Santos Brasil Participacoes SA

BOVESPA:STBP3

Earnings Call Transcript 2020-Q4

[Operator]

Good morning, everyone. Welcome to the conference call for the Fourth Quarter Results of 2020 of Santos Brasil. With us today, we have CEO, Mr. Antonio Carlos Sepulveda; Mr. Daniel Pedreira Dorea, who is Chief Financial Officer; and Investor Relations Officer. Mr. Ricardo dos Santos Buteri, Chief Commercial Officer.

This event is being recorded. [Operator Instructions] This event is also being broadcast live via webcast, and may be accessed through Santos Santos Brasil Participações website at ri.santosbrasil.com.br/en, where the presentation is also available. Participants may view the slides in any order they wish. The replay will be available shortly after the event, and those following the presentation via webcast, you may post your questions on your website, and they will be answered by the IR team after the conference is finished. Before proceeding, let me mention that forward statements are based on the beliefs and assumptions of Santos Brasil Participasções' management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore, depend on circumstances that may or may not be in place. They are not an ensure of performance because they involve risks and assumptions. Therefore, investors and analysts should understand the conditions related to macroeconomic conditions, industry conditions and other factors could also cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Dorea, who will begin his presentation. Sir, you have the floor.

[Daniel Dorea, executive]

Thank you very much. Good morning, everyone. I hope everyone is well. Welcome to our Santos Brasil call. Antonio Carlos, who is here with me, he is President of the company; and also our Chief Commercial Officer is with us today.

The COVID pandemic has affected our work because we faced a very serious crisis. Santos Brasil, due to its enthusiastic perspective for 2020, suddenly changed in concerns with our financial liquidity.

Fortunately, we closed a fourth quarter, which was sound, with growth across all the lines, very good operational margins and with container volumes above to the previous levels. Throughout the year, we implemented many commercial strategies to mitigate the loss in volumes and others to reduce administrative costs and overhead and also to preserve cash flow.

And our business continuation plan was well succeeded. And it shows that all of our operations were operated normally, integrating and ensuring the integrity of our stakeholders. In the operational point of view, we are strengthened, and we have become and we have even -- we can even see a silver lining in the Santos port, which is resilience, which grew by 2.7% in the volumes of containers, especially due to the commodities such as sugar, coffee and frozen beef.

And especially in the fourth quarter, we saw a very significant recovery in import containers, there were 33 extra scales in the last year, and we achieved 22 almost 60% of the total, with a very positive impact of our market share in the Santos port. In the fourth quarter of 2020, circumstances grew year-on-year, 6.9%, which was enough to offset the loss in volumes in the previous half of 2020.

In the aggregate, we handled containers in equality, which grew -- which shrank by 7%. And this can be explained due to the largest exposure of our terminal to imports if we compare to other terminals at the port. In the other units, I would like to highlight growth by 11.1% that in the quarter of 2020 as well as an expressive growth of 47% of the vehicle terminal also in the fourth quarter, both compared to the fourth semester of fourth quarter of 2019. We had a drop in 42% in second quarter due to the lower circulation of rice in the domestic market. On the other hand, the cargo grew by 47.9% in the last quarter due to new agreements of cellulose and food. The warehousing operations grew 6.9% in the fourth quarter of 2020, influenced by the extra scales in the port and because the industry picked up again, especially in the auto making industry.

In 2020, SBLog dropped by 17.3% the in warehousing, and this was in line with what happened in the Santos port and reduced our capitation base due to warehousing containers. A positive element is that the drop in shares price was lower than the total share because of the renegotiation of contracts and more diversity of logistics services.

For example, in-house operations, cross docking. And going on to the highlights, the financial highlights. The company presented growth 13.2% of net revenue in the fourth quarter of 2020 compared year-on-year. This mirrors the picking up the volumes that we mentioned earlier. In -- the consolidated net revenue was 99 -- BRL 930 million, a drop by 4% year-on-year, which was inferior to the volumes that were operated by Santos Brasil. This positive aspect was only enabled because we were negotiated price at several units, especially at Tecon Santos.

