Good morning, ladies and gentlemen. Welcome to the earnings conference call of Tupy S.A. for the second quarter of 2026. This conference is being recorded, and the replay can be accessed at the company's website at ri.tupy.com.br. The presentation is also available for download on the IR platform and website. Please be advised that all participants will be in listen-only mode during the presentation, and later we'll begin the Q&A session when further instructions will be given. This presentation is being recorded and translated simultaneously. Translation is available by clicking on the interpretation button. For those listening to the video conference in English, there is the option to mute the original Portuguese audio by clicking on mute original audio. Before proceeding, I would like to reinforce that forward-looking statements are based on the beliefs and assumptions of Tupy's management and on information currently available to the company.
Such statements may involve risks and uncertainties as they refer to future events and therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should consider that events related to the macroeconomic environment, the industry, and other factors may cause results to differ materially from those expressed in such forward-looking statements. The following executives are present today: Harro Burmann, CEO, Rodrigo Périco, CFO, Ricardo Fioramonte, Vice President of Structural Components, Gueitiro Genso, Vice President of New Business, Innovation, and IRO, and the Tupy IR team. I would now like to give the floor to Mr. Harro, who will start the presentation. Please, Mr. Burmann, you may continue.
Good morning, everyone. I'm pleased to participate in my first earnings conference call as CEO of Tupy. In this first 60 days, I visited all the company's plants, spoke with our employees, spent time with customers, and directly observed industrial processes on the shop floor. I saw a Tupy that doesn't always appear with the strength it should. A company with significant assets, distinctive industrial capabilities, applied technology, and many concrete opportunities to generate far more value. The plant located in Santo Amaro, for example, shows the Tupy of the future.
There are automated machining lines, assembly of proprietary and third-party engines, lean principles applied to operations, and benchmark operational indicators. It's a clear example of technology and operational discipline. The parts distribution center, focused on the aftermarket, is a benchmark in safety and productivity. Also noteworthy is the number of new products developed and launched, which reinforces our growth potential.
Looking at our core business, our operations in Brazil, Portugal, and Mexico are important bases for the company's future. In particular, Ramos Arizpe should be seen as a strategic platform for growth in North America and to accelerate our value-added agenda. My conclusion is straightforward. Tupy has assets, customers, technology, and capabilities that surpass the results we are currently delivering. These examples reinforce an important message. We have concrete reasons to trust what has already been built. Our biggest challenge is not restarting from scratch. It's transforming these internal best practices into company standards by applying with discipline what already works very well in our operations. Based on this diagnosis, our agenda is focused on four very clear pillars. They are interconnected and stem from a very simple premise. It's not enough to grow. We need to execute better, standardize what works, and ensure an adequate return on allocated capital.
Of the four pillars mentioned, the first is the stabilization and efficiency gains in operations, ensuring quality, predictability, and stability in critical lines. This also involves ensuring that new products achieve the expected profitability, strengthening contract management with clear rules regarding volumes and pass-through. The second point, no less important, is asset portfolio management, ensuring the right part is on the right line at the right price, while prioritizing lines that provide an adequate return on capital. Automation will also play a significant role as a key process for safety, quality, and productivity, prioritizing projects with proven returns, especially those involving processes critical to productivity, quality, and operational stability. Ultimately, growth comes through value creation, growing with discipline, increasing margins, and generating economic value. Moving on to the next slide, we highlight the evolution of capacity optimization and operational efficiency initiatives.
We have taken significant steps in the optimization of our industrial footprint, reducing one shift at the Betim plant and gradually relocating production to other plants. This move has already generated gains of BRL 40 million in the first half of the year and will total BRL 100 million in 2026, contingent upon the completion of transfers, validations, operational stabilization, and effective reduction of the cost structure. Our goal is not to have the greatest possible capacity. It's about having the right capacity to serve customers, grow with discipline, and provide adequate return on invested capital. Furthermore, initiatives focused on quality, maintenance, productivity, and service level contributed BRL 23 million in the first half of the year, with an expected benefit of approximately BRL 140 million for the year. I would like to emphasize that this agenda is not limited to cost reduction.
