That all participants will be in a listen-only mode during the company's presentation. After Ultrapar's remarks are completed, there will be a question and answer session, and at that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. We remind you that questions which will be answered during the Q&A session may be posted in advance in the webcast. A replay of this call will be available for seven days. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ultrapar management and on information currently available to the company.
They involve risks, uncertainties, and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Ultrapar and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'd like to turn the conference over to Mr. Rodrigo Pizzinatto. Mr. Rodrigo, you may now begin the conference.
Good morning, everyone. It is a pleasure to be here once more to talk about Ultrapar's results. Starting on slide number two, I remind you that both the earnings release and this presentation consider Ultrapar's data from continuing operations in 2023. As for 2022, the company's data is presented in the pro forma view, considering the sum of continuing and discontinued operations, as disclosed throughout last year, unless otherwise stated. Moving now to slide number three, with Ultrapar's consolidated results. As you can see in the chart in the upper left side, our recurring EBITDA from continuing operations totaled BRL 1,992 million in the third quarter of 2023, 124% higher year-over-year. This increase is due to the higher EBITDA at all businesses, especially Ipiranga.
Results that we will, I will go through in detail in the next slides. Ultrapar's net income was BRL 891 million in the third quarter, compared to BRL 83 million in the third quarter of 2022, mainly on the back of the higher EBITDA from continuing operations. Investments from continuing operations totaled BRL 380 million in this third quarter, 27% lower than that of the third quarter of 2022, due to lower investments at Ipiranga, partially offset by higher investments at Ultracargo. We had, in the third quarter, an operating cash generation of BRL 1,901 million, BRL 609 million above that of the third quarter of 2022.
This increase is a result of the higher EBITDA, partially offset by the reduction in draft discount balance and the investment in working capital in the third quarter of 2023, now rising from the increase in fuel prices. I remind you that in the third quarter of 2022, on the other hand, there was a release of working capital as a consequence of the reduction in fuel prices in that period. If we exclude the reduction of BRL 294 million in the draft discount balance, the operating cash generation in this third quarter was BRL 2.195 billion. Moving now to slide four to talk about our liability management. We ended the third quarter with a net debt of BRL 7.1 billion, a reduction of BRL 924 million compared to June 2023.
This decrease resulted from greater operating cash generation, partially offset by the payment of dividends and the reduction of BRL 294 million in the direct discount balance this quarter. In addition to these effects, during the third quarter, we received the second installment from the sale of Extrafarma in the amount of BRL 198 million, and we disbursed BRL 210 million for the acquisition of Opla. Our leverage went from 2.1x in June 2023 to 1.4x in September 2023, the lowest level of the last 10 years, on the back of the higher LTM EBITDA from continuing operations with cash generation and consequently the reduction in net debt that I've just mentioned.
I'd like to point out that the numbers of net debt still do not include pending receivables of BRL 932 million related to the sales of Oxiteno and Extrafarma. We've included, at the bottom of this slide, a table with the total amount of draft discount and vendor lines, as well as pending receivables from the sales of Oxiteno and Extrafarma, all lines highlighted in our balance sheet. The net debt of September 2023, adding the draft discount, vendor, and divestment receivables, would be BRL 7.7 billion, which is BRL 1,746 million lower than the balance of September 2022, one year ago. Moving on to slide number five, to talk about another excellent quarter of Ultragaz.
The volume of LPG sold in this third quarter was 1% higher year-over-year, due to a 4% increase in the bulk segment on the back of higher sales to industries. The bottle segment, in its turn, remained flat. Ultragaz SG&A in this third quarter was 15% higher than that of the third quarter of 2022, due to two main factors: expenses with freight due to higher sales volume and higher expenses with personnel, mainly collective bargaining agreement and variable compensation, in line with the progression of results and a larger headcount, due to the acquisitions of Stella and Neogas. Ultragaz EBITDA totaled BRL 453 million, 36% higher year-over-year. This growth is mainly explained by efficiency and productivity initiatives implemented in the last quarters, by better sales mix, and by inflation pass-through, despite higher expenses.
