Good afternoon, everyone, and thank you for waiting. Welcome to RUMO Logistika Conference Call to discuss the 4th Quarter 2020 Results. Today with us, we have Mr. Berto Abril, CEO Mr. Ricardo Levin, CFO and IRO and Mr.
Gustavo Rosa, Investor Relations Executive Manager. We would like to inform you that during the company's presentation, all participants will only be able to listen to the call. We will then begin the Q and A session when further instructions will be given. We also would like to inform that the conference call will be presented in English by the company's management and there will be a simultaneous translation to Portuguese. This event is also being broadcast simultaneously on the Internet via webcast.
Before proceeding, we would like to mention that forward looking statements are based on the beliefs and assumptions of Rumoh Management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that conditions related to macroeconomic conditions, industry conditions and other operational factors could also cause results to differ materially from those expressed in such forward looking statements. I will now turn the conference over to Mr. Ricardo Levin.
Please, Mr. Levin, you may proceed.
Good afternoon, everyone, and thank you all for joining us in this conference call for the Q4 2020. Before the results, I would like to invite our CEO, Beto Abreu, to share his view on some bold accomplishments that we delivered in 2020. Beto, I give the floor to you. Thank you, David. Good afternoon, everyone.
Welcome to our Q4 2020 results. I will start talking about 2020 and also share our views regarding 2021. 2020 presented us many challenges, but also allow us to achieve great progress in the consolidation of our long term strategy. We develop our portfolio even further by increasing the capacity of the terminal in home monopolies. We signed the early renewable of polyester network concession until 2,000 and 58 and completed the investments to render the central network operational at the beginning of 2021.
This with history connecting by rail the state of Coyage in Tocantins to the port of Santos in Sao Paulo. We have improved our capital structure, conducting a BRL6.4 billion for loan offering, the prepayment of concessions fee of Central and Polysta network were BRL5.1 billion and the insurance of the first green bond Latin America rails, thus getting home ready to deliver on its business plan. We have also strengthened the organizational structure in key areas such as commercial, pricing, people, innovation and regulatory, so we can continue with the solid implementation of our strategy. We moved our efficiency agenda with important improvements in several operational metrics and therefore assuring our capacity to grow. In the Port of Santos, we started and will conclude this year transformational investment that will positively affect port capacity and efficiency at the third line of Paqueta, the addition of the line in Macucu and the expansion of T39 and Terma terminals.
We had significant advance in our EFC agenda. With respect to the environment, this year, we delivered a reduction of 10% out of 15% of our 2025 target on a specific emission. As for the social component, our personnel and rail safety results have been remarkable, having outperformed U. S. Class 1 rails.
Regarding governance, we continue to operate at the highest corporate governance level and have recently appointed Janet Trasteo to the board, who in addition to being the 1st woman to hold this position has broad experience in international rails. We got off to a better start in 2021 than in 2020, and things are looking up in terms of competitiveness. The strong demand for logistics, coupled with the recovery of fuel price, brought more favorable market conditions to home. Therefore, we envision an increase in our volume supported by 3 drivers: an expansion in the gray market and the recovery of the usual sector and increasing market share supported by a higher attractiveness of rail versus other logistical alternatives and the start of the central network operation, which has great potential and was well received by customers. I conclude reintegrating my trust as well as the entire organization in execution of our long term plan with strong discipline on capital allocation and enormous value generation for our shareholders and clients.
Thank you very much. And I will hand over to Levin, who will manage the presentation. Thank you, Alberto. Talking about our operational results. In 2020, our volume went up 3.9%.
Throughout the year, several factors impacted the volume performance of each operation. The North operation had a 7% increase in volume. In grains, the most relevant product, during the whole year, we had higher competition coming from the paving of BR163, still with no toll charges and also from lower oil prices that prevented the company to improve even more volumes and affected the pricing for grains. In the second half, producers held back on corn exports, leading to lower railway transportation. In this context, we use the capacity to transport sugar that grew 76%.
Pulp and Sertilizers continued to grow consistently. The South operation saw a decrease of 5.8% in volume. The industrial segment was affected by COVID-nineteen, decreasing 20% year over year. Furthermore, the agricultural segment had a marginally negative performance, especially in Rio Grande do Sul, where volume was impacted by a shunt crop due to late climate conditions. Container operation grew 6.9%, still below the usual growth level for this operation due to limited demand because of COVID-nineteen.
