Good morning. Good morning. Good morning to everyone who is joining us here today and joining us online. It is a cold and rainy day in São Paulo. Before we begin the presentation, I have some safety announcements for those of you who are here in person. We will not have any fire drills or emergency drills today, so if you hear a siren, we do have a team ready to direct you to make sure that you leave the premises safely.
We have a full morning. We will start with our CEO, Rodrigo Pizzinatto and then we will have the business presentations. Alexandre Palhares talking about finance, and then Alexandre Lutz will also make the closing remarks. Then we will have a Q and A session. If you are here, you can ask your questions on the mic, and if you are online, you can send us your question through the chat box on the platform. If we have enough time, we will answer those as well. Have a great morning, and we will start with a video. Rodrigo Pizzinatto, can you come up to the stage for the opening remarks? Thank you and have a great morning.
Ultrapar does not just allocate capital. It allocates knowledge and values. For close to 90 years, we have accumulated ethics, experience, management techniques, market interpretation, and the ability to think ahead. [Non-English content] Fantastic. Good morning. It is great to have you here with us again for Ultra Day. Ana talked a little bit about what we are going to do this morning. We will have four presentations about the businesses, but we will have one additional one, ICONIC. It is our JV with Chevron for lubricants. So we will have some information about that business as well. Without further ado, we will start by talking about Ultrapar.
We got some feedback on Ultra Day last year to have more objective presentations, so our challenge today is to have Ultra Morning. The presentations should be shorter, and even with ICONIC's presentation, we will have a shorter agenda. To start with Ultrapar, we will start with safety, which is a non-negotiable value, and our condition is to have a license to operate. The pursuit for excellence and value creation is what we always aim for. You can see that our lost time incident rate has worsened this year. This is a consolidation for LTIR at Ipiranga and Hidrovias, which have a rate that is higher than Ultrapar. We also had something happen at Ultracargo, and Fulvius is going to talk about that in a minute. This has been our journey over the last few years. I will try and summarize the last five or six years in a slide.
Everything started with our portfolio in 2021/2022. We sold Extrafarma, Oxiteno, and Conectcar. We have changed a lot. Our capital allocation has made great progress. We have a lot more discipline. We have made acquisitions over the last few years across the different businesses, Ultragaz with new energies and bulk, then network infrastructure, the bulk fuel delivery business, and also Opla, new terminals at Ultracargo, and Virtu GNL, as well as the acquisition of Hidrovias. We have consolidated more than 70% there. In addition to allocating capital, the holdco also creates value, and this is how our managed model has progressed. We have got some macro principles here in terms of solidity, institutional power, how we conduct our teams, and changes we have made to the business, simplification, compensation model, new leadership. We are going to zoom into these topics over the next slide. To start with capital allocation.
When we think about cash flow and generated cash, these are the five main cash allocation decisions we make: investing in the core businesses, investing in adjacents, which are around the existing businesses, thinking of a new business. These are the three main things we consider in new businesses: an industry with good potential for growth and value creation. We, as shareholder, has the leverage to create value, and will make that business better by going in. If it's an actual tangible opportunity to go in, if the price is compelling, and if the risk is reasonable. Another option, when we were highly leveraged, was to decrease debt if it makes sense in terms of risk. When we have cash left over and we don't have enough options to have better allocation, you could do a dividend payout or interest on equity or share buyback.
This is the beauty of the whole process. A funnel with discipline and patience allows us to select the best projects with the best potential for value and return on investment. This is what happened over the last few years. We had over 100 projects that we looked into, and we concluded 14. Some figures, 2021- 2026. Palhares is going to show you the return on these investments. I'm just going to give you a macro capital overview. In the last few years, we allocated BRL 28 billion across these five fronts. About BRL 1 billion a year is just to keep businesses going. That's about BRL 1 billion. That's why the dark blue doesn't change. So BRL 1 billion a year in maintenance CapEx. In the last few years, we invested BRL 10.5 billion in expansion and productivity, adding up CapEx plus growth M&A and productivity.
This includes IT platforms to increase productivity, the expansion we mentioned in service stations, bulk at Ultracargo and Hidrovias, and adjacent businesses is everything we've done around the existing business. We have the allocated capital in biomethane, renewable gas at Ultragaz, electricity at Ultragaz, Krispy Kreme, service stations at Ipiranga. All of that adds up to about BRL 1 billion. New businesses, BRL 2.9 billion, mainly coming from Hidrovias, which joined the company. In expansion, we've got about BRL 10.5 billion expansion and profitability. We've paid BRL 7.4 billion of interest on debt. Then we consolidated Hidrovias' debt, which was much more leveraged. We're going to deleverage that. We paid out also BRL 5 billion in dividends and buyback. BRL 570 million was buyback at around BRL 18, close to BRL 19. Out of the BRL 5 billion, BRL 2.5 billion was in 2025.
This doesn't include the dividend payout this year because it was only for the first half of the year, and the first one was in August. It shows the rationale as we generate more cash, dividends keep up with that. That's the return to shareholders of the additional generated cash. Palhares will be sharing more financial information with you. This is an overview, and then we can share all the figures in the IR website because it was going to make it very confusing here. The capital. To execute on capital allocation, you need a top-shelf team. This is how we've been working on renewing the leadership. It all started in 2022. There was a succession at the board. In 2025, we had succession at the Ultrapar leadership.
These are the 10 main mandates that summarize what the Ultra leadership is thinking about, how it is acting. It all starts with the license to operate with ethics and security, humility, focusing on the long game, growing with value, align incentives, continuous improvement, and that is what is in everybody's mind when we think about the Ultra leadership. In terms of incentives, how can we make sure that the team at Ultrapar leadership is on the same page?
This is for Ultra N1 and N2. In terms of compensation, 30% is fixed and 70% is variable for that group. Out of the variable, 30% is an annual target based on EBITDA and cash flow, and 40% is a three-year target, and it has two components at Ultrapar. Delta EVA, which is a value creation target for three years, and the return to shareholder target, which is the share price plus dividends.
That is the TSR. So for every three years, we have a new value creation target measured by Delta EVA, plus share valuation, plus dividends. If we take the 100 people in the senior leadership and we add up all the shareholders that were received by the long-term incentives, plus the partner plan at the company, and that includes the board plus executives, there are 25 million shares, which account for 2.3% of the company's capital. So that is what ensures we are all on the same page between the leadership, shareholders, and investors. To conclude my part, we try to summarize the seven pillars that summarize how Ultrapar creates value. It all starts with a high-performing team to ensure that the strategy is supported and that we have growth management.
The implementation of the Ultra model with capital discipline, with a robust capital discipline focusing on the long term, governance and incentives ensuring a commitment with the best. So that was my summary to you of how we see Ultrapar, how we have positioned the company to create value. Now Linden is going to come up to the stage to talk about Ipiranga. Thank you for your attention and have a great morning.
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Great. Good morning. Pleasure to be back here. I think this is my sixth Ultra Day, or maybe the fifth, I'm not sure. I think it's the sixth. I'm going to show you the continuity of the work we've been doing, and we've been reporting on that work with a great deal of transparency. So we'll start with safety. As Rodrigo said, safety is our license to operate. We've been making considerable progress at Ipiranga, which is a key matter to what we do, and the challenge lies in the businesses we're bringing into the Ipiranga system, as Rodrigo said, because there is a cultural safety gap and we need to catch up. As we acquire more experience in bringing in new businesses, working with new teams, and creating that safety culture, those indexes will definitely improve. It's been a very busy year in fuels.
I like to say that it's been affected by two main factors. We don't know exactly how much each one of them will affect our business, but the first one is the crackdown on illegal trade. We've talked a lot about that over the last few years. A great deal of progress has been made as of the second half of 2025, with benefits to everyone across the chain, consumers, distributors, obviously, producers, importers, everyone who does serious work in this industry, and to the government. I was with Governor Ricardo Couto two weeks ago, and he said that in Rio de Janeiro alone, ICMS tax in the fuels industry in 2026 has grown by 87%, and it's no different in São Paulo. If you add up São Paulo and Rio de Janeiro, it's a 40% growth in fuel ICMS tax.
Which goes to show the size of the problem we had to deal with and the opportunity that lies ahead if we can make sure that this is indeed a new and safer business model in Brazil. Of course, there are still challenges. The positive side is that we are all creating that culture. We are all keeping an eye out to illegal practices, organized crime, tax evasion. ICL is highly active.
A lot of progress has been made, and they are still very active, especially looking at the ethanol chain. Serious businesses are also very active and keeping an eye on that ball, and we hope that this improvement continues. There is no turning back. The second thing that has an impact on our business, and everybody is going through that, are the conflicts in the Middle East, which came after the conflict between Russia and the Ukraine, which went unsolved.