We're talking about better organizing industrial flows, increasing productivity, improving quality, freeing up capacity on the most competitive lines, and ensuring that each asset has a clear role in generating returns. The company continues to expand its participation in strategic segments with new contracts at different ramp-up stages, which contribute with revenues of approximately BRL 250 million received in this first semester. Market signals are positive. The recovery of results will depend on our ability to seize the opportunities that are within our control. This will be the focus of management in the coming quarters. I now hand the floor over to Rodrigo, who will comment in more detail on the financial performance of the quarter.
Thank you, Harro, and good morning, everyone. As mentioned, revenue stood at BRL 2.5 billion in the second quarter of 2026, a 6% decrease compared to the same period of the previous year, mainly reflecting lower sales volume to the domestic market and currency appreciation throughout the period. Geographic distribution of revenue is 42% in South and Central America, 38% in North America, 17% in Europe, and 3% in Asia, Africa, and Oceania. In terms of business segment, 86% of the revenue was generated by structural components and manufacturing contracts focusing on cast iron and higher value-added services such as machining and component assembly. Distribution segment accounted for 8% of the revenue, focusing on the sale of spare parts and hydraulic products. The remaining 6% came from the energy and the decarbonization segment, with emphasis on generator sets, in-house manufactured engines, and solutions for the decarbonization agenda.
On the next slide, looking at the domestic market, revenues of units of structural components and manufacturing contracts were impacted by the weaker performance of the commercial vehicle market, especially in the heavy vehicle segments, reflecting high interest rates, higher default rates, and a more pressured agribusiness sector with effects on off-road applications as well. In the international markets, increase of truck orders from OEMs is already reflected in the company's demand, supported by fleet renewal, a result of improved demand in freight conditions, as well as investments in infrastructure. Sales intended for off-road applications in the foreign market, characterized by long production chains, performed positively during the period. This growth is related to sectors that demand applications in large engines such as data centers, non-residential construction, and mining, which helped mitigate the effects of underperformance of agribusiness in domestic and international markets.
Finally, higher value-added products accounted for 45% of this unit's revenue, reinforcing the strategic importance of solutions with greater technical complexity and a greater contribution to profitability. Moving forward, we highlight the performance of the energy and decarbonization unit. The quarter's performance mainly impacted by lower sales of generator sets, which was partially mitigated by growth in revenue from proprietary engines used in mining and construction in Brazil and abroad. As a result, revenues from this business unit fell 18% compared to Q2 2025 and represented 6% of the company's total revenue in the quarter. We have the spare parts unit. Its performance dropped by 6%, reflecting the worsening macroeconomic environment with high interest rates, pressured freight costs, and poor performance in agribusiness, impacting inventory levels in the supply chain and postponing maintenance by distributors and carriers at the beginning of the year.
The business unit accounted for 5% of the company's total revenue in the period. We have costs and expenses for the period. The drop in production volumes exceeding sales levels pressured the dilution of fixed costs and impacted gross margin, which reached 12% in the period. We also observed cost and labor pressures, as well as the appreciation of the Mexican peso, effects that were partially offset by cost reduction initiatives and operational efficiency gains. Operational expenses, on the other hand, decreased by 6% compared to the previous year due to lower freight costs, currency appreciation, and efficiency gains. Next, I highlight the top of the adjusted EBITDA, which totaled BRL 156 million in Q2 2026, with a margin of 6.3%. The margin for the traditional business was 5% in the quarter, reflecting the drop in production volumes, which impacted the dilution of fixed costs.
On the other hand, MWM's operation had a margin of 9%, stable compared to the previous year. At the bottom of the slide, we have the net result, which was a loss of BRL 11 million resulting from operational factors. Next, w e see the main effects that impacted the adjusted EBITDA in the period. The net effect of sales and production volumes generated a negative impact of BRL 6 million, while currency appreciation, mainly Brazilian real and Mexican peso, added a negative effect of BRL 104 million. These impacts were partially offset by cost and expense reduction initiatives and a more favorable product mix, which contributed BRL 68 million in the period. Looking at the final results for the period, financial expenses remained stable compared to the previous year. Meanwhile, financial revenues increased by 10% during the period, driven by a rise in cash positions in reais.
