Good morning and welcome to Movida's conference call to discuss the 4Q23 results. Joining with us today are Gustavo Moscatelli, CEO; Pedro de Almeida, CFO; and Camila Franceschelli, IR Officer. This event is being broadcast on Zoom and can be accessed on the company's website at ri.movida.com.br. We would like to inform you that all participants will be only watching the event during the presentation. Then they will be able to send their questions on the platform, and those will be answered by management during the conference call or by Movida's investor relations team after the conference call has ended. I would like to remind you that the content presented will be in Portuguese, with simultaneous translation into English. For those who wish to follow the audio of the presentation in English, please choose the language on the interpretation globe at the bottom right of the platform.
For those who don't speak Portuguese and want to listen to the presentation in English, press the interpretation button on the bottom right corner of the platform and choose the language. Participants are now free to submit questions on Zoom. All you have to do is click on the Q&A button at the bottom of the screen and enter your question. Before moving on, we would like to clarify that any statements submitted during this conference call relative to the company's business outlook, projections, operating, and financial goals are based on the beliefs and assumptions of Movida's management and rely on information currently available to the company. Forward-looking statements are not a guarantee of performance. They involve risk, uncertainties, and assumptions since they relate to future events and depend on circumstances that may or may not occur.
General economic conditions, industry conditions, and other operating factors may affect the company's future results and lead to results that will materially differ from the forward-looking statements. The results discussed in this presentation are adjusted for non-recurring items, and reconciliations can be found in the earnings release and in the table available at the company's investor relations website. Now I'm going to turn the call to Mr. Gustavo Moscatelli. Mr. Moscatelli,
good morning everyone and welcome to our conference call for the earnings of the fourth quarter and year of 2023. I'd like to start by thanking our people, more than 6,000 employees, for their commitment and determination in the deliverables of the year, and particularly for what we already see in the beginning of 2024. Now I'm going to start presenting our results.
Starting on slide 3, I'd like to highlight that we closed 2023 with important advances in this new phase of our strategic plans, focused on creating value to our shareholders. We delivered the priority initiatives with discipline in execution and agility, showing continuous evolution in all business segments, including gains in productivity, efficiency, and a better cost of debt for the company. In 2023, we had net revenue of BRL 10.3 billion, growth of 11% compared to 2022, with adjusted EBITDA of BRL 3.5 billion, a growth of 5% in the same period. Rental results grew even further, with net revenue of BRL 5.1 billion, growth of 19% over 2022, and adjusted EBITDA of BRL 33 billion, an expansion of approximately 21% in the period.
We closed the year with a total fleet of 244,000 cars, mainly growing in the GTF segment that went from a share of 45% in capital invested in 2022 to 56% in 2023, the year in which we see a substantial increase in GTF margins. In fleet management and outsourcing, we continue our plan to grow and close the year with expressive growth of 32.7% in net revenue and 38.1% in adjusted EBITDA. Important to highlight that the marginal growth is being conducted with diligence to ensure the profitability of new contracts. We can see the growth of profitability in the adjusted EBITDA margin, reaching 72.1%, up more than 2.8 percentage points compared to 2022. In the rental car, we had substantial improvement in the use of invested capital, which translates in an increase of 7 percentage points in overall occupancy rates, reaching 70%.
The segment's net revenue was BRL 2.8 billion in 2023, up 10.1% over the previous year. The increase in revenue happened thanks to the better utilization of our 113,000 assets, reinforcing our objective of maximizing capital invested. Thus, we expanded revenue per car and EBITDA per car by improving occupancy rates and the average ticket mix of marginal cars. In Seminovos, we had a healthy volume of sales with more than 76,000 cars sold, growth of 5% compared to 2022. The increase in the volume of sales shows our capacity to execute and the right fit of our stores throughout the country. On Slide 4, we bring the company's priority for 2023 to create value, with discipline and agility in execution and in deliverables that we already achieved.
Starting with the productivity of capital invested and fleet efficiency, we had an expressive gain of 7 percentage points in overall occupancy rates for the rental car compared to 2022, to 70%, as mentioned before. In addition, better negotiations and proactive negotiations in the use of assets ensured the expansion of 0.4 percentage points in the yield of the RAC, getting to 37% in 2023. In addition, we continue to adapt our fleet to rental demand, reducing our average percentage of cars in the rental car by 7%, reaching 75,000 in 2023 versus 85,000 in 2022. As a central point of our strategy, we have operational improvements focused on asset turnover. In 2023, we reduced implementation times by 58%, getting to an average of 18 days. In productive rates, reduced by 1 percentage point, getting to 68%.