The impact that has on our business in Brazil is a disruption to pace. Cost, price, everything is a consequence of that disruption in the product flow, and it is a very tight chain. Let me give you an example. A while back or a few years back, resellers used to work with a 10-day inventory. Now they have a two-day inventory period, and that efficiency went to the chain. It is efficient from end to end, from the service station to the consumer. If there is a disruption, if the Strait of Hormuz becomes an issue or if there is a logistical problem, if there is a deviation on the route, it does affect the business very significantly, and the world has to find different options.
What we are seeing are countries looking for alternatives to mitigate the impact in different ways, but the fact is that there is a disruption in the pace, and that leads to instability in supply. Brazil, like most of the regions, has been finding different ways to do it. Ipiranga has been working hard on that, always prioritizing supply, especially to our clients, but also playing the role of a structural supplier in the Brazilian market.
You keep up with the market, you are all familiar with that. At a certain point, Petrobras left the market, and the companies that have the structure to import and are able to, had to cover that space that was left in the market, and that is what we have been doing. We have been focusing on ensuring supply, ensuring an efficient flow, and focusing on meeting our client needs because that is when we show how important it is to have a brand like Ipiranga.
Now, all this dynamic seen in the market doesn't change what we define as our working journey with these four pillars that I've already mentioned. This is the North Star of our philosophy in the company. One, we need a supply that generates different options, competitiveness. We need logistic efficiency, an extremely competitive value proposition because of everything that Ipiranga can deliver. We can use our brand as a great driver of engagement that our stakeholders that go to the end customers and our shareholders. This is our working proposition, and it doesn't change. It only strengthens us for dynamic, disruptive moments like this.
In terms of supply, I already mentioned a couple of things. When we go to the past, during the five, six years, this was one of the best decisions that we made to create a sound training area, and today we can see the great value that it offered, our capacity to originate products in different places in the world, efficiency, our intelligence system. To have a good view of all the dynamic in the world regarding fuel supply, this helps us in our business. It's not by chance that we grow 50% in the spot market, in consumption volume, the volume of network, and this is leverage because we have a good supply model, be it internal or through imports, especially during these moments.
Now, from the logistics point of view, throughout the past five years, many times when we had a project to create BRL 800 million in efficiency, we just wanted to catch up, and we thought that this was necessary regarding best practices. Now, this effort was done, but this doesn't mean that it has come to an end because logistic efficiency is something continuous. You are always with the opportunity to improve processes, to optimize your fleet, to improve contracts, and this is what we have done in the past five years. Now we're embarking on a journey year-on-year, and we're finding different opportunities here in logistics and distribution. Now the network has harnessed this moment, and we've benefited a lot from this moment. The major companies and the Ipiranga brand is a very important brand in the market.
With this, we're growing our network, the adjacent program, like AmPm fuel and Jet Oil, but there is a qualitative effort behind this. As you can see, we have service stations with a new image. We're talking about 60% of the 6 service stations. Our product sales profile is growing. These are premium products. We're improving our product profile. We remodeled our KMV. It has gained momentum in the market in terms of creating more loyalty amongst our clients. And this is a good moment for the network, but it is a good moment to pay attention to the network. As this is favorable for our brand, this does not mean that we have to lower the bar in terms of quality. This means that we have to raise our compliance bar.
When you undergo moments like these, there are many people that operate under the shadows of illegality and trying to find cover to operate their business. We cannot let this happen. We have to pay attention. We need investment with quality. We need discipline in compliance to maintain the quality of our network because this is a long-term growth. Now, regarding convenience stores, we follow the same journey. I've mentioned this a number of times. We've focused strongly to add value to the AmPm brand through strategic partnerships, and we've done this throughout the year. Krispy Kreme is a good example of this. We brought the initial idea, and we wanted it to be an important offering in our convenience stores. The success of Krispy Kreme has been so great that we haven't been able to do it fully.
We have events every now and then, but we've had specific events because we cannot produce what we need to sell. It is a great success, and this delays the offering in the store. Now, Krispy Kreme always offers us an agenda of retail knowledge. It's very important because we've tried to understand this much better in depth. Now in B2B, no novelties. I've outlined a number of times what we always pursue is the decommoditization of our offering in this industry. This was seen in a marginal way with low margins. It was important to dilute your costs to generate volume, but it doesn't work this way anymore. We've reframed our customer portfolio. We've improved, we've seen segments that were more profitable. We participated very little to have an aggressive entry plan. The maritime diesel is proof we are growing in business volume, profit, and in market share.
Together with this decommoditization concept of B2B, we see the diesel retail operation that is no novelty. These were regional investments together with local partners. The partner gives the operational expertise. They contribute with the knowledge of the region. We provide a governance structure, including long-term planning that we discuss with the partner, and we put it into play jointly. Our story has been very successful. We have four businesses distributed throughout Brazil, all strictly within what was planned, if not better, with good figures, and this is a business line that you will see evolve in Ipiranga in the upcoming years. We always stress efficiency, and what touches efficiency is an ERP platform much more updated than what we have today. This is a project that has been within Ipiranga for more than two years now.
More than an exchange of ERP to gain efficiency, this is redefining how we work. We want to improve processes, we want to adjust culture, we want to readjust our organization, so we have a much more efficient operation using this new ERP as a catalyst of this story. Now, regarding people, this is the backbone of our business. I remember that during my first Ultra Day, when we were analyzing the different opportunities and the difficulties that we were facing, one of them was the difficulty in succession or successions that were necessary for the company. We worked strongly on the succession agenda and talent development. 84% of important positions are mapped with successors to take over these positions up to three years. We exchanged 45% of the executive team. So we have invested strongly in talent development.
Ipiranga today is a company that is prepared to follow its quality journey. The reality you can see in the organizational environment, this has always been a strong point, but we want to continue evolving in the environmental climate, being excellent, to excel on this point. The result of all of this is a year which has been very important from the financial point of view. As I mentioned in the beginning, there is a market dynamic that helps us.
But this is not just because of a conflict. We have in here what represents practically a free fuel market in Brazil from the worst scenario, from the regulatory point of view and tax evasion. We are focusing to face these moments, but I believe the results have been very positive in 2026, and we are doing everything to close an excellent year in Ipiranga. Well, what I had was this. Thank you very much for your attention. I will meet you again throughout the Q and A session. I would like to call Bassaneze.
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Well, good morning to everyone. It is a pleasure to be here this morning. He said his sixth Ultra Day. It is my first Ultra Day. I will give more color to ICONIC numbers, starting with safety. ICONIC, since its creation, has safety as a value. This is a characteristic that came from our partners, and we have had excellent performance in the past years. We value three points. One, people, how we train and qualify our teams and strengthen the safety culture. Equipment as well. We have many equipment in our operation, how we specify, install, and maintain, and put them into play, maintaining our operations, running with availability, with not causing accidents or incidents. Three would be process safety.
How can we anticipate risks in our operation, reassuring that we implement safety barriers in order to prevent catastrophic events? Talking about the strength, we have identified four great strengths. One would be an infrastructure that you cannot copy because of the assets that were applied here. Two, that would be technology, ICONIC. Since the beginning, has a center of technology, has the competency of R&D, and I will deep dive regarding the meaning of them, because this is a strength, and it is the only dual-brand enterprise, because we work with Texaco and Ipiranga that are two ICONIC brands that are very present in the life of Brazilians, that have allowed us to develop important competence, that is brand management. Number four, it would be the ecosystem of our partners.
We have Grupo Ultra with Ipiranga, with 6,000 gas station, B2B that allows us to explore all the opportunities to sell lubricants and gas and other businesses during certain moments. We are customers. For example, Ultragaz has strongly helped to decarbonize our operations with biomethane in our Duque de Caxias plant. We also have sales opportunities with businesses that are connected to lubricants, and we have Chevron as a partner, a verticalized oil company that is present in the three elements that make up lube base oils, additives, and the finished lubricants. So here, we support each other, and this is a global company with a global relationship with its customers, and we have state-of-the-art technology that is incorporated in Brazil, in our products and in our businesses.
Now, when we see our infrastructure, as I mentioned, the contribution of our partners' assets allowed us to be independent regarding the infrastructure to supply our customers. Therefore, we have a terminal in Rio de Janeiro and São Cristóvão that gives us flexibility and independence to import our inputs. Brazil, for example, is undersupplied in inputs, so it is important to import products, and many products needed for lubricants, we do not even produce this, so we count with imports, and we have a complete infrastructure in Rio de Janeiro. This asset was the old Ipiranga plant. It has allowed us to create new businesses with an investment that is marginal today. We also have another industrial complex in Duque de Caxias is where we produce all our lubricants. The third industrial center complex, that is coolants and grease plants in Osasco.
In addition to this, we have an authorized distributor network, and this was excellent because when we consolidated our operation, we had 50 authorized distributors, and the consolidation allowed us to choose which were the best business partners. We do have a network with 18 distributors with scale and capillarity to service 100% of the country, but ICONIC is present in four other countries. That is Bolivia, Uruguay, Paraguay, and Argentina, and also servicing these geographies from Brazil with our distribution, and this allows us to reach over 100,000 customers in our country and Southern Cone of South America.