For the fourth quarter, we expect a profitability measured in EBITDA per ton, similar to that of the third quarter, despite seasonally lower volumes. Moving now to slide six to talk about another great quarter of Ultracargo. The company's average stock capacity was 1,059,000 cubic meters in the third quarter of 2023, an 11% growth year-over-year. This increase results from three capacity additions carried out in recent months. 90,000 cubic meters coming from the acquisition of the 50% stake in Opla as of July. 12,000 cubic meters from the acquisition of the Rondonópolis base from Ipiranga in September, and 10,000 cubic meters relating to the expansion of the Vila do Conde terminal. These capacity additions had no material impact in this quarter's results, and should begin to gradually contribute to the upcoming months as operations ramp up.
The cubic meters sold increased by 26%, mainly due to higher handling of fuels in Itaqui, in Santos and in Suape, and the startup of operations in Opla. Ultracargo's net revenues were BRL 264 million in this third quarter, 18% higher year-over-year, as a result of spot sales, higher cubic meters sold and higher tariffs. Combined cost and expenses were 8% higher than those of the third quarter of 2022, as a result of higher personnel expenses, mainly collective bargaining agreement and variable compensation, in line with the progression of results. We also had higher expenses with advisory and consulting services linked to expansion projects. Ultracargo's EBITDA totaled BRL 173 million in the quarter, a growth of 27% year-over-year, due to higher capacity occupancy with profitability gains, spot sales, higher tariffs, and productivity and efficiency gains, despite higher expenses.
EBITDA margin was 65% in this quarter, 5 percentage points above that of the third quarter of 2022. For the current quarter, we expect Ultracargo to continue its good operating performance, but with fewer spot sales, marginally reducing its results. To conclude this presentation, moving on to slide seven, let's talk about Ipiranga's results. Volumes sold in this quarter decreased 2% year-over-year, with a 3% reduction in the Otto cycle and a 1% reduction in diesel, mainly due to the strategy of lower sales to the spot market during this period. We ended this third quarter with a network of 5,816 service stations, 465 stations less than that of June 2023. In September, we concluded the process of managing the legacy of service stations started in 2022.
A total of 70 new service stations were added to the network, with an average volume contribution of 288 cubic meters per month. On the other hand, 535 service stations were closed, with an average volume contribution of 57 cubic meters per month. The greater number of stations closed this quarter relates to the decision to also close service stations with commercial practices not aligned with business principles and in disagreement with contractual obligations. This increased level of closure of stations did not have a relevant impact on Ipiranga's market share or results. In addition, we ended the quarter with 1,542 AmPm stores, with same-store sales growth of 9% year-over-year.
Ipiranga's SG&A increased 27% in the quarter due to four main factors: higher provisions for contingencies, higher provision for doubtful accounts, higher marketing expenses, and higher personnel expenses, mainly collective bargaining agreement and variable compensation, in line with the progression of results. The other operating results line total -BRL 178 million in the quarter, in line with the third quarter of 2022. The disposal of assets line total BRL 68 million, mainly due to the capital gain related to the sale of the Rondonópolis base to Ultracargo in the amount of BRL 59 million, and the sale of three real estate assets. Ipiranga's EBITDA total BRL 1,513 million in the quarter, 184% higher than that of the third quarter of 2022.
Recurring EBITDA was BRL 1,445 million in the quarter, 199% higher year-over-year. The higher EBITDA mainly reflects two factors. First, margins benefited from the inventory gains caused by the increase in fuel costs throughout the quarter. I remind you that in the third quarter of 2022, we had reductions in fuel costs and inventory losses. The second factor was the normalization of the commercial environment in the third quarter of 2023, due to a more regular product supply in the market, which affected the second quarter results. These two factors were partially offset by higher expenses. As you may have noted, the fuel distribution sector has had more volatile results in recent quarters. Therefore, we also highlighted on the slide the EBITDA cubic meter of the last twelve months, helping to provide a better perspective of the results over time.