Average retirement time: 13 days, a reduction of 32%, also reaching the target for the year. With this, we gained 21 days in available assets to generate revenue during its lifetime. The third highlight is financial management. We prepaid more than BRL 4.4 billion in debts that were at a high cost and contracted new debts with suitable costs for the company and business. Thus, the average debt costs reduced from CDI plus 3.2% a year to CDI plus 2.2% a year, more than BRL 120 million savings in interest over the net debt of 2023. In addition, we raised new money of BRL 3 billion, with an average cost of CDI plus 1.9% a year. With this, we closed the year with a capital structure even more robust to support our development plan without the need of additional capital.
Now, on slide 5, we show details on the fleet residual value by purchase cycle. We had a prevalent evolution in the fleet profile due to better purchase mix and better conditions with OEMs. The previous cycle, with worse purchase conditions and worse average tickets, was reduced along the year from 75,000 to 33,000 cars. The cars were bought at a time of less favorable purchase conditions, higher, and resulted in higher depreciation rates during their lifetime. As you could see, they were at 12.5% and 13.5% a year. Purchases as of the third quarter of 2022, the first two lines of the table adding up to 62,000 cars, had an average ticket that was more affordable due to the normalization of OEMs and better commercial conditions. Therefore, they have depreciation rates between 7.5% and 9.5% a year.
At the end of the year, we had a detailed analysis of the residual value of our fleet due to an even more challenging used car market, as we saw in the fourth quarter. In December 2023, we had an additional depreciation of BRL 39 million in rental car cars, which is 2% of our total vehicle asset. This non-recurring impact is a result of the more challenging scenario for used cars in the fourth quarter, but also our strategy to anticipate the sale of these cars to benefit from purchase times with better conditions from OEMs. As a result, we should continue with depreciation rates at the rate of the car between 8%-9% a year as of January 2024, stabilizing margins, having a better read on the business, and allowing for a new cycle of value creation to shareholders. On slide six, we show Movida's consolidated financial results.
Net revenue was BRL 10.3 billion, 11% above the year of 2022. Rental EBITDA revenue grew 19%. Adjusted EBITDA reached BRL 3.5 billion in the year, expansion of 5%. Adjusted rental EBITDA had growth of 21% year-on-year. Growth in rental EBITDA is very relevant for profitability indicators, in addition to bringing more stability and predictability to the company's future results. Adjusted EBIT was BRL 1.8 billion year to date. Here, we can observe the effect of the increase of the recurring depreciation rate in the period. I'd like to draw your attention to the contribution of GTF in the consolidated numbers, accounting for 66% of the rental EBIT compared to 53% of the previous year. Adjusted rental EBITDA margin was 63.7%, an improvement compared to 2022. On quarter-on-quarter comparison, it also showed an improvement of 1.7 percentage points, showing success in the actions implemented along 2023 in all business lines.
On slide seven, we show no recurring effects that we had in 2023 results. We adjusted the impacts so as to favor comparability and to better reflect the year's net results. Impact number one, as we mentioned, is the additional depreciation of BRL 390 million in rental car cars. Important to mention that this has no cash impact and represents 2% of the total vehicle assets. Impact two is also non-cash and is related to the payment of the spread installment of acquisitions of the company in previous years, thinking of the assets sold. It is BRL 139 million. In addition, the write-off of deferred income tax of this company because of the mergers also generated an impact of BRL 52 million in results. Impact three are non-recurring expenses related to business improvements, like the closing of six used car stores, downsizing, and expenses with strategic consulting projects.
Finally, impact four is related to the impact in the financial results of rates and losses due to the prepayment of debts, especially related to the bonds overseas. These impacts will have a positive impact in 2024 by the normalization of the rental car depreciation rate around 8% since the first quarter 2024, simplification of the corporate structure that we believe will generate a reduction of BRL 32 million and reduction of costs and expenses by the implementation of new pricing tools and asset turnover tools. On slide eight, we bring our strategic plans for 2024. The priority is to increase value to shareholders, and three actions were selected for that. The first has to do with the adjustments of the rental car price rates. This is our number one priority for 2024.
