Good afternoon and thank you for waiting. Welcome to the teleconference of Tegma Logistics, for the discussion of results in the second quarter of 2023. We have with us today, Nivaldo Tuba, CEO of Tegma, and Ian Nunes, Manager of Investor Relations. We mention that this is being recorded, and that all the participants will only be hearing the teleconference during the presentation of the company. After that, we will start the question-and-answer session when more information will be supplied. If you need any help during the call, please ask for help from one of the operators, typing asterisk zero. The replay of the event will be available right after the closing of the event for a period of seven days. We'd like to start, pass over the microphone to Nivaldo, President of Tegma, who will start the presentation. Senhor Nivaldo, please continue.
Good afternoon to everyone. I am Nivaldo Tuba, CEO of Tegma. In the name of the entire company, we'd like to thank you for your participation in one more teleconference of results of earnings. I would inform you that exceptionally in the event of today, you will not have the participation of our financial director and relations with investors, Ramón Pérez . This absence was programmed due to his participation in a course in advanced management in the INSEAD overseas. With that, our Manager of Investor Relations, Ian Nunes, will handle part of the presentation today. We also have the support of Felipe Fogaça, a member of our investor relations team. As is customary, we'll start our presentation on slide two, where the participants can see the disclaimer with respect to our prospective declarations. In slide three, we'll talk about the highlights of the third quarter.
The first point we'll mention about the approval of the payment of dividends and the interest on capital. Reference to the first half of 2023, we will distribute BRL 37.6 million, equivalent of BRL 0.57 per share. This will correspond to 50% of the net profit of the first half of 2023, and 59% of the adjusted net profit for the constitution of the reserves for fiscal incentives. These will be paid on the 17th of August, benefiting those stockholders who have a stockholder position as of Tuesday, the 8th of August. These amounts will correspond to a dividend yield of 2.6%. Following that, we'll bring the considerations of the administration of Tegma with respect to the program of incentives for the government for the purchase of vehicles. This started on the 7th of June and continued for one month until the 7th of July.
The discounts on popular cars was BRL 2,000 - BRL 8,000 varying according to criteria of sustainability, economic sustainability, environmental sustainability, and the nationality of production. The management of the company identifies negative and positive points in this program, which will be discussed in the earnings release of this quarter. Among the negative points, we point out that the announcement of the program was early. Made on the 16th of May, which impacted negatively sales between the second half of May and the beginning of June. Beyond that strict sales, especially to rentals companies, which were waiting to see if they would be included, went into the period of the exclusivity of discounts for individuals. Finally, the company stocks, due to the disconnection between the program and production and sales, the production grew greatly in May and June.
We understand that this is the principal factor to generate the production halts in the following months and not the question of structural demand. As we said previously, there are also positive points which are worth mentioning. As there is the discount, companies discount on some companies beyond the amounts offered by the government for several models. In fact, for models which were not even eligible in the program. With that, we were able to observe a change in the mix of sales in the month of June, which privileged lower priced cars in detriment to the more valuable car, higher priced cars. It is an important effect, was that it was the maintenance of the reduction of prices and discounts for certain models. Something that happened even after the end of the program in the month of July.
As the third highlight, we spoke about the cyber-attack which hit the company and its controlled companies suffered in May of this year. We had to quickly reestablish our activities, being able to guarantee the maintenance of our services and our controlled company without any impact on our results. The fourth highlight, as was mentioned in the earnings results call, we are very happy to communicate that we have conquered for the third time, the certificate of Great Place to Work, GPTW. Which motivates us to continue with our initiatives aimed at creating a professional environment, more and more diverse, collaborative, and innovative. The fifth and last topic talks about the first integrated report of Tegma, which was released on 14th of July of this year.
These are the market transparency and integrity with respect to the initiatives developed by the company, and there is environmental, social, and governmental area, governance areas, as well as the future goals established by the company. The integrated report is available in the digital media of the company at its institutional site, the IR site, LinkedIn, Instagram, and Facebook. Now, going to slide four, we are going to talk about the principal data of the vehicles market in Brazil. As you can see in the first graph, domestic sales in the second quarter of 2023 were 4% above those compared on an annual basis. This is a reflection of the better availability of components such as semiconductors, but also following the discrete tendency for the improvement of the auto market in Brazil, which could be noted.