In addition to the normalization of product supply, the third quarter result benefited from inventory gains. For the fourth quarter, considering the current scenario of product supply and no significant impact of inventories, we expect a profitability measuring EBITDA per cubic meter above that of the last twelve months, and continued recovery of the return levels of the industry. With that, I now conclude my presentation. I appreciate your interest and attention, and let's now move on to the Q&A session, in which we are available to answer your questions. Thank you.
Ladies and gentlemen, we will now open the floor for questions. We will take questions from investors and panelists. To send a question, please press star one on your touchtone phone, and if at any point your question is answered, you may remove yourself from the line by pressing star two. Questions will be taken in the order they are received. We kindly ask you to, when you pose your question, pick up your handset to provide optimum sound quality. Please hold while we poll for your questions. If you are following the conference call via webcast, please click on Question to the Host to send your question. The first question comes from Monique Greco, Itaú BBA.
Hello, everyone. Good morning. Can you hear me?
Yes. Good morning, Monique.
Good morning. Thank you for your presentation. Congratulations on your very strong results. I have two questions on my side.
Let me start from the end of your presentation, please, Renato. You talked about the dynamics expected in terms of margin for quarter four in Ipiranga. Can you please share with us a little bit more about what you are feeling in terms of the competitive dynamics in quarter four? We saw that in the first half of the year, this competitive dynamics was very linked with products imported from Russia. So can you please share with us what you see for the dynamics, the diesel dynamics in quarter four? And also, we have been talking a lot about diesel and the auto cycle ends up as staying in the background. So, I would also like to hear from you what this dynamics look like for the auto cycle.
My question to Lutz is that in Ultragaz, you talked a lot about some opportunities for growth, with a strong focus on agri business and also energy transition. So can you please talk more about this? What are the prospects and opportunities in this sector? What are the main criteria that you consider when you're looking at these opportunities? Thank you.
Hello, Monique, this is Linden. On your first question, was about competitive dynamics. Of course, this is a very competitive market, and in quarter four, we are seeing a somewhat more balanced situation in terms of supply and demand, which balances out the market. But we have to look at this market as a movie and not a snapshot.
What we saw in quarter three was indeed a favorable scenario for our business, but we cannot forget that we were coming from a quarter one, which was very poor in terms of we had some major inventory losses with a high supply of diesel, as you said yourself, and this scenario is starting to change in quarter three. Then we had some inventory gains and better market conditions. In quarter four, I'd say the situation is more balanced, but it is a transition quarter because we are also starting to see some parity opening up. We start to see a higher appetite for imports, so I think we will have a transitional quarter in quarter four. But as you heard in Rodrigo's explanation, we are looking at quarter four with a potentially with higher margins than what we saw in the past twelve months.
And just an additional comment, Monique. In the first half, we had an excess of products in the market, and retail fuel is no different from other industries. When you have excess product, this will negatively impact your margins, which is what we, and what we had in quarter three, and that should remain in quarter four, is this return to normal levels, normal stock levels in the industry, and that allows our margin to return to the levels expected. So now I'd like to hand the conference over to Marcos.
Hello, Monique. Good morning. So let's start by the criteria, which I think is the most important point in your question. We will have to have huge discipline looking at the risk-return ratio of our projects. As we said, we want to be more exposed to every business. We want to grow more in these regions, in our three areas of business, Ultragaz, Ultragaz, and Ipiranga are making all the effort to expand their operations in these markets. And we are considering multiple projects and companies that have a higher exposure to these markets. And the main criterion here is the return on investment, of course, combined with the risks of this investment. So these are more mature projects that give us slightly lower returns, but have also lower risk, are very attractive, and less mature projects have higher risk, and that has to be justified.