The next slide shows our results by operation. EBITDA was 8.4% below 2019, impacted by lower yields and higher costs, driven by a less profitable assortment of cargo, with more sugar and less grains, which caused additional pressure over margins. Non cooperation EBITDA went down 9.4%. Yields decreased 10.7% due to lower fuel prices and the increased competitiveness of trucks in the North region after the payment of BR 1 63 highway still with no toll collection. Furthermore, volume of port loading and logistics solution grew more than the railway volume.
This helped net revenue, but also brought higher variable costs since these operations have lower margins. South operation EBITDA went down 6.4%, pretty much due to lower demand once grains suffered from lower crops due to bad weather conditions and industrial demand was significantly affected by COVID-nineteen. Container operation EBITDA rose 66% to 2 significant non recurring gains in EBITDA as a result of the sale of some unprofitable business units during the year. Now we will take a look at our financial results. Regarding financial expenses, I would like to highlight some points.
This year, we saw concession fee expenses increasing approximately BRL200 1,000,000. Let's get back to 2019 to explain it. That year, on top of all the previous concessions, we had the entrance of central network that generated additional financial expenses for the last 5 months of the year. In 2020, central network was generating financial expenses since January. And on the top of that, once we renewed Polisa network, we started to have additional expenses since June.
In September, we prepared BRL5.1 billion in concession fees, reducing significantly the level of financial expenses. From a cash flow standpoint, there will be no obligation of payment in the next 15 years for central network and 17 years for Paulista network. So for 2021, we expect roughly BRL254 million to be recognized as concession fee expenses. On cash flow, there will be approximately BRL121 million to be paid as financial expenses and BRL107 million as amortization. That being said, let's take a look at the financial results.
Financial result in the year grew 23%. Cost of debt was affected by BRL273 1,000,000 due to non cash mark to market pact with BRL 160,000,000 of losses in 2020 compared to BRL113,000,000 gains in 2019. Other expenses increased by the additional impact of concession fees. Net income dropped by 61% due to the lower EBITDA and the higher financial expenses. On the next slide, we will take a look at our indebtedness.
Our net debt increased from R6.6 billion dollars to R7.2 billion dollars and the leverage stood at 1.9x broadband debt EBITDA. Humu ended the quarter with cash of approximately BRL 9,200,000,000, leaving the company in a very comfortable position in terms of liquidity and amortization schedule. The next slides show information about the market scenarios for corn and soybean. Regarding soybean in 2021, Agelroal forecast shows 5.6% growth in Brazilian production and 1.2% growth in the country's exports. Production in Goyas should reach 13,000,000 tons and Imato Grosso 35,000,000 tons.
The state of Rio Grande do Sul that suffered with bad weather conditions in 2020 should raise its production in 6,600,000 tons. Also, according to Agi Rural, sales of 2021 crop is advanced compared to previous years, having already reached 60% in Brazil and 74% in Mato Grosso. Although crop was late, grains are already arriving at our terminals. And once we have most of the volume sold in take or pay agreements, we hope to have significant volume growth. The next slide show information on core.
In the current market, according to our consult forecasts, Brazil's production should grow 5.8%, reaching 109,000,000 tons and exports should reach 37,000,000 tons in 2021, 5.7% above last year. Mato Grosso is expected to produce 38,300,000 tons, 2,000,000 above last year. And Goyas should produce 12,700,000 tons of corn. Although we still see some uncertainties, especially due to late soybean crop, Agirol's forecast data also indicates that the sales are pretty advanced, 44% in the South Central region of Brazil and 68% in Mato Grosso. The next slide will show information about the improvement in the port of Santos.
Santos is an important cornerstone of our business. In order to debottleneck its capacity, we have several improvements underway. We are also building more lines in the Macauco region, segregating trains heading to the export corridor from the ones going to the pulp and paper terminals. Additionally, we have 2 important expansions, 1 in the T-thirty nine terminal that will more than double its capacity for grains and other in Termag seeking to expand fertilizer capacity. On the next slide, I will comment about central network.
As Bert already said, in 2020, we accomplished the investment of BRL 711,000,000 in Central Network, and we are very proud to announce that the first train was loaded last Friday. We accomplished the bridge over Parana Iba River between the states of Goyas and Minas Gerais, and also Sao Simon terminal is ready to operate. For the first time, we are able to connect by rail the state of Goias to the state of Sao Paulo, allowing this important productive area to access foreign market with reliable transportation. Before ending this call, I would like to talk about our guidance disclosure expectation. We will announce our 2021 2025 guidance in early March.
