Vibra Energia SA
BOVESPA:VBBR3
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Vibra Energia SA
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Good morning, ladies and gentlemen, and welcome to Vibra's Conference to Discuss Results Relative to Q1 2022. This conference is being recorded and a replay facility can be found at the company's website. The presentation is also available for download.
[Operator Instructions] Before moving on, I'd like to reinforce the fact that forward-looking statements are based on beliefs and assumptions on the part of the company's management and also on information currently available. These forward-looking statements may involve risks and uncertainties as they refer to future events and therefore depend on circumstances that may or may not materialize. Investors, analysts, and journalists should have in mind that macroeconomic factors, industry factors and other operating factors might lead these forward-looking statements to be different from those announced here today.
Here with us, we have Mr. Wilson Ferreira Jr., Vibra's CEO; Mr. Andre Natal, the company's CFO and IRO. I'd like to turn the floor now over to the company's CEO, who will conduct the presentation. Mr. Ferreira you have the floor.
Good morning, everyone. I'd like to thank you all for your attention, shareholders, investors, analysts. Thank you for being here, attending our Q1 2022 conference. This is the fifth quarter that I'm reporting results about. The most exciting one was the first one, of course. Several volatility elements which characterize our scenario, but once again, I'm happy to be here to share good results with you for Q1. I'm talking about a drop in the volume of sales, but when you look at comparable numbers, we have a performance which has been highlighted in our release, which is quite positive at the end of the day, actually larger than market expectations.
We continue to expand our network over 156 service stations when compared to Q1 2021. We continue to expand intensely, which has been a mark of our management and our performance. In terms of recovering our market share, we have reached the level of 28.2% in market share in this quarter. Most of the important numbers are there on the slide. The company continues to lead. And in terms of costs, the deliverables we have made, especially last year relative to cost reduction, logistics, we'll go into that in a moment, BRL 60 per cubic meter, that allowed us to have consistent margins of BRL 123, which is per cubic meter, which was the same as we had last year despite the high volatility we faced this quarter and once again reached a level of EBITDA of BRL 1.1 billion. So all in all, a very positive work done by the company. Again, amidst a lot of volatility, war, the pandemic, problems around pricing, Petrobras pricing policy. So a challenging scenario, but which we faced very positively.
And the numbers on the next slide reinforce this resilience, have been growing our EBITDA. In 2018, we're working around BRL 62 per cubic meter. We have twice as that in Q1 2022.
In terms of expenses, it's the exact opposite, in 2018, BRL 111, we're now reaching the level of BRL 60, which proves our commitment to bringing costs down and to managing cost efficiently and the market share in the bottom part of the slide, in 2020, we were at around 26.5% and we are now at 28.2%, an increase of 0.2% when compared to Q1 last year.
So once again a consistent recovery process in an environment, as you can see on the next slide, Slide number 3. I have a snapshot of the quarter. Quite complex, quite challenging, when we look at the fuel market and we look at what happened in January when compared to 2 years back, the pandemic, Omicron of course are responsible for that, the spike we had earlier in the year. But in February, you see the opposite trend. In March, we still have important growth unfolding, but all in all, the volatility in volumes calls our attention, and you can see that on those 3 charts, when you look at volatility and the price of Brent oil, a spike of 55% and 3 spikes actually which are important for an activity such as ours, so that requires a lot of care and attention on our part.
When we look at the CBIOs on the left-hand side, because of the delay in harvest, around 150% of change. In the past, that number was flat or just about flat, so there was an important increase. And then the U.S. dollar of course, we had the dollar going down 12% and going up a little bit once again more recently. So all in all, an environment which required a lot of attention. We'll be able to address all of that when we come to the Q&A session in terms of the measures that we put in place to reach the results we have reported amidst once again a lot of volatility. The buzzword for the quarter is volatility.
When we look specifically at the 2 main business lines of the company, service stations is one, our largest market. We have an increase in market share and also an increase in volume in that business, 0.1% when compared to Q1 last year. The number of service stations, as I mentioned earlier today, we are now close to 80 to 114, an increase of 156 on annual base. And in terms of sales volume, which was affected by the pandemic, as I said, we have a drop when compared to Q4 last year of 6%, but still an increase when compared to Q1 of last year.
So that to some extent reflects all the changes or the evolution we've seen based on our value proposition to resellers. It is of course, part of our loyalty program, which is also a characteristic of our ecosystem combined with an important advancement what refers to our convenience stores, Americana's stores, allowing us to increase assortment and also monetize all the stores in a much more efficient manner, and this will continue to happen throughout the year, but we have already in place numbers that show the advancement of that business.
Also optimizing sales for resellers, Siga Bem and Lubrax also doing well, and over a thousand service stations with the new signage of the company, and competitive prices. That's something we can share with the market because of our higher competitiveness, efficiency of our business.
And as for B2B, next slide, the situation is quite similar when compared to same quarter of last year. See price going up 5%, a drop in 7%. As you can see on the left-hand side, market share growing 1% when compared to last year. As for Aviation, we are kicking off. As if I may, when we compare with pre-pandemic numbers, that's the only segment which has not reached the same level that we had at pre-pandemic. But we see an important progress and increasing market share, getting close to 81% in the first quarter, an important accomplishment which offset some losses, so we're moving 33% up when compared to last year.
And in lubricants as well, of course that's a challenge for the second quarter. The completion of our plant, we are now at 95% of completion and commissioning this will happen. Now, in this quarter, we will expand our capacity by 60% and the most important thing to evidence our sales capacity is the reformulation of our sales channels. Authorized distributors, and as I said, 60% of the volume accredited distributors, which is providing a very positive outlook for our lubricant business. And based on these 2 businesses, we have built a strategy in terms of having a multi-energy platform, and that strategy has moving forward -- has been gaining shape. Last year, we had an important commitment about deliverables for efficiency. We can see that on the left-hand side.
It's strengthening the core business across the 2 businesses I just mentioned, B2B and B2C. But of course, an important work in terms of a bringing more results going forward. Number 1, the implementation of our ethanol trading company which has the potential to be the largest Brazilian ethanol trading company, this has just been approved by CADE recently, the Consumer Defense Agency. So in early July, we will be already operational and the partnership with Copersucar. Number 2, the implementation of Bem, this was approved last year. The company went into operation early February and we have the possibility of enjoying relevant growth in terms of number of stores, we can more than double in the next 2, 3 years, the number of stores, and of course our growth vectors highlight Comerc. This quarter, we also closed that operation. We have a very broad platform, 34 companies linked to Comerc working around services, energy efficiency, renewable energy trading serves an important growth platform about 2,000 megawatts for the next 2, 3 years.