And also, about risk return, it is important to note that even with the current return levels, the risk-return ratio of fuel distribution project in Brazil is not yet appropriate. We have a volatility level that we think is here to stay in this segment, and this would warrant a requirement for a higher return from this project. Today, we see, for example, that the price in Brazil is higher than the international price, so this increases the entrance of profit. So we should have an inventory loss, because we should see a price reduction in Brazil shortly in the future, because it doesn't make sense to have a price which is that higher than the international price. So we will see this volatility taking place. You, it's what I said about seeing it as a movie versus a snapshot.
We need to more and more focus on seeing the past 12 months and not just the past quarter, to evaluate whether we are going in the right direction or not.
Perfect. Thank you.
The next question comes from Leonardo Marcondes, Bank of America.
Good morning. Thank you for taking my question. I have two questions about Ipiranga. My first question is about the service stations. The can you please recap what are the effects that we can expect Ipiranga after you finish this process with the service stations? And also, what can we expect from the company in terms of the future, or your brand strategy for the future? And also, I have a question about Ipiranga's margins.
You already mentioned what you expect for quarter four, but looking at the mid- to long-term, I think your market is seeing a recurring margin of about 100 or 110 BRL per liter from you. In your mind, does this level of margin make sense, or do you think you can have a stronger recurring margin for Ipiranga looking forward? And still within this context, considering the four pillars of the turnaround process of the company, is there still room for improvement, in your opinion? And if yes, this improvement will come for each pillar, for which pillars? You remember that there was. I remember you mentioned that there were some improvements to be made in your network and logistics, so can you give us more color about that?
Hello, Leonardo. Good morning. Thank you for your question. Well, about the close down of service station, I'd say that the effect will be a healthy effect, both from the Ipiranga standpoint and also the reseller standpoint. This was a clearance of legacy service stations that we absolutely had to do, and as you said, we are coming to the end of this process and what we still expect to have in the future is a natural clearance of our network of service stations, which takes place naturally. But the bulk of this process is already finished, and you start to see the effects, for example, when you start seeing productivity gains or increased productivity of each Ipiranga service station. For the brand strategy, we will continue with the same strategy that we have been using so far.
We are making investments, raising the bar of quality because of the reasons we mentioned before, because we want points of sale that have the highest potential. We are looking at our business, prioritizing the highest returns on service stations, because this brings us a healthier relationship, and we will keep investing as we have been investing in the past years. As I said, we're now a slightly higher level of quality. We are always raising the bar. Now, as for the margin, we talked about this during Monique's question, but you asked us if this makes sense. One thing is what we expect, and another thing is what we should have according to the compensation level expected for the business.
For the next quarter or this quarter that is starting now, we're expecting a margin higher than what we saw in the past twelve months. But what we should have in this business is something that could provide us with a return of about 20%, which is what we are pursuing. So as an industry, I think we still have room to improve in terms of profitability, and that's what we have been working for.
Just one follow-up question about the service fee. I remember that there was the point of depreciation, and now with a healthier network, I imagine that there will be a positive impact on the receivables of Ipiranga, overall. So can you please talk about this, just to recap?
Hello, Leonardo, this is Rodrigo. Yes, we should see a benefit in the reduction of amortization and depreciation for Ipiranga, but remember that we have other investments to make, so it's a dynamics in our depreciation. But this standalone effect finished now with the month of September, so we should see this benefit of reduction in our depreciation and amortization. And I didn't understand your question about the impact on our receivables. Well, now that you have a healthier network and more of a plus network of service stations, is there still room to improve your receivables? I don't think that's relevant, Leonardo. The impact on receivables reflects the best situation in terms of receivable now, so we don't have any additional recognition to expect in the future or looking forward.
Okay, thank you.
And Leonardo, to your last question about if there's any room for improvement, and you talked about the four pillars.
Oh, yes, the four pillars. Yes. In your investor day, you mentioned the four pillars. And the point that there's still room to do more in terms of trade and logistics. So I want to know if you've seen any evolution since then that you can share with us?
So first, just a general comment. I don't like talking about turnaround anymore because I think we're past that, but I want to talk about improvement processes.
