mix at Tecon Santos, with a highlight for the growth of 34% in imports year-on-year, chemical products, consumer goods, plastic, glass and general consumer goods. 24% growth in exports, especially agricultural and food commodities, paper, pulp, coffee, frozen beef and sugar. And a growth of 46% in cabotage with a strong increase of services coming from other destination ports, whether this is in Brazil, Argentina, or Uruguay. I would like to underscore that most of the growth observed come from an increase in the consignation of regular services operated by Tecon Santos. They account for 86% of our volume. Our services contracted in '24 represented 7% of the total and the scale 6%, which means that we are experiencing a strong and sustainable organic growth that truly is not extraordinary. Now, the Imbituba port had a growth of 59% in the volume of containers handled compared to the second quarter of '23. Now, what is driving the growth that we observed was the beginning of the operation of a new long-haul service in the Caribbean and Southern USA area, as well as the use of ATLAS, both operated by CMA CGM. The warehousing operations at the terminal had a growth of 40% in the second quarter, if we compare this to the second quarter of '23. In Santos Brasil Logistics, the bonded warehouses grew because of greater imports at the Port of Santos, with an increase of 17% in the number of containers at the bonded warehouse in the second quarter '24. Finally, the Liquid Bulk Terminals handled 183,000 cubic meters of fuels in the second quarter of '24, a growth of 2.6% year-on-year, with a highlight of the conversion of operations, something that gives us a better forecast stability and duration. The positive highlight is the warehousing of our terminals that focuses on the addressable market, helping us to work with imported goods through the Itaqui port. Going on to the economic and financial highlights. All of the main line items had a sound growth year-on-year. Net revenue totaled BRL 703 million in the second quarter '24, representing an increase of 29%, especially due to higher volumes at all of the company's business units except at Tecon Vila do Conde and at TEV, and because of the increase of the average ticket positively impacted by full containers and the real time of storage for imports. Recurring EBITDA was BRL 348 million in the second quarter of '24, a vigorous growth of 57% year-on-year with a margin very close to 50%, an increase of 6 percentage points vis-a-vis the second quarter '23. In my assessment, the EBITDA margin could be close to 51% were it not for the increase in the personnel cost due to the hiring of 362 (sic) [ 372 ] employees for the operation of Tecon Santos that are still undergoing training and they cannot be used in the operation. This is equivalent to 12% of the company's headcount. Now, this situation should be normalized until the fourth quarter when we will be able to attain greater savings in these operating conditions. Now, net income had a growth of 82%, reaching BRL 172 million with a net margin of 24%, an increase of 6 percentage points year-on-year. Regarding capital allocation. In the second quarter of '24, we invested BRL 101 million in the expansion and streamlining of our assets. Now this figure will increase in the 2 coming quarters of the year. For the first half of '24, CapEx represented BRL 217 million, and our provisions reached BRL 304 million in the first half of the year, representing BRL 0.35 per share at this moment. Yesterday we announced the payout of BRL 209 million between dividends and interest on capital. We are determined to pay out 100% of our profit, and we have proposed to the shareholders in the company to reduce the capital by BRL 1.6 billion. And this will be submitted for appreciation of the General Assembly on August 14. This will adjust the capital structure of the company. We ended the second quarter with a net debt of BRL 228.5 million and with an extremely comfortable leverage. The final message, I would like to reinforce the positive outlook for the second half of 2024 that already began at a strong pace. In our vision, the container terminals should continue to present positive volumes with a recovery of Tecon Vila do Conde, but especially driven by Tecon Santos. And as we think that demand for coming years will be sustainable, Santos Brasil will continue to invest in the expansion of the capacity that we offer in the markets where we are active. With this, we can proceed to the Q&A. And I am at your entire disposal for any question, along with Mr. Sepulveda and Ricardo Buteri. Thank you.

[Operator]

[Operator Instructions] Our first question comes from Julia Orsi from JPMorgan.