So this was a very important acquisition at a moment where we have -- the free market of energy becoming more available, so this will allow us to prosper across several activities.
With ZEG, we have the first plants being developed in partnership with Vibra, so we have an agreement in place, production of biomethane is already ongoing. And EZVolt, third column, our partnership with a start-up, it's the first time we invest in a start-up, 200 or close to 300 charging points across 9 Brazilian states, so that's 3,000 Chargers-as-a-Service with partnerships with several different automakers.
BMW, for example, the car's dashboard is able to identify where you can find charging stations, you can reserve a time slot, you can use your credit card by that. So a very extraordinary possibility that we have something very, very innovative.
And lastly, our partnership which was signed this quarter with Brasil Biofuels. Specifically, was NAF taking operation where we have the possibility of trading over 500,000 cubic meters a year, including green diesel and aviation sustainable fuel. So that's a considerable part of our strategy to grow EBITDA across different businesses and through very acknowledged partnerships.
We continue to advance in terms of logistics and supplies. This is also key to foster our competitiveness, so investment in logistics, implementing our control tower, this has allowed us to reduce logistics costs. You will remember that we only had that for some of our fuels, now we have that for chemicals and aviation fuel, so across the board, and we have also captured more efficiencies. So this was part of our plan last year that adds up to BRL 90 million and our derivative trading, our byproduct, this will strengthen our leadership position.
Importing is something important and covering our needs for Brazil. So we have onshore, offshore, our product desks to mitigate the exposure to fluctuations, 800,000 cubic meters operations already accomplished under this new models starting December last year. And you can see in the chart column, showing the importance of imports vis-a-vis sales vis-a-vis gasoline and diesel supplies from December through March, those numbers are always above 80%. In January, it was 20%, almost 21%, so this is going to be very relevant for the company going forward.
When you look at the next slide. We talk about this joint venture with Copersucar for biofuels and we can capture value via synergy, our strategic rationale is also lucid there. Vibra has an extensive footprint and sale and distribution of ethanol over 3 million cubic meters in 2021. Biofuels, as you know, are attracting more attention. They are increasingly more important because of course also decarbonization efforts.
Today, we are talking about 24% of the current energy matrix as of 2030, that number should be close to 35%. So that partnership with Copersucar will bring a 100% of the parties' ethanol trading by the joint venture. No direct sales to service stations to respect best practices in terms of logistics and costs to increase competitiveness and will continue to distribute to our clients.
It's important to highlight that Copersucar, across 60 years in the market leads ethanol distribution, has the highest grinding capacity in the country and 34 plants over 91 million tons arbitration based on seasonality factors and importing anhydrous alcohol in the Northeast intercrop and exporting at strategic prices. And of course, with such a big operation, we can have more bargaining power and more liquidity in bulk purchases. We may reach 9 million cubic meters per year and with synergies coming from the combination of both companies both in long and short positions, something very close to our ESG strategy.
With LASA, we're also reporting the start of the operations in February, 2 very important agents, Vibra and LASA, so we can expand our stores 1,250 stores, as I mentioned. We're talking about 80 to 100 service station, so there is room to grow. We're talking about a partnership which is 50:50, combining the parties capabilities working with Local and BR Mania brands, neighborhood stores, so that we can speed up the number of new stores.
Just to give an idea in the first quarter, we have 12 new stores across 11 cities. We are also optimizing their profitability through market intelligence, through supply chain capacity, the idea is to increase the revenue for those stores and of course to present better value propositions to store owners. For the first time, we see operators or retailers being very, very satisfied with this partnership.
On the next slide, some of the highlights with Comerc, which was also signed in January, the last day of February actually. That strengthens our position in a market where we have a very positive potential to grow. The free market now trades 32% of the volume in Brazil. It should reach 50% in 4 years, very strong growth, 80% of our clients B2B are not part of the free market of energy. So huge opportunities there in terms of synergies and also important to highlight is the fact that this company can develop balance, so the capitalization which was initially done by Vibra will allow further expansion. It is already the largest GD company in the market with 50 gigawatts peak and they have 326 megawatt for centralized generation for large clients, and we have the possibility of multiply that by 6 throughout the next 3 years.
So that outlook, that evolution through our time is very, very exciting and can already see results. The company is growing gross income, gross profit and also increasing its EBITDA, as you can see on the right-hand side of the slide. 80% of the growth is coming from solar energy but also wind energy play an important role there. So all the energy being traded by Comerc is renewable energy and incentivized as well.
And a partnership with ZEG lastly, today there is a large report on our economic newspaper about the importance of methane. It's the fuel that has been gaining share because of its quality, because of its ability to neutralize carbon footprint. So this partnership allows us to have plants in place and generating that biomethane. We do have an advantage coming from our partnership with Copersucar, of course. We have a process in place to extract and produce biomethane from vinasse from sugarcane, so the partnership we have with Copersucar through ethanol will allow us to increase competitiveness of each of our plants. We can produce biomethane as an addition, so it's also an advantage coming from that combination.
And I'll move onto the next 2 slides, the final ones. First, I want to talk about the BBF specifically. So within our platform for production, platform for green diesel and sustainable aviation fuel, all around ESG procedures. Again, we are taking an offtake position where a 100% of the production coming from BBF and the State of Roraima in the Amazon will be used to produce HVO and sustainable aviation fuel.
We have a plant being built at the cost of BRL 2 million in the Amazon and the greater areas of the Amazon linked to the plantation of cocoa. So the idea is to recover the biome in the area with cocoa and other crops. So that's an important commitment that we have taken on concerning ESG.
And also in closing, last one, our partnership with EZVolt, a start-up. 300 charging stations across 8 Brazilian states, 3,000 plus car batteries recharge, it's the largest operator in terms of charging capability in Brazil for private fleets, a partnership with largest Americanas, EDP, BMW, as I said, several partners already signing on and it's a convertible agreement. We're going to invest BRL 5 million with a future option to acquire the operation. So Vibra will have a preference in the next funding rounds conducted by EZVolt as they expect and the option to include the brand Vibra at the charging stations. And Vibra, of course, will leverage its commercial network and we'll be able to negotiate agreements between EZVolt and major carmakers. So an outlook of growth.
