Good afternoon. Thank you for waiting. Welcome to Rumo's second quarter 2025 earnings conference call. Please note that all participants will be in listen-only mode during the company's presentation. After that, we'll begin the Q&A session when further instructions will be provided. We would also like to inform you that this presentation is being recorded and simultaneously interpreted. To have access to the interpretation, please click on the interpretation button. For those listening to the English channel, you may choose to mute the original Portuguese audio by selecting "Mute original audio." Before we begin, we'd like to remind you that forward-looking statements are based on the expectations and assumptions of Rumo's management and on information currently available to the company. These statements involve risks and uncertainties as they refer to future events and depend on factors that may or may not occur.
We recommend that you read the disclaimer on page 2 of the presentation. I will now turn it over to Mr. Felipe Saraiva, Rumo's IR Executive Manager, who will begin the presentation. Mr. Felipe, please go ahead.
Good afternoon, and thank you for joining this Rumo second quarter 2025 earnings call. Let's begin with the highlights on page three of the presentation. We have delivered a solid quarter, marked by growth in transported volumes, strong commercial and operational execution, and disciplined cost management. Margins remain healthy, and we achieved consistent results despite a more challenging market environment than initially expected. We transported nearly 22 billion RTK during the quarter, driven by an 8% increase in the Northern Operation. Operational performance benefited from several levels, including improved energy efficiency and train operations. As a result, adjusted EBITDA reached BRL $2.3 billion and adjusted net income was BRL $731 million, both up year on year. We distributed BRL $1.5 billion in dividends to our shareholders and closed the quarter with a financial leverage ratio at 1.8x , a balanced level and in line with our capital structure strategy.
Turning to page four, let's look at our market share this quarter. The grain export dynamics improved compared to the first quarter of the year. We recovered our fair share across all of the four operations highlighted on this page. The slight decline in the quarter reflects temporary monthly fluctuations, such as the peak of soybean exports from Mato Grosso in May and operational challenges in April at the Paranaguá and São Francisco do Sul corridors. Let's turn to page five to review our operating metrics. We delivered another strong quarter in operational efficiency, supported by ongoing investments in infrastructure, technology, and process optimization. Despite higher volumes and more rolling stock in circulation, the trend sign between Mato Grosso and Santos in the Northern Operation was stable. In energy efficiency, we achieved a 5% reduction in fuel consumption, with a solid performance in both the Northern and Southern Operation.
The successful rollout of the 135 railcar train design and the continued improvement in this new design of operation marked a significant step forward for the company. Let's turn to page six to review our operating results and volumes. We transported RTK 21.8 billion during the quarter. The Northern Operation was a major driver for the growth, with an 8% increase in volumes, driven by strong performance in soybeans, pulp, and bauxite. In the southern operation, we saw a steady and gradual recovery throughout the quarter, with volumes returning to a more normalized level in May and June, particularly in agricultural commodities. Let's turn to page 7 for the highlights on revenue and yields. Consolidated net revenue reached BRL $3.7 billion in the quarter, a 4% increase driven primarily by higher volumes in the northern operation.
Rumo remains focused on maintaining a balanced strategy between volumes and yields, with the objective of maximizing the overall system profitability. In the northern operation, healthy demand and a strong competitive position supported stable yields. In the southern operation, we adjusted pricing in response to a more challenging competitive landscape, with the goal to recover our market share in strategic markets. Let's turn to page eight to review our EBITDA for the quarter. EBITDA grew 6% in the quarter, reaching BRL $2.3 billion. In the northern operation, higher transported volumes drove a stronger contribution margin. In the southern operation, commercial repricing and lower volumes weighed on our results, but the impact was offset by a BRL $70 million indemnity related to lost profits from the extreme weather events in Rio Grande do Sul in May last year.