[Julia Orsi, analyst]

We have 2 points at our end. First of all, a follow-up. It was clear from the presentation that the dynamic of the volumes will continue positive going forward. Which is your expectation regarding the mix, if it makes sense to think about something similar to the first half of the year? The second point refers to the mid and long term. There was recent news that the decision of the Supreme Court will be postponed for some more years, which means that the capacity of Santos and other terminals may be impacted. So which is your outlook for supply?

[Ricardo dos Buteri, executive]

Well, good morning, Julia. This is Ricardo Buteri. Thank you for the question. Now regarding trends about the mix for the second half of the year, and of course, we're speaking very precisely about our regular services, what have been contracted. The mix will remain as it is with a great deal of traction in the volumes, as we saw in the previous half of the year, with a contribution from exports that we have been receiving. So the trend for the second half of this year is to maintain the present day mix that you see in our results.

[Antônio Sepúlveda, executive]

Julia, good morning. This is Antonio Carlos. The news that has just been published, I understand that this is news made by the [ ST10 ] referring to an enhancement in access, of course is of the utmost importance. You cannot operate with the demand in the cities if you don't enhance access. Now regarding the terms, it's -- they're the terms that were set forth in the ST10 project. And it will take approximately 7 years because of the magnitude of the project. Until we operate with the first ships and have significant volume at the port, it is necessary to go through that whole process of signatures, environmental licensing, licensing of operation, bonded warehouses. And of course, this process will extend significantly to 7 years, at least, in Brazil. I believe that the capacities that will be delivered for -- because of additional capacity in Brazil, we'll be able to maintain a good level of service. The terminals will remain full with a good occupation and significant growth until that launch of the ST10 project. Based on what we see as background in Brazil and worldwide, the time for this is 7 years and perhaps somewhat more than was disclosed before we have access.

[Operator]

The next question comes from Pedro Bruno from XP.

[Pedro Bruno, analyst]

We have 2 questions. First, regarding the volume. We have seen news about a possible anticipation in the volumes that you mentioned. You mentioned record volumes in the month of July, and the peak season did begin last month. Traditionally, we think that the peak season will begin in August or September. You have already spoken a bit about the mix, but in terms of volume, which is the process that you expect to see until the end of the year, if the strong volumes that we saw in the month of July will represent what we think will be the peak season? So if you could give us a better explanation of the speed of what will happen with the volume until the end of the year? The second question regarding cost and margin. My question has a different angle. Now, you did increase the headcount significantly, and they're undergoing training. Now, I would like to know if the headcount helps you to face that challenge that you were facing of hiring employees that you had mentioned. Now, does this mean that you have been successful in that strategy? And of course, this will have an impact on your margin for the half of the year.

[Ricardo dos Buteri, executive]

Pedro, this is Ricardo once again. Thank you for your question. Let's speak about this cadence, peak season and volume. You are right. In fact, the peak season was anticipated, and we saw greater concentration not in the months of August and September. Now to divide your answer in the 3 main terminals, Tecon Santos has had a ramp-up since the first quarter to the second quarter. As Daniel mentioned, we had a record more than 120,000 containers. And this is our forecast for the third quarter of '24. Despite speaking to ship owners and the movements of organic growth, this will be maintained and throughout the full third quarter and fourth quarter, up to November. When we look at Tecon Imbituba, we have reached 9,000 containers with two new services. And there are new services under negotiation that will come into play in the third and fourth quarter of this year. So the volume that you view for Imbituba will be higher. And when we speak about Vila do Conde, there is an effect that begins now in the -- begins in the second quarter -- fortnight of September, which is the drought of Manaus. This also impacted our volumes and results last year. We have worked with a layout and engineering in Vila do Conde, removing all of the empty spaces to provide greater capacity for those moments of demand that are quite comprehensive. So for Vila do Conde, speaking about the cadence of volume, we're negotiating an increase of approximately 2,000 containers for 4 months, beginning at the 1st of September until the end of the year. This is what we do when we look at each terminal and in a consolidated and scheduled way with recurrent volumes, not only from our clients, but as part of our preparation to accommodate these volumes.