As we also mentioned previously in the highlights, in the second half, in the second quarter of 2023, the federal government implemented a program of discounts for new cars up until BRL 120,000. This measure was very well accepted by consumers and by the industry. However, it is difficult to quantify the effect of the programs on the vehicle sales in the quarter. Production, on the other hand, grew by 3% in the second quarter of 2023 in comparison on an annual basis, as we show in the graph below on the left, which growth explains the same motives of the evolution of domestic sales in the period and is impacted also negatively by the fall in exports, which fell off 16% in the second quarter of 2023. Looking to slide five, we have the principal operational indicators of the automotive logistics division.
The quantity of vehicles transported in the second quarter of 2023 was 157,000 units, 14% above on an annual comparison, and our market share has recovered and reached the level of 26%. Recovery of this market share reflects the behavior of the principal clients of Tegma during this period. The performance of their clients. Finally, the distance for the trips was slightly lower than on an annual basis, mainly due to the maintenance of a tendency, recent tendency of increase in the participation of domestic sales in the South and Southeast regions, which are where the biggest producers are located. The participation in these regions also represents 71% of all the licensing in the country. After this, I am going to pass it over to our Manager of Investor Relations, Ian Nunes, who will talk about our results, our cash flow, and other indicators.
After that, we will open up for questions and answers. Thank you very much for your attention, and have a good afternoon.
Thank you, Nivaldo. Good afternoon to everyone. I would like to go to slide six, where we will talk about the results of the automotive logistics in the period. As you can see in the graph on the upper side, 24% of our net revenue comes from the second quarter of 2023, which can be explained principally through the increase of 14% in the quantity of vehicles transported in that quarter. Beyond this performance, there was also readjustments in prices, transport prices realized during 2022 and in 2023.
We also like to highlight the good development and performance of Fastline, our unit of logistics for used vehicles, which continues to present a very positive evolution of revenue, as well as the logistics services of the division, which benefited by the increase in industry stocks. Below, we see the evolution of the EBIT and EBITDA in the second quarter of 2023 in the annual comparison, accompanying the respective margins. A slight reduction in the margin EBITDA for 2023, for the second quarter of 2023, comes from discounts, commercial discounts to clients related to the disconnection of the pass-through of the price of diesel during the previous periods. Beyond that, there was also a realignment of the prices in the division to levels in line with current fuel prices. On slide seven, we present the results of the integrated logistics division.
We can see that the net revenue in the division in the second quarter of 2023 was reduced by 7% on the annual comparison. This reduction happened in the operation of chemicals, through the instability in the operational flows generated by the renewal of the fleet of silo trucks, tank trucks. This renewal happened in the quantity transported of chemical products. On the other hand, the operation of electro domestic, of electrical products, had a slight recovery in revenue, reflecting principally the recomposition of the prices which are practiced in that division.
On the graph below, we see that both in the EBIT margin and both the EBITDA margin presented growth in the second quarter of 2023 in comparison to the annual, which was influenced by the results of the operation of electrical products in the period and the discipline and control of costs and expenses in the operation of chemicals. In spite of the fall in revenue, margins have maintained close to the average historical levels of the division. On slide eight, we will talk about the consolidated results of Tegma. The net revenue was BRL 367 million in the second quarter of 2023, growth of 20% on annual comparison, reflecting the growth of the automotive logistics division in the period.
Obviously, both the EBIT as well as the EBITDA present expansion in annual comparison, a reflection of the growth of the revenue of the division of automotive logistics, bringing a better dilution of fixed costs, as well as discipline and control of costs and expenses in both operations. The stability of the margins in the quarter, in spite of the growth of the automotive division, comes from the commercial discounts previously mentioned and the realignment of prices in the transport on the same division. Finally, the net revenue of the second quarter was BRL 39.9 million, 30% above on an annual comparison, an expansion of 0.9% of the net margins. This evolution is the fruit of the growth of the results of the operational division of the automotive logistics division and the financial results even more positive, a constant generation of cash and the structure of capital, which is deleveraged.