And we grew by 15.3% in the fourth quarter, the EBITDA year-on-year. In 2020, EBITDA was BRL 212 million, which represents a retraction of 4.4% compared to 2019, but with the same margin of 22.8%, which means efficiency and cost reduction, which were essential to maintain the EBITDA margin regardless of all the challenges we faced in 2020.

We had net profit of BRL 14.3 million in 2020, a variation of almost 40% year-on-year. But on any occasion, we had loss of BRL 13.8 million in indebtedness. And in terms of cash, we have a net cash of BRL 630 million. And deleveraging of the company enables our -- Tecon Santons to realize its investment cycle and to position itself strategically due to the organic management of its businesses.

We applied over BRL 200 million, which is our main asset in Tecon Santos, totaling CapEx of BRL 318 million between the period of 2018 and 2020.

These resources enable our competitive advantage and also enable the recuperation of ships of service classes for capacity to 14,000. And actually, in the end of February of this year, the Brazilian Navy authorized the port to receive long-haul ships, which will be the largest kind of ships in the East Coast of South America, and this will definitely intensify the role of the Santos port. It will strengthen its strategic position, increased capacity and efficiency in our terminal.

Moving on to my last remarks, I would like to highlight 2 topics. First of them is the ESG agenda of the company, which contain our sustainability strategies and corporate governance strategy. We are in the 12th edition of our sustainability report. And it's the seventh that comply with the global reporting initiative, which is GRI; and the third in the standards. And since 2019, we have also we've been publishing the materiality of the company and improving the disclosed information to the stakeholder interest.

This set of values governed our management of our businesses, and we are convinced that they are line in line with sustainable growth. They foster talent retention and increase our risk management and reduce the capital cost. And actually, Santos Brasil has -- then the shares have been selected for the [ Dow Jones ] and [indiscernible] launched of a group of shares.

And another highlight is the expansion and growth of Santos Brasil. We are confident that within the current market conditions, 2021 will be marked by a trajectory of picking up operational and financial results for the company. And this will be due to the repricing of the services rendered, especially in Santos and due to the renegotiation of our main contracts, and we aim are a healthy balance, a striking and healthy balance between offer and demand.

And the company will also benefit from the growth of economic growth, which will improve the rate of containers handled. Line in line with this, we are pursuing opportunities to advance organic avenues of development based on the following pillars: to accelerate the business plan in order to render logistics and port services, which are integrated and also to expand our action to other complementary handling.

And the follow-on in September of last year, when we obtained the amount of resources that we did. They are now -- I am available, together with my peers, for the Q&A session. And I thank you very much for attending.

[Operator]

Our first question comes from Lucas Marquiori, BTG Pactual.

[Lucas Marquiori, analyst]

I have 2 questions, which I would like to hear from you in more detail. My first point is about how negotiations to the Maersk are taking place or Tecon Santos? What is the status today, the process of negotiation with Maersk? And what is the expected deadline for signing the agreement? And in the event, the agreement takes too long to be signed. Are you willing to renegotiate on spot with the Maersk until the agreement? Well, any further information that you may have on the Maersk agreement, this would be important for us.

And the second question, Daniel, if you can give us an update and you mentioned the follow-on proceeds. But from BRL 6 million, BRL 7 million in the offer, could you give us an update on your expectation in concerning timing for allocating these resources? There were 4 actually auctions by the government in the end of the year. Santos Brasil did not take part, and this was an expectation. There was an expectation that you would. What is your schedule? And how will you deploy this capital across the year? I would like to know more about this.

[Ricardo dos Buteri, executive]

Lucas, this is Ricardo. Thank you very much for your questions. I'll start with the first one with the Maersk negotiation. And then I'll hand the floor over to Daniel, so he can give more detail on the timing of the follow-on. This negotiation, you asked for an update in terms of timing and what is the current status? We have sent the first proposal in November. So the intensity of the negotiations is greater from them to us, the proposals, ours and the others are being analyzed by both parties, and our expectations, Lucas, is to close this by the last -- by the end of this month.