Finally, exchange rate variation on balance sheet lines in foreign currency, combined with the results of hedging, generated a revenue of BRL 24 million, compared to BRL 26 million in the 2Q 2025. Regarding the main working capital accounts, the cash conversion cycle decreased by 26 days compared to 2Q 2025, and by five days compared to Q1 2026. Compared to the previous quarter, accounts receivable grew by BRL 49 million, with a three-day impact on the average collection period, mainly reflecting higher sales volume in the second quarter. Furthermore, accounts receivable in foreign currency, which account for 65% of the total, were impacted by the appreciation of the Brazilian real. In terms of inventory, there was a reduction of BRL 117 million, equivalent to four days, reflecting working capital management initiatives, particularly for finished and work-in-progress products.
In accounts payable, there was an increase of four days, mainly due to the higher volume of purchases, especially at the end of the quarter, in addition to management actions. Continuing the presentation, efforts in working capital management supported a good level of operational cash generation in the first half of the year, with BRL 502 million, reinforcing the discipline and capital allocation, which will remain a priority. Finally, net debt at the end of Q2 2026 totaled BRL 1.9 billion, a 26% reduction compared to the same period of the previous year and 8% compared to Q1 2026. Leverage was 4x the adjusted EBITDA for the last 12 months, mainly reflecting the lower accumulated EBITDA throughout the year. In terms of debt composition, 56% of obligations were denominated in foreign currency.
On the other hand, 52% of cash position was also in foreign currency, which provided a natural protection for the balance sheet. We ended the quarter with a cash position of BRL 2 billion, strengthening the company's liquidity. Now I hand the floor to Ricardo.
Thank you, Rodrigo. Well, we remain positive about the second half of the year, especially in the international market, confirming expectations we presented in the last conference call. At that time, we were already seeing signs indicating a gradual recovery in markets relevant to the company throughout the year, especially in the United States. This outlook was supported by reduced uncertainty, particularly regarding tariffs, improved freight prices, the need for fleet renewal, and a clear increase in new truck orders from OEMs. These factors continued to evolve throughout the second quarter, as demonstrated in our clients' results and public projections.
In North America, although truck production in the first half of the year remained below the volume of the same period of 2025, our customers are adding work shifts and preparing for a higher production rate in response to increased orders. Since we are at the end of the chain, we start to feel the effects of these movements as early as the second quarter, reflecting in sales in the quarter that were higher than the same period of the last year. Our portfolios remain robust and support a continuation of sales growth trajectory in the second half of the year. In addition to commercial vehicles, it's worth highlighting the positive dynamics in off-road applications international market. We have observed increased demand for components for larger engines, especially in applications related to non-residential construction, mining, and energy.
The chain related to data centers, for example, has sustained demand for larger equipment and power generation solutions for backup, and this has helped to offset some of the weakness observed in segments linked to agribusiness. In Brazil, on the other hand, the environment remains challenging. High interest rates, tighter financing conditions, and a still pressured agribusiness sector continue to impact demand for heavy vehicles and off-road applications. Looking at the second half of the year, the order book encompassing all regions shows favorable development with growth compared to the same period in 2025 and volumes exceeding our budget. It is also worth mentioning the positive contribution of the European market, where the cycle of increased sales and production of commercial vehicles began earlier than in other regions. Another relevant point is the contribution of new contracts.
In addition to the gradual recovery of markets, Tupy has been expanding its participation in strategic segments. For 2026, we estimate revenues exceeding BRL 600 million from new projects, of which approximately BRL 250 million has already been recognized in the first half of the year. These contracts are at different stages of acceleration and are relevant for two reasons. First, because they represent a gain in market share among important customers and markets, such as Class 8 truck market in the U.S., a category in which we currently have a relatively low presence. Secondly, because they have greater added value, such as machining services, and therefore offer superior economic conditions compared to the legacy portfolio. Comparing products that are at a more advanced ramp-up stage, we can say that the contribution of these products is already visible in the results.