Further details should be given soon. Thank you very much for joining us today, and we are available for Q and A session.
Thank you. We'll now begin the Q and A session. Our first question comes from Lucas Barbosa with Santander.
My first question is regarding yields. If you could provide more details on the yield performance on the 4th quarter, How much of that was explained by fuel? How much of that was explained by pressure from the North Northern Arc? And how much of that is basically the dynamic pricing that the company is was starting to develop in the middle of 2020? So that's my first question, then I'll ask the second one.
Thank you very much.
Thank you, Lucas. This is Betabrio. Let me take the question and then the team, if you want to add anything else, please jump in. Lucas, let's firstly look for the 2021. I will cover your question regarding yields, but let's talk about the volume as well when we talk about the North operation, which was also, let's say, a downside for us on corn business.
If you look for the volume in 2020, we grew double digits in the operation in the North operation for everything but corn. So soybean mill, fertilizer, even industrial products, we grew at least 10% in each one of them. The corn was the downside. And then we lost 12% of volume on 2020 when we compare with 2019. So that's the that's where we have to concentrate ourselves by 2021, which is the covering the market share mainly on corn and keep it growing on the other products.
Regarding yields, I think you answered already. We have these 2 main, let's say, issues during the year 1 was the once extreme, yes, let's say, which increased competitiveness, but also the fuel price. But I think it's important to look ahead as well. And when we see what's going on for 2021, let's take the 1st semester, which we already almost sold out in terms of volume. So very confident that we're going to that we will grow the volume.
And that doesn't mean that we have to compromise yields. I also see this is basically because the fuels price is now on a completely different shape when we compare with exactly the same period last year. We will see even slightly better yields for 2021. And I think we can say this after seeing the everything that we sold already for the 1st semester. And so that's how we see, let's say, 2021 and that's what happened in 2020.
So thank you for your question. If the team would like to add something else, please welcome.
Thank you, Batu. Lucas, I don't know if Batu, I think I already answered your question, unless you have any clarification.
Let me know. Yes. That's to answer my question, but maybe just a follow-up. Is there any movement in terms of stimulating more prices near Sohizo region, for example, and less in Hordenopolis? Or is that still that, that was an idea from the past?
Has this developed or not up to now?
Yes, I have to say yes, Gustavo, please go ahead.
No, exactly. You can take the question if
you want.
Go ahead.
No, the answer, yes. I think we are a completely different mode in term of sophistication of, let's say, pricing. But what we can see about Zohrizo, I think the most updated information is that the freight cost on the roads has increased more than BRL 100 in the last, let's say, 6 weeks. So the environment has changed completely in the last mainly 1.5 months. This is I'm talking about the cost from Sohuiso to Millikitubo.
So that's what's going on in the market, okay?
Perfect. Thank you very much, Beto. And if I may, a second question regarding SG and A. In the Q4, the SG and A increased 60% year over year in North Operations. I just wanted to understand if there's any specific line causing this increase or if there's any nonrecurring there?
We'll start with one, Chivas, but I also would like to comment on
that in the end, please.
No. Okay.
Okay. So specifically on SG and A, Lucas, we increased our costs pretty much related to cybersecurity. As you may know, in March, we suffered with a hacker attack. So we review our systems. Now we adopted more firewalls, we shipped all the data to automate systems to Kald.
We also hired consultancy to shift the systems to cloud and to increase security to avoid further hacker effects in the future. As North Corporation is by far where the most part of the profits come, it also receives the most part of the SG and A expenses. So we did that at the corporate level, but NORC operation has subserved most parts of this cost of cybersecurity. So this, we believe it's a one off. It's not something supposed to last much.
And also, when it comes to cost and SG and A, we also saw some phasing impact. So in the Q4 last year, we had probably the lowest cost ever. On average, between the 1st and the third quarter, our cost was around BRL 325,000,000. In the 4th quarter, it went down to BRL 270,000,000. So it was a weak base in terms of costs.
And for that reason, we saw coupled with the additional costs for cybersecurity, we saw costs going up in the Q4. But then I think Petrol would like to share his view as well.