We have the Duque de Caxias plant. To discuss the technology center, because ours is a Brazilian company, we had to develop our R&D expertise, and we kept that at ICONIC. In 2024, we opened a new tech center, which is state-of-the-art in Rio de Janeiro and allows us to work together with our clients, identify business opportunities, and also understanding the different specificities and characteristics in Brazil to do with how to use machinery and equipment, the different characteristics of our fleet, taking into account the Brazilian fuel matrix, which is very different to other geographies.
So developing the ability to work with our clients has been something that sets us apart. It has allowed us to be innovative and to take innovative products to the market because we have over 50 professionals who hold doctorate degrees, master's degrees. We also provide services to our clients to identify how our products are performing, and we monitor their life cycle and during our relationship with our clients to work out how we can continue to improve our products.
We also have a services department in the technology department that helps us monitor our relationship with our clients. So two ICONIC brands, as I said, we have great brand management to find the right position for each of the brands. Ipiranga is very active in retail and in the everyday life of Brazilians. It is a very well-known brand, and Texaco, which is a well-known brand internationally, it has a lot of technology.
It's a high-performing brand, and Chevron considering global trends and also including their technology in our products. Most of our official distributors are also dual-brand, which allows them to have the right skill and to operate more efficiently. Given the fact that we have two brands, we have a wide-ranging portfolio. We operate in over 20 different sectors. We have products for motorbikes, cars, trucks, the maritime industry, steel industry, different plants and mills, practically every industry that requires lubricants. We want to be a one-stop shop for our clients when it comes to lubricants, greases, and coolants. That's why we have a wide product portfolio, and our infrastructure has allowed us to start working on new businesses as well. This is an example of something that happened precisely because we are part of our partners' ecosystem.
In 2023, we realized that given the inefficiencies in the Brazilian market when it comes to inputs, we could go into a new business, which is base oil distribution. In 2023, we went into base oil distribution through Chevron, then we started working with additives through Oronite, and that has allowed us to bring in new business partners to add to our offerings in this new business. Ascelin is an example of that. They are our partners for Base Oil 1 and Nynas, which is a Swedish company. That has allowed us to work all of those areas through our partnership with Chevron and to develop new partners here in Brazil. The combination of those elements have led to very positive results. ICONIC was founded in 2017. In December, it will be its ninth anniversary, and its journey can be split into three stages. First, consolidation.
We had to consolidate our teams, our assets, organize the company so that the JV could work well. The second stage was optimization. That's when we started to work on synergies and benefits from the many initiatives and projects that were launched since the joint venture. More recently, the third stage is the stage of expansion, and that's where we are accelerating ICONIC's development. As I said, we've had some very positive results over the last few years with positive cash generation, which has allowed us to reinvest in the business and to continue to update our assets and compensate our shareholders.
In 2026, specifically, there's been a lot of cost volatility due to the geopolitical conflicts, but because we have a robust business, that means at times of volatility such as these, we are ready to continue to supply, provide reliability, and trustworthy operations, and to continue to meet the needs of the Brazilian market and all other markets where we operate. Well, that's it from me, and now I will turn it over to Tabajara from Ultragaz.
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Good morning. Thanks for joining us. [Non-English content] Over the next few minutes, I am going to be talking to you about Ultragaz. As Linden said, this is also, I think, my sixth Ultra Day. Actually, I have never counted it. Rodrigo challenged us to be much more to the point. I am going to talk about Ultragaz's recent journey, what has been affected our organization in the last few years, and then I will take some time to talk about future prospects and what we will be doing.
Like everybody else, my presentation will not be very long. I will go over a few points and share a few highlights with you. [Non-English content] I will start by focusing on safety, because safety is extremely relevant to the Ultra Group, and it is the same at the Ultragaz business. Because our main product is LPG, that means we have a great deal of responsibility.
Our journey started in 2021. We had a huge challenge. Our product has considerable operating risk, but it is an industrial business and household delivery business, so we monitor the product the whole time. We do have our LTIR. We have done very well, and we believe we can continue on the same track. Our company largely works with gas cylinders, gas bottles. Over 10 million bottles are delivered every month, loading and unloading at a filling base and at the reseller. So we move filled bottles 40 million times, full bottles. Any incident, any accidents, if anybody gets hurt, that affects our indicators. We are continuing on our safety culture, and there is the benefit of safety per se, which is considerable, but that also leads to operating efficiency and excellence, which is one of the principles to keep to our long-term objective.
So we are highly motivated, and we are also very respectful and careful when it comes to safety. Let me share a few highlights about the LPG market with you. [Non-English content] There are some specificities to our industry. First, the size of the market. The household residential market is one of the largest in the world in terms of the number of gas bottles and the proportion to population, one of the highest. It is used by 90% of the population, so the gas bottles or cylinders play an important social role.
The Brazilian energy grid is also a highlight because it provides dignity to families, efficiency to businesses, so it is a core product to our operation. Something specific to our market is how complex the logistics are. It is hard to see a similar operational model that relies so much on road transportation. It is highly intensive, low inventory levels, so huge turnover.
We always like to share key numbers. In Brazil, we deliver 13 gas bottles or cylinders per second, and we conduct surveys all over Brazil. We ask people, "How long are you willing to wait for a gas bottle?" It is close to 15 minutes. Nowhere in the world do people expect for a gas bottle or cylinder to be delivered in less than 15 minutes, and that happens across Brazil. In the Brazilian countryside, if you do not deliver it within that timeframe, you lose the client. We are present across all municipalities. I will conclude the LPG market by talking about the progress we have made. There is still a lot to be done in terms of regulation. It is the most up-to-date and pro-consumer legislation we know of. It ensures safety and quality to everyone, and there is open trade and competitive market.
We need to make progress in the regulatory framework, but we do have the right ecosystem for that to happen, and we have had it for the last decades. Now, let me share some details about the Ultragaz operation. We have got some excellent figures here, and the key message is our go-to market and our relationship with our clients. It is clearly a very strong brand. It is a pioneering brand. We have a great deal of capillarity in terms of operations and resale. We are going to give you more details about our strategy, and this is what we have been doing over the last few years. We have been generating positive results, using resources intelligently, reinvesting in the business to extract more value, and to ensure its longevity. That is a summary about Ultragaz, and it is a great asset for years to come.
As I said, our challenge is to be objective, so I want to share the five drivers behind our strategy. I will take a deep dive into a couple of them, but this is a key slide to our conversation here today and to address what we do. We start with safety as a value, and to the energy and LPG business in particular, that is the basis for the development of our organization. Then a relevant footprint in key industries.
That is the driver that has most changed the organization in the last two or three years. Our journey started four or five years ago, and we realized that the market is not as efficient and reliable across all regions and segments. We have been positioning ourselves. Ultragaz was more dedicated to retailers, finding solutions to resellers that are closer to the end consumer and moving away from non-profitable segments.
In the business segment, we focus on some target segments that add more value to the clients, and we have been expanding that. I will give you some more details about that in a minute. Focusing on recognized efficiency by the client. In retail, there is more segmentation, so operations are more complex. There are new launched products, and we need to make sure that our operation is efficient because this is a market at scale. We have been doing a lot over the last few years, and there is more to do. We make sure that it is long-lasting through infrastructure and technology. We have been structuring a lot across the company that has been creating value, but there is still a lot more to happen.
We want to have a top-level team focusing on our strategic model that can support the growth we have had and that we want to continue to have. Let me highlight some of these points, especially beginning with the bottled segment. We realized that the LPG market is a highly competitive industry. There is not much value to be extracted from it, and we realized that the retail market is where you can last a long time and add value to the resellers consistently. We have been dedicating ourselves to that. We went from 5,800 resellers to 6,300. When we started in 2020, we had fewer than that. We have added a lot more resellers focusing on retail, and the main change can be seen here. In 2022, we had 66% of our volume in retail, and the other channels are more wholesalers.
If I take a step back, that used to be 50/50, half of the volume, which is what the LPG market looks like in Brazil, and 50% through wholesale, which means it is commodities. You are just selling price. You are not selling products or differentiating your offering. We have made progress. We still have a long way to go, but that model is close to ideal, but we have made some positive progress. We have that operating efficiency challenge, reducing gate-to-gate time. Even though we have more capillarity and more resellers, our efficiency has been greater as well. Reseller NPS, we monitor many different NPSs. All of them have made positive progress in 2026, so we are very careful to make sure that we are continuing to do things well done. A digital relationship using AI is already happening with resellers and end users.