I would like also to highlight a 3% nominal reduction in fixed costs and expenses, reinforcing our ongoing focus on efficiency. Let's move on to page nine to review our financial results and net income. Net financial expense for the quarter was BRL $698 million, reflecting the prevailing interest rate environment. Despite the higher cost of capital, we delivered an adjusted net income of BRL $731 million, in line with the same period last year. Let's turn to page 10 to review our debt position. The net debt was BRL $14.2 billion at the end of June, driven by the cash burden that appeared. We closed the quarter with a healthy leverage ratio of 1.8x . Our liquidity position remains solid, with over BRL $7 billion in cash position and minimal debt to maturity over the next three years. Let's turn to page 11 to go over our quarterly investments.
We have invested BRL $1.78 billion during the quarter. Recurring investments were BRL $503 million, reflecting our continued commitment to asset preservation and operational safety. In the Mato Grosso railway, we invested BRL $468 million, with disbursements speeding up in line with the construction progress. Other expansion projects accounted for BRL $423 million, mostly driven by increasing capacity and revamping the existing infrastructure. Let's now move on to a brief update on soybean and corn markets on pages 12 and 13 of the presentation. Both the soybean and corn production in Mato Grosso reached record high levels. The state's exports are expected to approach close to 60 million tons in the year, which continues to support strong demand for logistics services. Our investment thesis has only grown stronger.
Brazil's Central West region is becoming increasingly relevant in the global rail market, and our railway is firmly positioned as the most efficient and competitive logistics solution to serve this demand. It concludes my presentation, and now we are available for the Q&A session. Thank you.
We will now begin the Q&A session. Joining us today are Mr. Guilherme Machado and Mr. Felipe Saraiva. To ask a question, please click the "Raise Hand" button. If your question is answered before you're called on, you may exit the queue by clicking "Lower Hand." We kindly ask each analyst to limit themselves to one question so that everyone has the opportunity to participate. If time permits, we may open a second round for additional questions. Please note that questions submitted in writing via the Q&A icon will be answered by Rumo's IR team after the call. Please hold while we collect the questions. Our first question is from Pedro Bruno with XP. Mr. Pedro Bruno, please go ahead.
Hi, good afternoon everyone. Thank you for taking my question. I'd like to start going over costs. Could you please give us a bit more information on this? I'd love two approaches here. First, variable costs. I was paying attention to fuel efficiency and how it's been improved even further. Where should we expect this kind of efficiency to stabilize? I'd love to pick your brains on that. Also, what have been the marginal drivers for the increase in fuel consumption efficiency? I think you were down 4% or 5% year on year in the second quarter. Regarding fixed costs and expenses, we have a 3% decrease. In the first quarter, we saw a relevant shift in your cost dynamic here. I'd love to understand what explains this in the second quarter because you see another decrease in costs which were already close to zero. I'd love to understand this in depth. Variable costs, fixed costs, expenses. Thank you.
Hi, Bruno. Good morning. This is Felipe Saraiva. We had a very good performance in this quarter when it comes to cost management. As you were saying, in both fronts, both variable and fixed costs and expenses. I think in variable costs, energy efficiency is our biggest lever. We have a train with 135 cars now. At the beginning of the year, we had trains with 120 cars. With bigger trains, the ratio between transported weight and locomotive power leads to more efficiency. As we become more mature with this model, we're going to get even better. Looking forward, we have other initiatives at the company which are going to be important levers for energy efficiency. First, we have the PTC system to be implemented.
This is a system for licensing and coordination of trains in our network. We're also going to increase our capacity. This is going to be important for us. We still have room for growth when it comes to improving our energy efficiency. Regarding fixed costs and expenses, in our conference call for the fourth quarter, we said that this year we would see this line settling a bit. Our fixed costs grew sustainably so that we would be able to sustain the investments that we had. We've now reached a level that we believe is appropriate for the future. For fixed costs and expenses, we want this number to only follow inflation over the next few years. As we improve our volume, we're going to reduce our unit pricing. For this quarter and the first half of the year, more specifically, we were diligently managing this.