Thank you, Lucas, for the question. I think cost is something critical for us. It's something that we really look on a daily basis here. I'm not going to cover SNG, but also the fixed cost. As Gustavo said, the last quarter of 2019 is not a good one.
But I think when we look for the pace on the 3 Q1 of 2020, this is something that we really have considered as a good base for us. So excluding, let's say, central network, which will be operational by 2021 or realtors, there's no reason to operate on the different level in terms of pace than the level that we operate again on the 3 Q1 of 2021. I think this is a really good base to take into account, not only for SG and A, but also for the fixed cost.
Our next question comes from Bruno Amorim with Goldman Sachs. Please, Bruno, go ahead.
Thank you. Good afternoon. So I have two questions.
The first one is more short term oriented and a follow-up on the pricing dynamics in the short term. Between the 3rd and the 4th quarters, we saw an improvement in the level of diesel prices. The iron was probably as much of a problem as it was in the 3rd quarter, right? It was paid in the 3rd quarter, it was paid in the 4th quarter. So what I'm really trying to understand is why have prices gotten even worse, right?
The yearly variation of price in the 4th quarter was worse than in the 3rd quarter. One potential explanation would be, and you correct me if I'm wrong, volumes, which were weak in the 4th quarter and in volumes for MAPFOGrosso as a whole, which might have driven a scenario of oversupply of transportation capacity. And if that's the case, we won't see prices going up meaningfully when volumes revert this trend possibly towards the end of Q1, beginning of Q2, when the soybean season will get stronger this year.
So how are you seeing
the dynamics? Do you agree with this rationale? Are we using something? That's the first question.
Thank you, Bruno. I will try to comment and please if I don't cover something, let me know. So
let me start. When we think about yields in the Q4, of course, it was affected by the whole dynamic that affected us in the year, pavement of the R163, low fuel prices. You're right, we saw some recovery in fuel prices, which brought a better environment. But you have to remember that most part of the volume was sold in the previous quarters, therefore, under much worse condition. So we brought the conditions the market conditions from the previous quarters to the Q4 in our commercial agreements.
So that pretty much prevents us from having better yields in the 4th quarter, even though oil prices were a bit better. Another thing is, as Ricardo mentioned in his presentation, producers were holding back inventories of corn. So there was not much availability of grains in the market. So that increased the competition for the grains. Once the supply of logistic was much higher than the demand for logistics.
So that is something that is more likely to happen in the Q4 where we have low volumes. And last but not least, we have to remember that December 2019, we had very low volumes. And typically, December is the month in the year where we have the lowest tariffs in the year. So because our volumes grew more than 30% in December 2020, it also increased the weight of December, a month where typically the tariffs are low in the quarter, bringing our tariffs a bit down as well. So I think trying to summarize everything, I think those are the factors that create pressure, additional pressure over yields in the 4th quarter.
That makes sense. Thank you. But looking forward then, when do you expect for that trend to revert? With March, is it second quarter given the potential delay in the export of soybean this year?
Good question, Bruno. Of course, January, it's a bit idle. Everybody knows that we have a late crop of soybean. So it won't be a month with great volumes, but we are already seeing trucks arriving at our terminals in Angamalpolis and in Sao Simon. So we are foreseeing strong volumes.
And with then with much better oil prices and once we started to negotiate take or pay last year and we have a much higher percentage of take or pay, it's fair to say that right now we can predict slightly better prices without taking into account any additional pricing coming from fuel prices. Right now, fuel prices are helping us to have better tariffs. We cannot predict what's going to happen with fuel in the future, but it continues that way. It could be even better than slightly better. So we expect to have better yields definitely at least until the end of the first half, which is the period where we have almost full visibility once we are sold out in terms almost sold out in terms of take or take.
2nd half was yet is sold. So it will depend a bit on the market. We are evolving also fast in terms of negotiation, But we'll have to see a bit more to have better figures to share with you guys for the second half. But first half should be way better than the performance that we had last year.
Understood. And then I have a second question on the long term. You usually guide for strong volume growth, two times, which probably embeds some market share gains, the assumption for some market share gains on top of some growth in the volume of grains exported out of Brazil.
So can you please remind
us what's the rationale behind that? You have consolidated most of the markets in the southern region of MAPFRE Grosso already. So maybe in order to grow above the volume of Brings exported out of Brazil, you would likely have to gain market share over the north and north. So first of all, is this assumption correct? Am I right in reading your usual guidance for the long term?