We will probably get a great deal of value from that in the future. Another segment that is really interesting is the bulk segment. We are the leaders by far in the Brazilian market, although we are not trying to increase volume here. The main transformation came from choosing segments where we can add value, develop specific solutions. Every year we add new segments, and the idea is to work, to have segmented sales, segmented products, segmented operations, and that brings in a lot of loyalty in this kind of market, which is interesting to us. Considerable operating challenge because the operational scale is crucial. We have been making progress in the segments that are interesting to us and ensuring positive progress in the NPS across these clients. A highlight I want to share with you, we launched the new individual measuring system for apartment buildings and gated communities.
We got to our operational capacity limit. We launched it in the first few months of 2026. We have 650,000 direct clients, so we have a direct relationship with them. We meter it, we bill them, we provide technical assistance directly to them. It's a very valuable segment. [Non-English content] I'm sure you've all been seeing the approval of some users that are still restricted in this market. We still have that to come. As I told you, we have individual metering and agribusiness, which is a segment we believe in, especially because we've been making a great deal of investments, and there's a huge potential for growth.
I wanted to highlight the other infrastructure pillar, and we've made progress because we're closer to our customers. Be it retail or corporate, we need a proper structure. We've evolved a lot, especially in the operational consortium that we created with Supergasbras. Our bases are closer to our customers. We are benefited because of the service quality and operational cost. We are very close in an optimum point in terms of suppliers' service. The logistic complexity that we discussed this year, now we have 100% of our logistic operation monitored by the control tower in this building. We have practically 2,000 trucks that work directly and indirectly for Ultragaz, and this provides us relevant operational efficiency, and we have a major infrastructure.
We have the biggest bobtail infrastructure, that is the truck that delivers our product in over 26,000 cylinders with our brand, and we will grow more in the upcoming year. We've expanded it, and our real operational cost has dropped because of the deployment of the operational consortium. We are closer, and we offer better quality without adding any cost to our operation. We have an important plan to implement a Pecém terminal to improve our operation. We will inaugurate the new base in Rio Verde developed for agribusiness. We already have a relevant share in the region, and it will be opened in the upcoming months, and this will impact our participation in the agro segment. Together with infrastructure, I want to show technology. This is undergoing a lot of transformation, very similar to other Ultra business.
We are reviewing our architecture, and currently, we have a major project to replace ERP and the satellite project. We have maturing this project in the company, and it's time to deploy this, and there is great potential to improve agility, proximity, and relationship with our customer and the cost benefit. At first sight, we can drop operation cost on a yearly basis when deployed in 2028 above BRL 100 million. We are adopting AI in the relationship with resellers and customers, and we already have an architecture for communication with all of these clients, multicanality to sell the cylinder. We have contact with our corporate customer. We have a good relationship with reseller, the customer.
We have an app for relationship, and we have a relationship platform with the reseller, with lots of data, lots of customer information, and we can improve the experience, which is the target to develop resellers so they can make progress. We have been growing in the market in all these figures in terms of percentage. Everything that we have mentioned are highlights for LPG, but we are aiming at Ultragaz as an energy platform, adding to the offering portfolio other solutions. Here we have biomethane, electric energy, natural gas. We have consolidated the third operation of special gas, a special use of LPG. It is not burned as the propellant like when you use aerosols, probably they use an Ultragaz product. We have infrastructure, laboratory, technical knowledge, and we develop this together with our customers. We are consolidated in the market, and we are paying attention to other innovations.
We always offer our service as a good vehicle that can offer good things to our portfolio. Electric power, we are maturing the integration and the evolution. We are very happy with everything that we have been able to materialize, combining business as a special with prospects of opening market. We are selling more energy. We are the second-biggest, highest high-tension retail seller. This is a market that we do understand that has an important connection with our core operation and an interesting growth potential. Now in biomethane, we are even more consolidated. We started this journey two, three years ago, focused on the industry, so we were able to do a lot. Opportunities have emerged in the segment of dedicated fleets, and Ipiranga helps us allow we have an adequate supply level to grow in the upcoming years. Over 45 contracted clients, so more than half are in operation.
We recently opened the first internal operation station to work with our fleet that works with biomethane. In the upcoming months, we shall have an operation in an Ipiranga gas station because they do not have strategic places to supply, so we have a good perspective with this Ipiranga service station. Now my conclusions, and I am running out of time, I believe that the entire journey that allowed us to evolve positively with great results, this strengthens a number of things that we did right, and we corrected what we were not very assertive, but an investment capacity and delivered differently, and we are very excited. I thank you once again for your time, and I would like to call Fulvius.
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Good morning, everyone. It's a great pleasure to be with you and to talk about this company that I'm so proud of, and it celebrates its 60th anniversary this year. To talk about Ultracargo is to talk about fuel logistics, the energy transition through biofuel logistics, and a number of logistics chain. Ultracargo is part of an infinity of products that are essential for our country, for packaging things that we consume in other industries. Brazil has exceptional vocations like agro, the productivity in the agricultural segment that translates into fuel. We have a consuming market of continental size, but vocation without logistics is a waste. We want to move all of these products that we store the best way possible with efficiency to reach the consumers. It could be consumption, energy distribution, the best way possible.
This is the role that Ultracargo has had in the past 60 years. Our most important role, what is it? We have safe operations because the products that we store have a potential to explode and to pollute, and we have to maintain high-level safety operation because safety speaks with operational efficiency. This is why our operations are intense and repetitive, and they can only be safe through well processes, good controls, and people that dedicate to meet rigorously the norms and procedures that are the same attributes that make an operation safe. According to the LTIR, we saw a deterioration in the past 12 months. Although all these accidents were low, people sprained their ankles, and no process accidents incurred in pollution to the environment.
This doesn't drop our responsibility to see each one of these incidents so that we can improve our processes, identify things, and to create controls and processes so that they never happen again. This is why we've evolved in this agenda, because our target will always be zero accidents. To talk about our strategy, we like to use this mandala that represents the union of all factors and pillars that are part of the strategy. Number one would be our operational efficiency. In our country, Brazil spends 15% of GDP in logistics. When we compare it to countries like the U.S. and European countries, this is a one-digit figure, very close to 8%, 9%. This is because there is a lot of friction in our logistics system. What we pursue here is to diminish friction, guarantee efficiency, to connect producers and consumers the best way possible.
This is done through improvement of our processes, pursuing how we can better use our terminal that will provide better return to our investments, and the safety of our operations. This is so that Ultracargo can have 15% more turnovers in our ports than the market. This shows more productivity. We have indexes like loading, unloading time, flow out of boats, gate-to-gate, to guarantee that our operations can translate this efficiency not only to us, but also to the value chain of our customers. This has to be reapplied in the unique platform at the end of the line. Ultracargo is the biggest independent player of net grains. All terminals where we work in may show the same efficiency and have to translate the principle of operational efficiency. To do this in a number of terminals requires connections through efficient models.
This is why we have partnership with waterways and highways, not only to store our molecules, but their connection. That translates in placing this molecule the best way possible with two pillars that are fundamental, and they follow our values. One is safety and the ethical commitment. This is why Ultracargo is the only enterprise of the logistics sector that is associated to the Instituto Combustível Legal, and this is why we've achieved all of this in the past years. To translate better what Ultracargo's strategy is and why it's a leader in the market, we have 1.2 million cu m in capacity. We have nine operational terminals throughout the entire country, and they are located in strategic corridors that allow us to connect production and consumption, import and consumption. The production can be exported, and we also work with cabotage.
This is why we've been able to handle 11 million tons, which represents 17 million cu m sold. Another thing that I will mention here, it's our Miritituba terminal that is under construction and will complete the logistic of this region in the northern arc with resiliency for the fuels that are produced in the center west. Just a map. This demonstrate our strategic position, but all these arrows that you can see here identify our business' target. In our essence, we store a number of products, mainly in the six port terminals where we're present. These terminals are of utmost importance for the country's logistic. This is the entry and the exit gate to a number of net grains.
When we talk about import of fuels today, one fourth of the diesel used in Brazil has to be imported, and this trend and this percentage will only grow in the future. With the growth of our economy, we need more transportation, more machinery, and so forth. So more and more the entry gate will be important to foster the entry of the fuel needed in the country. The growth of this fuel is mainly connected to the new agro frontiers, the areas in the interior of the country where economic development is fast, and you have the consumption of diesel even greater because these are regions bereft of refineries. This is why we have to position our terminal. So the diesel that goes to the port have to service these consumption centers the best way possible.
The regions that produce biofuel, they should be able to use the same terminals and logistic models, taking products back and forth, and this can be used for cabotage, taking products to other regions. So the same molecule that goes to Ultracargo terminal goes to other two terminals. Therefore, the molecule will reach the consumer with low friction, and this diminishes transport cost and enables the production of biofuels and other products.
And that's what we do in the central corridor in Brazil, which is connected to ethanol from corn, which is produced in Mato Grosso. Everyone here knows 25% of the ethanol we use comes from ethanol from corn, which is an industry that practically didn't exist 10 years ago in Brazil, and it's been growing at a two-digit rate every year. That's why in 2036, an additional 10 billion liters of ethanol from corn produced in the south will have to be transported to reach consumers in the southeast, and that will happen through the central corridor. So that ethanol is connected to the rail network, and it gets to the Paulínia terminal, so it can get shipped to the southeast. It can even go to Santos to be shipped along the coast to other ports and then other countries.