Because the current agreement expires on March '21. On your second question about the possibility of having a spot tariff concerning the representativity and the share of the both companies that are involved, Santos Brasil, the greatest operator of Santos port and Maersk. We understand that the results may take place this month, and there will be a continued pace of trust between the company.

So we are having weekly meetings, and we are very confident that the new agreement will take place and will start at -- in -- actually on April 1, 2021.

[Daniel Dorea, executive]

Lucas, let me follow-up on your second question, which is about the use of proceeds of the follow-on. In terms of M&A, you're right. There has been 4 auctions that we analyze 2 of them for the Aratu Port in Baia, one for for solid and bulk. And we studied both of them. And in the end, we thought that our accounts did not point to the kind of return that we expected from that asset. So that is the reason why we did not go into that round of auctions, which took place on, I think, December 18.

There are now 4 other auctions in April for liquids. We are following the same plan, and we are studying, analyzing this market, the infrastructure of Itaqui port and demand. And our intention is that if the figures and the risks associated to these auctions are risks that we can manage, we will position ourselves.

But again, this will depend on the return/risk ratio. There are also other fronts that we have opened, others which are more sensitive in terms of discussions because on M&A, we have to be quiet about it until we can disclose something to the market. But we are firm in terms of our agenda. Our agenda prevails in 2021. So there is expectation, a real expectation that part of the resources or all of the resources. So that depends on the operation of the transactions, be used in 2021.

This, of course, is not written in stone. Because there are too many factors that influence this in M&A businesses and transactions. But our expectation is that there is a lot of energy invested in growing the business through M&As as well.

[Lucas Marquiori, analyst]

That's very clear. And just following up on the first answer concerning the agreement -- the business agreements, especially Maersk. What has been taken into account that we we assume that Maersk has 70% to 80% of the terminal from the other. What does this mean for the other 30%, 40%, which are not Maersk? How much can you transfer in terms of price from September, October and beginning of March, concerning the other shippers and the other clients? So -- just so I can have an idea of how things are in Santos.

[Unknown Executive]

Thank you for your question again. If we take a look at the past, we had a major renegotiation of agreements in the first quarter of 2020. So all these contracts have been renewed for 1 or 2 years where -- and now they are expiring in the first quarter of 2021. Concerning the shipowners that your questions refer to, we are now going to start the cycle, the first cycle was in the last half of February of the agreements that have been enforced in 2 years. We are now reviewing them. So we will make the necessary price adjustments, which are yearly, but they will only start as of March. So we'll see that a contract that expired in the 12 months. This will be full March.

[Antônio Sepúlveda, executive]

I would like to add on this. This is Antonio Carlos, Lucas. We now have, in Santos, very different moments than we had shipowners used the situation very well. They face the disbalance between demand and offer. And now Santos is back to the market price, and back to world market price, in fact, this has been happening across countries. So the moment now is a moment to recover prices. This has already been happening since last year. And will continue to take place.

And we have a lot of capacity at Tecon Santos and the port will not suffer in terms of quality and level of services because we are putting capacities at the request of shipowners and the price will be back. We can't disclose the levels of renegotiations. We can't tell where they are going for obvious reasons. These negotiations are very difficult, they are sensitive. There's a lot of competition. So I would say that the scenario today, a scenario of recovering margins is what is going to materialize.

And in the next coming years, we will see an increase in volumes of Tecon Santos above the volume in the port because most of the available capacity is in our hands. So I think that is the scenario. We're doing this in a very strict way and very -- it's a moment where we have to give the balance back to our agreements, that is the short-term measure. And together after this -- after March 30, we will continue to invest on a long-term agreement. And the interest between Santos Brasil, and I believe that both companies will benefit from a joint action. They have the volume, and we have capacity.