This is important because it reinforces a message the company has been conveying to the market. That is, we're not only seeking growth in tonnage, we also want to grow businesses with greater aggregation of manufacturing services, which strengthen strategic partnerships with customers and contribute to better margins and return on capital. The third point I would like to highlight, it is a trade agenda. As previously mentioned, the exchange rate had a significant impact on the quarter's results. A portion of our revenues has contractual adjustment mechanisms, and they allow for a recovery of some of these impacts. However, due to the time lag between the impact and the actual price adjustment, recovery is expected only in the coming quarters. This is a dynamic that we explained in the previous quarter, and it remains valid. For unprotected businesses, we continue our commercial conversations with clients.
These conversations are conducted with a focus on long-term relationships, business sustainability, and fair compensation for our products, services, and assets. At the end of these negotiations, we hope to recover the exchange rate impact in a way that exceeds current contracts clauses, but we also seek improvements in contractual protections in general. In summary, we see a more favorable combination for the second half of the year. International markets with better signals, a robust portfolio, new contracts accelerating, and a promising trade agenda. With that, I hand the floor back to Harro.
Thank you, Ricardo. In conclusion, our view is that the second quarter did not yet represent the level of results we are capable of delivering. We entered the second half of the year with a more robust portfolio and better signals in relevant markets. However, market growth won't do all of the work for us.
The additional volume will only translate into increased margins and value creation if we have a stable, efficient production system capable of adequately remunerating the capital employed. Therefore, our actions will be concentrated on the following fronts. Consolidation of cost gains and product mix with the acceleration of actions aimed at operational efficiency, quality, and advancements in products with higher added value. Second, dilution of fixed costs with increased production on more efficient lines. Third, commercial discipline, mitigating exchange rate and external effects, guaranteeing the return on capital. Fourth, controlling of working capital and reduction of leverage.
To achieve this, we are strengthening the culture of accountability for results and connecting day-to-day decisions to the company's economic outcomes. Each area needs to clearly understand its role in creating value, whether in relation to customers, products, or operations. I thank everyone's presence, and now we move on to the Q&A session.
We'll now start the Q&A session. To ask a question, please click on Raise Hand. If your question is answered, you can leave the queue by clicking Lower Hand. The first question comes from Gabriel Frazão from Bank of America. Mr. Gabriel, the mic is open.
Good morning. Thank you for accepting my question. It's about the prospects for the second half of the year. We understand that the orders portfolio that you mentioned has increased volume, which should help dilute fixed costs. At today's level, according to our calculation, that should be unfavorable to margin, at least in the next months. If you could share if the operational leverage and adjustments and capacity would be enough to increase capacity in the second half by two digits, it would be very good.
Also, the cost that you mentioned in the release, there was a very strong increase in labor costs. What was the main reason that caused this growth? Was it the engagement of labor before the demand increased? If you could tell us how that will be in the second half of the year, that would be great. Thank you.
Thank you, Rodrigo. I'll talk about the breakdown of costs. Actually, we saw a greater movement in that line of our balance sheet regarding the increase in capacity levels and the need to hire extra workers, as well as over time. There was also the salary annual adjustment. Gabriel, I'm going to comment on the exchange rate, which has an important impact on margins. As we mentioned, our contracts allow for those costs to be recovered, but there is a lag.
In the third quarter, we expect to recover around BRL 15 million, just according to contracts. We have good expectations to reach agreements with customers to recover an amount which is significantly higher than this. With other agreements in excess of what's already established in the contracts.
This is Gueitiro speaking, Gabriel. I would like to add on the issue that we continue to seek a two-digit margin. It's a set of actions that are being taken by the company. Harro mentioned some regarding operational efficiency. Ricardo just told us that this renegotiation process with customers is something we always do. There is this lag. In the second half of the year, there are triggers that will come in handy. There's also the recovery of the market. The third quarter is seasonally a better market, also with the recovery of the U.S. market.