It was important we thought to present all that. We announced our strategy on September 1 last year and we already shared back then the main investments. There are still things to come and we hope to have throughout the next quarters possibility to close those deals that have the necessary elements for us to meet the commitments we took on.
We have strengthened our own business. We'll continue to grow. Have increased our competitive edge. The business, core business is without a doubt the key element of our strategy. But on top of the core business and by resorting to our main assets, the main asset is our clients. 8,200 service stations, 80,000 corporate clients, 30 million clients using our service stations and that asset is being explored by each of those strategic items I've just shared with you.
So once again, thank you very much for your attention and we are now available for questions and comments that you may have.
[Operator Instructions] Our first question comes from Mr. Christian Audi.
First of all, congratulations on the results, congratulations on the great performance for outperforming your competitors, and also the clarity and transparency of your press release is very, very helpful. You give additional color to the numbers. You allow us to better understand what's happening. Thank you for that transparency.
I'd like to touch upon 3 points. First, capital allocation, we're talking about a market which is quite volatile, high inflation, foreign exchange variations. Given those variations, how do you see organic and inorganic CapEx for the year? That you -- leverage levels, are you comfortable with current net EBITDA ratio, and finally dividend payout?
number 2, margins, you continue to deliver what you had committed to. You are performing better. So I'd like to understand, as Wilson clearly said, this early year, this has been very volatile. Can you comment on the environment for Q2 and also on your ability to maintain those high level of margins you've posted in Q1? And lastly #3, as Wilson also mentioned and mentioned well the growth plan, that growth platform around several energy sources. It's very, very clear, and I'd like to understand when do you expect to share numbers on those strategies? A more quantitative take on those numbers, please.
Thank you, Chris, for your questions, for your comments. I'll just make a brief introduction and then Andre can carry on in terms of capital allocation, dividend payout and so on.
I'd just like to talk about our growth plan. Yesterday, we had our first meeting with our new Board of Directors, and later in the month, the last Friday of the month, we'll have our first formal Board meeting. So just to be sure about the growth plan, of course most of the transactions happened throughout Q1 of 2022 as we start working with them, Copersucar and we also finalized the agreement with Comerc and EZVolt, the off-taking. This is all first steps. Several transactions unfolding now. But we understand that given the commitment we had taken on that this set of strategies will generate additional results on top of our core business results. Based on that, our team will dedicate time and work so that every quarter, you'll have evidence of the growth coming from those joint ventures, it'll be through the equity pickup method, of course. I like when you mention transparency. Of course, we'll be always transparent and always try to make understanding more straightforward of the business coming from those deals.
We had a commitment that at the end of the decade, 1/3 of our EBITDA would be coming from new businesses. Just as a reminder, these numbers, the specific case of Comerc IPO is BRL 1.5 billion by 2025 in EBITDA. Of course, we're going to be working towards those figures, but there is a very good potential and we share this with the market concerning the pipeline. There is a chance that that number would be even higher than that [Audio Gap] and that alone. If you look at our current EBITDA at BRL 5 billion for 12 months, we already will have a 30% increase only based on that initiative, on that transaction. Not really sure whether all the others will perform well are as well as this one, but the outlook is good. But anyway, starting next quarter, we'll have a more quantitative sharing of that information arising from those new businesses, no doubt.
Now Natal will address the volatility environment and also detailing procedures that we implemented to preserve our competitiveness. We have a executive meeting every Tuesday, where we discuss what has happened and we also discuss the outlook for the coming week and we saw an important change this quarter because of the high volatility during those meetings. But I'll turn it over to Natal.
Yes, Christian, thank you for the questions and for your feedback. Well, in your first question, I'd say the following. The world changes and we need to adapt. Of course, as you well said, volatility was quite high and that brings about several implications and it places us in a position of caution.
We had mentioned that in Q1, a few months ago, and we already mentioned the need to be cautious vis-a-vis the volatility in there in order to preserve the company's cash. And so it's important to recognize -- what we do not know what cannot be seen, so when we see those oscillations in foreign exchange and brand prices, shortage across the globe, so we expected a scenario that could require additional working capital. So all of that, just as before, before the pandemic, we did not know the depth of the pandemic but we reinforced the company's cash at that time to preserve liquidity and to avoid missing out on important opportunities or even avoiding more drastic measures.
Right now, there is no liquidity restriction in the market as a whole. We have ample access to credit and we resorted to that access to credit. We went to market and we raised more resources since the problem in Ukraine and Russia. So we reinforced the company's liquidity, limiting dividends in order to preserve cash and preserve our leverage level. We also have built some stock in our buyback position. Our treasury is an important shareholder as is, but we interrupted that to preserve liquidity so we wouldn't run the risk of down the road having to raise more money or to bridge our leverage level to keep the company going. So that would be a bad allocation of capital. But thinking in the long run, the mentality of the mindset is the same.
We understand the current situation as structural and given the current structure, we are in a position of wait and see, if I may. We saw some relief in terms of working capital because of imports, where we have longer payment terms. But looking in the long run, we have that allocation out of all the cash to be allocated across organic, inorganic and return to shareholders, we understand that by 2026, give or take, we should be allocating half in today's business. CapEx and organic and structure and so on, part of it, smaller, about 20% most of that has been executed. I'm talking about transactions, we did to create the new growth avenues that Multi Energy platform, which we also mentioned and the remaining 30%-35% would be allocated to dividend payout in this period for 5 years.
That's a long-term allocation, that's the mindset that hasn't changed because of the current scenario. But in the short run, we need to react to the situation and that requires some caution now. At the end of the day the conception of working capital was not as large as it could have been, so we maintain a very robust cash level. So cash level is not a concern now, but that may change quickly. So that's why we are monitoring the global dynamics and being more cautious about it.
As for your second question about the start of the second quarter, Q2, I'd say that this new environment of high volatility, it brings about several implications. So it's good to look in the longer run. So in this early window, if I may, we had a very good performance despite all challenges. We were able to navigate this quite well, but still we think that because of the volatility in place, we do have a chance to continue to perform well because of the higher scale, higher appetite, a higher capacity to accommodate those risks brought about by volatility. So throughout April, for example, we saw a similar scenario. We're not as high as last quarter, but still with margins above level than expected and as we showed and we wrote about in our release, we expect that that stock will be carried over to the second quarter. You need to wait and see what the price there and then to continue the same in the next half of the year. But so far so good. The path has been positive in terms of margins as a whole.