The price adjustment that we estimate will lead to the rental car monthly yield from 3.7%-4.2% a month. With that, we are going to go to a new level of business profitability. It should bring approximately BRL 387 million of revenue a year with the same capital invested. We are confident that after all improvements in process, fleet operational efficiency, and systems we developed along the year will give us the basis to reach our objectives. Also, we would like to mention that the potential debt can be captured, can take us to levels close to 4.6% yield monthly. In used cars, we want to improve productivity and efficiency of our stores by having a higher volume of retail sales and reducing discounts.
The improvement in profitability for this year is 21% per store, reaching 34 cars per location, and improving the dilution of fixed costs and profitability. In addition, we are having a better mix of cars in our stores. And together with tools that we developed in terms of car distribution and management, we are going to have better discounts compared to the FIPE table. As for GTF, we continue to prioritize the greater allocation of capital in the segment, which is more predictable in terms of cash flow, profitability, and has better operating margins for the company's consolidated results. We went from 45%- 56% of capital invested in 2023. At this pace, we can get to 60% in 2024. On slide nine, we bring you a preview of the first 2 months of 2024, unaudited.
The results bring us very encouraged because it shows all the work made along 2023. In the first 2 months, as you can see, we had net profit of BRL 21 million, reversing the negative results of 2023. Net profit of BRL 21 million is 100% related to the operational evolution, with gains in margin and a better financial cost, our priorities in 2023. Our net revenue grew 16.4%, reaching BRL 1.9 billion. EBITDA had growth of 20%, with substantial gains in margin, as I mentioned before. In the rental segment, there was an expansion of 3.9 percentage points compared to the first 2 months of 2023. I'd like to highlight the evolution of the rental car EBITDA margin, which is above 62% now compared to 54% in the fourth quarter 2023. GTF profitability continues healthy in levels above 72%.
In used cars, the Seminovos segment, we show that the performance of these 2 months was even higher than expected for 2024, with sales of 35 cars per store and important evolutions in pricing both at the retail and wholesale markets. We see stability between these two channels, keeping EBITDA margin at normalized levels close to 2%. EBIT had even more substantial growth of 38.4%, reaching BRL 386 million in the first 2 months, which can be seen as a turning point in terms of value creation. On slide 10, we bring the return on invested capital evolution in the company, showing an inflection point for the creation of value in the beginning of 2024.
The Right initiatives conducted in 2023 enabled us to get to a ROIC of 10.2% in the first 2 months, reaching a positive spread compared to the cost of debt in 1.2 percentage points, with a trend of growth for the return and reduction in the cost of debt. This evolution, together with other actions mentioned before, will lead us to very healthy levels between 4% and 7 percentage points, with a sustainable profitability to our shareholders. Now, I'll turn the call to Camila, the company's IR officer, to present our business unit's results. Camila,
thanks, Moscatelli. Good morning, everyone. On Slide 12, we have the operating highlights in fleet management and outsourcing. We continue growing the contribution of long-term contracts in the company's consolidated results. With growth 2023, we total fleet of more than 130,000 cars, growth of 16% over 2022.
The volume of daily rates was 9.8 million, up 12% the previous year due to an addition of operational fleet. Our backlog of contracted revenue, considering contracts already in operation, is BRL 4.5 billion, up 74% compared to the fourth quarter 2022 and 18% over the third quarter 2023. The amount of cars that we have to deploy of recently closed contracts also showed strong growth in 2023, reaching to 18,700 cars, more than double the volume of December 2022. That shows the contracted growth of this business line, ensuring more predictability and stability of results in the coming periods. On Slide 13, we have financial GTF indicators. Net revenue grew 33% versus 2023, in a total of BRL 2.3 billion in 2023, or 45% of the total rental revenue.
In addition to growth in volumes, once again, we have an expansion of 18% in revenue per car, reaching BRL 2,275 in the fourth quarter 2023. Adjusted EBITDA for the quarter was BRL 464 million, in the year, BRL 1.7 billion, up 38% compared to 2022. Adjusted EBITDA per car also had a new high in the fourth quarter, with an average BRL 1,446 per month, evolving more than 23% compared to fourth quarter 2022. Slide five shows the highlights for rental car. Total fleet: 113,000 cars at the end of 2023, basically stable compared to the end of 2022. Average daily rates: BRL 126, almost virtually the same than fourth quarter 2022. Even more important than the rate itself is the yield, as Moscatelli mentioned, increased by 0.4 percentage point in 2023 compared to 2022 and 0.6 quarter-on-quarter, reaching 3.9% a month in the fourth quarter 2023.