Yes, indeed, in line with the four pillars that we have been discussing for a long time now, we even said in Ultra Day, and we have our logistics pillar, which is more of a short-term pillar, and it will still take us some time until we can actually enhance and potentialize the improvements that we see for this pillar. We're expecting to potentiate these gains by the end of 2025. But you're right, certainly we have room to improve further in Ipiranga's operations.
Very clear. Thank you.
The next question comes from Thiago Duarte, BTG Pactual.
Thank you. Good morning.
Let me bring back the discussion to Ipiranga. We already talked about the margin with some very good information, but I heard Linden talking about this when we talked about your brand strategy, because I think that these two things are related. But I want to go back to the topic of the share, because until the end of the first quarter, there was, as you said, there was excess product in the market, excess molecules, so you had a consistent loss of share, not just for Ipiranga, but for the main three, the three main businesses in the industry, in the three main companies in the industry. And now, in the second half, there seems to be a recovery in the share, and we talked about the imports from Russia, but this loss of share also took place in the auto cycle. So I want to hear from Linden.
I know that this is not the utmost goal of everything, but I believe that with better operations now and a more balanced market and your value proposition after the turnaround is finished and your value proposition is very consistent and positive. I believe that you are expecting a resumption or a recovery in your market share or in your volume as a positive symptom of this turnaround.
So do you think it makes sense to think of this evolution as a positive indicator looking forward, also considering your brand strategy? I think this positive value proposition will increase the opportunity to explore your brand, and as you said, you're raising the bar at every time. So this is my question. And my second question is for Marcos. And we know that the company's leverage today is much lower.
You have a good cash generation, and your results are improving more and more, so the market wants to know about your next movement. Have you discussed at a high level. You discussed this at a high level during Ultra Day, and Marcos talked about this in this call. But my question is, what format should we expect for your capital allocation movement in the future, aiming at growing the company? I heard from Marcos during the other day, that the company no longer has a dogma of having to control 100% of the business. You're thinking of, partnerships or minority stakes.
So Marcos, I don't know if you can, well, after time has passed, can you give us more information about what we can expect, and what, if the company is willing to minority stakes or non-controlling stakes on other companies, and what are the, the companies that you're considering in this pipeline? Thank you.
Tiago, let me ask you a quick question. First, in terms of market share, we need to break this down. For example, if you look at the share of contracted volume in our net, in our own network, we don't have any loss of share. If you look in, in the last two years, there was an evolution in our share, where we actually lost share because of the market decision that we made was in the spot market.
This is due to issues related with the supply, the supply issues that we had in the first half of this year. Now, the spot market represents a price-sensitive volume, so when you think recovering is a good strategy, then you can go back and compete in that market. So we prioritize the supplies to our own network because we were more concerned with supply at that time, so that's why we made this the top priority, and we stopped temporarily supplying to the spot market.
I'm not concerned with the share. The share is a consequence. What's important for me is the scale, the volume, and the share is a consequence of the quality of your value proposition and the work that you do. If you make high quality investments and have high quality operations, the share will come naturally. For the spot market, we will work on the spot market as it goes back to making sense to the company.
Tiago, first, I think that our role here as a capital allocator is to not be anxious or not to be as anxious as the rest of the market. We have to carefully look at the opportunities, and we don't control their timing. We have to be prepared for the opportunities, and this we have been doing really well. Our balance today is well prepared for any opportunities that may arise in the future. But having said this, indeed, our main drivers here are the risk and the return that we expect from those projects. Our three businesses have been making investments and have been looking for avenues of growth.
In some cases, we made some small acquisitions and organic acquisitions, which is the case of Ultragaz, which is now growing organically with the companies acquired. Also, in cargo, we have a project of exploring the inner part of the country and out of the capitals with a broader logistic offer. Now, as for Ultrapar, I think that first, in Ultrapar, we have a higher requirement for a higher return, because the money is closer to the shareholders, so we need to have higher return rates for those projects. Now, in terms of the format, which was your specific question, we have fewer paradigms today, but we will not make investments where we do not have a relevant influence in where that business is heading. So we are adding value with the strategy, the structure, the business model, and we will not go for acquisitions where this cannot be leveraged.