We also were mentioning that the financial results of the second quarter of 2023 were positively impacted by the recognition of BRL 2.4 million of revenue in financial revenue, resulting from the monetary correction of tax credits recognized in recent years. In slide nine, we see on the graph on the left, the cash flow cycle was 41 days, which corresponds to three days less than in the cash cycle in the previous period, and greatly below that of June of 2022. In relation to CapEx for the company, the total investment for the second quarter of 2023 was BRL 5.2 million, 1.4% of our net revenue, with no investment which is individually highlighted. Finally, on the right, we see the free cash flow of the company. The BRL 33 million, positive in the second quarter of 2023.
This generation of cash is the result of the operational behavior, positive behavior, performance aligned with a cash cycle that is improved, and the compensation of BRL 5.1 million in tax credits, which contributed positively to the operational cash flow. On slide 10, we present details of the capital structure of the company. In the first graph, we see the current cash situation, which is BRL 237 million, greatly superior to the amortization of the debt coming in the upcoming years. It is worth mentioning that on 17th of July , we did the liquidation of a loan of BRL 40 million of principal and BRL 3.1 million in interest, in line with our program of amortization shown in the first graph. In the graph on the side, the cost of the debt, which has maintained at CDI + 2.07 in June of 2023.
Table below, we can see that our cash position in June of 2023 was BRL 146 million, below the position in March of 2023. This reduction occurred, even though we generated a great deal of cash at the time, due to the payment of dividends and interest on capital referenced to the year of 2022, which totaled BRL 39.6 million. Finally, on the right, our rating, which was reaffirmed by Fitch in April of this year, has maintained at A Local with Stable perspectives. In the slide left, we can see the evolution of our return on invested capital and also our net, our net capital. In the gray line of 29.2, 1.8% points above the first quarter, reflecting the positive evolution of the results of the company.
The same is true for the ROE, return on equity, now the orange line, which expanded in the second quarter of 2023, also contemplating the good results of the joint venture with GDL and the improvement of the financial results in that period. On the graph below, you can see the evolution of the EVA in the second quarter of 2023, maintain the tendency of recovery since the middle of 2022. This evolution is a reflection of the good operational performance of both divisions, the resilience of car logistics markets, and the good results of Fastline, our operation of logistics for used vehicles. On the right, we show a history of dividends and interest on capital paid by the company.
On the gray line, we indicate the payout of the distributions and anticipation of profit for the first half of 2023, corresponding to 50% of the net revenue or 59% of the net revenue, considering the reserves for fiscal incentives. On the orange line, the dividend yield for the last 12 months corresponds to 8.1%. Finally, looking at the last slide, we see the behavior of our stock compared to the Ibovespa index. As you can see, they showed a performance above that of the stock market, in spite of the uncertainties of the automotive sector. This performance is a reflection of the operational resilience of the company, as was shown in the graph below. These shares of Tegma are shown in multiples above the average, as well as occurs with a good part of the listed companies in Brazil, influencing the macroeconomic scenario still in recovery.
With that, I'd like to thank you all for your attention and open for the section of questions and answers.
We will now start the question and answers period. Make a question, please type asterisk one to remove your question from the list. Senhor Nivaldo will answer the question. Please wait while we collect the questions. Thank you. First question comes from Luiz Capistrano from Itaú BBA. Please go ahead.
Hello. Thank you. I have two questions. I'd like to understand, we saw the impact of the government's programs, and if that's over with or if that will come back somewhat before that program started, which gave us. We had, it was looking very poor, and we're finally seeing a fall of interest in relation with any type of reduction. We still have that problem with the audio here. I'd like to hear a little bit from you about perhaps if there's a tendency in the coming months, and understand how is the market overall in relation to these new variables. The second question is in relation to third type of news, which is the entrance of the BYD, which further prices are very low and all of the car companies have lowered their prices due to that. If this has an impact on other types of vehicles, that this might change the—
Hi, Luiz. Thank you for the questions. As far as the perspectives of the industry, the stocks are still maintaining themselves a little bit above in the factories, above the expected levels, in spite of the government program to accelerate sales. But it didn't really lure the stocks enough. On the other hand, we have several effects, such as the fall of interest rates, better conditions for financing, and principally, the biggest companies are still maintaining their discounts, which is leveraging the sales again. We believe that the humor of the market is more positive than negative due to these sequences of months going forward. As far as the BYD, when it arrived, and they have a strategy, a market, which is very strong, very aggressive.