And if so, how do you intend to deliver those market share gains? Thank you.
Gustavo, let me take this one. This is Beto. I think what's important to say when we look for the long term is that in the next 5, 10 years, the world will demand something between 75,000,000 and 100,000,000 tons extra of corn and soybean. And most part of this volume will come from Brazil. So that's the number.
This is why looking for the market share, it's so important for us. So when we look for what happened in corn, for instance, we're very honest with us. What hurt us here, it's losing backaches. So market share for us is important because in the long term, we will have a lot of volume. Capacity will keep growing.
So we have a new geography, which is Mayas and Brazil. We will keep moving and keep increasing its participation on the global trading brands. So that's what we see in the long term. So Brazil increasing its participation on this global trend. So it's very close now to 40%.
We'll keep growing. The world will keep demanding more and Brazil will be the main supplier. So we must be very well positioned in terms of market share and keep increasing our capacity. So that's but regarding the guidance, we will see this in March.
Our next question comes from Victor Mizusaki with Bradesco BB. Please, Victor, go ahead.
Hi, thank you. So I have two questions here. The first one with regards to the expansion of capacity for Los Santos. I mean, in this slide I feel like Slide number 6, you mentioned about a lot of construction works. So I'd like to understand when do you expect to conclude all these expansions?
And if you can also comment about the recent MoU of Difu Road to construct a new terminal for Grand and Port Larders outside the Port of Santos? And the second question related to Malacentral. Levin, you mentioned that, I mean, the first train was loaded last Friday. So can you comment about this operation? And if there is any concern about the ramp up?
So maybe the company is more confident that there's no problem for the construction. And then maybe you can have some positive news here.
Thank you.
Good afternoon. Thank you for the question. This is Carlos Vind. Well, firstly, a few projects that we have in Samskborg, okay? All of them that we actually the ones that we showed here are expected to be ready by the end of this year, okay.
I usually I split the projects from Santos into books. 1 are the transformational ones and the other are the ones that we since we merged with AURO, we have done to support the global capacity and efficiency in FELSO. So the ones that we showed here are the ones in this book that we have always done. We barely talk to you guys about these projects. They are like we don't talk, but they are really relevant.
They are the ones that will be bringing a lot of efficiency and a lot of and consequently, increased capacity. So we have seen the Pachata, the total line of Pachata is a project that we have been trying to approve with the government for the last 5 years. And finally, it was approved. It will bring efficiency to the entrance of the port. 3rd line of Macauco will improve efficiency and capacity of the port.
The T-thirty nine is a partnership that we have with Caramoru. The same one Caramoru, we have a partnership in Mala Central that we'll talk after a bit about that. But we'll double the capacity and increase efficiency in T39. And keep in mind that you have a minority stake. We are also investing there to increase the capacity of fertilizers that will support the growth of volumes in the next years and the importance of fertilizers for the company, increasing revenues, increasing margins also.
Also about the Molyneux Eptuiti world, it was an initial step for the construction of a terminal in the land that they have close to their terminal, close to also Suzano. So they have a free piece of land there. And we are studying together the construction of a terminal with 8,000,000 tons of for our bulk, for grains mainly and 3,000,000 tons of fertilizers, the capacity for 3,000,000 tons of fertilizer. We are evolving on that. We have been since we announced a lot of conversations, we have been evolving in the development of the project.
Much probably, we will have a minority stake. These men belong to them. So we'll be only, as I always say, a capitalizer of this project, helping them to bring volumes and bring a lot of besides capacity, bringing a lot of efficiency. The terminal will have its own group, okay. So that will be a very, very efficient terminal.
Hopefully, I answered your question. For about central network, I will give the word here to Metro. Well, Victor, thank you for the question. Regarding the central network, I think the first step was to conclude all the civil works of the line. That was concluded last year in December.
So the last big bridge, which is a 600 meter bridge, was finalized and tested. So this is everything ready. During January, we finalized also the city works on the first terminal, which is Sao Simal. So Saint Simon has, let's say, a capacity to almost 2,000,000 tons, and it's ready. We are in this moment commissioning.
So we will see this terminal operate in the next couple of weeks. So the train is already there. So all the test is being done. So it's very good news for us. Since we were able to finalize before, we expected we were expecting it to finalize by March, April.