So I don't have to acquire 100% of a company. I don't need to be a controller, at least not initially, but I need to have a clear path in terms of the influence I want to have on that business. So for example, if acquiring a minority stake is not something that interests us, because there would be a controller in the picture. So in the end of the day, we have a high level of clarity about what we want, but no, we do not necessarily need to acquire 100% of another company. What we need is to have a good return on investment versus the risk. And we want to buy efficiently.
It is better to go for those projects and just buy 100% of a company and trying to control the timing of a transaction, which is not something that is under our control. I hope I answered your question.
Yes, thank you.
The next question comes from Luiz Carvalho, UBS.
Hello, good morning. Thank you for taking my question. Congratulations on the results. I have two questions, one for Lutz and one for Linden. And looking at things from a different angle. In our last few calls, you shared a lot about this company's strategy and capital allocation. But I want to know more details about the time frame and prioritization. So I want to understand how much you're focused on diversification or capital allocation, and how much that is to be done in terms of operational improvements.
I will no longer call it turnaround. So is there anything that you can do still, in terms of your management preparation and that initial plan of having just one position in your board? So how are you allocating time, and what are the priorities in the next 12 months? And my second question, going back to what Lyndon's comment, it is very clear that there was an improvement in your competitive environment.
I think it is unanimous that both small and larger players are more focused on profitability, and you mentioned a 20% return rate as an appropriate level for Ipiranga, considering all the moves and volatility. Thinking of the margin, how far is Ipiranga from the rest of the industry? For example, you talked about diesel, and then there's ethanol. Do you think we will see a fast improvement in these fields? And how do you see the competitive environment looking forward and your probability of reaching the 20% return rate, as you mentioned?
You sound like my mother, Luis. But when you ask about my time allocation, I don't have a very fixed routine. It will depend on the weeks and the demands of each week. Rodrigo and I, we have a monthly routine with our business. Maybe I'd say it takes 25% of our time, and this is part of our routine. The other 35% depend more on what's happening during that month, in terms of business and also other aspects.
Rodrigo and I also dedicate some time to governance, to the board, and the transition that is taking place and has been taking place in the board, and the major changes that we made in our governance and the generational transition. So I don't have a straight answer for you. But I don't think we have any time restriction, if that is your concern, for us to dedicate to new investments. We have the capacity. We have built this capacity over time, so I don't think there's any problem in that sense.
Luis, I think we have some positive points that allow us to believe that we can go back to the 20% return rate, and the industry has been at that level before in the past, and but we also have risks. And it's not just about the margin. In returning to the 20% level, it's not just about the margin. It's, it's the margin, but it is also the environment. And specifically at Ipiranga, as we have been saying, we have some paths of improvement in our operation that will help us get closer to the 20% return rate. Brazil has seen some advancements in the regulatory framework. You talked about some tax-related issues, which are positive, but there are also risks to this environment. We have irregular trade, we have tax evasion, we have problems with counterfeit products that we need to fight together as an industry.
So as I said, you're looking at a snapshot. If we look at a snapshot of quarter three, we are not that far. But if you look at the movie, there's still a lot of work to be done until we can get to the 20% return rate, but we are in the right track. But it's important, we, we shouldn't just wait for the margin to solve everything. We have to work also on the competitive environment and other business aspects, and we also have some homework to do, some housekeeping to do, to improve Ipiranga's operations, as we have been doing in the past two years.
Perfect. Thank you. Very clear.
The next question comes from Rodrigo Almeida, Santander.
Good morning, Lutz, and the rest of the team. I have two questions. First, we already talked about this today, but I want to look at it from a different angle. I want to talk about the company's capital structure.