[Antônio Sepúlveda, executive]

Regarding the hiring -- this is Antonio Carlos, Pedro. About the hiring of personnel, we hired 90% of what we required. We're simply missing a category of stevedores, which is the labor that works on top of the ships. But all of the yard people have already been contracted. We have teams that can work with 11 land equipment. So we continue to attempt to hire that category of stevedores. The number is quite limited compared to what we needed. I should say that we have been successful. It was a point of concern, and if we hadn't had success in the hiring, of course, we would not be able to work with those volumes. We've gone beyond handling 120,000 containers, 4 million to 5 million TEUs. This is the annual volume for the last month. And we believe that the peak month that will happen in August and September will reach 2.6 million TEUs. Although this group is not fully employed, they're still undergoing training; most of them, at least, we already feel an impact and an improvement in speed at the terminal.

[Operator]

Your next question is from Andressa Varotto from UBS.

[Andressa Varotto, analyst]

I have a question. When we look at the number of containers, there was a drop during the half of the year. I would like to understand if there was something that caused this and how we should think about this for the coming half of the year, thinking about mix and considering that all of this had already been contracted for the year based on your negotiations last year. That is my first question. My second question is if we can expect any significant change in CapEx for the second half of the year?

[Daniel Dorea, executive]

Andressa, this is Daniel. Good morning. A drop that you observe in the revenue quarter-on-quarter cannot be justified by mix. What happened was the following. When we look at the port operation, there were less revenues coming from what we call the export [ park ], less revenue that were very strong in the first quarter, strong in the second quarter, but not enough to surpass the first quarter. So we lost approximately BRL 12 million in that line item. It's what Ricardo mentioned. The expectation for the second half of the year is that the revenue worked with reapers will be very strong again. This is one of the points. When we look at warehousing, there was a drop of revenues as well. It's very difficult to control that. The first quarter was very strong. We had high volumes in the first quarter. With warehousing, we lost BRL 12 million or BRL 13 million. So we have BRL 25 million less in terms of revenue. Now the cargo mix is not a justification. There was an increase in transshipment, that is true, but we worked with transshipment of full containers. But there was a drop in the movement or handling of empty containers. The mix continues to be very strong. The peak season that begins now should generate interesting volumes of imports. And in the mix, there is no problem in truth. It's these 2 points that impacted our revenue. And of course, Imbituba today, given the volume has a higher representativity, lower than that of Tecon Santos, of course. Regarding the CapEx. Yes, I would say that you can expect intensified use of our CapEx in the second half of the year vis-a-vis the first half of '24. We have maintained the expectation of working with BRL 700 million or BRL 800 million of CapEx [ for ] 2024. And to attain that range, we need to intensify investments in the second half of the year. In the first half of the year, we had BRL 217 million in CapEx. So naturally, there will be a concentration of CapEx in the second half of the year to bridge that gap that I just mentioned to you.

[Operator]

Our next question comes from Marcelo Ornelas from Kinitro. [Operator Instructions] The next question comes from Jens Spiess from Morgan Stanley. Our next question comes from Victor Mizusaki from Bradesco BBI.

[Victor Mizusaki, analyst]

Well, congratulations for your results. I have 2 questions. The first referring to your new business in your port terminal. I would like to know if you have your eye on some of the new assets. And regarding the Vehicle Terminal, we have seen movement of importing vehicles to Brazil. If you have detected a new opportunity for TEV because of this for your Vehicle Terminal.

[Daniel Dorea, executive]

Good morning, Victor. This is Daniel. Referring to the auctions in ports, no, it's not part of our strategy to participate in these auctions. We have worked with capital allocation investments in expanding our own assets and in payout of capital to shareholders through proceeds, through dividends. Our strategy for the longer term would be to have the opportunity to grow the supply of containers at the Port of Santos. This makes more sense as a business strategy and because of the return that we intend to obtain.