And then that same outflow receives the same by-products, essentially diesel, so that it can supply the different machinery and trucks in the Midwest. So by-products and biodiesel are transported as efficiently as possible, and that means value not only to our value chain, but to consumers, our clients, and everyone have access to fuel and biofuels with lower emissions and more efficiency. That's the problem that we need to solve across the country. To complete that solution, I talked about the Miritituba terminal. It could create another connection in the north arch, connecting the Vila do Conde terminal in Barcarena, Pará, to the new Miritituba terminal, all of that through waterways. So the ethanol production that comes from Mato Grosso, especially in the north of the state, goes by road on BR-163 to the Miritituba terminal, and it gets to Vila do Conde on barges.
From there, it can go to the northeast of the country or even for export. Let's not forget that such a huge production and with massive growth products such as ethanol in Mato Grosso, it cannot just rely on one logistics mode, whether by road or waterway. If we have options, we can provide more resilience and capacity to meet the needs of production of this key product to energy transition, not only in Brazil but maybe in the world one day. That's how we think about it. We want to translate that into more efficiency in our chain, and that means responsibility and cost discipline. We can see that in this chart. Since 2019, our cost and expenses per static cubic meter has been dropping at an average rate of 6% a year, which is a result of our pursuit for continuous improvement and discipline in execution.
By doing that, despite a 39% increase in our capacity in the same period, we've had 154% increase in our EBITDA in the same window. However, let's not forget that what we're doing is literally moving the entire country. So the first thing you need is infrastructure, then the industries and the flows get developed. So many of these terminals where we've added capacities like Rondonópolis, Paulínia, Santos, or Palmeirante are still ramping up and maturing. As flows become more established, as production increases, there will be a gradual process of occupying those terminals, and it will favor economies of scale, which is what we are pursuing. Let me point out that there's been a great deal of delay due to licensing red tape. You know that's a huge challenge in the country, which delayed the beginning and ramping up of these operations.
2026, as Linden said, has had many challenges and disruptions, and that's what we see here on this chart. There's been a reduction in our EBITDA comparing 2025- 2024. Let's not forget that in 2025, we had the conflicts in the Middle East, a reduction in attractiveness in importing Russian biodiesel because of the conflicts and pricing policy changes in the country, so that led to disruptions. Considering an even more challenging scenario in 2026, while we had the most restricted arbitration in the history of fuels, we've still had positive results in the period. And obviously, our operational cash flow has followed our EBITDA and our results. And that's what we want to continue doing, having discipline and execution, diversity in products, especially in biofuels, but also working on new fronts, such as ethanol logistics.
We've been looking for new solutions, and that product goes hand in hand with biodiesel production, as well as other products such as water coming from oil prospection and exploration, liquid fertilizers to meet agricultural demands. Through diversity, we'll achieve resilience not only in logistics in Brazil, but also our results over time. I think I've been able to convey a little bit about Ultracargo, which is a key company to logistics in Brazil. And now Hachem is going to talk about how Hidrovias has been navigating the last few months.
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Good morning. It's a pleasure to be here with you. I'm here representing Decio today, and I'll start by talking about safety. As we've heard previously, safety is a non-negotiable value to the group, and it's our license to operate. There's been an increase in LTIR in 2024 and 2025, which has to do with a culture adaptation process across the group. But the group does believe it's a non-negotiable value. More reports have given us a clearer diagnosis of our operation, and that has led to more effective action plans, which has been reflected on the 2026 rates.
We've made progress, but we are still far from the levels of the other companies in the group. A well-defined process and a well-designed process is a safe, efficient, and productive process. A lot of our journey has to do with that, having better processes, better practices, and more efficiency and productivity. And you will see that safety will come with that. We've had two intense, transformative years, and I'm going to share with you the progress we've had since we've joined the Ultra Group.
I'll talk about our portfolio optimization, capital structure, financial discipline, institutional and regulatory frameworks, governance and alignment, and people and culture. Starting with our portfolio, I think the main starting point was reviewing our strategic plan. We looked into the company's competencies, strengths, synergies, and we grouped our business into two main categories. Navigation, which consolidates the navigation assets in the North and in Paraguay. And there are plenty of synergies here across knowledge, processes, and maintenance, because a large part of the Paraguay fleet is the same as the North fleet. And terminals, where we have Miritituba, Barcarena, and Santos. They also share a great deal of knowledge. And in reviewing our portfolio, we realized that the coastal shipping business wouldn't be our best partner, wouldn't have a great deal of leverages and synergies with the other businesses.
We divested from that, and we concluded that process at the end of last year. Moving on to capital structure and financial discipline, we had a BRL 1.2 billion capital injection. With that, and with the Ultra Group coming in and joining our risks, we reviewed our financial management and our indebtedness as a whole. Right now, our debt profile is longer at lower costs, and our FX exposure, which used to be a detractor and destroyed a great deal of value in the past, our exposure is hedged through instruments and derivatives. Our leverage has gone from seven times to 2.4 times, supported mainly by better results. We've also managed our working capital with key reductions in time to receive payments, and now we are focusing on inventories. We've had better tax planning by restructuring our ownership structure, and we'll have a simpler structure.
We'll see that next year. By doing that, we've reduced expenses a great deal. Now, moving on to the institutional and regulatory agendas. The last couple of years have seen a great deal of progress. The whole industry has become a lot more present on the government agenda and the public agenda in Brazil as a whole. Last year, the Pro-Environmental Act was approved, creating legal safety for maintenance dredging, which is key. This year, the main technical agencies have been approved concerning the need to dredge the Tapajós River, especially considering the more extreme climate scenario we've had around the world and Super El Niño, which is coming. Right now, we have the legal and regulatory framework we need for dredging to take place. All we're missing is the execution.
There's been a great deal of mobilization of different links in society and in the media, and the North Arch right now is extremely relevant to Brazilian exports and Brazilian agriculture as a whole. It's no longer about a business agenda. It's about an agenda for the country and for the country's agriculture. Now, moving on to governance and alignment. There's been a great deal of change here as well. It's important to remember that Hidrovias has only been around for 16 years. It started from a PowerPoint, and it had to overcome a great deal of obstacles. Its culture has a lot to do with entrepreneurship and startups. It's not focused so much on governance and discipline. Now, it's scaled up very quickly. So now that culture and that lack of processes has become an obstacle to gaining economies of scale.
We have been improving the company as a whole. Agility and simplicity is probably the key factor. Our main project is Simplifica. Hidrovias is not complex. It can be complicated, though. So we need to accelerate a lot of things. We reviewed our governance process, our structures, our guidelines, our policies, and this project is going very well. Now, considering management discipline, we are working on continuous discipline. We are focusing on indicators and having financial discipline, which is a lot closer to what the group does with all the invested companies. Focusing on clients, as you saw in Ipiranga and Ultragaz, is a focus of the group as a whole. Since the beginning, there's a specific area focusing on working closer to clients. Last but not least, there's been wide change in executive alignment.
Rodrigo touched on some of the group's values and creating value in the long term and renewing leadership. This is probably one of the main charts. Hidrovias has undergone a great deal of leadership renewal. The average time in the leadership is 1.3 years, and across leadership as a whole, 2.7 years. We have people who came from the market, bringing best practices from other companies, people from the group itself, and internal promotions. As was to be expected, such huge changes in a company with a shortage of processes requires time and adaptation so that the teams can work together and so that we can rebuild some key learnings that may have been lost along the way. Now let me talk about 2026 and what happened in our operation in Brazil. The year started at the peak of the season with a lot of corn.
There was a great deal of rain, and transport was difficult. There were externalities, but there were also internal factors that affected that. It was very hard to receive cargo at our transshipment terminal, so it was hard to increase our integrated system, and we partially offset by increasing the unloading in the external terminals. There were a lot of key learnings, and over the second Q, we were able to recover those rates. Results at the end of the day was that the peak of the season, we were unable to capture the volume we wanted from the integrated system. There were major key learnings for next crop. Right now, we have third-party capacity to diversify our transshipment terminal to feed the integrated system.
We also have more players in Miritituba, so we will be able to organize the flow better, and we are expanding our receiving capacity at the terminal so that we can receive more trucks. So key learnings from this year will lead to a much better 2027. Moving on to Paraguay. Also major key learnings here. We started the year redesigning our operation and migrating practically the entire fleet to iron ore. As you know, iron ore volume is what adds the most value to our system. The assumption was, if we can mobilize the entire fleet to iron ore and we have a shorter cycle, we will be able to have scale enough to justify cost increases. There was appetite on the client side. We were able to increase iron ore, but the cycle time fell short of what we needed to achieve the scale we wanted.