May, the month of May is not that different, maybe slightly lower than April, but still very positive when compared to our forecast. So if everything remains constant or give or take or constant, we do not anticipate any structural reason for us not to reach our targets and the targets are similar to the -- for the analyst forecasts, right. We are converging in terms of margins of what we think and what you think and we are going after the same objective. No major surprises. This is a complement.
We have self-imposed levels of leverage at 2.5 net debt to EBITDA and we are now at 2.1. So it's important to say that a good portion of our strategy was focused on creating a multi energy platform that would allow us to work or to move ahead gradually. We need to be there for when the energy transition happens.
The largest deal, which was with Comerc, that's being done and all the other transactions will have demand for CapEx for those transactions as the energy transition unfolds. So we can be very gradual along those lines. So the main inorganic CapEx investments have already been made. So this will allow us to continue to invest half of our cash generation in our core business and we continue signaling to pay our shareholders back well and will soon share more on that.
Congratulations on the numbers.
Our next question comes from Bruno Montanari.
Congratulations, as Christian said. Your release is quite straightforward, quite objective, thank you for that. Number one question, volatility. Can I say that distribution market is going through a different change, different prices between national and imported and if the old proxy had, is not going through a simpler system or have a more detailed hedging, the transfer of pricing is more simpler now? The second question, how can this new market configuration affect traders that choose not import now? Does Vibra expect to gain a more market share now going forward, given that those numbers seem to be going up? And if I may, my third question about the invested capital, in addition to the price dynamics, is there any way in which part of the capital will be sent back -- will be going back to the company to improve the return on invested capital?
I'll give it straight to Natal, all questions have to do with finance. But in terms of the price dynamics, your third question, it's only natural given the increase and then increase in the cost of operation, because of the hike and brent prices. We need to have margins that are compatible with the capital we invested. So it's only natural to see that happening. And we have shown in the quarter that this is the case here, but we have managed to bring margin results that are once again compatible with the higher cost of invested capital. Thank you for your feedback, for your questions.
So, as for your first point, I'd say that I agree with the dynamics you have described. I would then call it structural. I do not think it's a structural change. I think this will be recurring going forward. And I'm talking about a long-term. If we talk about months, anything can happen, right. If tensions escalate in Ukraine, we could have a scenario where brent prices would suffer even more and that could generate a longer period of domestic prices converging towards international prices, but it's difficult to anticipate that. So the point is when the world changes, we need to react. We cannot do things as we've done because it won't work and this has proven to be right. This industry worked the same for decades and then in 2016 everything changed and the companies that did not adapt, lost. And there were important changes now in this last quarter, for example, and I think that what you said is, what we did.
We thought that the fundamentals that would justify the positions that we used to do were no longer present. Until recently imports -- economic imports based on opportunity -- opportunity import, you have a choice, you have an option, you can source either more from abroad, more from domestic. There was a possible connection between those 2 options and that option was made looking for larger savings, right. So the hedge that we had was basically a way for us to lock that positive arbitration, which was received in imports. That was the case when that was happening. But now -- what we have now is imports that come into supply, right? It is a necessary supply coming in. It's not a choice, not an option, it is the only way to supply or to meet the current demand. But of course, in a context where there is no arbitration, BRL 2,000 in cubic meters for diesel, so negative arbitration actually -- very negative actually.
So we began to understand that, well, the reason -- the driver for imports has changed. The arbitration that we had using the derivatives that we used to in the past is also no longer present. The correlation between domestic and international prices is also no longer making sense. So the hedge instruments are no longer valid because there is a scenario in which the international price should be going down and the domestic price still needs to hedge up, so that correlation no longer makes sense either.
And lastly, there is an issue that we have a war going on, which affects the price of our products, the products that we buy. And we understood that it would be a bad idea to be short in derivatives in a commodity which is exposed to spikes because of the war and there is no limit for that, and we see a very restricted scenario right now which could lead us to a short squeeze. So we understood that we should gradually throughout the quarter, to reduce exposure, we started working with stop loss mechanisms. The next part of our process to be hedged for the first $30 spike was may impact we suffered, but after that we changed and we reduced the pressures.
Looking back that decision so far has proven to be the right one. We have avoided losses of hundreds of millions, if we had maintained normal course, business as usual. So the decision has proven to be consistent and positive. Not only because it worked, but consistent because it's also based on the fundamentals. Some of the fundamentals, as I said were, no longer present. But I do not think that -- and I agree with you, the hedge was hedged for the price and the market was short, and with that you are able to transfer that cost on to the market. So the hedging instrument loses its purpose, right.
Having said that, I do not think this is a long-term issue. It's a more structural issue. And as soon as tensions diminish in Europe, we will see margins resuming past levels. So we should go back to reconsidering that local supply will have prices close to the parity price and with that we should resume our hedging mechanisms.
As for the other question about the independent traders, this environment of high volatility creates difficulties for independent traders for them to go abroad and bring a low. We did not have a sharp position that will severs us in Brazil. They won't have a network of clients to buy that. So they take a lot of risk by bringing in a single load. Maybe you did it on a day where the price was $130 and then come to Brazil and you have to find a buyer for that at a price a week later. So for us, we bought several vessels a month and we have the whole of the country to accommodate those fluctuations. We have different prices of different vessels. We are in a better position. So it is riskier, but it's a lot riskier for independent traders. So -- and we believe that to be true and that led independent traders away from this market. And that of course brings about opportunities for us and other larger distributing companies as well.
If this will become a market share, I don't know, this will depend on how this will be translated into delta margin or delta share. And so the market share dynamics is also very volatile and dependent on the fluctuation of suppliers. You have to have the right product in the right place at the right time, unlike what happens in "normal times". Our market share is very linear, very flat. But for the past month, this has been different. We gained in February then we lost in March.
None of that had to do with our ability to attract interest for our -- by the proposition we had to do with the supply dynamics which became more complex of course because the delta prices across competitors is much more asymmetrical, more volatile. So we have lower demand here and higher demand there. So you may have an average stock which is operational but not across the board. But we do think given enough time, we should be operating at larger or higher than usual margins and still maintaining competitive market share, but it's difficult to anticipate that dynamics and about invested capital return to investment capital.