We were finding levers to make it simpler. We made processes simpler, we made structures simpler, and we focused on what really mattered. Whatever could be trimmed was trimmed. This has to do with the management of the whole system. We had a performance that was even better than what we expected for the first half of the year.
Great, thank you. I'll come back later with other questions if I have the opportunity to do so. Thank you.
Our next question is from Guilherme Mendes with JP Morgan. Mr. Mendes, please go ahead.
Hi, good afternoon. This is Guilherme. Thank you for taking my question. Could you please discuss your expectation regarding volume for the second half of the year? I'm trying to think of a few variables. For instance, you have increases in corn crops, you have the level of inventory for this industry, and you have your level of efficiency. How could we expect the evolution of volumes to play out in upcoming months? Would it make sense for us to think about a fourth quarter that is stronger than your historical seasonality? You may have overproduction in agriculture. Thank you.
Thank you, Guilherme. Here's what we see for the second half of the year. We believe we'll have a very similar structure to what we had in the first two quarters of 2025. We're going to see slower trading, even cautious trading, I might say, from growers because this is the position taken by the traders, which are our clients. This has to do with turnaround for these products.
We are adapting to it according to volume and according to our capacity and our commercial efforts. The most important assumptions on which we're working to guide our operations and meet our targets for the year is that there is product available. You can look at soybeans, you can see the performance of corn, and this is a very important variable for us. We know that this product will come into the trading curve at some point. Another important variable is that we don't see price disruptions, neither upwards nor downwards. We see good, healthy levels that allow for us to perform our operation. We have been operating well. Saraiva was talking about costs, and we have been focusing a lot on managing these costs from the beginning of the year.
Operationally speaking, during this quarter, there were months when we were able to test the capacity of our system, and it performed well. There's room for more. We expect and we're ready to operate at higher levels when it's necessary. Now, to answer your question, looking forward, we believe that the fourth quarter, according to the ratios that we see and what we've seen in previous years, should be a busier quarter. We're attuned to that. We're freeing up space. Of course, we have empty spaces in our operation. We plan maintenance, but we want to free up space and have the space available for that. We're going to have something similar to the beginning of the year. We're going to use this capacity as we need to allocate things to our whole system. By the way, I would love to reinforce our guidance for this year. I reiterated.
We know what the variables are, and we believe that for these variables, which are volume, EBITDA, and CapEx, and we had a performance according to what we had announced, we do not expect to change our guidance at all for 2025.
Excellent, Guilherme. Very clear. Thank you for your answer.
Our next question is from André Ferreira with Bradesco BBI. Please go ahead, Mr. Ferreira.
Hi, good afternoon. I have a question regarding CapEx. We had a slowdown in this quarter as expected. It is in the top half of the guidance when we look at the first half of the year. Historically, our CapEx is higher in the second half of the year. We had a peak in the first quarter. We may have a different seasonality here. We may see a decrease in the second half of the year, and I'd love to pick your brain on that. If we look at the annualized profit, it is above the, it is actually below the two quarters according to the year's forecast. I would love for you to discuss that.
Thank you for your question, André. You're right. We saw what we had mentioned to you at the end of the first quarter. We had a mismatch in the first quarter of the year. We were very focused on the ramp-up that we had with FMT. We had some expenditure with rolling stock. Now we've stabilized. Now we are going towards the guidance that we had announced. Our investments are being made as planned for. We have a bit over $6 billion. This is well distributed among our maintenance program and our expansion program for our investment portfolio.
FMT is a highlight. It's been fulfilling our plan. This has to do with what we had mentioned earlier. There's no point of attention here. We don't have any kind of deviation regarding our guidance. Could you please repeat the second half of your question?
Of course. I was saying that when we look at the CapEx for the Mato Grosso railway, actually, it is a bit under BRL 2 billion, which is what we forecast for the year according to the distribution that you mentioned in the previous quarter. Should we expect any kind of acceleration here for the second half of the year, or should we be below BRL 2 billion for the year?