We continue to seek the resumption of at least two digits that the company previously had for the second half of this year.
Okay. Thank you all very much.
Our next question comes from Fernanda Urbano from XP. Fernanda, your microphone is open.
Can you hear me?
Yes. Go ahead.
Thank you. First, a question about the leverage trajectory. Assuming the basic scenario of gains that you have today, what do you expect in terms of capacity and productivity? What is the leverage trajectory that you expect until the end of the year? You mentioned a profitability trajectory in the previous question. I would like to understand how much of this leverage would come from the recovery of EBITDA as the third and fourth quarter are accounted for, and how much room do you still see for improvement in working capital and reduce net debt?
The second question on long- term for Harro, we wish you success, and we would like to understand the beginning of your administration. What is the priority in your agenda? We saw Tupy taking a series of initiatives, but I would like to understand where do you see opportunities for the company to advance even further. Thank you.
Good morning. This is Rodrigo speaking, Fernanda. Thank you for the question. Talking about leverage. We always communicate to the market a trajectory of deleveraging. We now deliver the second quarter in a much healthier level than we had mentioned before, and that's the idea, to continue with the gradual deleveraging.
The second quarter, you've seen the peak, the highest level, and of course, this leverage will be lower as soon as we have resumed volumes that we expect for the third quarter, and we expect a very positive margin for the third quarter. The third quarter will be a period in which there will be some cash consumption because we are incrementing the activity level of the company, but nothing significant, and this will be returned in the fourth quarter. Our plan remains valid. We expect leverage below 2.5x by the end of the year.
Fernanda, this is Harro speaking. Thank you for your question. As I said before, looking forward, the major opportunities we believe that will help the company to add more value are the initiatives that are ongoing, such as increased efficiency. In home, we have excellent examples, as I mentioned.
The line with better quality levels, we see opportunities of stabilization and improvements, which are pretty interesting. In the labor, there are some fluctuations in labor, but I see the glass half full because there's a reduction in turnover, and we see the opportunity to accelerate automation, especially in the areas where we can improve safety and quality. This is in line with the operational discipline, but also, as Ricardo mentioned, in terms of operational expenses. We have to have the right part at the right line, at the right price. This discipline to make these reallocations creates very good opportunities.
When I compare our best lines to the best lines of customers, we don't have the same scale, and that could lead us to significant gains looking forward if we apply the same philosophy, having high volume plays and the caps and closures line with prices at the right prices and with the right complexity. Something we already see in the company and that will remain is the reduction of inventory and improvements in working capital, and the allocation of CapEx exactly at the lines that are our main ones, automation, improvement of safety and quality, seizing the opportunity that is available. Maybe it's a mid to long-term, but it will happen in a more intense way. These are the opportunities that I see to improve in the future.
That's very clear. Thank you.
Our next question comes from Gabriel from Itaú BBA.
Good morning. Thank you. I would just like to make a follow-up in terms of resumed volumes in the second half, and also for next year. Since the last conference we had, what has changed in the recovery pace? I understand that it's clear to everyone that there will be a recovery in the second half of the year, but I would just like to understand whether the pace of recovery of new orders and the expected increase in cost in OEMs has increased or decreased lately. If this specific point has a positive or negative influence on Tupy, and how could we think about increases in volume for 2027 as well? Thank you.
Hello, Gabriel. This is Ricardo speaking. Well, answering your question objectively, the data we have that were made available since the last call support our vision for a strong second half of the year, much stronger than the first, and a trajectory that will possibly be extended up to 2027. What we've seen since the last call is the confirmation of the trend of increase in new orders for fleet owners to OEMs, the result of these new orders in the second quarter is almost 200% higher than the same period of last year. That's for Class 8 trucks in the U.S. of 180,000 units, the total number. There are two conclusions that we may reach. There's more room in terms of production capacity in the second half in the U.S. for our OEMs, and this is the highest backlog since the second quarter of 2023.