[Operator]

Our next question, Victor Mizusaki from Bradesco BBI.

[Victor Mizusaki, analyst]

I have 2 questions. The first one has to do with Maersk's agreements that Lucas approached. Does it make sense if we consider not only a renegotiation of the base tariff but also containers and there's also a discussion on the accessory tariffs? And the second question, as Daniel has mentioned during the presentation concerning the process of the Navy that the Santos port has now increased its capacity in terms of ships? And do all terminals have this ship capacity?

[Ricardo dos Buteri, executive]

Victor, this is Ricardo. Thank you for your question. And yes, the Maersk issue encompasses all the services that we render to them. The first one is for us to understand the level of service and preparation that Maersk may want in addition to what they already have. And we have a sheet or a spreadsheet showing all the kinds of capacity, additional capacity they may need from us. So when you look in terms of accessory tariffs, this is very, very comprehensive. It has to do with a lot with transport, warehousing, and all the services that we have, coasting, for example, everything will be negotiated in one single agreement that is -- that will expire on March 31.

Our role is to invest in improving our efficiency of service and to provide commercial flexibility that Maersk demands due to the amount of lead and regular services that they have with us. So in short, all tariffs and all accessory revenue are being renegotiated in this new agreement. Thank you very much. I'll give the floor to Sepulveda, so he can talk about ship capacity, draught capacity.

[Antônio Sepúlveda, executive]

This recent approval of the 366 ship This will have a lot of impact. I think you raised this question very well. This, of course, strengthens Tecon Santos because our BRL 1.7 billion investment has this ship as the standard ship, we can operate 3 of them of 366 meters simultaneously. And our draught is adapted to this. We have 2 cradles ready and 1 being built to -- being prepared to receive this ship. This one, of course, will remain more coasting and many other things. So the Santos port is the one that will require -- will also require transshipment services and so on.

BTP can also operate 2, 366 ships at the same time and Embraport also 2, 366 ships at the same time. So I think the port is ready to receive this. So this ship can be operated at full capacity in the Santos port. We have 14.20 of depth and this ship requires 14.15 -- 14.50. So it's basically ready. This ship already does this in the East Coast of South America. This ship is already in Peru, Chile and with a draught at around 14.20, 14.30. So we are -- we expect this to take place, and all ship owners have been studying this. And I believe that the Asia transportation will be the first to adopt this kind of ship.

[Operator]

[Operator Instructions]

Our next question is from Joseph (sic) [ Joshua ] from Morgan Stanley.

[Joshua Milberg, analyst]

They have recently mentioned the normalization of the market, and there was a piece of news saying how much the pandemic has caused the discussion in the shipping market globally wise, increasing cost and even with implication for global recovery. And it also mentions that they are privileging the more profitable routes, such as Asia and the U.S. So my first question is, are you seeing this option? And how much can this have implications for the development of the volume for 2020 and throughout the rest of the year, if this is an issue?

And my second question would be about if you can give information on your legal efforts to adjust Imbituba agreement, has there been any developments in this field? An effort to strike a balance there.

[Unknown Executive]

Thank you very much for your question on the volume and options and also a number of origins. What can we tell you at this time? We had a fourth quarter that was very, very significant, and we did a lot of hard work. There we had a combination between recomposition of our inventory and associated to this, a consumption pickup as of the third quarter. After the acutest phase of the pandemic, we were impulsed, again, by the auto making and consumer goods and pharmaceuticals and all of these segments import a lot.

And therefore, there is a relationship between services that came from Asia, which was higher-than-expected when the economy was picking up again. So that's the first photographic shot I'd like to give you concerning the fourth quarter of 2020. It's also worth noting, and this is public data from the [indiscernible] STA, that this was not something which was isolated. If we look at January of '21, the Santos port increased 10% in volume, whereas Tecon Santos increased in imports of 20% and total volumes of 22%. That is Asia after it took up its productivity and efficiency after the pandemic, after May, has now been powerfully meeting all the demands globally.