There were some internal factors, some key learnings, and externalities to do with receiving time at client port terminals, which have led to some key learnings. Revenue went up in the first half, but so did the costs. So it offset all the gains. Now, next year, there will also be some key learnings. Can we do more iron ore? Yes, and probably at the scale we had anticipated. Now let me talk about growth and the future. The way we look at Hidrovias, or the way we split our north market, is into three blocks. First, navigation. We have some idle capacity in navigation, and we can navigate for third parties. That is something we are beginning to develop now. We have done some pioneering cargoes to begin with for our route and third-party routes. There will be a great deal of value in developing that in the future.
Now, looking at the BR-163 and the integrated system, we can unlock value here as well. When we look at origin products at 163, in addition to corn and soybean, there can be soybean meal, sorghum, and DDGS, which are also expanding in exports. Now, considering destination on 163, there is the fertilizer market, which is developing and where we are increasing share. There is a great deal of opportunity in capturing more share here. Now, on the 158, and this is basically road transportation cargo, there is opportunity for growth considering origin products at 158. The demand is much higher than the supply. We are rejecting demand because we are prioritizing the integrated system. Now, we can capture more volume. Now, considering the 158 destination, we are talking about fertilizer cargo. Unfortunately, our private terminal cannot do that.
The fertilizer business, in addition to being profitable, it makes the whole route more compelling because you can develop also a cargo on the way back for partners. Let me talk about our expansion project. The reallocation of our floating tipper will go to our private use terminal. With very little investment, we can receive things through the highway, especially for alternative load cargo. When we see this in a broader way in discussing the other out, it would be the private use road terminal. Here, we have a drop of 50% of the original project, basically through a combination of structural assets and modular assets. This new way of a project allows it to do this in stages. We can bring capacity in modules according to the demand curve, so we do not have to invest strongly and run with idleness. We can capture alternative cargos.
We can work with more than one product without the current problems that we face in our storages. This is a licensed project, and if you work with infrastructure, you understand the value of this. It is already part of our growth acceleration program, and we want to put it into fruition by 2027. Now, I have mentioned this year, we started below last year's results. Here, we have a learning curve that we are analyzing. We expect next year to be better in the peak of the harvest. We can see sound figure because we have a good cash profile. With this, I bring my presentation to the end, and I will hand it over to Palhares.
Well, good morning. I am very happy to be with you, to have you in our place. This is my second year spearheading Ultrapar's financial department. Welcome, and I hope that you are enjoying today. In order to start, I believe that last year I demonstrated 2023, we reach a new result level of our business, and during 2025, both Ultragaz, Ultracargo, Ipiranga reach a new level.
But here we have Hidrovias to consolidate, and this is a consolidation of the result of Hidrovias that was positive in 2026. Here, we have the FX mentioned by Linden, but we have structured FX. That is the crackdown against illegality, and this is aligned with what we delivered last year in terms of results. The improvement of results, Hidrovias, together with a great discipline of capital management and working capital, our cash was very strong since 2023. We have reached a new level.
But this sum up together with Hidrovias increase our cash in 2025 and 2026 because of all the working capital that was necessary in ICONIC and Ipiranga with the results of the first quarter. Now, when we see the company's leverage position, the discipline and capital management, as Rodrigo mentions, the divestments of Oxiteno and Extrafarma and Conectcar, together with the improvement of the results of our businesses, well, this accelerated a deleveraging process that starts in 2021. In 2023, we're slightly above one times. There's a CapEx to have a good position in Hidrovias, the consolidation of Hidrovias, and the result of our company that is highly leveraged, and our leverage is slightly above 1.7 times. In 2026, strong results, strong cash generation put our leverage at one times.
That in the context of today with lots of volatility and uncertainty, I believe this is a comfortable level. There is a target between 1.5% in an environment of as uncertainties as an environment where we feel comfortable to operate, and a strong result, an improvement of operational results in all business cash improvement. This gives us net revenue, which is highly relevant, not only since 2023, but also now during the first semester of the year. Of course, the fuel market was good, and here we had the effects of the entire situation. When we see the return here, there, we interact with you, and we insist on the importance to see this in the long term. So the trend when we see this window is positive. Now, when we see in the long term, the risk is to have a positive or negative bias.
This is why it's important to see a long cycle. 2026 offered an extraordinary result. Nonetheless, during this period, it's important to remember that there was a carry-over because of tax credits that went to our balance, but when we see the value generation Delta EVA here, we're talking about BRL 2.5 billion of delta value that was added to the company. Now, the discipline in cost management efficiencies in the business cannot be different in Ultrapar. Therefore, this pursuit for efficiency applies to us. When we see throughout this period, we didn't only reduce the amount of people, the overhead, because of a constant pursuit of simplicity and Simplifica. We've reduced the cost of the hauling from BRL 260 million- BRL 220 million in a context where we increased the portfolio of our companies. We improved the result, we created cash, but always focusing on efficiency and simplification.
At last, sustainability is a theme in evolution and connected with the evolution of Ultrapar. We also focused on updating our matrix regarding relevant subjects, and I would like to underscore too the importance of capital allocation and the relationship with our customer base. This is important because this reaches the broad concept of corporate sustainability. We touch environmental, social points. How do we guarantee that sustainability is long-lasting within the company? We like to show this information. Here we have the performance of our share since the IPO.
Here we have a temporal perspective, a window of one, five years. We have had good performance. There was a complex context because we reached the peak of the regularity level. When there was uncertainty regarding the role of Hidrovias, how could we create value within this context that has been corrected because of the market, and now we have seen this share valuated. I would like to thank you for your participation. I would like to call Marcos so he can make his final comments and so that we can spend the afternoon together.
Well, good morning. I am going to be very brief because I believe everything has been said here. I just wanted to tell you how I feel regarding this company. I started working here as a trainee in 1994, so 32 years ago. That just flew. This has been an important evolution in the company. You just saw a chart regarding the value creation. Here we could see you cannot blame the fuel sector that faces problems of tax evasion.
This is not the only point to blame. We have a lot to learn as an organization. We made lots of mistakes. One of the things that was underscored here, we really have to underscore here would be, I believe that things that we strongly built within the group's culture is to recognize and to learn through our mistakes. Gandhi said, "I never lose. Or I win, or I learn." This was not something strong. This is something that we are strengthening more and more to make, you make a mistake, you make a mistake quickly, you correct. This is necessary for all organization cultures. Things are ever-changing. Things change rapidly. If you always want to be assertive or you will not do anything, or you will do anything, which is not good. I wanted to strengthen this, because we have made lots of mistakes.
We have made more good decisions than bad decisions. Now we talk more about the problems with the opportunities to improve, and this is clear. Now, I wanted to state this because this is part of a lot that was presented here. Very briefly, I would like to talk about the regulatory part because we interact a lot. The Brazilian economy depends more and more with the regulatory agencies. In order to build a new terminal of Ultracargo, you need at least four complex licenses. When I started working for the company, you only needed one license. Well, you needed a license from the environmental agency, and sometimes installation and operations. Now you have MInfra, you have a whole bunch of agencies that have to provide you a license. On one side, this is a barrier of entry for other players.
As a country, this can slow down. As investors, you take more risks to be part of a business or, well, the fact is, for a long period of time, we have been structuring and strengthening the regulatory environment, and we need to support these agencies. We need better and stronger regulators. There is no use in saying that it is bad, that it does not work. It works. It has to improve. We have to improve the efficiency. We have to help them to improve this, and we have made an effort to do this. When we talk about Ultragaz underwent a process of regulatory review. Brazil is a worldwide benchmark for LPG as we have 10 or 11 million residential clients. We have not heard of a cylinder explosion for a long period of time and let alone Ultragaz.
The fact is that we have very special things and many times are threatened, and you also have to defend this. Within the LPG consumers of Brazil, perhaps this is the best service of LPG consumption at very low cost because of the scale and the efficiency. Although we have good margins, the return of over-investment is of high quality. So when you forget, this is a properly structured industry with high levels of efficiency and safety. When we think about Hidrovias, as a matter of fact, one of the first meetings that I held Hidrovias, I said, "We have to change it. This has to be navigable beds of Brazil because we do not have lots of maintenance." When you start saying that you need maintenance, this means taking out sand from the banks of the river.
Hidrovias decided to do this and to invest in this, that in comparison, it is a low cost. We had to talk a lot in Brasília to explain in Brasília how important this is. Everything is organized today. In Brazil, we have a regulatory structure that allows us a law of environmental approval that excludes maintenance. So now, this works because today, for instance, you need an environmental license to cover a highway, for example, or hole in a highway, so things are evolving right now. I just wanted to mention this because obviously when we think about fuels, this appeared a lot in the newspapers. The other day I was with the governor in São Paulo and he said ICMS increased by BRL 300 million because of this. This was the competitive advantage of the illegal competition. We cannot think that this is resolved.