That's a clear confirmation that recovery is at full speed. I would also like to take this opportunity to talk about what supports such a recovery. We have been talking about the fundamentals recovery, especially freight prices, profitability of fleet owners, and this is confirmed. The spot freight rates in the U.S. have grown 20% when compared to the beginning of the year, and that's the main factor that supports this recovery. We said that the EPA27 could represent an upside. We never said that sales and production recovery would come from pre-buy , but rather from fundamentals for the industry as a whole. That's what we see happening. Fundamentals also include the need to renew the fleet, because the average age of the fleet is six years now on average. It's the highest in nine years.
It's very expensive for fleet owners to drive old trucks. With that, the industry decides to put in new orders. The robustness of these new orders is clear, and also the fact that there will be a lack of production capacity to manufacture everything. That should be the reality also for the second half of this year and the beginning of 2027 as well.
That's clear. Thank you.
The next question comes from Andressa Varotto from UBS BB. Mrs. Varotto, your mic is open.
Good morning. Thank you for taking my question. Two quick points. First, a follow-up on the discussion of the second half of the year. When we look at the second quarter. Except for the domestic market and exchange rate, we see that there has been a significant improvement in earnings looking at structural area in the domestic market, structural components, and that tends to improve even further. We still think about exchange rate, which is an uncertainty. We don't know whether this will be more favorable or not.
Also the domestic market for which there's no prospect of recovery. How much could that continue to influence negatively the improvements in results? I think you've mentioned the attempt to recover in terms of exchange rates, but if the international market doesn't perform well, what could be the effect? The second question is about U.S. tariffs. My understanding is that since most Tupy products are under 232 rule, there are no major changes. Recently, we saw extra tariffs being applied to Brazil. I would just like to confirm whether there is no additional impact in addition to 232. Thank you.
Hello, Andressa. This is Ricardo. Good morning. I'll start by answering your question about tariffs, and then I'll hand it over to Rodrigo. As you said, in our case, our products fall under 232, so all this noise we saw about new tariffs lately under Section 301 do not impact the company. This has been decided since November last year, and as we've mentioned in previous calls, the impact of tariff was negotiated with customers and transferred to prices.
Good morning, Andressa . This is Rodrigo speaking. Thank you for the question. We have to think in a set of actions. We've seen the U.S. market working and increasing, but exchange rate is an aggressor to our earnings. How do we deal with that?
We discuss and we negotiate with our customers also to achieve a new balance in terms of financial economic balance of these contracts. Most of the homework should be done in-house. We've put this to the market very clearly because everything is a result of our efforts. If, one, we're able to reduce capacity like we did in Betim with an efficiency project, all of that is perennial and provides significant benefits. We always try to balance these results with a set of actions. We believe now that all the projects will favor the company. Exchange rate is an offender, yes, we are discussing that with our customers as well.
Thank you.
The next question comes from Kiepher Kennedy from Citi. Mr. Kennedy , your microphone is open.
Hello, everyone. Good morning. Thank you for taking my question. We have two questions. Regarding Class 8 from the U.S., it is clear that it is indeed strong. This is a very cyclical segment, very strong purchasing periods, followed by lower periods. When you look at the indicators that you follow with OEMs and customers, do you believe that we're still far from this cycle peak? Even more importantly, what is the confidence level of the company that demand will remain at healthy levels throughout 2027, even after this stronger period of new orders?
Maybe a follow-up for the second question. Thinking about Brazil, after these adjustments of capacity that were done lately in these last years by the company, Tupy is cleaner now, more prepared to meet a stronger demand when it comes. At what level this resumption of demand will happen without the need of additional relevant investments? In other words, how much available capacity does the company have when the demand increases in Brazil?
Hello, Kiepher. This is Ricardo speaking. Thank you for the question. I'll start by answering the question about the U.S., and then Harro will talk about capacity. About how distant we are from this cycle peak, I'd say we just left the valley behind us. Class 8, looking at annualized figures for the first quarter, the industry produced 215,000 trucks. The peak of this industry is 340,000 per year, or was in the past. We are very distant from it. The annualized production rate of the second quarter, based on available data, point out to something around 250,000, 260,000. OEMs are getting ready to meet an even higher demand with further work shifts. We should see annualized rates in the second half of the year around 280,000.
