Good morning, everyone, and welcome to Earnings Result Call for Hidrovias do Brasil for the First Quarter 2025. Today we have with us Mr. Fabio Schettino, the CEO; André Hachem, the CFO and the IRO; and Gabriela Colus, Treasury Management and Investor Relations. This event is being recorded and will be available at the IR side of the company. After the company's comments, there will be a question and answer session, at which time further instructions will be provided. We have the simultaneous translation available on the platform. Click on the interpretation icon at the bottom of the screen and choose the language of your choice. Before continuing, the forward-looking statements are based on the beliefs and assumptions of the management and are based on current information. These may involve risks and uncertainties, as they refer to future events and therefore depend on circumstances which may or may not occur.
Investors and analysts should keep in mind that events related to the macroeconomic scenario and other factors could cause results to differ materially from those expressed in the forward-looking statements. Having said that, I would like to turn the floor over to Mr. Fabio Schettino, who will begin the presentation.
Good morning, everybody, and thank you for attending our call for the first quarter 2025. If we could go on to slide number four, please, to begin the presentation and refer to the highlights of the quarter. We began 2024 with normalized navigation conditions in the North and South Corridors. In the Southern Corridor, this is due to heavier rainfall and the progress in dredging and rock removal activities we mentioned in past quarters. In the north, we had normalized navigation conditions with operations faster than we had foreseen, and we had a more positive tariff adjustment.
The soybean harvest had a delay of some weeks, causing a drop in volume, especially in January, offset with positive tariff adjustments. Even with that delay of coming into operation in the first quarter in January, the company remained as an important player to receive grains in Imbituba and in Barcarena. In the Southern Corridor, the message is very positive. We returned to the operation outside of low water with iron ore within the quantities expected for the period. Once again, we did have progress in dredging and rock removal activities. With the levels observed in this quarter, we would not have been able to maintain the navigable conditions we observed in this quarter, so we had better conditions with the same levels of water. We still have significant work for this year and the coming year. We're confident in creating more stable and resilient navigability for the Southern Corridor.
We go on to the operation of the Port of Santos. We had volumes that were higher in the first quarter because of the start of the salt operations and other operations to fully capture the installed capacity we have at our terminal. In February, we announced the sale of our coastal navigation for bauxite to Norsul. This operation is geared towards optimizing our portfolio, allowing us to concentrate our efforts in more strategic issues for the company. 2025 is the beginning of a new Hidrovias, with a sounder capital structure, one that is lighter, more adequate, enabling us to resume our growth projects.
We are at the end of our capital increase, which is very public, and we will expand the capacity of the North Corridor, contributing to having a more sound logistic corridor in the country, reinforcing financial discipline and adding value to the shareholders. We go on to slide number six, where I would like to speak about our achievements in sustainability for the period. We went to a better score in CDP, improving from C in 2023 to B in 2024, strengthening the company's environmental and climate management to create a more sustainable and resilient economy in the areas where we operate. We also have the Irupê project that uses AI to predict climate conditions. Because of the climate problems we have faced with the water crisis, we won the prize in the IT Forum.
Having said this, I would like to turn over the floor to André Hachem, our CFO, who will speak about our business units.
Thank you, Fabio, and a good day to all of you. Before we begin, I would like to highlight some changes in our results, especially the way we present EBITDA and leverage. We are applying concepts that are better aligned with market practices to allow for a more precise and clear reading of our results. Everything is clearly pointed out in the release, and of course, our IR team is available to clarify your doubts. Now, this is all presented in a pro forma way, and the classification of cabotage has been discontinued after the sale of the coastal shipping. We begin in slide number nine with the results of the North Corridor.
In the first quarter, we moved 1.8 million tons, 11% lower than in the first quarter of 2024, because of the delay in the soybean harvest, but resuming navigable conditions. Despite that drop in volume, we offset this effect, and we had BRL 246 million for the quarter, 4% less than the first quarter in 2024. Recurring adjusted EBITDA new concept was BRL 152 million, 6% less than in the first quarter of 2024. Looking towards the second quarter, we're going to maintain the navigable conditions. We have a favorable tariff environment, and of course, the results will be displayed to the second quarter. We go on to slide nine to speak about the South Corridor. We had the best results in the history of the company. This draws because of the advances in dredging and rock removal in Paraguay River, allowing for positive navigable conditions.
Now, the logistic planning we carried out during 2024 played an important role. We positioned pushers through the waterway to be able to resume operations very quickly as soon as navigable conditions were resumed. As a result, we moved 54% more cargo vis-à-vis the first quarter of 2024, more than double what was transported in the fourth quarter of 2024. This allowed us to have a net operating revenue 44% higher than last year and recurring EBITDA of BRL 44 million. We reverted the negative results and BRL 26 million in the first quarter of 2024. Beginning this quarter, recurring adjusted EBITDA will be part of our equity results and no longer of EBITDA. If we look at the second quarter, the conditions of navigation should continue towards normalization, enhancing our results, something that is closer to the capacity of the corridor.