André, we want to meet what had been established, and this is our goal and expectation. Of course, with this program, we do not have a linear result month by month. In the region of Mato Grosso, rainfall requires us to adapt to the weather when it comes to the progress that we make. At the beginning of the year, we had to adjust our operations to the rainfall. We have all the right conditions to meet what we had proposed. It is very important for us to keep at this pace so that we are able to finish phase one in adherence to what we had mentioned for 2026. There is no point of attention here.
Perfect. Thank you.
Our next question is from Lucas Marchiori with BTG.
Hi, thank you. Good afternoon. I'd love to get your help to understand pricing. We started the year expecting something close to inflation, which is what I assume is the assumption in your guidance. We saw changes in the average price for the second quarter as well. You mentioned something, and there was a comparison with trucks. Your targets for volume and EBITDA for this year, according to what you said, are being kept. What is your price equation for the second half of the year? What should we expect? Should we be far away from the half point in the guidance?
Hi, Lucas. Thank you for your question. What we saw in this quarter specifically, and also when we look at the whole half of the year, is a level of pricing that was basically flat in nominal terms compared to last year. This is something that we have been operating in a solid, healthy way. In the last three years, we had significant adjustments in our pricing levels. This translates the fair value of our services. We have a very healthy pricing structure now.
In 2025, since the first quarter and throughout the second half of the year, we struck balance with our clients. This allowed us, as we could see in the second quarter of the year, that we had growth in volume. We also recovered our fair share, as Saraiva was saying in our speech. We were competitive. We were able to capture some of these volumes. Here is what we should stress. Our pricing strategy is not linear, distributed by month or clients or locations. We have dynamic results. This assessment is very dynamic. We always analyze how we're doing and how competitive we are. To answer Guilherme's question, we'll be ready to fully use the system and to bring volume into our system as we see that this market needs it. We have been operating at healthy levels, given the adjustments that we made in the past three years.
It is important to remember that we had very healthy price transfers, ensuring very healthy margins for the company. Our goal, as I was saying, is to fully use our capacity. We're ready to process more volume. Within this equation, we're able to reiterate our guidance. We're competitive. If we're able to operate with a lot of efficiency, we'll be able to perform according to our announcements to the market.
Great. Thank you.
Our next question is from Gabriel Rezende with Itaú BBA. Please go ahead, Mr. Rezende.
Hi, everyone. Good afternoon. I'd love to talk about Lucas do Rio Verde. What are you thinking for the CapEx level for phase two? I know there is still an ongoing conversation regarding the size of phase two, but could you please go into details regarding what you think about a CapEx per kilometer for phase two? What kinds of challenges and opportunities should we expect when we compare it to phase one? Should this kind of project be easier or more complex than phase one? Thank you.
Thank you for being with us, Gabriel, and thank you for your question. We're very focused on the execution of phase one. As I was saying, this is a path forward for us to go on to the next stages.
Of course, we've been doing our homework and we've been doing our research so that we're convinced of what we need for the next phase. If we were to mention any metrics here, right now we are diving into engineering research. We're assessing how our assets are positioned. We want to understand how we're going to go about the economic financial modeling of the next phase. Everything will be discussed with our board. We're very enthusiastic about the project. We should ask for the proper approvals when the time comes. So far, given the information that we have, we don't see any major deviations from what we've seen in phase one. We'll be sharing more information when it's appropriate to do so.
Excellent. Thank you.
Our next question is from Alberto Valerio from UBS. Please go ahead, Mr. Valerio.
Good afternoon, Saraiva and Guilherme. Thank you for answering my question. I'd love to understand your thesis for Rumo. We have negative yields for both networks, and I think this is a bit surprising to the market in this quarter. Do you see any structural changes in this market? We see news of legal reorganizations from growers. You also mentioned less trading this year. I'd love to pick your brain on that. Have you seen anything that changed, structurally speaking, in this industry? Maybe more irrationality from prices or growers? Is it just a one-off effect, or is this a structural change? Thank you.