And then next, we will have Hylveir. Hylveir will be the real terminal, let's say, will be our Hondo Mall cuisine, Goias. And this one, we are expected to be finalized during the Q3 this year. We hope to be in
the beginning of the Q3, not the end
of it. We are trying to anticipate 2, 3 months, so that the team is working and here it's real. It's a very modern with a great layout with 8,000,000 tons capacity. And there's also good information here. We signed it a couple of weeks ago, a contract to have a fertilizer in the terminal plant, 100% funded by 3rd party.
And so everything, it's on the plan. And then by end of the year, we will finalize the container terminal that is being built in Peratrice. This is in Maranhao and with capacity to export 2,000,000 tons. So that's the plan for 2021. So a lot of hope to do, a lot of news on the central network.
So far, so good. And regarding volume for this year, the challenge is capacity. It's not demand. So the solution that we have, it's really a very competitive one. So the challenge for the team here is really try to bring as much volume as they can since the demand is there.
Thank you very much, Vito, for your question.
Thank you. Our next question comes from Rogerio Araujo with UBS BB. Please Rogerio, you may proceed.
Thank you. Hey, Lavin, hey, Gustavo. Thanks for the call. I have a couple here as well. One is a follow-up on the central network.
First on Sao Simon terminal, we would be so it's a partnership with Karamoru. And is it going to be exclusive for Karamoru Cargo? Or is it open to other trading companies to operate as well? And also in terms of Rio Verde, do you have any third party there that is constructing a grain terminal? You mentioned about a fertilizer already.
So is there going to be already a partner there? Or it's going to be like a completely open terminal to negotiate with trading companies in the region? That's the first one. Thank you.
Regarding SENSIMOL, yes, you're right. The partnership with Caramulo is 51, home 149, Caramuro, and there's no exclusivity here. So Caramuro has a lot of interest in bringing their soybean product, which is great. And but there's also soybean that will start moving first, which not necessarily belongs to Karamoru. So again, there's a opportunity to bring it from other tradings.
So there's not exclusive to Caramuro. So that's the point. And Hill Vege, there's many opportunities in terms of partnership on fertilizer, as I said, on fuels. And but at this time, it's 100% home investment. And so it's a completely open for Grange, it's a completely open terminal.
And that will be really the heart of the operation of in that region.
Okay. Thank you. And how you're thinking about the capacity in Santos Port? How so I imagine that those cargo there is currently being done with some other rail network or with or by trucks. So how do you how are you planning to add this extra capacity in the right or left margin in Santos?
And so any so those projects that you mentioned, the third line of Paqueta, so is it enough? So how are you thinking about the Santos capacity to attend the central network?
Yes. No, Lagerie, thank you. It's a very good question and it sounds as critical as you can imagine. And for us, it was really good news, being able to implement all the projects that Plavin just mentioned and just showed to us. Those are important, let's say, bottlenecks in the right hand of the port.
And we will finalize during 2020 on all the projects that we show already. So Paqueta, Maculco, the expansion of our terminal, which the T-thirty nine, which is also a partnership with Caramoru. It's a fifty-fifty partnership. We are expanding that terminal. Termod, which is for fertilizer, is also the expansion.
It's we will have 3 times more capacity than it has today. It will be finalized this year. And I think the answer here is to keep promoting more capacity and more efficiency in the port, not only building capacity, starting capacity, but also working on the line to improve efficiency and productivity. So I cannot disclose, but there's many projects on the pipeline. We just show a few of them.
But our job here is to keep, again, working very hard to promote Santos as the main port for all these projects that will come from Bradesco.
Okay. And just a confirmation. So when you say that according to your negotiations with trading companies for first half 'twenty one, it may be we may see likely some slight increase in yields. So you're do you mean first half 'twenty one against first half 'twenty? Because for the full year, if there is any normalization in the 4th Q 'twenty one, we may see better than maybe low single digit, right?
Because only a normalization of 4Q may imply 3 to 5 percentage points of yield increase for the full year if there is a normalization. So just thinking about the when you say Vries, do you mean first half against first half, but the full year can be more than that? Or is it for the full year?
Rogerio, when we said it's basically comparing first half 2020 with first half twenty twenty one with 2020. As I mentioned, second half is still not clear. Of course, it will depend on the market and on fuel prices as well. So what we have a good visibility at this point is pretty much for first half. So second half, we'll try to get the best yield we can, but we have to remember that we are a scale business.