They have their sales underway, and we have participated directly in their process, whether through the receipt of parts and distribution through the GDL in Vitória, or the receipt of reception of vehicles via Tegma. They're making noise in the market. This will affect the internal market. It's very little that it would change. They don't have hybrid cars. These are electric vehicles. These are exclusively electric vehicles. But they're making noise and they want to. If we look at the sales of Great Wall Motor and BYD of July, it was equivalent, a little bit above what large traditional brands such as Porsche or BMW are selling here. They're arriving, and their perspective is that they have a factory. There's good perspectives for both these companies.
Interesting. Thank you very much. Thank you, Nivaldo.
No problem.
Good afternoon. This is Ian from Tegma. I'm going to start with a few questions that we received through our broadcast, through our broadcast. First one, Thiago Duarte. Good afternoon. Congratulations on the results. In terms of market share, does that have to do with new clients, or is it just more sales of current clients? He also asked a second question. The gains in revenue of GDL and your joint venture of storage in Espírito Santo, does that have to do with the BYD?
Duarte, thank you for your question. No, the gain of market share is not new clients. There was an increase in the number of sales and a bigger concentration in those brands which are already traditional clients of ours. I can point out which is public, such as GM. As far as BYD in the GDL effect, it's true. BYD is an old client of ours, not just in the automotive area, but also in other areas as well. And we receive practically all of their imports, BYD coming through Vitória's port and are nationalized in GDL, and then are distributed through GDL. All the concentration of cars that are being imported by BYD are also coming in through Vitória's port and are being stored in GDL. BYD has cooperated for the increase of revenue of GDL.
Your second question comes from Lucas Xavier. Congratulations on your results. I would like to know, after the end of the government program of incentives, the purchase of vehicles, if seeing a fall in the transport of new vehicles. If you're seeing a fall off in new vehicle transportation. Nivaldo.
Thank you, Xavier. No, we're not seeing that effect. The levels are being maintained, even because the cars are being sold. There's a delay in this, and it's also a relevant fact that many of the dealerships of all our brands are still maintaining the level of discounts. These are factors which are maintaining the level of volume up until the current moment.
Guilherme Ávila, Tarpon . Congratulations on your results, on the robust and recovery of market share. What is your expectation for your market share going forward? How do you see the level of sales in the vehicle market in the second half of 2023? Let me answer this. I think that as everyone knows, our market share, we have no way to really control it. It's the conquest of new clients as we have done with BYD, and the evolution of our market share is a consequence of the evolution of the market share of our clients. We have had a recovery in relation to 2022, as Nivaldo mentioned, due to the recovery of the sales of GM. Going forward, it's very difficult for us to say what will happen. It depends exclusively on the performance of our clients.
As far as the volume of sales in the new vehicle market in the second half of 2023, we're looking at this at the beginning of the falling interest rates, and when we see the discounts of some vehicles, the price of some vehicles on the part of some dealerships and companies, all of this makes it difficult to foresee, but brings some positive impact so that we are confident that the second half will be even a little bit better than we expect. However, it's difficult to make any prediction in that sense. Another question from Victor Blazquez . Good afternoon, Nivaldo and Ramón. Congratulations on the result. Can you please tell us about the perspectives of the financing conditions for new cars for retail sales of new vehicles, please?
Thank you for the question. I think this is a question which is a problem for the entire economy, not just the automotive sector, is even more critical due to a high level of non-payment of debt. To pick up, it's still difficult to recover these vehicles from clients. These are restricted points, but I think we can say that we're at an inflection point. The fall of the interest rate indicates this tendency. The association of the financial companies and the car companies, given to me, was indicated that the second half of the year would be very positive and that the car companies, in the short term, plan to do a revaluation of the interest rates for their financing plan. I think additionally, there are several points which are not yet possible to calculate.
For example, the guarantees, which has a lot of potential for the financing of vehicles starting as soon as it was approved, which will improve the level of guarantees of the banks, helping the banks to have their real estate as guarantees. A more relevant item for the sector, which was taking away the guarantees law, the different legal projects which are in Congress, looks to the de-judicialization of the recovery of these vehicles. If this is approved as it is, it has a tremendous potential, a positive potential for the automotive sector. Answering your question, this is an inflection point, and we believe that things will improve going forward.