And this is a trend that has improved in the fourth quarter and has started in 2021 in this recomposition of inventory and in terms of extra longers that we have taken, especially from Asia. So in terms of what we are experiencing in volumes and what effectively happen in the end of 2020 and now in the beginning of January. This is the information that we have in terms of what Asia and a trend of growth. As we have seen in January and since last year.

We -- you commented that they are privileging Asia and the U.S., Europe, and I think Slovanians have injected a lot of liquidity. There is a lot of volatility in terms of the country, and this has generated a lot of stress. And therefore, we have a lot of volatility. But economy is being back -- is being put back on track. So we see that today, we know that foreign trade grew twice the GDP. These figures today are very similar nowadays, and we will be following upon this.

We will continue to suffer some stress. There will be a shortage of containers on some occasions. We know this. We buy a lot and we are always doing a lot of work. And we experienced a shortage because there is a lot of pressure in terms of the acquisition of of equipment. And there is also a change in behavior. Online trade does not affect maritime trade, but it does affect other issues. And this obviously stresses our logistics channels.

We have vaccination in many countries, but the pandemic is continuously -- has continued to affect life in society. So I think that the traffic of containers will be much stronger than it was last year.

[Daniel Dorea, executive]

Josh, this is Daniel Pedreira. I would like to give an update to our efforts, our legal efforts concerning Imbituba. That was your second question. I think everyone here knows that we have handled with this. And although we had many favorable legal opinions, at the end of the day, it was not well -- we do not have a very good success in terms of this favorably to the rebalance of the agreement. So Santos Brasil, it has reached out to the courts to have the right of the re equilibrium of the agreement acknowledged by the court. We have won the first lawsuit. So we have an injunction to ensure that we do not pay the NMC according to a court order. This has a cash effect, which is significant, although we are still provisioning in terms of the results, the payments, right?

And therefore, we have good perspectives of a satisfactory outcome in the courts, but you have the time of the courts. So this is very sometimes unpredictable when this will actually end, but we have this favorable result. What we won here is for us to have the balance of the agreement to be reestablished. We had unexpectable facts that took place, and we will update the demand curve according to the infrastructure ministry. This is what we are after.

So we continue in our court action, and this is another regulatory item. And I would say that this is the one that has to do with the current portfolio because it -- because all the others have been approached. And this one requires a lot of focus and a lot of attention. That is it. That's what I have to say.

[Joshua Milberg, analyst]

If you can -- can I make a last question? And I'm sorry if you have already addressed this. From the sound of the tariff, you had a very favorable result in terms of volume. But this has been related to the costs of handling, can you mention this evolution? So I can understand better what actually happened.

[Unknown Executive]

This goes back in what we have in the pandemic with a pressure. And I would say that it has a variable cost, which is effective, which is -- and most of them are variable costs. And we also had moments that were significant for the port tariff that impacts the cost of vehicle operation, the vehicle handling, but I don't think the auto making industry have now been normalized as of the end of the year. There was a big drop in volumes in the second and third quarter of last year. And I can say that I believe that this will be -- this is now normalized with the same handling levels, 20,000 vehicles -- 15,000, 20,000 vehicles a month, and I would say that this is the level of cost that we have today. We will probably have no other surprise concerning this.

[Joshua Milberg, analyst]

So when you think of normalization, the evolution of the half, which is expressive, but looking year-on-year, this will probably a more normalized level.

[Unknown Executive]

Yes, precisely, Josh. Just closing, so you have no question concerning this. Movements in 2019 was very low. And in 2020, we had a very special and actually different than we had of last year. And this is because of the tardy seasonality effects that we experienced. But as you remarked, when you look at the consolidated for the year, it's absolutely -- and it's completely in line with 2019.

[Joshua Milberg, analyst]

Perfect. I just wanted to confirm that there was no extraordinary effect there.