There is room for the industry still before it reaches its peak. These peaks were favored or boosted somehow by changes in the emissions rule. As it was defined by the beginning of this year with EPA27, this transition is more gradual. We won't see such a strong effect. That is favorable to the industry and to the supply chain because it prevents sudden changes, and that is good for stability. Therefore, we see it positively.
This is Harro speaking. Thank you for the question, Kiepher. When I say that Tupy is lean, I would say that it will become even leaner. We are pursuing some extra projects in addition to those implemented already. Looking as a production engineer, we have OEE that's very high, and other lines are very low. The translation is a capacity gain.
We won't need to make significant investments to have added capacity in productive lines. I always divide lines that are competitive and non-competitive. In non-competitive lines, we will continue to reduce their capacity unless someone is willing to pay for that cost. We'll make some agreements with customers if they want to use that non-productive capacity, then we can discuss that. We are focusing on having the right part at the right line. We have a lot more capacity to be enjoyed when compared to the current one. At Joinville, for example, we used to have 24 capacity, and now going back to that level with no investment, just the only change in labor in order to stabilize these changes in the market, ups and downs of the market, we'll invest, but more in automation. Aiming at safety, quality, and productivity to make it stable.
As I always say, once those productions lines are stabilized, we'll be able to grow in productivity and capacity. I don't see any investment in the base, but rather punctual investments. I mean specific investments with significant returns in order to stabilize the competitive production capacity.
Okay, thank you very much. Have a good Friday.
Next question comes from Marcelo Motta from JPMorgan.
Good morning, everyone. I have a question about the future restructurings and also all the savings that you expect for the second half of the year. It is our understanding that most of these gains you mentioned, either in the footprint, the BRL 100 million plus BRL 60 million, as well as BRL 120 million in productivity and quality, is that in-house already, right? That's a gain of something you already spent during the first half of the year.
Now looking forward, what would be the future gains that you seek when you look at the rollout or expansion of this program that you're implementing, and what would be the cost involved? Maybe it will be an ongoing project, so there will always be restructuring costs to remove less profitable products from the lines that always involve changes. We would like to understand future savings as well. What would be the expenses to reach those savings? Thank you.
Thank you for the question, Marcelo. This is Harro speaking. Well, we're talking about optimization, and we talked about removing shifts, but it will continue because, as I said before, all the capacity that we identify that's not competitive will only stand if there is a return. The right part on the right line at the right price.
On the other hand, as I mentioned, it was a nice surprise to see that Tupy has excellent assets and plants that are actually very good, such as the mother plant in Joinville. Even there, where there are seven lines, some are state of the art, others are not. At Betim plant, we are removing capacity from some lines because they are not competitive. I envisage that we'll continue this work. This was the first year. Numbers are smaller in the first half of the year because this is something that started in the beginning of the year, and we'll reap the fruit of those initiatives of improving quality and productivity, as well as maintenance. Maintenance in terms of reducing capacity so that maintenance costs will no longer exist. In terms of quality, Ricardo mentioned, we have BRL 600 million, out of which BRL 250 million has been recognized already.
This is a learning curve. There are quality gains to be executed, including in new products. There is always a learning curve. Then we'll again produce at high quality levels. There are future gains in quality with no investments, future gains with capacity, with improved efficiency at low quality, and focusing on safety and quality through automation. For those, that is a new front that you will hear from us reporting on it from now on.
That's very clear. Thank you.
The next question comes from Werner Roger from Trígono Capital. Mr. Werner, your microphone is open.
Okay, thank you. Welcome, Harro, to Tupy, and success on your new journey. First, two questions about capital structure, not leverage, but the new funds, I think, Sovereign Three, and whether they would be used to reinforce cash or reduce the cost of the current debt.