[Ricardo dos Buteri, executive]

Victor, this is Ricardo. About your question about the Vehicle Terminal, your reading is highly aligned with what is happening in Brazil as a whole. To speak about the Vehicle Terminal, while Brazilian exports had a drop of 30% to 35% vis-a-vis the second quarter of '23 to markets that were relevant last year, Mexico, Colombia, Chile, and Peru, imports, on the other hand, had a growth of 53%. So our mix -- and we were used to working massively with the imports of Brazilian assembly lines, now see this volume of imports coming in from China. And this has happened quite recurrently. The electric vehicles, before the new tax levy that came into operation in June, was very important here. And what we foresee for the coming months is a recovery of the Argentinian market that was reduced since the end of last year up to present, but has recovered 16% of the market share they lost, and the continuation of the imports of electric vehicles from China and the opportunities we have locally.

[Operator]

Our next question comes from Lucas Marquiori from BTG Pactual.

[Lucas Marquiori, analyst]

[ Two ] points that I would like to ask about the stress dynamic in the freight for global operations. There is a lot of Red Sea, there are a lot of problems still in Asia. Now, how do we work with that, with this advancement of the peak season? Does this represent a problem? Or will the ship owners try to bring down their goods earlier on because of the port congestion because of what is happening in Asia? I would like to hear your mindset in terms of this. And an update, if you could, on what you have heard about the regulatory discussion for the ports. This might represent additional capacity as the port authority is constantly renewing licenses to operate the port. I would like to hear your opinion in terms of this.

[Antônio Sepúlveda, executive]

Lucas, good morning. This is Antonio Carlos. The Red Sea, yes, of course, it has added stress to logistics. That environment through the Cape of Hope has demanded the use of more ships. There is also an increase in demand in that region. The demand in the U.S.A. continues strong. What we have observed are these 2 factors. Now this has not affected Brazil. There is no communication with Brazil. In Brazil, we do have some relevant points. First of all, last year was extremely weak. The first half of last year was weak, as well as the second half of the year. There is more. We have a problem with the coast. We have other terminals on the coast with structural problems, BTP and Santos, Navegantes and Itajai. This impacted Santos considerably. We are returning to normalcy, and I believe that August will be a stronger month than July. I see this difference. Instead of thinking of 12,000 containers every month, I think we have anticipated all of this. There are cargoes that are doing very well. Brazil is becoming a large supplier of cotton for the world. And this type of cargo has become stronger in the last 5 years, and it was very strong in the first half of the year. Now the Port of Santos has an enormous diversity of products that are imported and exported. Some do very well and they end up driving up the volume. We do hope that the following month will be even stronger than the past months, as happened in all the other years in Santos after August. Now, August is the peak month, and this is our expectation that this month will be very strong, stronger than July. About the Eco port, because of the information conveyed publicly by the port authority, we believe that this terminal will be transferred for cruise ships to integrated into that older area in Santos, where you have real estate development based on the older warehouses, and that the general cargo warehouse heavy cargo terminal will be maintained. It's the only place we have in Santos operating this special cargo. And it's also being said that there will be that ST10, there will be an increase of BTP. But this is what we have heard about the Eco port. Specifically, I'm truly not aware of what is happening with that process. I know that there is something happening in Brazil. Several things have been [ compound ]. It's possible that this is the case, but I cannot refer to this precisely.

[Operator]

Our next question comes from Lucas Barbosa from Santander.

[Lucas Barbosa, analyst]

My question refers to 2025, which is the visibility that you have, which is the growth of volume that you can deliver the coming years? Secondly, you had a very good growth of volume this year. Which are the types of products that are still below their normal level and that would represent the main upsides for the coming year?