So we must be sure that our operating will be running with full volumes. So it will depend more on the market side in the second half of the year.
The first half
will be, as I mentioned before, good, especially because right now, fuel prices are
tariffs.
Our next question comes from Regis Cardoso with Credit Suisse. Please, Regis, you may proceed.
Good morning, everyone. Thanks for taking my questions.
Okay. One
question and then two quick follow ups. The question is regarding the Lucas to extension of Cebu Norte. What do you believe are the next milestones for that project? Is it something that you believe could be included in the next meeting of the PPI? When is the next meeting of the PPI, if you know?
And whether you expect or does it make a difference if the Bill of Law 261 is approved or not, whether that makes a difference for that project. So if you could update on those fronts, which would be pretty appreciated. Then the follow ups are regarding your speech at the beginning. You talked about the guidance in the beginning of March. I wanted to know, I mean, I suppose this new guidance will include the central network.
And from your comments earlier, I understood that this ramp up of the central network will still take a few years. Is there maybe a guidance for a few years down the road, not anymore for 2023? When is it that you would be you'd have the central networks fully operational, fully ramped up? And whether this would be part of the long term guidance. Still on the same metric, also a question there of whether you believe the value was essentially in the grains or if you see more upside in other kinds of cargo?
And then just maybe one last follow-up, same topic as Rogerio's question right before, regarding the yields for 2021. If you could maybe I mean, just to be clear, I understood it correctly, it's up year on year versus 2020, but it's probably still down versus 2019, I imagine. And you talked about Surizumiritiituba Freight increasing very sharply, but the data we have so far in EMEA was actually through the end of January was still that freight was coming down very sharply. I think the latest data point was closer to and 40 barrels per tonne. I just wanted to confirm I understood it correctly that you expect improved sequentially, but still below 2019.
Is that the price you see higher for Milituba is already more recent than that latest data point at the very end of January. Thanks.
So thank you for all the questions. Let me start with Lucas de Groverde and also some further information regarding central network and then I hand over to Gustavo and to Raveen. Regarding Lucasville Veggie, let's say, I have been saying that we have 3 fronts on that project. One is the environmental license. The second one is the improvement in the government.
And the third one is on engineering side. There's many questions regarding the way and the regulatory side. And firstly, I have to say that the project not necessarily will go to the PPI, okay? Actually, we will not. We are discussing directly with the regulatory agency, and there are a couple of alternatives, but the PPI is not necessary here.
And this is we are working on that. We are also working on the engineering side. But to be very honest with you, for me, the bottleneck is not that part of the project, it's the environmental license, which we stopped a year and a half ago. And we think we will need at least an extra year until at least end of the year, maybe early next year to be ready. But for me, that's the bottleneck in the whole process, okay?
I think this answer somehow the milestones. On the central network, there is some extra opportunity beside grains or the sugar. So we will have by 2022 another terminal in Turama, Minas Gharay. This one is already being built. We went there.
And this is 100% third party investment. It's being done by Curulipi. It's we also have a lot of opportunities on biofuels and liquids as a whole. So going with gasoline, diesel and DBAC, bringing biodiesel and ethanol. So there's also a lot of opportunities on that side.
And by 2022, let's say, we see opportunities on Bauschita. So maybe there's also opportunities on kind of to date. So I mentioned everything related to 2021, but when we look at the medium term, there's some ex opportunity on that, Avela, okay? Hand over to Lavin over to Gustavo to go through the other questions.
Okay. That Please go ahead. Okay.
Well, I started to add and it seemed to add Levitonova. If I remember all the questions that you did. But regarding yields in 2021 being still below 2019, remember that we had 2019, only at the end of 2019 that we start the government paid BR163 But now the most important reason for the debalancement in prices for going moving to North Port or going down to 70. So we imagine that BR 163 may be pre baptized by mid-twenty 21 to fall or 2022. We don't foresee in our pricing being affected 2021 by pivotized to 2021.
But this privatization was a reason maybe for having the prices going back to 2019 levels, okay, to believe maybe the start for improving prices. Once prices for going up, actually the toll roads can increase the prices of transportation going to the North part by in our population between BRL15 and BRL22 per tonne. So the second part of your follow-up on prior yields, you said something around, so Hizumab Expoda increases shortly. And clearly, the PBT is part of the second part of
the question of the follow-up in yields.