[Unknown Executive]

Josh, only just to add to this, the extraordinary facts that we had, which was happened as of January of this year, is the new demand afford, which we are doing according to the new agreement. So we understand there is a positive effect concerning the demand.

[Operator]

[Operator Instructions]

Our next question is via web by [ Rodrigo Moraes ], who is an investor.

[Unknown Attendee]

We have seen in the last year, a growth in accounts receivables. What are the reasons? And what are the action plans to fight this situation?

[Daniel Dorea, executive]

This is Daniel Pedreira. [ Rodrigo ], thank you for your question. We see that accounts receivables has grown because the volumes have increased. So this balance grows as the sales volume increases, so it's proportional to that. But so you have more insight in this, you can look to 2 things. One is the quality of our clients. This is a B2B, which we look at the ship owners who are major economic groups. We look at the same clients. At the end, they are equally very significant clients. So this is very -- this is what happens to ours. And as you see, this has been controlled.

In Santos Brasil another point that we have to look are the discussions that we have with the other terminals. There are certain factors which make difficult, and this may distort some of it.

[Operator]

Our next question comes from Marcelo Aguiar.

[Marcelo Aguiar, analyst]

And congratulations on your results. This question is a bit more strategic. And this is now in the next following years, and your vision, what do you see? And Saboó, you have precarious agreement in some cases, what will happen to these assets? And how can this affect the competitiveness of Santos Brasil? I know that this is a bit too early. You may have a lot of things going on at the moment. But when these terminals start handling containers, when will they be operational?

And the second -- my second question, going back to the Maersk issue, which is the hot topic of the day. I'd like to understand a little bit more the impact of the exchange rate. How is this being addressed in your agreement? Because the last time you did this it was in 2019. The exchange rate was BRL 3.80. Now we are at BRL 5.40. It's almost 45% in terms of variation. How -- could you shed some light on how this is taking place? Because according to conversations that have been taking place, your agreements were for -- was for 1-year only? Or are you looking at a 5-year period? And if it's only for 1 year, how do you see this? Do you see this as a risk in terms of the management of the terminal, if we look at 2022?

[Antônio Sepúlveda, executive]

Marcelo, thank you. This is Antonio Carlos. About Saboó and about the agreement. This has been part of our conversations in -- so the port authority is rearranging terminals and trying to group terminals in order to enable an increase in scale, cost efficiency and cost reduction. And Saboo is the last field available in the Santos port. There are other areas, but many of them are greenfield, and they are very expensive, especially due to the access of the railroad. So Saboo is the last area, it was already in the last PDV for general loads, and there was a space for vehicles, and they also use the cradle for fertilizers.

We have 2 areas in Saboo. We got them in auction, short-term auctions, and we are very impressed with the demands that we have for project loads that the industry, they want to increase its area, it's capacity. They want to renew their areas. This load comes in special ships with increased dimensions, and this is the only available space in Santos to cope with the amount and the size of these equipments for the polyester industry. And another cargo that has a lot of demand that takes a lot of capacity is fertilizers because you don't have other spaces to unload them. There is a lot of soy and corn in Santos, and the truck goes back empty. It could go back with fertilizer. The railroad is preparing itself to receive fertilizers. And it would be very good to have a return freight.

But in our view, in Santos Brasil, the best utilization is to increase the container terminal that we already have. Instead of auction 2 to do another terminal in Saboo. Why is that? Why do we think that this is better to set up the existing terminals? Instead of creating a new one because that's what logistics asked for. We have a synchronous movement, which is the 366 ship and the road of BR Mar, and this will increase transshipping and connectivity. And you can always have connectivity in a terminal that copes.

So it can connect adequately. So the port authority is studying this. They are studying what it would be like to have a container terminal there. We are in the beginning of these studies. It is a possibility to assess this now. They will look at this more to loads and what the São Paulo markets and the region needs and to rearrange and look for return for the port authority. We believe that this will -- should be done as public policy. And if we follow this rationale, this division, looking at BR do Mar and the 366 ship and if we look at this, the timing at this time will be the distancing. And I believe that you can't put this and set this up in less than 5 years, which we -- would take us to 2026. And therefore, we need this development period for this project, but it's not certain yet.