In addition to the adjustment in the fleet mix, an important point for the evolution is occupancy rates. Year-on-year, thinking of total fleet, the indicator grew by 7 percentage points, as we mentioned. Thinking of operating fleet, we closed 2023 with an occupancy of 79.7%. In the quarter, we grew even further, reaching 82%, more than 5 percentage points above the fourth quarter 2022. On Slide 16, we see the rental car financial highlights. Net revenue: BRL 2.8 billion in 2023, up more than 10% year-on-year. As a result of the expansions we just mentioned, the revenue per car had a new sequential increase, getting to a record of BRL 3,083 per car per month in the fourth quarter 2023. Adjusted EBITDA was BRL 1.6 billion in 2023, growth of 6.6% compared to 2022. EBITDA per car also grew, getting to BRL 1,596 on the average of the year.
On Slide 18, we show sustainable performance in the used car operations, with a sale of 76,200 cars in the year, up 5% compared to 2022, with a healthy turnover for our fleet. Net revenue was more than BRL 5.2 billion in 2023, growth of 4% compared to the previous year. EBITDA margin for the year was 5.1%. In the fourth quarter, 3.5%, closer to normalized levels of this business line. Now, I'm going to turn to Pedro, our CFO.
Thanks, Camila. Good morning, everyone. On Slide 20, we break down the profile of our balance sheet. The first chart shows the evolution of our net debt in the fourth quarter 2023, amounting to BRL 12 billion and is covered by 1.5x the net value of our fleet, as we already saw in the fourth quarter 2022.
This chart shows an important rationale of our credit profile: coverage of our debt by very liquid assets comprising basically low-age and mileage cars. We evidenced the strength in 2023, particularly in the first half, when we reduced the rental car total fleet and applied the capital generated in the management of our liabilities, reducing our financial costs. Our leverage kept at 3x along the year, closing at 3.1x in December 2023. I would like to highlight the strengths of our capital structure that enables us to develop our development plans without a need for additional capital via equity. Our gross debt reduced by almost 15% compared to the fourth quarter 2022, basically on the liability management that we conducted along the year. We closed 2023 with total gross debt of around BRL 15 billion.
Better conditions and payment terms negotiated with OEMs continue to help the company's cash flow dynamics and management of working capital in the last quarter of the year. On Slide 21, we have the cash and the schedule of debt maturity. We can see our current cash position, of approximately BRL 3 billion, is enough to cover gross debt payment by mid-2025. In addition, 100% of debts to mature in 2024 were refinanced by two new financings at the beginning of the year. Still, in financial management, I'd like to mention that in 2023, we prepaid our most expensive debt in the amount of BRL 4.4 billion that had a cost of approximately 140% of the CDI. New funding along 2023 adds to BRL 3 billion, with an average cost of CDI plus 1.9% a year, an average maturity of four years.
That shows the diversification of our financial sources and the support the credit market gives to our strategic plans. The result of these initiatives was reducing the weighted average spread of all our debt by 1 percentage point, going from CDI plus 3.2% in December 2022 to CDI plus 2.2% in December 2023. To close my presentation, I'd like to remind you that the company continues with better assessment of credit risk with a triple-A rating by Fitch. Now, I turn the call back to Gustavo Moscatelli to complete our presentation. Thank you very much, and best regards.
Thanks, Pedro. Finally, on Slide 22, we summarize the company's new phase for 2024. As you could see along the presentation, the combination of evolution of operational efficiency and a solid balance sheet enabled us to resume positive profits in the beginning of 2024, as we did in 2023.
In 2024, we will continue to increase the contribution of GTF contracts to our whole because they bring profitability and stable results. Today, we have the suitable fleet mix to the rental demand, and we are very healthy for the sale of used assets. That enables us to improve our yield and reduce maintenance costs. We are also at a healthy level in the rental car depreciation rate with a better mix and better purchasing conditions. We are prepared to have healthy profitability levels. In the beginning of the year, we can see the proven capacity of our used car stores with installed physical structure and no need to open new stores. In the first 2 months, we already saw an increase in the sales volumes, reaching 35 cars per store, and we will keep our equity balance sheets with a healthy leverage.
Today, we have a cost of debt that enables creative value to shareholders without the need for additional capital, as Pedro mentioned. To close, I'd like to reinforce that I am absolutely certain we are on the right path and have discipline and agility to execute our plan. We are ready to start a new phase of value creation. We'll now open to your questions.