[Ricardo dos Buteri, executive]

Lucas, this is Ricardo, and thank you for your question. Regarding 2025, even though you mentioned a stronger growth in 2024, I'm going to go back to what was said by Antonio Carlos. The reference base of 2023 is lower, so the volumes have increased year-on-year. Regarding 2025, we have begun the pricing at the company, the market intelligence area, contact with ship owners, visits and expectations, we're beginning to work on them in terms of volume and price. All of the contacts that we have had so far saw a growth above and beyond the trends of volume of 2024, a growth of 3% to 4%. At Santos Brasil, we recompiled all of this. We consolidated import and exports based on segmentation inventory. So we have to, based on this, work with our forecast. I believe that in the third quarter of '24, our visibility in terms of this will increase. We will have a minimal vision of growth, organic growth, and the market studies are helping us in this regarding the type of segment that is not growing or growing. We have a very favorable condition in terms of global training. We have 8 areas growing. When I see something that is somewhat below 2023, it is marginal. For example, the export of metals and poultry, all of the top export segments have been growing. So if we see what we have realized in the first half of the year, there is no segment that shows a greater leverage for 2025. Everything is underway. And the same happens with imports. The imports of the 10 main segments, and we have mentioned some, 8 of them are very strong. We see a certain slowdown in imports in machines. Notwithstanding this, and depending on the government policies, real estate and civil construction, there could be an increase. And in the automotive area, the replacement products for assembly lines, we don't know if this will be increased in 2025. We will see the consumption in the second half of the year and the inventory of assembly plants. And perhaps we can give you more information regarding 2025 at the next call.

[Lucas Barbosa, analyst]

I will ask the question again on the next quarter to hear an update on this.

[Antônio Sepúlveda, executive]

I would like to add to what Ricardo said. There's a very important point, which is the delivery of capacity. And at the end of last year, we decided to anticipate investments. And at that point, this was with a view towards the years 2025, 2026. Nothing more could be done for 2024. It was a highly ascertained decision, enabling us to enter Santos and Imbituba that are ports with a low demand to go in with a better capacity. We're attaining in the works in Santos a great deal of speed. And we will be able to begin 2025 with 150,000, 200,000 additional TEUs to sell throughout the year, which is also highly important.

[Lucas Barbosa, analyst]

Yes, of course.

[Operator]

Our next question comes from Jens Spiess from Morgan Stanely.

[Jens Spiess, analyst]

Sorry. I'll do the question in English. I hope you can hear me now. So I just wanted to do a follow-up on the CapEx question and the acceleration of the investment plan. If you could give any color into what CapEx we should be expecting or a range of CapEx in 2025 and 2026 to reach those 3 million in terms of capacity, and the 2.6 million in 2025? And my second question is more of a modeling question. I saw that expenses were a bit all over the place. I think for the Vehicle Terminal, they increased like 20%, while the volumes were down, right? And the Liquid Bulk Terminal, they decreased 10%. But just to understand what's driving those expense -- those changes in expenses?

[Daniel Dorea, executive]

Jens, this is Daniel. You asked the question in English, but I will answer it in Portuguese. Once again, I hope that you can hear me well. Regarding our CapEx, 2024 will represent a peak of our investment cycle for the company. And beginning with the coming years, there is a trend for a reduction in the investment volumes of the company. I can say that now, we're working on 2025 and 2026 with disbursements between BRL 350 million and BRL 450 million until the end of the year. Of course, this figure will be refined. We're going to see if there's an investment carryover, investments not fully made during 2024 that we can carry over into 2025. But the figure stands between BRL 350 million, BRL 450 million CapEx for 2025 as well as 2026. Now, regarding the costs, we had a higher average ticket because of greater revenues with warehousing and strike.

[Jens Spiess, analyst]

Sorry, I'm getting lost in translation here. Do you want me to repeat my second question? Hello?

[Daniel Dorea, executive]

I do apologize for that. Let's proceed with cost, depreciation, personnel and expenses. Now, what has driven cost? What has pressured the cost item is Tecon Santos with 372 additional employees on our payroll without enabling us to reduce the volume of expenses with additional hours that we have had until these personnel is fully absorbed into our operation. The other costs are marginal. They refer to material for the company -- they're not material for the company. I'm sorry.