We go to slide number 10 to speak about coastal navigation. We have contracts devoted to the client, and based on the outlook of the company, we increased 706,000 tons of bauxite, a reduction of 13% vis-à-vis the same results last year because of the anticipation of docking of ships, which means we have to lease vehicles. We had BRL 66 million in the first quarter of 2025, a growth of 9% vis-à-vis the same period last year, positively impacted by the exchange rate. Recurring adjusted EBITDA totaled BRL 21 million, a reduction of 13% vis-à-vis the same period in the first quarter of 2024. Now, this performance is due to that anticipated docking and the additional costs related to the lease of an additional ship during that period. If we look at the second quarter of 2024, we expect results aligned with the previous quarter.
We will have the end of the docking and the resumption of operation with our own ships. We end the presentation of results on slide 11, where we speak about our Santos Port. We began the operations in the second quarter of 2024 with salt and fertilizers. We have the addition of 139,000 tons of salt, totaling 440,000 tons for the half of the year, a growth of 50% vis-à-vis the previous year. Now, the net operating revenue was BRL 34 million in the quarter vis-à-vis BRL 31 million in the first quarter of 2024. This is explained by larger volumes of salt, although we had lower volumes of fertilizer.
Recurring EBITDA was BRL 11 million in the first quarter of 2025, a reduction of 22% vis-à-vis the first quarter of 2024 because of the challenges and ramp-up of the operation, especially due to operating issues and the margins that we have captured for this asset. For the second quarter of 2025, we hope that our results will be aligned with what we had the previous year. We now go on to slide 13 to look at our consolidated results. We moved 2.4 million during the half of the year. We had BRL 555 million in the first quarter of 2025, a growth of 23% vis-à-vis the first quarter of 2024, thanks to the recovery of the Southern Corridor. Recurring adjusted EBITDA was BRL 256 million, 54% above the first quarter of 2024, and consolidated margin of 46%.
To speak about indebtedness, the leverage for the first quarter closed at 5.9 times based on net debt EBITDA criteria. Compared to the fourth quarter of 2024, this is the best leverage, but still standing at a very high level due to the carryover of the challenging results of 2024. Now, the shareholders have adopted a capital increase of up to BRL 1.2 billion at BRL 2 per share. All of these shares have been duly subscribed, and we will be creating a new share stake throughout the quarter. With this, I would like to end the presentation, and we are now at your entire disposal to respond to you r questions.
We will now go on to the question and answer session. Should you wish to pose a question, please click on the Q&A icon at the bottom of the screen and write in your question.
To ask questions through the microphone, click on raise hand. Our first question is from Fernanda Recchia from BTG. You may proceed, ma'am.
Good morning, everybody. We have two points at our end. First of all, we would like to have more detail on your project for the North Corridor. If you could give us an update on the size of the expansion you're imagining when you think about 13 million tons in 2027, with concentration of investments in 2026 and 2027. Now, if you could speak about the recycling of capital, you have concluded the sale of the coastal navigation. I would like to know if there's anything else in the pipeline that you are analyzing regarding this capital increase.
Thank you, Fernanda. Thank you for the two questions. Regarding the expansion of the North Corridor, we're going to resume our expansion agenda but have well-adjusted capital.
We're at the end of our capital increase with our shareholders. We had a significant restructuring. We hope to make all the movements because of this capital increase. After this, we can carry out more balanced studies to go back and resume our possibilities. Now, presently, we are not disclosing the details of our project. Of course, we will do this in a timely fashion. We, of course, will present this to the market. The capacity, the timing, and other important factors we will have. You should recall we are in a process of transition. We're working with a transshipment that is presently being constructed. Beginning the next year, we should begin to work with all of this ready. This is about your first question. Regarding the second question, the sale of our cabotage asset took place at the beginning of the year.
We still have not had the closing. We expect the closing in the end of the first half of the year, beginning of the second half. This will enable us to increase our fleet for other operations in the company. Now, when it comes to the sale of other assets, we have nothing planned for the time being. Should there be any development, of course, you will be made aware of it. Thank you.
Thank you. Thank you very much, André.
Our next question comes from Pedro Bruno from XP. You may proceed.
Good morning, everybody. Thank you for taking my questions. I would like to focus my question on the operations of the North Corridor and then the South Corridor to separate the operations as the capital structure, which was an important move, has already been carried out.
We're curious about the potential and looking at the leveraging if this capital adjustment will allow for this. Also, in terms of EBITDA, we see a good sign for this quarter. I would like to better understand if you could give us more granularity without guidance, of course, but what can we expect of both operations during the year in the North Corridor? Obviously, our expectation is concentrated on the fourth quarter, a change of level when we look at the performance in the last 12 months. In terms of navigation capacity, everything seems to be normalized, and the volatility during the year in the North Corridor should be diminished. I would like to know if this rationale makes sense, normalization for the full year, especially the fourth quarter. With the visibility that you can debate this.
In the South Corridor, you mentioned two factors that aided and abetted your results and surprised us: dredging and rock removal and anticipated maintenance. If for the entire year, therefore, I would like to know if this first quarter is close to that potential EBITDA level, close to $17 million when we think about the entire year, if you are forcing this possibility of navigation and capacity for this year. These are the two questions we have.