Thank you very much. We are now open for your questions. First, we are going to take questions for analysts and investors only. If you have a question, please click on the raise hand button on the bottom part of your screen now or at any point. If your question is answered before you can ask it, please press lower hand. When you ask your question, please speak close to your mic so that everybody can understand you clearly.
Participants can also send questions in writing. You just click on the Q&A button at the bottom of your screen and enter your question. Please wait while we collect questions from analysts and investors. Our first question comes from Victor Mizusaki from Bradesco BBI.
Good morning. I have two questions. The first concerning the rental car yield, 4.7%. Please, if you could give us a bit of color on the mix, if you have an increase of the corporate line here. And second question, thinking for the budget of 2024 and sources and use of resources, what are you thinking in terms of sources? My question has more to do with what you showed in the presentation. You're talking about debt amortization in 2024. You already said that you already had two new fundings in March, but you have a bit of working capital in the suppliers line.
We should expect Movida selling a bit more cars in the first half of the year because, thinking of the snapshot of December, you had a bit of a higher purchase in the end of the year. So you don't have to give us precise numbers, but at least percentages, X% in the sale of cars, X% from services, that will help us a lot. Thank you very much.
Hi, Victor. This is Moscatelli speaking. Thanks for your question. I'll start with the rental car yield. 2023 was a year that we were very much focused on increasing productivity on the capital invested for the rental car, and you also saw the substantial increase in occupancy rates for the segment.
So that naturally led us to have higher revenue per car, capital invested generated value for longer, and therefore we went from 3.3-3.7 in our operational yield. The next step is 4.2. That's our target, something we believe we can reach this year, keeping a high occupancy rate as we closed last year, so above 80% and total occupancy rate above 70%. But now with another seasoning for this yield adjustment, which is the price adjustment of our daily rates. If you see the price of cars, interest rates, all the inflation base really changed and evolved in the last two years, and the sector's daily rates did not have the same adjustment. So you will remember that we focus on new pricing tools developed last year, and together with those tools and the time in market, we are very much focused on adjusting prices.
In the first half of the year, we are probably going to be able to show part of this increase from 12%-14%, as we mentioned. Again, we focus on adjusting just one-off daily rates, and then we are going to start focusing on the monthly product rate. So the results of the fourth quarter show that, and when you see the yield, it's even going to be clearer. Your second question, uses and sources for 2024. This is very much based on the business cash generation. You saw the first 2 months that we showed a preview with a bit of growing 20% compared to last year, and we don't see a reason for it to go down. So that will naturally bring a much stronger cash generation for the company.
I think that in terms of debt profile, we have a very positive positioning, as you mentioned. We basically do not have any debt maturing in the short term. Whatever we had was already renegotiated. All cash generation for this year, and as I mentioned, at least 20% higher than last year, will meet our needs for the purchase of cars and fleet renewal. Just one comment on suppliers, Victor. If you take a look, the supplier lines in 2022 accounted for 13.8% of the company's fixed assets. In the end of 2023, it doubled. It went to 26%. That shows that we focused on all stages of the asset cycle to extract value, especially in the rental car, whose main source of profitability is more elastic time with OEMs, which is what you see in the supplier lines. That helps with profitability and cash flow.
And that, I believe, is a strength of the company in more recent negotiations and has translated in value creation, as you can see with the ROIC that we disclosed for this earnings release.
Perfect. Thank you very much.
Our next question comes from Guilherme Mendes from JP Morgan.
Hello, Pedro, Camila, Moscatelli. Good morning. Thanks for taking my question. My first question is for the used car market. You did give us a preview on January and February, and it's clear that the market, compared to expectations of the end of year, is worse. But if you could give us a bit more color on the market in recent weeks, price level, just for us to understand and think of depreciation from now onwards. And the second is a follow-up of the previous question with liability management and balance sheet.
How do you see the trade-off between growth and possible restrictions in leverage? In the beginning, equity seems not to be a priority as growth leveraged, but with a leverage of 3x, how much do you think you can grow in terms of free percentage, keeping this leverage constant? Thank you.
Good morning, Guilherme. Gustavo Moscatelli again. Thanks for your questions. I'll start with the used cars. As I mentioned in the presentation, the scenario for the fourth quarter was quite challenging. We saw deterioration in car prices, but in the first quarter, 2024, and that was very clear for the results that we released, we saw an improvement in the credit environment, so more flexibility and speed from banks in approving credit that helped with car liquidity.