What we think is important to say is that we should have all those levers in hand to be able to manipulate the mass fund changes. We need to adapt to the way the world changes. There will be moments where it would make sense for us to return as much capital into the company as possible, others where we'd be buying back more, so this will vary. We could even understand that it makes sense to invest that capital in our new companies which have interesting pipelines of products, so this should have to be analyzed on a case-by-case basis. There is unique answer for that.
For now, we are allocating capital on those companies because they have a very large ramp-up going forward, but they all offer interesting opportunities. So for now, we do not see as a prerogative to pay out larger dividends. This of course might be an option if the scenario changes, as I said.
Our next question comes from [ Moniki Greco ]
Congratulations on the numbers. Very robust amidst such a volatile quarter. I have 2 questions. Number one, in terms of higher tensions in the war. There is a growing risk of an additional need for working capital in the short run. When you import, you take more deadline than we have here in Brazil. My question is, do you consider the possibility of trying to extend your terms internally to try and mitigate that effect? Another question is about you've had lower numbers this quarter when we compare to the competitors. Is that a reflect of not finding new businesses to bring home and how do you see that going forward, how do you plan to expand that going forward?
Starting with the last one expansion. We have been maintaining a perspective of having between 200 and 300 services stations a year in expansion. Perhaps for this quarter, because of this season, Omicron rather, Omicron variation, because of those problems perhaps we haven't found too many opportunities to expand. Maybe for this quarter, this is an off quarter in terms of that. Our value proposition is quite clear and is well recognized coming from those initiatives both in terms of imaging and also with the operation of them. Right now, at this moment, we do have an advantage. I think larger companies that have a higher supply capacity, they are more competitive, they have the capacity as well, and we have been cautious and prudent, and the idea is to grow gradually as it was said that's important.
As for the war, just a comment. That volatility environment, it supports us and working on improving our work processes. It's not for nothing that we have presented all those deliverables. The team was put under important stress and the team reacted very creatively, very intelligently, as Natal said, based on fundamentals. There was an important analysis process in terms of adjusting our processes so that we could maintain the same perspective. We needed to understand all the variables and that's coming from our strategy, so that we could share new procedures with our network, and that's why we managed to reach the results. I'll give the floor over to Natal to talk about working capital. Working capital is a challenge no doubt. So what can you think about it?
Thank you, Moniki, for your question and for your feedback. That's an important point that you raise. We do have a consumption of working capital as you can see in our numbers for the quarter and still we cannot anticipate whether we might need more than that or not. We were at your conference actually last week and we've seen an increasing concern on part of investors trying to understand that this whole balance will be even more restricted going forward. Spreads are too higher, as you know, and they are above historical levels and there is no ceiling for that, given all the sanctions.
Having said that, I think we have been doing all the things I've mentioned before in trying to preserve liquidity. We do have a robust cash, as I said. I think we have, as we call it, a war chest which is reasonable for us to face additional oil price increases, but you've touched upon an important point. Today, we have as an alternative to use our risk for withdrawals, which is where you have a quick spike in oil and diesel prices. We might have an urgent need and then we cannot structure a debenture or something like that fast enough to face a spike. That will take a few months to put together. So we do need to have some quick responses ready, and we have been developing that.
One thing we did was the ability to use our withdrawals risk. We did that last year. It was an operation which we have been pre-authorized by the Board to use that as a bridge for them to restructure a more robust funding, but we do have the possibility of using their withdrawal risk.
Petrobras receives the cash immediately and then we use the terms offered by the banks, but we have not been able to do that for Petrobras because they have this historical restriction in the past that prevented Petrobras from differentiate rates. So they need -- they end up having a higher level of rates which do not link to the level of risk that we do at Vibra. So it makes no sense for us to have the same level of risk as a smaller company, right? So that's why that was not an option for us, but we thought about that could be the case. There is no regulatory impediment for that. That's something we could think about doing.
That would be a very good option for capital allocation for them as well, especially when we talk about AAA clients, plus we can have larger payment terms and not using the urgent withdrawal risk. Also we have relationship with several banks, international banks, multiple banks. Our greatest creditor today is an international bank and we have developed partnerships where we have a pre-approved credit. So there is appetite for them to offer us credit at competitive costs, so we can do that at very fast and cheap way. So that's also an option. So if we do not have that credit line through supplier, we can execute that as well. We've done it before using bilateral negotiations with certain banks. So that has to be part of a larger portfolio of options. So we do not put all the eggs on the same basket in terms of funding.
And in terms of expansions, of course there is the seasonality issue. If you look at our track record, we have for 2 consecutive years been positioning ourselves ahead of the industry. We were more accelerated than the industry itself. In this quarter, given the volatility, given the dynamic, we focused more on operations, hedging. We focused on operating well in a more difficult environment. It was a different quarter because of that, but it also made clear the advantages of our value proposition of being associated with a large distributing company. And because of this more turbulent context, we're able to enter into good deals which will unfold in the next quarter. So we don't look at this as an isolated symptom. So the attraction is there, return rates are high, so we think we are on track to be able to reach our growth objectives.
Our next question comes from Mr. Vicente Falanga.
Very good once again, as it was said, for us to have all those details in the release. 2 questions, about the first interactions with the new Board, this new Board of Director, well qualified Board, what do you think they can bring to the company, to the table, what they can add to the company in terms of qualifications? And also, I'd like to understand the dynamics around the refineries vis-a-vis imports when your relationship with Petros, what impact you've seen in the services stations?
Thank you, Vicente, for your questions and for your feedbacks. Well, we had very, very few interactions, actually one, the answer to the first one with the new Board. But interactions have been very positive. When you look at Sergio's leadership position, very quickly put together committees, we have already put together with him an onboarding process for the whole Board, so they do have executive experience which is relevant, and this will make our decision-making process more expedited in terms of execution.
In terms of ESG, we have recently brought in a work with Accenture so that we could put together an agenda to discuss with the Board around ESG. We do have some Board members who are clearly experienced and that I could mention, but not limiting to, but I could mention Walter Schalka, Ana Toni, the experience that they have in ESG is quite important.