You asked about the exchange rate. Santos is so out of the market that if you think of exchange rates, this does not affect us. It's outside the Brazilian market, it's above what we have. And obviously, this does not have an impact in devaluation, but also in the account of inputs and concerning the exchange rate impact, when you buy a crane, for example, to operate ship 366, this will affect the economic balance.

And you also asked in the long term. Our strategy is short term, which we require this in the agreement, so we can maintain our operation in sustainable terms. At no point we interfered with our service level. Our service level is kept, and we work hard on it to challenge competitors. And we need to generate cash in order to ensure this. And the 366 ship requires a lot of infrastructure and technology investments. But this has been taken into account.

You also asked about long-term agreements. I think this will be inevitable. This will not be solved in the Maersk negotiation because the Maersk negotiation has to do with the shipowners, and it may take place in the year. And therefore, we may negotiate price now for 2020. and we -- and following this, we will look for partnerships for longer terms, looking at the largest operators of containers in the world and in Brazil. So I think it makes perfect sense for these 2 parties to come and continue together to generate value for the shareholders of both companies.

[Marcelo Aguiar, analyst]

If I can make just a more question. You mentioned January year-on-year. Could you mention what February looked like? And what do you think scales for March will be, just so we can understand how your pipeline is evolving in spite of the exchange rate.

[Unknown Executive]

We haven't disclosed this February because it's not public information yet. We can't mention the figures now. But I can give you a general overview of the port. Our greatest competitor has no more capacity and we're with more capacity. And we have a growing GDP, which means a growth in foreign market. So we expect growth in the Santos port, and Tecon Santos is growing even more than the port because it has capacity. It is a gravity port to attract most part of the capacity of the port. And this is logical because we still have capacity, we have equipment. We have moved early in terms of preparing our equipment in order to absorb all this growth. So we are now entering a very positive cycle for Tecon Santos, in my view. So if you follow the statistics for the port, which are public, you will see very clearly the growth of Tecon due to this fact, I think this is the major point for adding value to the company.

[Operator]

[Operator Instructions]

Our next question is via web, [ Orlando Mansour ], FCMP.

[Unknown Analyst]

We know that the exchange rate have an impact in the volume of imported sales and revenues. Because exchange rates are above BRL 5, and they should remain there in the medium term, what actions are the company taking to mitigate this risk? Maybe increasing exposure in logistics and exports?

[Ricardo dos Buteri, executive]

Orlando. This is Ricardo. Thank you for your question. Well, in terms of exchange rates beyond BRL 5, we have been experiencing this for some time. What can we have now in the commercial area? What we have is a structured pricing, which is completely structured. We have competition intelligence that is able to see very well, a lot of business intelligence to know what the exchange rate looks like for our competitors and for the entire port and also how the logistics services for imports, warehousing or exports are behaving in the light of the capacity the port has of setting this.

So what I can ensure you is that on a monthly basis, we are looking at a cost serve client -- client, in addition to what internally we have, in terms of margin and comparatively of what the market is been -- has been doing. So the exchange rate makes us to look at this 3 pillars of pricing, competitive intelligence, business intelligence, and commercial area talking to each other to do everything that we need in terms of agreement adjustments and long-term cargo.

[Operator]

[Operator Instructions]

Now we are bringing to a closure the question-and-answer session. I would like to give the floor to Daniel for his final remarks. Sir, the floor is yours.

[Daniel Dorea, executive]

Thank you very much, everyone, for taking part in this earnings presentation. And I hope to see you again in our next earnings presentation, and thank you to you all in name of the Board and the management.

[Operator]

This concludes Santos Brasil Participasções conference call for today. Thank you very much for your participation, and have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]