[Operator]

[Operator Instructions] Our next question comes from Luiz Capistrano from Itau BBA.

[Luiz Capistrano, analyst]

In the Q&A, we spoke about 2 elements that will help profitability, higher volume and the -- well, you have contracted everybody that you need, impacting the profitability of the first half of the year. What type of operating results can we expect for the second half of the year? When we look at the EBITDA margin, the peak was 3% at the end of the year, it went to [ 60% ] the first quarter, [ 50% ] now, adjusting for non-recurrent expenses. What can we expect for the second half of the year? Something aligned with last year? Can we perhaps prepare for more? Which information can you convey to us?

[Daniel Dorea, executive]

Luiz, this is Daniel. Let's go in part. Mix and volume, we've spoken about a very positive expectation that should continue on robustly and balanced. We can expect more imports and volume is what was said by Antonio Carlos and Buteri. What happened with that issue of our headcount with almost 2% of increase, they take approximately 4 months until we can truly allow these people to work with our equipment. So far, we haven't fully observed this gain in the third quarter. The normalization of this should be perceived only in the fourth quarter. We're in August already, so we still have 300 people of a contingent of 372 new employees undergoing training, 300 of 372. That people -- those people are undergoing training. And because of that, we have pressure in terms of personnel cost. Why we have brought in 372 people into our payroll, but we still have extremely high expenses with additional hours to work with our operations to fully deliver what we do. All of this will only be normalized in the fourth quarter when I am convinced that at that point, we will have activated this operating leverage. There is a point to take into account. We're working with [ 11 current ], that can operate 2.6 million TEUs or more with that same contingent of people until the end of the year. Our volume should be 2,300,000, 2,350,000 TEUs, which means that we will still not have that operating leverage, despite the people that have been contracted. This margin will continue to expand, but it will not generate the wealth that we expect in 2024 because in the -- we're preparing the terminal at present so that it can handle at least 2.6 million TEUs, 120,000 containers monthly in a continuous fashion. So this is what refers to margin. You made reference to the fourth quarter of 2023. But in 2023, we need to recall 2 events that contributed to this margin increase in the fourth quarter of '23. We had a great deal of volume being captured by Tecon Vila do Conde. I doubt that this will repeat itself because of the drought of the Amazon River in 2024. We had an extraordinary flow of containers that came out of the Itajai/Navegantes system to Imbituba, most of which are import containers that are full, generating warehousing revenue. Well, due to the situation that happened in Navegantes and the flooding, we can't forecast a new flood that will halt operations at Navegantes and Itajai. Imbituba is almost at full operating capacity. The reality now is different. I would not recommend replicating the margin of the fourth quarter of 2023, when we had 2 extraordinary events, and think that this will be recurrent in the company. Once again, this is not or was not a recurrent event.

[Luiz Capistrano, analyst]

Daniel, if you allow me an additional question, any news in terms of the renewal of contract with MSC for the coming year?

[Ricardo dos Buteri, executive]

This is Ricardo once again. The contract with MSC is in effect until December of 2024. We have a full semester ahead of us to be able to perform what they still need this year. And as I answered a previous question, the premises we have considered for volume and terms for 2025, of course we will hold the conversation with them in terms of the present-day services and the additional capacity they may require in 2025. We have anticipated an increase of capacity to 3 million. So we don't only speak about the short term 1 year. We will hold conversations not only with MSC, but with 13 ship owners to think about 2025 in terms of volume and price.

[Luiz Capistrano, analyst]

That's very clear.

[Operator]

[Operator Instructions] As we have no further questions, I will return the floor to Daniel Dorea for the closing remarks.

[Daniel Dorea, executive]

Well, I would simply like to thank all of you for your attendance, and I hope to see all of you at the conference call for the third quarter in November. Thank you very much and have a good day.

[Operator]

The Santos Brasil conference call ends here. We would like to thank all of you for your attendance. Have a good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]