Regarding industrial activities, biomethane and ethanol and even generators and BNDES funds that finance biomobility, I would like to understand what is the market like, and what are the prospects for biomethane and also ethanol-driven engines and other engine sources such as biomethane in pumps and generators, all the areas that demand cleaner, more renewable fuels.
Okay, thank you for the questions. This funding with BNDES, this loan will meet the requirements that would be support to working capital for exports and also optimization of the capital structure of the company.
This is Gueitiro speaking. Thank you for the question. I know that you are enthusiast of biomethane and ethanol and Brazilian energy sources. Answering your question, we have the support of BNDES, Finep, and other innovation areas to develop such technologies.
We're talking to the market, and that this is an avenue that leads Tupy and MWM to a new cycle. We really invested a lot in this new energy. That's a concept that Harro is bringing to our discussions. OEMs worldwide see Brazil as an avenue for growth due to agribusiness and the industries that generate such energies, and it needs to evolve at those niches, which are niches for them, but for us are opportunities of scaling. We acquire that competence with MWM to support them in developing those engines. We have the fuel, but you have to have the engine and the equipment. We have accelerated prospects for growth in those avenues. Of course, that's not reflected in the EBITDA, but it's more in the CapEx for that. It will certainly be an area where we'll derive revenues soon.
Sub-generators, just to follow up, are there prospects of using biogas that also replace diesel?
Perfect. Well, says Gueitiro.
There are segments that need those equipment, and with the new portfolio of new fuels, that's also part of our portfolio, Werner.
Okay, thank you very much.
The Q&A session has now ended. I now would like to give the floor to Mr. Rodrigo Périco before we proceed to the company's final remarks.
Well, I'd like to leave a personal message. Today, I'm closing a chapter at Tupy. I had the privilege of participating in an extremely important period in the company's history. These were years of complex challenges, important decisions, and a lot of work to strengthen fundamentals, improve governance, enhance financial discipline, and prepare the company for a new cycle of value creation. None of that was built individually.
The progress we have shown to the market throughout this journey is the result of the talent, dedication, and commitment of an outstanding team, coupled with the constant support of the Board of Directors and the trust of our shareholders, investors, and creditors. I am proud of what we have accomplished together. More important than any quarterly result, we helped build a stronger, more prepared organization with a solid foundation to face challenges and seize opportunities in the coming years. As I conclude this chapter, I leave with a profound sense of gratitude. I am convinced that this company made a decisive contribution to the development of my professional career.
I thank the Board of Directors for their trust and the always qualified debate, our shareholders, investors, banks, and creditors for their support and credibility placed in the company throughout this journey, and my colleagues on the executive board for their partnership, sense of purpose, and ongoing commitment to value creation. My special thanks also to our employees, who transform strategy into execution and results into reality every day. Allow me to make a special mention, too, of the finance team. I had the privilege of working alongside extraordinary professionals who faced increasingly complex challenges with competence, integrity, resilience, and a sense of ownership. Much of what we have built over these years carries the silent yet decisive dedication of this group of people. I leave this chapter proud of the journey we've taken, respectful of the journey we helped build, and with absolute confidence in the company's future.
The fundamentals are solid, the strategy consistent, and above all, the people who support this organization will continue to drive its growth and value creation trajectory. To everyone who was part of this journey, my sincere thanks. Now, I turn the floor to Mr. Harro for the final remarks.
Thank you, Rodrigo. On behalf of Tupy, we would like to thank you for your contribution during all these years. Your leadership played a significant role in very important moments. Your professional performance and value generation left important marks in the company. I wish you success in the future, and thank you very much for the legacy you leave at Tupy.
To wrap up, we're optimistic about the prospect for the rest of the year. We have more robust orders, and we continue to advance with an important in-house agenda focused on efficiency, productivity, discipline of capital, and cash generation. This agenda is being conducted by a very competent team committed to creating value for the company. As already announced, starting next week, Augusto Ribeiro will be part of this team as CFO and new IRO of the company. He will be with us in the next conference call. Thank you all very much, and have a good day.
The conference call of Tupy has now ended. Thank you for attending, and have a good day.