Also in the last 6 months, Guilherme, we saw used car prices, at least in our mix, quite stable, which is very different from what we saw in the fourth quarter 2023. For used cars, we have been positively surprised. Sales volume for the first 2 months was a record, so productivity is also quite good, and that had a very important dilution in fixed costs, as we mentioned. Better scenario. Of course, it's still not pre-pandemic numbers, but a lot better than what we saw in the second half of last year and fourth quarter. That makes us naturally think of a stable depreciation rate between 8%-9%, which we showed in the presentation. Given the scenario, I do not see any challenges with regards to that.
As for growth and leverage, we have a plan designed for the next five years that is very clear objective, allocating capital in GTF that has a much better EBITDA margin than the rental car, almost 73% so far, recurring cash flow that is a lot stronger, and that makes us to have planned growth for GTF of approximately 15% a year in the next three years, and with the rental car with stable fleet. With this growth that I mentioned, GTF and the rental car fleet practically stable, we are able to manage the company in the coming years with no need for additional capital and keeping leverage up around 3x , which obviously, considering declining interest rates in the country, makes an even healthier balance sheet for the company. So these are the plans and what we agreed with the board of direc tors.
Thank you very much. Very clear answers.
Our next question comes from Lucas Marquiori from BTG Pactual.
Good morning. Thanks for the call. I have two questions on my side as well. The first, just to understand the impacts of the fourth quarter. I understood the adjustment and additional depreciation. If you could just explain the adjustments related to your acquisitions because I don't think that has an effect on the costs. It's just for us to understand this adjustment. And also consulting costs. Is it a specific project, digitalization? What is it exactly? And also the rental car margin. It seems that the beginning of the year was better than the end of year. What do you think happened in January for this to be better? And I would like to understand also what are you expecting for the year in terms of the rental car margins?
Hi, Lucas. Thanks for your questions.
I'm going to start with non-recurring action items that you mentioned. We bought some companies in the last year, and part of the spread paid for this company was included as added value of assets of the companies that we bought. In the end of the year, we incorporated all the taxpayer numbers and recognized this added value in results. It is a non-cash effect. And if you think of 2024 onwards, that generates a benefit of less than BRL 32 million in taxes a year. So that was the reason for the restructuring of companies inside of Movida. So basically, we incorporated all acquired companies, recognized the added value attributed to these companies, non-cash effect, and from now on, we are going to have a benefit of BRL 32 million in avoided taxes for the year. Second question you asked, one of them, the consulting.
The two main projects for the consulting that we hired last year were, first, to develop a new pricing tool for the rental car, a dynamic tool that enables us to extract more value in a smarter way in the rental car segment. The second is a tool that will give us the optimum time to retire a car from the rental car. So thinking of the whole asset turnover to be as precise as possible in the retirement of cars and extract the best value from each car. In this line, BRL 22 million, we are not talking only about consulting costs. It's also the closing of used car stores, six altogether, downsizing, and that leads to a non-recurring cost and a consulting. Now, for the rental car margin, I think the 62.3% margin of the first quarter is very clear.
And basically, what's happening is that we are enjoying all the initiatives and actions that were our priority last year. So asset productivity, cost reductions, better SG&A, all that translated and is translating in the first quarter in better rental car margins. We already have an increase of prices in this margin, but it is not the bulk of the difference compared to the fourth quarter. So most of it is enjoying the initiatives that were planted last year.
Very clear. Thank you very much, Moscatelli. Thank you, everyone.
Our next question comes from Rogério Araújo from Bank of America.
Good morning, Moscatelli, Pedro, Camila. Thanks for the opportunity. I have two questions on my side as well. The first is perhaps just to understand, I got it right.
Based on the last call, one of the main drivers to recover profit along 2024 would be reducing depreciation rates since the company was selling cars that were paid at worst purchase conditions. Now, with this mark-to-market, we should expect an adjusted stable depreciation rate as of January of this year. Is my understanding correct? And with that, what is the trend of your profit for the year, and what are the main drivers for this trend? So this is my first question. The second question, a bit more specific, we saw growth revenues of car rental divided by the number of daily rates dropping by 9.5% year-over-year, but the reported rate is decreasing by 1%. I would like to understand what you are expecting because we always think of growth revenue over volume or we think of the reported daily rate.
Hi, Rogério. Good morning.