So we'll be in a position to advance that agenda. Of course, the Chairman, of course, also an important person. In any event, they put together committees, we have an agenda for them. We'll have a meeting the last Friday of the month with them. So we are moving fast to have a higher level of understanding of our business on their side. Especially when we talk about financial volatility, we will have good contributions coming for them. They have lived through similar experiences in other industries and they'll be able to share all of that with us. It's a very senior Board, which will be able to provide important contributions, specifically around new topics that require more experience. ESG would be a case in point, environmental, social governance. People would be able to contribute greatly. They do add a lot of value to the company because of their experience. I think the decision during the shareholders' meeting was unanimous, right, in terms of validating the slate. So investors and shareholders are placing their bets on this new Board as well. I'm very optimistic.
In the afternoon, we'll will have a meeting with Rial, who will be introducing himself to our executive. So they are very fast, quick to response, so great contributions moving forward with this new Board. And I'll ask Natal to address the second question.
Thank you for your question, for your feedback. For obvious reasons about price, we have been trying to get the highest volume we can from Petrobras and that's true for any player. It makes economic sense to do that. But of course, when Petrobras look at quotas, definitions to look at our history, seasonally in 2019, we became the largest importer in Brazil. Of course, they cannot meet our orders. We'd like to buy 100% from local refiners, but that's not possible now. So even with an increase in foot, the foot going up does not change the relative proportions. It increases the whole amount, but the demand is also growing.
So proportionately, it does not change the vision of the whole amount. It is the same. So we work not to lose our relative positions. We do not want to be at a worse place than we were before in terms of accessing local supply, but the elevation of the foot does not necessarily translate into different percentages, different shares because shares of the whole amount because the market demand is also growing, but the idea is to have 20% of our gasoline outsourcing in the international market, around 20%. But when we have independent players, not important right now, we think we have a favorable position to transferring those delta costs on and still remaining in a comfortable position in the market. We have actually been feeling higher than expected demand for our products.
[Operator Instructions] Next question is from Mr. Marcelo Gumiero.
Thank you for your numbers, for transparency. Several questions have been answered and I have one final actually on my end here about the price dynamics. As you mentioned, about 20% of your supply is coming from imports, 20%. So if we think that a 100% of the price at the pump, if it were to convert to the parity level, the returns would be very high. Of course, that's not necessarily true given that oftentimes the difference in parity reached something close to BRL 1,000 per cubic meters. So how do you see the transfer of costs going forward at the pump? Does that transfer -- is that transfer happening in some cities and others, in some geographies and others? Is it happening across the country, taking into account on a weighted average of import and domestic prices? So how do you see transferring that prices at the pump level?
Thank you for your feedback, for your question. I think that's an important and interesting question. Has been raising a lot of discussion, a very rich discussion actually. What you said is true. It doesn't make sense for us to think that the price at the pump will be the PPI, the parity price. The cost of companies, for companies is not around PPI. The balance price will not be given by the price of the last barrel when you have such a relevant price of supply being sold at a price which is divergent because of the discount of Petrobras.
This would only be true if you had exclusive access to a certain player. That could have a cheaper price or cheaper sourcing, but only you, only that player, so that player would be in a good position to price across like everybody else and all that delta would be coming margin for them. But that would only be true, if you only had one player. It's not the case. What happens is that all the players are buying everything they can from Petrobras, and they are having something around that level of discount 20% or 15%, 20% give or take, coming from the local discounted supply. So when everybody has access to that discount, that discount will be set all the way down to the pump, to the consumer.
If you think 2016, '17, 2018, when importers had access to discounted imports, it was inverted situation. The imports were discounted back then. At that time that and those moments, that amount did not become margins for those players. All that cost delta which could have become margins, additional margin for the players, that did not happen. It became a discount at the pump. The pump price was disconnected, right, but they gained share but not margins. The marginal cost at the time was coming from the import. The higher cost player was Vibra or BR Distribuidora at the time. They did not import at a time and 100% of its raw materials coming from Petrobras at a much higher price and the market did not base itself on Petrobras' prices. The pump price reflected the discounted imported price.
The same will happen now. It is easy to see that by the numbers, that discount in this will reach BRL 2,000 per cubic meter when compared import and domestic. If you think that our margins are BRL 125, if we were pricing by PPI, our margins would be BRL 1,600 that of course did not happen and will not happen. And it won't also be linked to Petrobras' prices. Because if it does, nobody will be able to import that product. So as players bring sourcing from imports, they will have higher margins but they won't have extraordinary margins. The margins will accommodate that price and that transfer. And of course, this will reach the pump. That's what we believe.
And in terms of geographies, as you asked, we do believe that usually that transfer and this was important to see we increased the frequency of our monitoring of pump prices to make sure we were not being mismatched in some geographies because the difference was such that we would need to increase BRL 500 in one geography and not in other, and that of course could generate very large asymmetry. So we are watching that more closely. And what we realized was that market started to reflect the fair price for that market. So if they have a market where it was half and half imports in domestic, that price went up at the same proportion, give or take, following a rationale of local adjustments at different geographies, not exactly that but that's the best approach, best proxy I could share with you.
Our next question from Mr. Gabriel Barra.
I'll repeat what my colleague said, important results in a very complicated scenario and your release is an example to be followed. I'll try to touch upon a few points. The main question have been answered, but 3 things I'd like to comment.
Number one, you talk about imports. One of the main things I'd like to ask about is about strategy. When you take into consideration the short you have in the market, the short position, the opportunities you have, how to choose between not taking on risks in import and only supply your own network or increase your market share in the local market. Where would be that balanced point in your strategy? And if you could talk about the different scenarios when we look back to Petrobras, in the past, in moments where there was no buffer and negative margins, if you could talk about your strategies, will help us understand how the rest of the year would unfold in terms of price policies?
And 2 things about the new businesses. In terms of Comerc, 2 short-term opportunities, especially about service stations, in selling energy to stations and expansion of your own stations. So that seems to be a great opportunity. How to execute that opportunity? How do you plan on exploring those synergies with Comerc?
And lastly about Copersucar, one of the things you mentioned about your bargaining power in purchases and you're dealing with a cooperative here, right, Copersucar. Have you already designed that purchase model within the group and how to explore those synergies as well in terms of pricing as well and you are investing a lot in pricing? So how to explore those synergies?
Thank you for your questions and thank you for your feedback as well. As for the first one, that's an interesting discussion. We've had somehow as we are now going to the external markets and bringing products at a higher price than average in Brazil, the question remains why to do that? Why are we doing that? Why not stick to a larger unit margin? Why? So our answer is the following.