We have a question from Marcelo from BTG. Congratulations on the results. Can you please talk a little bit about Fastline? What are the differences of this operation between this operation and Newcars, and how do you see this performing in the long term? How do you see it performing?
Marcelo, thank you for your question. Fastline is the transportation of used cars. It operates nationwide. The biggest difference is that it can be operated with goosenecks in long trips, but for short trips in urban areas, basically, this operates on platforms or tow trucks. The client is a little bit different. The client from Fastline are principally rent-a-car companies, individuals, insurance companies, and finance companies. It's an operation which has historically been performing with a constant growth, reaching volumes always above the numbers which are budgeted, and gradually, with a growing margin, getting close to the margins that we have in the operation of new vehicles. It's an operation which has a growing horizon.
As an analogy, today, Brazil has a move of sales 6 x bigger of used cars than in new cars. You have a scenario of growth going forward.
Thank you very much. Next question from Pedro. Nivaldo, Ian, Felipe, congratulations. I want to understand what we have to see in the incentives of the government in the operation of Fastline. Secondly, the market share, which has recovered its historical levels. Is this due to growth? What's the normalized growth rate?
Thank you, Pedro. Fastline has been favored by this. Once there's more new cars being sold, then there's more sales of used cars as a consequence. As this transport of used cars, consequently, there was also a movement for Fastline. We felt, yes, additional positive movement in Fastline.
As far as market share recovering its historical level, as we mentioned here, there was a growth which comes from larger sales by GM, which is a very relevant client for Tegma. As far as the normalized level, it's difficult to say. For us, the bigger the better. But we're seeing that historically that the recovery after this pandemic of this level.
We will pass to the next question. We already answered part of this. Eduardo. Good afternoon. Two questions from my side. Can you comment how to evaluate the sales of vehicles in July? How do you see the strategy of BYD and what are the perspectives? The second we've already answered. Nivaldo already answered. I'm going to go for the answer the month of July for him to answer.
Eduardo. July was a surprise, the month of July. We were working with a sales of 8,000 or 9,000 cars per day, and this level reached 10,000 cars per day. Effectively, there was positive performance in July. Difficult to quantify that, how much of this was organic. We had a delay of approximately 15 days between the sale of a car and the vehicle being licensed. Part of the performance of July is the leftovers from the government program in June. in July, there was also a stock due to the fiscal situation. The rent-a-car companies also cooperated very positively in the month of July since they were held back due to the delay in the release on the part of the government. This wound up concentrating sales for the rent-a-car companies for the month of July. The highlight of the Volkswagen brand, which got close to Fiat in market share.
The Polo, which is a car which has its sale always in average levels, took off their level of sales. Several resellers maintained their discounts or offered special discounts for this government program. These are measures which happened, which wound up making it possible to have this growth in the month of July. Finally, as I said, these two Chinese entrants, BYD and Great Wall, were very surprising, overcoming the sales of BMW and others.
Next question from Rodrigo Schmidt. Good afternoon. Can you please explain in more detail the question of the operational flow in relation to the fleet operations?
This is the following, Schmidt. One of our big clients, our principal client in this line, came from a change, a rule from the time of the metal tank trucks which bring their products. In that way, we've had to radically change our fleet, which is a process which takes time. It's not something that. We have to purchase, manufacture these tank trucks and put them in operation. We have the purchase of these tank trucks with programmed deliveries. Little by little, we're getting our fleet up for this new client. The tank trucks which are older will be utilized in other routes. It's a question of until we have the effective receipt of all the tankers which have been purchased and are in production, and part of them have already been received.
Ladies and gentlemen, remembering to make a question, all you have to do is type asterisk one. Please wait. Ladies and gentlemen, please wait. Please stand by. Once again, if you have a question, please type asterisk one to make a question. We now close this time of the period of questions and answers. We'd like to pass the microphone back to Nivaldo for his final considerations. Nivaldo, please go ahead.
Thank you very much for your participation. We made these reports and are satisfactory in the second quarter. We are starting the third quarter strong. We are maintaining and optimizing the results reached in the first half of the year. Once again, thank you very much, and have a wonderful weekend.
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