Both in terms of inorganic growth or capital allocation, and also the current capital of the company. So looking at the past six months, I know it is difficult to foresee which opportunities will come in the future, and to understand in terms of these potential products. But in the short term, it is clear to us that you will continue to generate cash, and you have a relevant cash entry expected for the next quarter. So I want to talk about the capital structure of the company. Where do you think the company stands in terms of its capital structure, and how efficient this capital structure will be three or four quarters from now? And what are the implications for dividend payout, buyback, and inorganic growth? I understand that you have a dividend policy.
I want to understand how the efficiency of your capital structure in the upcoming quarters can have an impact on that. My second question is also about going to the slight difference. You talked about your societal reorganization and how changing the leadership from a conglomerate to a holding. I want to understand, what are your next steps? First, in terms of this reorganization, what can we expect in terms of more capital structure for the different businesses? For example, for Ipiranga, I don't know if maybe you want to increase the leverage for Ultragaz and Ultracargo, or maybe optimize your... Maybe organize your liability structure, your debt structure. Also, within the process of portfolio optimization, are you expecting something similar to what you recently did in Ultracargo? Are you going to do something similar with Ipiranga? Thank you.
Good morning, Rodrigo. Thank you for your questions. Well, since the evolution in the results and, and our cash flow, since we had this evolution in our results and cash flow, we can say that we are in a comfortable position in terms of cash generation. We are using our cash for investment projects. We have a concentration of investments in quarter four, and we recently had a disbursement to acquire Opla in quarter three, also the investments in Neogas and Stella. The way we look at our investments, Marcos talked about this, is very risk sensitive. So is it a business that we know well? Because in this case, the risk is much easier to measure, and the lower the volatility of a company's business, the best you can foresee your flow.
Ultracargo is a more stable business, and Ultragaz is more volatile, and that's why the return rates of Ipiranga should go back to the level of 20%, which is suitable to the risk of the business. Now, when we go from very well-known businesses to businesses that we don't know that well, the level of return that we require is higher due to the lack of knowledge of that business and the higher level of risk. So looking forward, if we don't have good applications for the cash and good prospects for mid- to long-term projects, we will increase the payment of dividends, because we don't want to be at a suboptimal capital structure.
Now, you, as for your question about the businesses' capital structure, the capital structure for each of the business will reflect that of the holding. This is something that will be discussed timely at the right time, when the time comes.
Perfect. Thank you.
The next question is from Borja Segura , Citibank.
Hello, everyone. Thank you for taking my question. I have two questions. My first question, I want to know more details about imports. I think it's a very unique dynamic, which was what we saw in quarter three, much different than what we saw earlier this year, and a return to normal levels, which we haven't seen since 2020. What I want to know from you is that at this point in the quarter, we have a little more fat to be trimmed in imports and maybe a more open window looking forward with a stronger lineup for November and December.
I don't know if maybe Linden can help us, but I want to understand how these dynamics will change, considering this scenario. It seems to me that a great part of this relevant improvement that you had in your margin has to do with supply and how the market has behaved and changed the way it behaves since last year. I don't know if I missed this part, but can you talk more about the import dynamics in quarter three, how much it helped your sourcing or with more competitive prices compared with the Petrobras consortium? Can you give us more clarity that will help us better understand the results of Ipiranga? My second point, in other industries, and particularly in the fuel industry, the tax issues are important. Maybe this is the main topic being discussed in the industry today, the tax reform.
Yesterday they had their first win, their first vote, and their first win for the tax reform. There's an important point, which was the point about ethanol. I think the exchange that everybody's expecting, and maybe the most relevant point of this tax reform relative to fuel, is the point about ethanol, and they, this could be game-changing. I want to hear from you how relevant this is for you, and how could this affect your margin levels? Because since last year, this wasn't the case. There was an improvement in the industry, but this will cause a structural change in how this industry operates, and this will affect productivity, particularly for the three or four top companies in the industry. So how do you see this looking forward?