So
Yes, regarding the yields, just questioning on the EMEA data on the freight. The most up to date data point we had was from late January and it still showed prices coming down other than that. So I just wanted to make sure that this view of increasing prices you are seeing for freight is already more recent than that data
point. Yes. What we and what we have of information that from trucks from actually prices from Miritutuba, so so visit to Miritutuba in the last 2 months have been going up, okay? So prices as fuel has been going up, we see that fuels are more or less at the level of January 2020, so at the peak prices of 2020 and at the North Arch prices, Brazil prices are very influenced by steel prices. What we haven't seen is the increase in the last months.
We probably don't have we have something to complement here.
Yes. Regis, maybe the difference is because the new harvest is arriving right now. So right now, the demand for transportation is pretty high. Maybe EMEA data didn't capture that yet, but they will soon because the market is very prices are going up due to the interest of the new harvest of soybean. So we have checked the price with other sources as well.
And right now, what we are seeing in the market is higher prices, but we hope that EMEA will show that soon as well. I think there was a missing point in your questions, Regis, before. You asked about the value of other cargoes. And as we announced in the previous earnings call, there's going to be a lot of other cargoes to be transported in the central network. Wanes are going to be the most important cargo this year because we're going to have only terminals for grains.
But alongside in the next upcoming years, there's going to be also other cargoes.
Thanks, Gustavo. So maybe just on that last point is I was maybe thinking the other way, right, going up, other than down is imports going of more value added products, containers. I mean, that kind of thing was part of the plan. And also the timing of all of this, especially for the guidance, right? I imagine by 2023, the central network will not be fully ramped up.
So you might want to provide a guidance for later down the road. So that's what I'm trying to understand.
Yes. Agnes, this is Levin. We will be providing some weeks the guidance and we will explain a bit more on the next few years what will happen with central network, okay? So we will not be providing anything on numbers today. But you're right, in 2023, it's not the peak.
There is a ramp up. We'll be providing guidance to 2025. So in 2 weeks, just wait a little more. But you'll see that in 2025, volumes in paper network will be going up and will be close to maturity, let's say, to maturity, okay? But I just ask you to wait for additional 2 weeks here and we will be providing the guidance until 2025.
Let me just complement one thing. If you take the presentation that we did in the Q3, you see that we provide all the terminals and the products that will be built for the central network. So it's one of the last slides. So this gives you a good clue about what we'll be transporting and well, okay? So, Ben already said about Jose and Sao Paulo, then you'll see other projects that we are we'll be transporting and other terminals.
This is a good close if you go to the 3rd quarter presentation and take a slide on that.
Our next question comes from Georgi Lodinsen with Morgan Stanley. Please, Georgi, go ahead.
Good afternoon, everyone. Thank you for taking my question. This is a quick one on Mala Central. Could you provide a rough breakdown of how much of volume growth in the next maybe 3 to 4 years you expect to come from incremental production in the influence area? And how much you expect to come from shared gains from trucks and other real operators?
Thank you very much.
Here, Again, I just would ask you to be a bit more patient, but in 2 weeks we'll be providing guidance. So we don't want to provide any guidance in this call. But although we remember that thing that we already talked about is that central network is going through the heart of growth of greens in Goya, okay? So this is the natural market for Humon, okay? Having said that, like remember that our market share today is 0.
It will be 0 only for a few days because we already loaded a train there. And naturally, we'll be gaining a lot of market share in this area, okay? So there is a huge growth of market share. And when you compare all the growth of the market in the central metro, it's a bit lower than that in the north network. But the results are like if you take the and this was a calculation that we did based on all their sources.
But when we bid for central network, the size of the potential market for central network, double in 10 years, okay. So in and only for grains, okay. So the potential market in 2018 when we did was something around like 12 in our phones and it doubled until 20 28. So there is a huge gain in market share and the market is growing, okay? So but just need for the guidance, long term guidance that we can provide more details on that, okay?
Okay, very clear. Thank you very much.
That concludes our question and answer session. Now I would like to turn the floor over to Mr. Ricardo Levin for his final remarks. Please, Mr. Levin, you may proceed.
I would like to thank you, everybody, for participating in the call. It was a very rich conversation, and see you in the next quarter. Thank you. I also would like to thank you for all and everyone for the great questions, great conversation. And we hope all of them all of you have a great year.
Thank you very much.
That concludes Rumu's conference call. Thank you very much for your participation. You may disconnect now. Have a good day.