Thank you for your question. You know, the difference that we've seen in this crop season compared to previous periods is the dynamics of trading. We see a different kind of seasonality here compared to our history, compared to what we used to see. Nothing really draws my attention when it comes to credit or cost structure for growers, at least as far as we're concerned. When we look at the size of this crop season, at least so far this year, we have no information that would lead us to change our expectations for the next crop season when it comes to the size of it. Of course, it's still early. We'll soon have more information about soybeans and about the crop season for 2026 because of the sanitary break. We are still convinced that we are at the right place at the right time, working with a good part of the Brazilian economy, which is still growing. We are going to keep on making investments to really invest in servicing this market. Nothing draws our attention here, and nothing changes our thesis. We are still convinced of the assumptions that we were working on.
Great. Thank you.
Our next question is from Rogério Araújo from Bank of America. Please go ahead.
Hello, Guilherme and Saraiva. Good afternoon. Thank you for taking my question. Please talk about your expectations for the FICO 1 auction. We have a connection at the Central Network, so it is obvious that Rumo should be expected to attend this auction. What are your expectations? What's its connection with Lucas do Rio Verde 2 and 3? Does it make sense for that? Is this something that you're considering? If you could also talk about the MOU between China and Brazil for the Brazil-Peru railway, we understand how challenging it is for engineering, licensing, and economic feasibility. We'd love to know if you have any strong views about this project. Would you look into it? Would you go deeper into it when you're approving the phases two and three for Lucas? Would you say there's a small likelihood of it working out, so you shouldn't even consider it? How would you tackle this structure with FICO in this project? Thank you.
Thank you for your question, Rogério. As a major player in this market, and I believe that we are with railways, of course, we're very, very excited about any type of creation of infrastructure that is going to make our country more competitive overall. More specifically, when we talk about the FICO-FIOL railway project, we look at it as one single project because this is how the government approached it. As far as we're concerned, we believe that there are some significant challenges in this project. However, we're unable to have a full assessment of the initiative because we still don't have anything that's very concrete. There's no RFQ that has been published for an auction, so it's hard to give you our opinion.
Obviously, since we are in this market, we're going to keep an eye on it because we have a fiduciary duty to do so. This is a part of our job. Regarding the document that was celebrated, I don't have many comments to make. I think it is an even more challenging project. We need to understand where these conversations are going and what we could actually become. Now, the concrete fact that has been drawing our attention and capturing our energy is what we already have in our operation and portfolio, which is the railway in Mato Grosso. We have this whole investment program for the Paulista network as well. We're also continuing the licensing of our project with our terminal. We have a partnership with RUS-HS for the Santos system. This is where we've been focusing our attention. This is very important according to our program. Of course, we're keeping an eye on everything that the government is doing so that we are up to date on this market. As we have more concrete information, then we'll be able to react appropriately to it.
Thank you, Guilherme. Very clear.
Our next question is from Felipe Nilson from Citi. Please go ahead.
Hi, everyone. Good afternoon. Thank you for taking my question. Let's go back to volumes. If we think about the soybeans, corn lineup, I mentioned this in our last conference call. In July, we're still focusing a lot on soybeans. The harvesting of corn is over, but is there a lot of potential for overlap? Have you seen this overlap in your operation? Is this something you're getting ready for? Is this something you're expecting? What do you see when it comes to demand for one or another? I just want to understand the evolution of this duo in the upcoming months.
Thank you for your question, Felipe. Yes, we're seeing some overlap. We believe that this is going to be a six-month period where we'll be operating all three products. Our team is ready for that. We're making the appropriate adjustments in our operation to be able to work with that. We know that there is still some soybeans to leave Mato Grosso. We have a whole program for corn, and as I was saying in the previous questions, we have a trading dynamic that is different from previous years. It is a little bit later this time. With MILL, we're going to have traditional operations, as we could expect for every year. In the second half of the year, we're going to have three products in our system. This entails a bigger challenge.