There is lots of money. We still have lots of people interested on this money, and we have to continue supporting these agencies. But I wanted to end saying something that I like to repeat. We human beings have this bad tendency to overestimate in one year and overestimate something that we can do in 10 years. You can do anything in 10 years. If you want to be a doctor in 10 years, you can be a doctor. In one year, you cannot. We are building and transforming an organization because we want it to be more modern, more nimble. There is a great effort in infrastructure.
Rodrigo and his team have focused on governance management. They focused on a change of culture. So now that we are almost celebrating 90 years, we will pay good 90 years in the future to create value. I would like to thank you once again for being here. We will have lunch. We will be able to talk. It is excellent to organize this event in our office. This is the roots. This is where we are rooted. We are very pleased to receive you, and I hope you can make the best of this day. Thank you very much.
We will go to our Q and A session. If you wish to pose a question, please raise your hand and we will take the microphone to you. For those that are online, you can pose your question through your chat, and if we have additional time, we will answer your question. Otherwise, our investor relationship team will contact you. We will have an opportunity to ask questions of the executives. Vicente, please go ahead.
Thank you. This is Vicente from Bradesco BBI. Congrats on the event. My first question is, the impression I get from talking to investment funds here and abroad is that depending on the results of the elections, the case rotation will be less leveraged, less cyclic. I think Ultra fits into that with category of being more cyclic and more leveraged. If that happens, will Ultra and Ultra's shares end up suffering because of that technical shift? What about the company's willingness to buy back shares? I think this year that was something new in your case, right? The share buyback. The second question is, I've been reading in the media about Rumo purchase process. Apparently, two buyers decided not to go ahead. Will that change your capital allocation process? Thank you, and congrats again.
Hi, Vicente. Thanks. I'll start. About the decision-making process, we talked a little bit about what we consider when we are thinking about capital allocation, and that doesn't change depending on the scenario. What does change is the ability of closing on a good project, a good transaction. If the economy is thriving, obviously, that means there will be more investment projects. So we do have a more resilient portfolio. I think that helps in the event of an uncertain scenario. But we'll still have the opportunity to leverage growth if the economy means we have more of an opportunity to grow. Buyback is always an option, just as dividends are. So we'll look at the different transaction opportunities and the excess cash that's generated in addition to project options will be distributed via reallocation or dividend payout.
The scenario is part of the context, but that doesn't mean we'll have an opportunity to use it if the economy picks up. Now, about transactions, and that goes to any kind of transaction. We have three factors. The industry has to have good growth prospects, value perspectives, and we have to do better through our management and a good entry equation. Entry equation means price, risk, and governance. If we find that in a project, then we'll go ahead with it. If not, we won't. So that goes to any Goes for any investment opportunity or transaction we are considering. I won't go into any specifics, but that's what we're looking for, and that's what we are pursuing. I think there are three here.
Hi, good afternoon. Eric from Itaú BBA. I have two questions. The first is, considering the M&A opportunities we've been discussing, I don't think this is a watershed year, but looking at the next 3, 4, 5 years ahead, how will the company navigate leveraging considering 2027 and potential differences? The second question is about imports as a segue to Linden's presentation. We've been seeing some different strategies in distribution companies when it comes to using subsidies or not. So I'd like to hear from you what you take into consideration when you go into it or not, what were the upsides and downsides you considered, and that's it. Thank you.
I can begin talking about leverage, then I will turn it over to Linden. A while back, 1.5 to two times was a comfortable leverage level. We have taken that down to one to 1.5 times for two reasons. First, because we are in a more uncertain macro scenario, geopolitics is more uncertain. Second is that given a more uncertain scenario, there may be other opportunities to use cash. There may be opportunities to make good investments. During cash scarcity is when you see good acquisition and investment opportunities. There are both sides of the same story, uncertainty and opportunity. We are working with the scenario. Right now, it is not clear to us what the winning scenario will be. That said, we have to be ready for both scenarios. How we are going to position ourselves if things move left or if things move right.
Given that our company invests BRL 4 billion in Brazil a year, how will that company continue to make investments and to grow regardless of who wins the elections? When it comes to subsidies, our rationale is simple. It is all about market dynamics. If a large part of the market is using subsidies and price at the end is being composed considering the subsidies, then obviously you are going to use it because you are going to have to come to that price to sell.
Prices in Brazil do not follow the cost of imported molecules because Petrobras affects the price and there are subsidies when it comes to imports. Otherwise, it would be much higher. You need to compete at the same price level. To do that, you can use the subsidies. That is what subsidies are for, to make sure that end prices are more competitive. It is a simple equation, really.
Good morning. Tasso from UBS. Thanks for taking my questions. I have two. First, we talked about regulatory conversations across all businesses. We started with Linden at Ipiranga, then LPG at Ultragaz, Hidrovias as well. I would like to hear from you how over the next few years, and considering elections next weekend, will bring risks or opportunities in that context. Some of the decisions have been more political than rational. What might be the risks or opportunities as these discussions move forward? My second question is to Lutz, as a segue to your presentation.
The company has been making a lot of mistakes in the last few years and learning from its mistakes. Could you give us some examples or tell us a story about what you have learned in the last few years? What have been the key learnings? Looking forward 5- 10 years from now, where do you think there is room for improvement or key learnings and improving processes? Thank you.
The second question is more complex. I could give you some examples, but it is all about culture. You have to live the culture. When it comes to the regulatory environment, whenever there are elections, as a serious large size company with an institutional footprint, we need to have technical discussions with the technical departments of the government because they will not necessarily change depending on who wins the elections. Often, they are far away from Brasília. These are technical people. I think a mistake people from São Paulo make is that we keep our distance, we complain, we are not there, we do not explain things, and we put it all down to ill faith. That is not true.
There's a lot of serious technical professionals who want to get it right, and they need technical support to understand what the issues are so that they can come up with regulations that make sense. I can give you an example that most people are familiar with. We invested in distributed generation. Our assumption wasn't confirmed, which was that the market was going to deregulate in a way that we could bring Ultragaz clients electricity with the Ultragaz service standard. The way the regulation was implemented, that couldn't happen. We discontinued it at a loss. It wasn't a huge loss, but the acquisition contract had an earn-out clause, which wasn't paid.
There was a cost, but the Ultragaz team raised its hand and said, "We have an opportunity to get out at a low cost." We just wrote it off, and that was, I think, last quarter. That's an example. But the main thing is, if you have an assumption, if you make an investment based on some rationales and they're not confirmed, you shouldn't try and come up with reasons to pretend like you got it right. It ends up being more expensive than you had anticipated. Let me just talk about the legal market. There's a difference between what we're going through now to other times when they try to fight it more solidly. Right now, the entire chain has realized the size of the hole that was there. When you talk to resellers, now they know how much they were losing.
Distributing companies, the regulatory agency, state governments, now everybody clearly realizes the magnitude of the losses. As we heard, and as I said, even though we cannot lower our guard, we have to keep our eye on the ball, because this is an industry that is prone to tax evasion. But now, awareness has been raised about how beneficial it is to everyone, for everyone to work in a fairer way.
Good morning. I think she wanted to ask a question. Regis Cardoso from XP. You're such chauvinists. Well, a couple of things. One to Ipiranga and the other one to Ultrapar. Ipiranga, can we talk about price composition? Because it's based on marginal cost, right? There's an influence of import parity on price composition. If you could comment on that and compare that to domestic supply, that difference between the two.
Linden, if you could comment on the buildup on margin expectation, recurrent margin, and the beneficial effect on the distribution chain. Fighting illegal practices will also have other benefits to society, not only to the distribution company. I have no doubt. Ultrapar, now that Hidrovias has had a few years experience with the portfolio, what is it like having minority shareholders? Is that something you'd do again in other group assets? What have been the lessons learned, advantages and disadvantages? Maybe the flexibility to go up or down to reallocate capital. I'd like to hear from you on that.
Well, price is not based on the cost. Price is based on the market. It has to do with our ability to invest, and we will look for the best alternative possible to supply the operation with efficiency, so you can have the lowest cost possible and be competitive at market prices. The market rules when it comes to price composition. In Brazil, obviously, even if you do not consider geopolitical events, one of the characteristics is that a part of your business is based on Petrobras' pricing policy, and part of the business, which is key, maybe 20%, 30%, is based on imports, which have a completely different rationale and are much more volatile. Our plans are long-term. If you are planning for imports, you are looking at November and December because we can have that predictability.
We can look at our client and our portfolio and think, "Well, we have a regular portfolio, so I am going to be ready to meet the needs of that portfolio." And you import based on your needs, and then you work with an average cost. Now, when there is a lot of volatility and prices are detached from that, then you can work based on the spot market, and then price is based on marginal cost. So within the business itself, there is not a single rule. You go with the flow, but it is volatile. Sometimes you are working with more, and other times you are working with less imports. Just to provide some clarity, we are in Brazil. Places are very different. In Bahia, they are selling. They use international prices. And there is also imports. So the market is based on international prices with subsidies.