Thanks for your questions. The first item, the expectation in terms of improving profit is not only because of a drop in depreciation rates. This is a highlight because it is the main line of costs of a rental car company, so that will certainly improve our profit. But we cannot fail to mention all the operational improvements that we have implemented in the company. We increased occupancy rates by 7 percentage points. Together with the reduced depreciation rate, I would say, are the two main factors that contribute to a better profit for the company as a whole. And in addition, you have growth in GTF that already has a very good operational maturity, good margins, and a better cost of debt. We reduced our average cost of debt by more than 100 basis points, and that brings BRL 100 million of benefits to our results.
So it's a set of things and not the depreciation rate alone, although it is the most important point. As for rental car revenue, perhaps this is a misunderstanding when you look at 2022. 2022 is when we bought the operation in Portugal, and the fourth quarter, 2022, has 5 months of revenue of the Portugal operation because that happened in the fourth quarter between sign and close. So the IR team can sit down with you and really give you the breakdowns and to everyone who wants, just for you to have the comfort of these numbers. The 1% in terms of daily rates is more than plus 7% because if you think you reduce the fleet average ticket by almost 8% and we kept the same rate, this means that we increased price. This has to do with the product mix that is available for rental.
And that's why we are being very focused on looking at yield and not only daily rates because the fleet mix changed substantially. Anyway, thanks for your question, and if you want just a follow-up, just let us know.
Now it's clear. Thank you very much, Moscatelli.
Our next question comes from Alberto Valerio from UBS.
Good morning, Moscatelli, Camila, Pedro. Thanks for taking my questions too as well. First, I'd like to understand, after a year in the company, Moscatelli, what made you change the strategy for the last quarter? I think since you took over the position at Movida, you had the strategy of a lower volume, more focused on the GTF than rental car, and in the fourth quarter, you had more purchases directed to rental car. That's my first question. Second question, the competitive environment for this year.
Movida seemed a more challenging scenario than previous year, but so are the competitors, Localiza, with results that are not at the level of profitability that is historical for the company. And also, we had a meeting with small and medium-sized rental car companies that shows that probably when they start renewing the fleet, we are going to have an even lesser supply. So what's the competitive environment? Is it more directed to daily rates? Is it more about growth? And also, the strategy changes you had along 2023. So thank you for taking my question.
Hello, Alberto. Good morning. Thanks for your questions. So I'm going to start with your first question. Well, very clearly, there was not a changing strategy. What you saw in the fourth quarter was the company's capacity to move fast and seize opportunities to improve profitability.
As I mentioned, we saw commercial conditions with OEMs much better in the fourth quarter. And because of our need still to renew part of the rental car fleet, we just accelerated the process. So it was one-off event. The company's strategy continues the same of basically allocating more capital in GTF. So the fourth quarter was just an opportunity for us to advance replacements in our car fleet with better conditions. That's it. The competitive environment, I think it's healthy. You all follow the industry, and all companies, I think, have the same mindset of really readjusting prices for daily rates. But GTF is 60% of our business. So we talk a lot about the rental car business, but fleet management and outsourcing continues to be our priority. In the rental car, price adjustment is a reality for the whole of the industry, and it's no different at Movida.
So as I mentioned, we did have some adjustment in the first 2 months. Demand did not go down, which showed us that we have much room to continue with the objective of getting to 4.2 operational yield. So I think it's very healthy. Thank you.
Very clear.
Our next question comes from Filipe Nielsen from Citi.
Good morning, everyone. Thanks for taking my question. I have two. First, I would like to understand the restructuring of used car sales. If it is part of your strategy, do you still see a need for adjustments in store geography, volume of stores, workforce, if you see the strategy continuing for this year, or if you have done everything you had to and now you're just reaping the fruit? As for purchases of cars, you're talking about better conditions.
I would like to know if you still see an impact of longer terms with likely lower discounts or if the discount rate is closer to pre-pandemic rates and the term is a bit reduced. So just for me to understand what these conditions are all about.
Hi, Filipe. This is Moscatelli. Thanks for your questions. I'm going to start with used cars. I mentioned in the presentation that in the fourth quarter, we had a major restructuring in the used car business. Just for you to have some numbers, we changed 36% of our workforce, 50% of regional managers, and last week, we changed one executive director that led the business. Together with that, we changed other things like variable compensation for incentive to sales force, training, and we closed 6 stores.