Thank you, Pedro. This is Hachem once again. First, we will speak about the South Corridor. I would like to remind you of two points. We have a rule that measures from the surface of the water to soil, and we have the draft where we can carry the barges until the ship per se.
What we saw this quarter is that based on the rule, the levels are still below the historical levels of the river, but the draft level is better than it was in past years. This is thanks to the rock removal. We had significant process in the year 2024, and in 2025, we have made significant strides in this. Along with this, we had a better cycle than we had in previous quarters. There are two factors that improve the result. A shorter cycle term, we can carry out our routes in a shorter time, and this means we can work with higher volumes. A very important point to mention has to be compared with previous years. During the drought of the fourth quarter, we had already positioned our pushers in the northern part of the river.
When the waters changed, we were very close to Corumbá, and we were able to resume our operations. This enhanced our trips at the beginning of the year, and of course, we carried out maintenance during our stopovers. We do not work with the guidance for the year. We do not offer guidance for the year. We see that the river is still not in a normal water situation. It is subnormal. The dredging will continue. It will continue this first half of the year, and our goal is to have a more perennial navigation. Basically, this is what we expect for the South Corridor. In the North Corridor, we saw that Paraná has resumed normality in terms of water levels for the north. We are very close to that figure of 50, our average for the last 20 years.
This year, we go back to that P-50 in terms of water level, much above what we saw last year, and this enables us to resume our operation. There are two important points to remember here. We had heavy rainfalls at the beginning of the year, helping us, but they did cause a delay in harvest. Now, the May's harvest still has not taken place, and what we're seeing is a displacement of the revenues from the first quarter to the second quarter. A second important point we should recall, when we look at our operation, we have an entry volume, and most of our invoicing happens during navigation.
What you're seeing here is that invoice, the entry invoice, when we look at the results in the north, what we observe is a volume that is lower, 11% lower, and there's also a 4% impact in terms of the tariff increases. We have a good outlook for volume and a much more healthy tariff environment than the one we had in previous months.
This is Fabio speaking, and the challenge, as Hachem has mentioned, is to continue to minimize the impacts of volatility or the water volatility. The results of this quarter already point to that. This is something we have mentioned continuously in the calls since 2022 when we faced the first water crisis. This began with studies of water behavior. We spoke with the authorities of Brazil and Paraguay and in dredging and rock removal. This is something that we will continue on.
Now, when you speak about a return to normality, the navigation conditions are better, better than if we had not worked with these initiatives. This will allow us to have a more predictable navigation, less subject to volatility. These initiatives have begun. They are beginning to show their effect, but they are not over. They will continue on during this year.
Thank you. Thank you very much for the answers.
Our next question comes from João Andrade from Bank of America. You may proceed. Your microphone has been activated. You may proceed.
Very well. Can you hear me?
You may proceed.
Thank you, Fabio. Thank you, Hachem. I think that new dynamic of the South Corridor has been made clear. Now, will the dredging and the work in the quays allow you to go back to a more normalized margin?
Can we see margins that are higher than the ones we saw in the past? Another question regarding the mix of products in the South Corridor. Your tariffs are much higher in the South Corridor, even in dollars. Is this due to a change in products like iron ore, or is there an atypical impact that has also led to the rise of tariffs?
Thank you for the question. This is Hachem once again. Of course, when we have a situation of drought now in the south, we have the river divided in two stretches, the north stretch and the southern stretch, one from Asunción to Nova Palmira, San Nicolas, and in the north all the way down to Corumbá. We have water restrictions, and the northern part is more difficult to navigate. This is where we have most of the impact, and this is where we take iron ore.
Now, below, we work with barges. We are transporting grain, and of course, the distance is much shorter when you have the low water effect. Remember, we have a fleet that is not being fully used. We have larger ships that are not operating, and this, of course, has a higher impact on our margin. It's more associated to mix and overhead and not tariffs per se. Now, in 2024 and in the last five years, the only river we operated properly was in 2023. In 2025, the water level is still much below what we had in 2023. We're working with dredging. When we look at 2025, our water levels do have better navigability, and the interventions have allowed us for better navigation vis-à-vis the year 2024 and 2021.
Thank you very much, Hachem. That was a very clear answer. Congratulations for your results.
With this, we would like to conclude our question and answer session today. The IR team is at your entire disposal to answer any additional question you may have. I would like to give the floor to Mr. Schettino to continue with the closing remarks. You may continue, sir.
Thank you all very much for your interest in the call. We are confident in the fundamentals, the sound fundamentals of Hidrovias. Now, the journey we have gone through seeking more regular navigability is for the Southern Corridor after 2022, the first year of the drought. We have been working diligently to work with the dredging and rock removal, and we have shown you practical results this quarter. The progress, I think, is notable, and the results we have presented this quarter point to that. Secondly, we're thinking about the future of the company, reinforcing the entrance of capital.
It will make the capital more compatible to capture growth opportunities, strongly reducing the level of leverage this year. Now, this is the combination that will enable us to go forward. This is the takeaway I have for you today. We thank you for helping us to consolidate our journey in the sector and increase share value.
The Hidrovias conference ends here. We would like to thank all of you for your attendance and have a very good day.