However, we've reached good levels in our operation, as I was saying. We like it when we see pressure on this system, and we're able to make the necessary adjustments. It is going to be different, and it is going to require of us to have a different operational execution. We're here, and we're going to service this market. This is going to be a busy half of the year. We're adjusting our operations for that.
Excellent. Thank you.
Our next question is from Bruno Amorim with Goldman Sachs. Please go ahead.
Good afternoon. Thank you for taking my question. I'd like to go deeper into your journey regarding capacity for the next quarters, maybe towards the end of next year. You have a partnership, and you're working on two different initiatives. You have the Port of Santos, and you have the expansion in Mato Grosso.
Could you please discuss these investments? You have investments in the Port of Santos. When is it going to have an impact on your capacity, if it hasn't had an impact yet? From here towards the end of 2026, when should we expect leaps in your capacity, potentially adding space for increasing volume? Railways, as you put it really well, are the most efficient transportation mode. It is only natural for railways to absorb more volume. I just want to understand your potential for growth regarding volume in the next one and a half years. On a related note, your CapEx for Mato Grosso will mainly be done by December of this year. In the next second half or in the next first half of 2026, you're going to receive volumes. I would like to understand if you have any significant CapEx to be expected.
How is CapEx going to behave here when it comes to the rolling stock of this expansion in Mato Grosso? Are you going to see it in the first half of next year or throughout later years? What should we expect when it comes to the evolution of your capacity in the next one and a half years? That's my first question. Thank you.
Thank you for your question, Bruno. I believe that the company has been showcasing a different operational level, especially for the Santos corridor for the northern operation. In May, for instance, we had an all-time high for this operation. We have been consistently operating at a different level regarding volume. There's a lot to come from now on.
When we think about grains, which is our biggest item or the most significant one in the portfolio of products that we transport, we're talking about maybe 35 million tons. We see structural changes in this industry, which are going to take us to the next level. We think about these investments in sets. The first set of investments by the end of next year, which is 100% available for occupation, is the first stage of our railway in Mato Grosso. We also have a set of investments to recover existing assets, whether that's the São Paulo network or the Paulista network or the internal railway for the Port of Santos. We also have railway access to the port. We have another one, which is towards the end. With the set, we have an additional capacity for the system that is close to 10 million tons.
This will be potentially ready for the end of 2026, potentially in the second half of 2026. This is when we start our next step. We're now preparing the company for our next step. We're going to have two major initiatives at the port. We have Terminal T39 for the exports corridor at the right wing, and we have the RUS-HS partnership with a new port asset. This will be coordinated with new capacity in the countryside so that we're able to work with better capacity in transshipment in its origination. This is what we expect for the end of the decade. Right now, we have around 35 million tons in capacity, and we could go to 55 million- 60 million tons as we complete this whole investment program. There's something else in your question that I forget.
Could you please go over the expansion in Mato Grosso? When should we expect this capacity to be accounted for? For the first half of next year, do we still have lots of CapEx for that? The first half of next year will be preparation for the beginning of the operations in June. I'm asking because I think most of the investments will be made by the end of this year, at least for the construction. You also have rolling stock, and it's not clear to me when and where this is going to happen, or when and how much.
Bruno, I'm going to say something that we mentioned in the previous conference call, or maybe in the one for the fourth quarter. The program for Mato Grosso is a BRL 5 billion program. BRL 2 billion were spent by the end of 2024, and BRL 3 billion will be spent between 2025 and 2026.