All that said, the performance of rental car in the first 2 months was way beyond what we expected for the beginning of the year. Of course, the market also improved, but all these changes that we made reflected in the reported numbers. I think a major benefit that we have for this year is that we have no need, Filipe, to increase the number of stores for the volume of sales we planned for the year. Indeed, it's to have the maximum productivity possible at each store, extracting the maximum value from prices to increase profitability of the company as a whole. I think the first 2 months showed that we are on the right path. As for car purchases, naturally, we think of discount and payment terms as one. The company is very capital-intensive, as you know.
So I see the whole thing of the whole asset cycle to think of the value for shareholders as a whole. But you can consider that now we are at pre-pandemic levels. Considering the whole.
Okay, very clear. Thank you very much.
Our next question comes from Ygor Bastos from Genial.
I just have a follow-up of a question asked in the beginning by Victor, if I'm not mistaken, talking about payment terms and in terms of cash needs for the first half of the year. We saw in the third and fourth quarter a volume of at least BRL 7 billion CapEx for the purchase of cars.
Given a more challenging used car market, I would like to understand your mindset with regards to are you going to have to press your margins a bit more, going to wholesale given that you have the needs to have the fleet turnover in the first half of the year, thinking that the supplier line is going to mature? So this is the first question. Second question, I'd like to understand your mindset as for the car mix, not the purchase until the second quarter, 2022, because I know you had a worse mix then. After the readjustment, you talk about 8%-9%, but I think that in this BRL 360 million of impact, you have 60% because of worse purchase condition, 40% because of more intense devaluation in the used car markets.
I would like you to tell me what you see in this first quarter in the used car market, thinking that we still have some pressure from OEMs in terms of new car prices. So I just would like to know your mindset for the behavior of the used car gross margins for 2024.
Thanks, Ygor, for your questions. I'm going to start with funding needs, as you mentioned. I'd like to reinforce that I do not consider whatsoever destroying value for the sales of cars due to growth. Quite the opposite, if we have to stabilize the company size as is to create value, we will, as we showed in the first half of last year when we downsized our fleet. So the main objective of company management is to create value and delight customers, and that is not done by destroying value in the sale of used cars.
I think what's clear is that gaining productivity in used cars, increasing cars per store, decreasing discounts is something that we are going to pursue throughout the year. I think the numbers from the first 2 months show that. We don't have a challenge in terms of sales volumes, probably the same as last year. That gives us the options of having all the improvements for the macroeconomic environment, for the company profitability, and shareholder value. This is our objective with regards to used car sales. As I mentioned, in terms of cash flow, we are very well balanced. Depreciation. As I also mentioned, we saw the first 2 months with used car prices that are quite stable, at least for our fleet mix. That, for now, gives us a very favorable environment in terms of depreciation.
So I do not see a challenge between 8%-9%, which is what we see today, because the fleet has more liquidity, a more favorable credit market, and prices more stable in the last 60 days. I don't know if you have any other questions, but I think I could answer both questions. No, very clear, Moscatelli. That's it. If you could just perhaps comment on the new players in the market, if they have changed prices of used cars? I know the mix is different, but the average price of sold cars, especially electric, are in the market, perhaps with a different mix. But do you think it has affected the used car market? Is it more about demand? I think it's more about demand. So far, we haven't seen a real impact on the used car market.
Perhaps for our fleet mix, I think this is a relevant point. We have to consider that most of our fleet are very sellable cars, and this is not a reality for electric cars. So far, we don't see a deterioration in the market.
Thank you very much. Once again, congratulations for the results of the first 2 months of 2024.
That completes our Q&A session today. We are going to invite Mr. Moscatelli for his final remarks. Mr. Moscatelli?
Well, I'd like to close this conference call with the initial message thanking the dedication of Movida's team, which undoubtedly was what made the difference for the company to deliver all the improvements we mentioned and start 2024 with positive growing results. So thank you for the more than 6,000 employees.
And also, I could not fail to thank the other stakeholders, investors, sell side, buy side that have contributed with the day-to-day of the company, new insights, because indeed, this is something that we don't change overnight. It is something that happens quarter-over-quarter, as you have been following. So thank you all. And finally, the positive takeaway message is that we are very encouraged with what we saw in the first 2 months of the year and very confident of what we have to deliver this year, given everything that was developed in the last 12 months, which was a lot, as you saw. So the company is strategically well positioned in terms of operations and capital structure, and that makes us quite excited about the developments of 2024. So once again, thank you very much, and see you in the next earnings release.
Movida's conference call is now closed. We thank you very much for joining us and wish you a good day.