First off, we need to say that our contract with our clients, we have B2C and B2B clients. We have agreements of exclusivity. It makes no sense for us to have exclusivity agreements and then not have the products to serve or service those clients, that's an important point. So that would not be a reasonable strategy from that standpoint. That strategy could maximize, I don't know, margins or not, but the idea that we could capture additional margins going that line, it hurts our long-term vision, because in the long-term, the business lies on good reliable relationships with our clients. That is also true for the non-contracted clients. It's also a market which is interesting, even though it's -- of course it's a spot opportunity market, but it is a very relevant market in Brazil. It is a market from where we capture clients for our contracted arm.
So if we turn our backs on that market, we will lose competitiveness in the mid to the long run, so that's also not a good strategy. Of course, we have to make our hard choices between choosing who to service. Of course, we will always prioritize our network for obvious reasons, right. They carry our brands at the end of the day. But it's not a good idea either for us to forget about the market. And the fact that we import at a higher price than the average Brazilian price, that does not mean that we are losing money by doing that. It's quite the opposite. We've had enough conditions to transfer that prices down the road. It's difficult to isolate the molecule which was imported from the molecule which was domestically purchased. We cannot do that.
But our sourcing is a compositive of higher and lower price molecules and that delta is thoroughly transferred onto our prices and it's more than offset the lower margins. We do not think we would be making more money. We do not think that our absolute EBITDA would be higher if we were working with a higher unit margin and a lower volume. Not to mention, all the other new ones that I mentioned. We are building a pathway to bring those clients on board to occupy a larger space in the market. Whether or not we're going to increase our share, that's left to be observed. It has been more volatile because of a higher dependence on imports, of a higher uncertainty level. That's another nuance. That's a challenge of maintaining a stable margin. But anyway, I think we are on the right track in terms of serving those markets by importing, so that's what you can expect from us to follow along the same path.
Well, when we put together a strategy, you have to have a long-term view. Volatility is an opportunity for us to improve processes and so on and of course, navigate amidst volatility, which is difficult. But when you define a strategy and, as Natal said, what happened in 2016 when we had Petrobras operating at a higher level than imports, we had a growth in that independent front. But now because of higher competitiveness, maybe we may -- we don't know what's going to happen with each one of those players, but we might have an opportunity to consolidate more going forward. But I would say, objectively, that strategy is also always based on long-term view and that's the path we are following.
When you look at new businesses, Comerc as you mentioned, we already have a commitment in place that Vibra and all its operations will be using renewable energy and migrate to the free market. Our 8,200 services stations, out of them 900 of them are being serviced by free client traders or distributed energy. You know that distributed generation, you need to have the condominiums in the same concession area. So the strategy we're putting together clearly leverages our resellers. They can already share that potential of clients that may receive either energy from Comerc or from the free market. Our intention is that they also become more competitive and more renewable, if I may, as we offer that platform across those 8,200 service stations. So they'll have cleaner energy at a more competitive prices, no doubt.
As for Copersucar, as you said, we are putting together a platform and a platform like this one intends to increase competitiveness for ethanol. We'll have a share of 60% in this platform. For that platform to be profitable, it cannot simply be a process to generate sales here and a purchase there. It is the combination of the 9 million cubic meters, the combination of that volume being operated from the platform that will generate higher competitiveness and we are 50:50 partner. So it is interesting for us to reach that margin, and now those value levers are interesting as well.
So that platform is already being borne, where 60% of its volume is coming from Copersucar selling and Vibra buying. But we'll have more volume coming from other suppliers and then we'll have more competition and then better prices for the platform to reach its desired margins. And this of course, at the end of the day generates competitiveness for those buying as well. So it's a process that depends on competition. So an encouragement being put in place in terms of having the participation of several players.
When I talked about ZEG, when I tried to generate more competitiveness at the plant level by generating more methane, biomethane, it's also the same rationale. So looking from an ESG perspective, ethanol has a growing role to play in the Brazilian mobility matrix. It can be more competitive and platforms such as this help do just that and partnerships with ZEG also help us do just that.
Ethanol is already the #2 fuel in the world and will continue to be so, and it's a Brazilian example to the world. When you look at the emission numbers per mile, it's very favorable right. We rank amongst the lowest emitting countries in the world.
In terms of the ethanol traders, it's important to say that the scale for that player will be higher than Copersucar's long position and much longer than our short position individually, Vibra's short position. So when that scale increases, this will generate a higher possibility to optimize our logistic efficiency, but there are other synergies to be captured and also would increase a higher bargaining pie, because the sourcing from that trading will come from other companies, not only Copersucar but other plants. So a higher scale increases our bargaining power as well.
And of course, deals will be made on market basis. There is no expectation of having a direct transference of value of revenue across shareholders. No, it's quite the opposite. It'll be market-based. But that trading company will have a high enough volume to do that and that's what got our attention early on. It leads to a higher intelligence, a more positive combination of businesses for us to be more efficient at what we do. We work with ethanol, we do arbitrations, Copersucar does that as well. But we are doing that isolatedly. When we join forces, we combine forces, we'll have a higher level of expertise, and that's where the optimization is coming from. There is no revenue transfer across companies, just to be sure.
Our next question from Mr. Bruno Amorim.
I'd like to go back to the industry's ROIC dynamics. Working capital has been growing, as you said, to maintain the ROIC. The industry should increase margins in a context which is difficult because they have higher gasoline prices which might lead to a migration to ethanol where margins are lower, an increase in CBIOs, low growth in volumes. And the other lower players might suffer more. So the question is how to recover ROIC in this scenario? Where do you see other players in that respect? Before that pressure on working capital, the consensus was a margins at around BRL 122 per cubic meter for Vibra that was what happened in Q1. Do you expect the recurring margins way above that for the next 12 months?
Thank you, Bruno for your feedback and your question. You are right, the capital invested in this business needs to go up when Brent goes up. We are naturally hedged. We buy a product and sell the same product, so the level of the Brent does not in principle affect us, but those are one-time effects mainly. But when you look at the scenario, the level of the Brent price, it does not make a difference or it does make a difference if you see -- if the Brent is too high, you should be seeing a higher margins. But I'd say the following: the rationale is right, and this is happening right now.
Just as Brent went up, they hold dynamics around competitiveness or difficulties in importing or smaller players suffering more and so on, as you mentioned. So this will generate a competitive dynamics which will affect margins. Margins are slightly higher than we expected for the year. Of course, when you look at a quarter like this one, Q1 where we saw important movements, margins by now -- everybody has announced the results and margins contracted a bit, which points to the effects of that volatility, hedging positions and so on, inventory positions, a series of possible obstacles along the way.