In 2025, it's something around BRL 2 billion. For 2026, we have around BRL 1 billion. New investments going forward, as Guilherme was saying when he answered the previous question, are still being broken down when it comes to an engineering project, a commercial project, and an economic assessment project so that we know how to move forward with this initiative. The acquisition of rolling stock does not rely on this, on the legal assets. They actually rely on volume. As you're able to use rolling stock, then you create your programming. You're not going to operate without rolling stock or with a surplus of rolling stock. We have it customized. Year on year, this enters the CapEx program that we announced to you at the beginning of the fiscal year.
Great. Thank you.
Our next question is from Luis Pessanha with Safra. Please go ahead. Our next question is from Lucas Barbosa with Santander. Please go ahead.
Hi, good afternoon, Guilherme and Saraiva. Thank you for taking my question. I have a follow-up on Bruno's question, but I want to focus on commercial operations. When you think of a capacity of around 10 million tons towards the end of next year, how are you planning to use your capacity or to enjoy your growth volume throughout the years? You have an opportunity to try and use it as soon as possible until 2027, reaching zero additional capacity. You could do it more gradually to avoid compromising prices, especially taking into account the lower commodity prices that we've seen recently. This may be an important point for you because you need to think about your impact on freight costs. Could you please talk about that?
Thank you for your question, Lucas. We are building our expansion in Mato Grosso and our system capacity to service our market, to be able to service our clients. We're definitely interested in accelerating the use of these volumes according to what our market requires. For that, we need to monitor some factors like the size of agricultural production and exports to key markets so that we can match appetite and the ramp-up of the new capacity. In Mato Grosso, historically speaking, we grow 3 million- 5 million tons. If they keep up this kind of growth, it is reasonable for us to expect 3 million tons that are additional per year. That's growth. If we keep that, within three years, we're going to fully utilize our capacity. Of course, this all depends on how production and exports grow in our biggest market.
Perfect. Very clear. Thank you.
Our next question is from Luis Pessanha with Safra.
Hi, good afternoon. Can you hear me now? [Foreign language] I have a question regarding consolidated costs. Please go to page 10 in your release document. There's a big variation in variable costs. You have an explanation regarding BRL 40 million that would be connected to compensation for rolling stock. You also talk about BRL 90 million in costs that went in in the second quarter of 2024. It looks like we have lots of variation here. Could you please go into more details about your line regarding variable costs?
Thank you for your question, Pessanha. The BRL 90 million effect has no impact on our margin. This is an intercompany transaction between networks. We are showing it as revenue in one company and cost in another. This has no effect on our margin. The additional BRL 40 million regarding the payment of rolling stock for third parties means that we have co-investment in our commercial model with a few clients.
We recently had events here with clients for the transportation of grains and liquid fuel. There was the acquisition of rolling stock. As a counterpart to the investment that these clients make, you have a commercial discount that we register as costs, accounting speaking. This is what we do. We register it as costs to acknowledge the investments that they made in rolling stock. I see. These costs are a type of discount that you are granting because your clients are having less costs. Yes, we're offsetting investments that clients made in rolling stock.
Great. Thank you.
Our next question is from Rogério Araújo with Bank of America. Please go ahead.
Hi, thank you for the follow-up. Could you please update us on the granted assets for the West network and the Southern network? Any expectations, any timelines, anything you could share with us would be helpful.
Thank you for your question, Rogério. Of course. We have both concessions. For the Southern network, we actually have a working group. It's ruled by the ministry, and they have been having discussions regarding the model of this operation because this concession will reach its maturity in February of 2027. We have been contributing to this study group. We have been assessing what kind of outcome we could have. Right now, there's nothing that we could share with you. However, we've been attending these conversations. We want to make sure that we have a balanced business model to protect clients. We want to make sure that they have the necessary service that they need for this volume. We are a part of these conversations, and of course, this year and next year are going to be important for us to reach a conclusion on these conversations.
There is nothing that we could share with you at the moment. For the West network, we have some public information that we could share. The Court of Accounts said no to the request, and what we can do is to follow the timeline for the concession agreement. It ends in June 2026. In a very straightforward way, we've been following up on this, whatever the results are.