Hello, this is Gilmar. Thank you for your question. So let's try to put this in perspective and take a few steps back and look at this as an Ipiranga investor or one of Ipiranga's shareholders. It's very important to mention that Brazil today operates at very low margins compared to the rest of the world, and the main reason for this is not an inefficiency of the distributors. There's a lot of efficiency, but the main point here... But there's a part of this model which is not operating according to the rules established by the government in terms of taxes and regulations and permits. And this is a permanent fight for us, who are complying with the law and responsibly working, and we are trying-- They're also trying to change the laws, to simplify the laws, so that they can be better enforced and inspected.
Of course, this will improve tax collection by the government, and it will also improve the level playing field. It will more easily establish a conversion model that will be more homogeneous. So this is my first point. What we did not see during this period, you talked about the margin, but if we always import products, we will always source enough products to meet the needs of our clients. For example, with our market share, our B2B clients, our largest clients, will always be supplied by Ipiranga, and many months before we deliver, we are already preparing, planning and sourcing products for these clients. So even if the product was a little more heated in quarter three, there was no stock out for our clients.
But of course, we had this phenomenon where we had some opportunistic players, and in quarter three, these opportunistic players left the market. This created an additional demand, which ended up being met by the largest companies, which were better structured and had more inventory. It's important to mention this. As I said, if we look at the snapshot today, we have a huge arbitrage for import. We don't believe this will last long. It doesn't make sense that internal prices charged at refineries in Brazil are much higher than the international price, so this is just a matter of timing. We believe there will be an adjustment in the short future, and that adjustment will cause a major loss of inventory for distributors, including ourselves. This is part of the business.
You know, this always happens when the price drops, just like we always gain when the price increases. This is part of the business. So if you ask me, what do I think? If I think that regulatory improvement will bring impact to more margin, I'd say that the margin will give a fairer return to the investments made by the companies. For example, if you look at this math, a while ago when companies were running at 2%, 3%, 4%, 5%, 8% return on investment, it doesn't make sense now with a CDI of 12% and a company that has this volatility with a return on investment of 6%, 7%. So it is just natural for a well-structured company that has an infrastructure, a strong brand and the assets, they should have a return of about 20%.
So these adjustments, these regulatory improvements, should bring us to this scenario that I just described. And for consumers, it's the change is marginal. For example, you're going to have a net result of BRL 1 billion or BRL 1.3 billion. This means less than 1%. If it's BRL 2 billion, it's less than 2%, and in the end price to consumers, the change is marginal. But it is a brutal, brutal transformation for the industry in their capacity to invest, how much they can grow, how much they can improve their supply capacity, and so on and so forth.... So of course, my answer is more macro focused, but I think it's important that we all understand these points.
And just a follow-up question about the regulatory changes. One of the discussions that were raised recently is maybe have a national operation for a few different figures. I know it doesn't sound like a good idea at first, but how do you, as an industry, mitigate this risk?
Well, I think it's early to say, but if this is to reduce tax evasion and increase the efficiency of tax collection in Brazil, we can see that in a good light. But it's too early to say. I don't think that anyone today can truly know what's being built for the future. I think there's a dialogue between the industry and the government right now, and this could take place in the future or not. It's too early.
Thank you.
The next question comes from Bruno Montanari, Morgan Stanley.
Good morning. Thank you for this question. I have a question about Rodrigo's comment about the seasonality of investment. So first, we know that you invest in quarter three and quarter four, and usually that in 2023, the seasonality is even stronger. So we talked about BRL 2.2 billion in investments. So how is the company expecting to close the year? Will you be able to make all that investment in quarter four, or will the numbers be lower than expected, and will, will this roll out into 2024?
Well, our investment plan, we see it as a cap, as a cap of investments for the year. So I'd say it is normal to have slightly lower numbers, and that is an inflation retraction in quarter four. So part of our investment may roll over to 2024, but it's not part of the plan. Maybe we're talking about slightly lower numbers than what was planned.
If we have no further questions, I'd like to hand the conference back to Mr. Rodrigo Pizzinatto for his final remarks. Mr. Pizzinatto, you may proceed.
Thank you for the questions. Our, our, our investor relations team will answer all the questions that were submitted to our webcast platform, and we hope to see you in our next earnings call. Thank you.