But if you clean up those effects, if you will, and think about something more recurrent, within that dynamic, if you think what's underlying, that margin is slightly lower than historical levels -- sorry, higher than historical levels. If you keep everything else constant, you will see a less effect coming from those other issues. And of course, in April, we do have a price variation happening. So we've continued to see some noise around that dynamic. But if you look through them, you will see that those margins are once again slightly higher than historical levels.
Do we expect them to be much higher? No. working capital is not that much higher either, slightly higher. You're importing more longer terms, but there is a sort of balance in that. But the trend is if we keep everything else constant, if we have the same volatility level we have now, but without nonrecurring effects, we will see margins which will be slightly higher than expected, and this should last only until a point where we have a more competitive scenario, putting pressure on supply and at the same time a higher restriction on supply.
So those 2 things should walk hand in hand. So when we see one happening, the other will happen as well. So and that would allow the ROIC to unfold at the same level. The level of returns will be given by the competition levels, and this will be in line with what we had in the past, close to the limit. But a lot of emotion going forward, no doubt.
Our next question, Mr. Rodolfo De Angele.
I'll echo my colleagues and congratulate you on your transparency. Very straightforward release. It was a very complex quarter and investors will appreciate that. I hope that reflects on your share prices. 2 questions. I'm the last one in line, I think. First, a question around strategy. You have delivered several initiatives. You have started several businesses, Copersucar, Comerc and others around this new multi-energy platform. So the question is, now looking forward, is there a piece of the puzzle still missing or do you intend to address all those initiatives now to make sure all those business will fulfill their potential?
Number 2, very interesting to talk about import vis-a-vis domestic BPI sourcing. Just to wrap up the subject, I'd like to know in practical terms, where does the sourcing of fuels, what's the status of this right now in practice? Are you comfortable that you can access those markets and that you are going to be able to source whatever you need? Is there a risk, is there a limit in terms of pricing when you compare domestic imports?
Thank you, Rodolfo. In terms of strategy, of course the platform based on what we had anticipated, there is a piece missing, liquefied gas. When we designed the operation, we thought about that. We continue to talk about it. The New Fortress deal is a piece of the puzzle and 90% of our consumers, they are not being serviced by a natural gas distributor. So especially for LNG, low-scale LNG, liquefied natural gas, we do have an advantage in terms of logistics, in terms of relationship with clients. That's something that we still see lacking in the market and we believe we can provide that.
But if you look from the standpoint of deals and businesses, they all start generating results now. We're talking about a 9 million cubic meter trading, which of course will be generating numbers now. It's an investment in working capital that we do, but we will see results in the coming quarters, and the same thing goes for Vem. Vem will start operating now and we will see those 1,200 stores providing their results now.
The more eloquent result will come from Comerc, of course. It is operational company. They do have assets. They have clients 3,700 clients, they are working together with Targus. So it is a regular ongoing operational company, and it will have an important growth pipeline. 90% of the pipeline of 2,000 megawatts which is under construction has long-term PPAs, 15 years bagged to inflation or foreign exchange rates. So each one of those businesses, starting in the next quarter, they will be producing results. And as I said earlier today, we'll soon have quantitative results to share with you, with the market where the market can understand the share provided by each one of those businesses.
So this could be the missing piece of the puzzle, right? We are assessing opportunities, but we do believe that very soon we need to have something along those lines. We always asked about hydrogen, but that's a fuel that it's a longer-term study. Once it is generated by renewable energy, it'll also be produced by our platform. Natal?
Thank you. In terms of sourcing, we have been doing a couple of things. Number one, we have expanded volume. We have imported substantially more than we did before. We try to diversify sources. I'm not going to break it down because of competitive reasons of course, but we have been accessing several geographies that we didn't used to before. But it became a need because of this restriction, because of a tighter market with higher spreads and so on.
So for us, we started to diversify our geographies because of that. We are now exploring at least 4 geographies to source those products. But whether or not we are reassured, now we are never assured. We're never comfortable. We're always trying to avoid disruptors. That's mandatory for us, so we're always trying to find conditions to have access to products. Of course, things could take a turn for the worse because of the shortage that we have globally. But for now, we do not see a risk.
We're also working around strengthening our shipping area, which has provided us with access to a new pool of potential suppliers. And if we have a shipping area now, we are able to access FOB loads, which are much more flexible. It's an important counterpart for volatility. If you are flexible against volatility, that could be an advantageous position, we can change ports, change arbitration geographies. So as I said, we have more flexibility and have a larger pool of suppliers to tap. So that was a way for us to deal with this movement. So it's not a moment to be reassured, far from it. It's a moment for us to be paying close attention in terms of where to bring those products and we're doing that for our clients. So for now, we are comfortable, but not reassured. It is a challenging moment, and we are facing those challenges using the measures I have listed here today and of course, we're hoping for a less restricted market.
Thank you. The Q&A session is now over. I'd like now to turn the floor back over to Mr. Ferreira, the company's CEO for his final remarks. Please, Mr. Ferreira.
Well, thank you, everyone, for your participation in our earnings call. Thank you for the questions, the comments. It's a relief for us to reach the end of a quarter as volatile such as this with the results we were able to share with you today. A lot of work went into it, of course. I would like to acknowledge the work of you all, your analysts, the quality of your reports is also very helpful. So the idea was to provide you with the release that would help you understand the company, understand the numbers, the results and the outlook. So it is with great satisfaction that I receive your feedback for that.
And as I said, we are now in Q2, where we will have the same level of volatility as we had in Q1, especially with the war going still going on. And as Natal just said, it is a moment where we still have volatility, so we need to be paying close attention. The perception that something may have different implications, that's something we have and we'd like to have across our executive team and across the whole team. It's perception that things may change and to feel the pulse of our retailers, consumers, all of that has to contribute for us to improve our value proposition in an environment of high volatility. That's our current effort. In addition of course, to pursuing complementary deals in addition to our core business as we presented earlier today.
So once again thank you, everyone, for your attention and we are committed to the level of attention you have devoted to us. So we are alert, paying attention and ready to react to actions in a timely manner. And the idea is to, once again, be always here to share our numbers, our strategy. So once again thank you, and have a nice day.
Vibra's video conference is now over. Thank you all for participating and have a great day everyone.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]