As Linden said, we adjust our price to the average of what is going on with a slight Ipiranga brand premium. The cost might have an impact on the average price, but tax evasion in the past would have more of an impact, for instance. Markets suffered a lot, so we had to help resellers so they would not go broke, and our margin was often negative because of that. Regis, as for your question about being a public company, we do not follow any dogmas or a single model that will be replicated across all the companies in our portfolio. That said, Hidrovias. This is the second Hidrovias year. It is going through a learning curve, and taking a company from the inertia of a model and moving it to a different model means an exponential curve. It is hard. It takes time to move away from inertia.
There is a learning curve. When it comes to people, the team, the mindset, being on the same page, governance. So the company has to go through an adaptation to the new cycle. Now, being a public company, that was a public company. We like the principle of a public company. First, it is easier to align the company's management in terms of value creation. Second, the shareholders have a greater scrutiny than a private company with no partners, so the company is more disciplined. There is the cost of being a public company, but we think it is less than the benefits it provides. But it does not mean every single company in the portfolio will go public. It has to make sense for that company's reality, and if it is the best way for that company to create value.
There has to be clarity about that, but the starting point for Hidrovias is that it was already public, and there's a great deal of benefit to continuing to be a public company. There's a learning curve, and over time, once the plan is clear, once the targets are clear and in line, we need to increase liquidity because it doesn't make sense for a company that size to have the current liquidity it has. We need to work on that, but it's not the main thing about the company. The main thing is for the company to evolve as a company and not as a share. You were waiting, right? She's tense. She wants to ask a question.
Good morning. Thank you. Milene from JPMorgan. I'd like to hear a few more details about Ipiranga. We heard about all the gains in 2025, but I'd like to hear more about what happens at the end. [Non-English content] Things are going to get tighter. There should be more export bans, and I'd like to hear about your strategy. Is there an opportunity for more branded service stations? What's happening in the industry, and what part of that can be translated into supply risk? Second question. It's the first time ICONIC has provided more details about their operation, and more figures, the company strategy. What does that mean for the next two years? Will there be more growth? Is there an opportunity for a spinoff? Thank you.
Okay. If I forget to answer something, remind me, please. As a matter of fact, the international market is volatile, and it is a volatility that impacts the flow, and this creates problem in supply. Although you see national inventories dropping, these figures are public. Brazil is importing half of what it used to import in terms of diesel. This is a more adjusted inventory, but our role and our strategy is to find an option. I don't know if there will be export bans from the U.S., it will be total, partial, but we have to be prepared. What we're doing today, we don't have capacity to originate in other parts of the world. We have products coming from Saudi Arabia, from India, that we don't activate because the cost of the molecule is higher.
It doesn't make sense, but this is something that we can do in the future. This possibility is open. It will depend on how countries react, how long this geopolitical stability takes place because as countries diminish the impacts, they're finite in terms of the use of reserves or control of demands. These are finite measures. Sometimes they become tighter. Our role is to have options, and we do have options. We have good supply practically until the end of the year. What else did you ask, by the way? Now, okay, branded service stations. There are markets where we cannot harness all the opportunities. You just can't go and do things. First, you have to maintain the quality of your investment, which is something clear. Second, you have to be very careful to whom you bring to the network.
Because when you think that there are lots of people in the market working in the informal market, and they are supplied by markets that work in the informal market. There are companies counting with the coverage of a good company to commit another type of fraud. I do not want these type of partners with our brand. I want a partner that believes in the value of the brand, and now is realizing how important it is to work with a company that can guarantee supply, that has a good value proposition. I am not against other brands. I am against those that do not pay taxes and those that work in the informal market. This will be a good year for Ipiranga from the business growth point of view. This does not mean that we are open just to flexibilize our compliance rules.
Now, regarding ICONIC, disclosure has no way back. There is no return from disclosure. We have shown the evolution of the companies in the past year. This is extremely relevant, and we have a relevant growth of potential. Can you imagine next year to separate ICONIC and Ipiranga's result? Can you imagine what would happen if we would separate the results? I see ICONIC in three major blocks. The assets are assets that are modernizing itself, but they still have space to gain more operational efficiency. We are also implementing a new operational system in the company that will simplify, and our processes will be more agile. The pillar of efficiency is of utmost importance for a business. Number two, we are market leaders, but we are not leaders in all the segments, in all the sectors.
How can we fairly participate in each one of the sectors, in each one of the product class? The third great pillar, as we innovate, we can explore new industries, and we can develop new molecules and new products to meet the needs of our customers. I would say that the ICONIC journey will continue being efficiency, core strengthening, and trying to see where we can create value to our customers.
Good morning. Congratulations for your presentation. Very clear and highly objective. I would like to pose a question that up to the moment, no one has posed. It seems obvious that the growth of the use of the electrical vehicle will intensify in an unpredictable way. I cannot assess this right now, but I would like to know if you have already seen the growth perspective of the use of the EV, and how can this growth interfere in the performance of the fuel that you distribute.
Have you done a study? As you mentioned, it is predictable, but some things are not predictable. One part is predictable, some parts are not predictable. Every year, we see the future curve of demand. We are still in the moment of growth. Obviously, the EV has slowed down the growth of gas and ethanol consumption in Brazil, especially the heavy users. Now, the GNV in gas, natural gas, that this product, the car conversion, the conversion to gas was practically zero because the taxi drivers and the Uber drivers, they are buying more EVs.
There's still a problem with EVs in Rio de Janeiro because lots of EV cars are being stolen. They could take it up to the mountains, they don't have to take the car down and to fuel it up in the gas station. We do have these problems in Brazil when we see diesel that is a relevant side. I believe it's 2/3 of the Ipiranga's volume. We don't face this problem in the long term. As a capital allocator, I would like to give you an example that, for me, is very emblematic. For how long did we talk about the end of smoking? The tobacco companies would be extinguished, and they're there, making lots of money. Probably less money with slower growth, but they will last. They will continue generating cash and making money for some time.
People always talk about Kodak as a company that didn't have success when it came to adapting itself to the new technology. In theory, the digital camera was developed by then, and then they got lost in the middle of the way. Basically, they disappeared. As a share, I believe that the Kodak shareholder was happy with the management because if Kodak wanted to be the new digital camera producer, it was going to lose to Sony or to Apple. They were going to spend all the capital that could be paid out as dividend, trying to change things. Here, I'm talking as Ultrapar. The role of Ipiranga is to generate cash and create value in a sector where it makes sense. With efficiency, quality, operating better, and improving its indexes year on year without trying to become the next Tesla.
We're not going to be the next Tesla. At the end, if we say EV is going to be a fantastic business, where can we allocate our capital in a company that will benefit from EV, but we cannot transform ourselves in an EV company. We will always be a reference in Brazil for fuel, for mobility, for a number of things. Perhaps we'll make some money, I don't know, in service station and convenience store. We have to see how we're efficient with what we have without creating something that is unknown. Because as a matter of fact, this is an industry that is under disruption. China is different from Brazil, but we compare ourselves to China. We're extremely different from China when we think about the political side and the regulatory side. For example, they say everything is going to be EVs. We can't do that.
Brazil will be one of the last combustion engine cars in the world because we lose a lot of fuel. I believe that our horizon is quite long when we think about this industry, because it's an industry that is extremely important for Brazil, and Ipiranga has a very important role and a highly profitable role. I agree with you, but Ipiranga has access to 6,000 retail points in Brazil that are very good. Two final questions. The EV also use fluids. For instance, in Brazil, we already supply fluids to EVs. When we see the lifespan of EV, the amount of fluids is smaller, but the margin for our business is higher. You have the hybrid car that, in our case, it uses lubricants, you start using other fluids. There are good prospects for Brazil in this area.
As Marcos said, we will have a diverse matrix in terms of fleet. I am Jorge from Scotiabank. Could you talk about capital allocation, central business adjacents, and new business? I would like to understand because when you think about, perhaps you have more certainty on your central businesses or projects than adjacencies, and new projects are more uncertain. So, the level of return increases in each one of these boxes as you analyze this. What is your starting point? Is it ROI? So you are going to start building on the central project to compare it to other project or an ROI that in the long term, because now it is difficult to prove anything because of the extraordinary things that we have seen. I would like to understand what you think about each one of these three blocks.
I believe the rationale is the further from what we do, the greater is the return. A business can generate value. How long will it take to be in the black, or will we reach a break-even point in the project? The third element would be, we have a long-term mock, which is the minimum requirement needed. So you will have a project. The technology platform exchange from ICONIC, Ultragaz, and Ipiranga, these are projects that should be done regardless of the return, because we have a JD Edwards system that does not even have maintenance today. It is not a matter of choice, it is a matter of need. The exchange will give us more efficiency. We have a VPL, which is positive, and everything is positive.
When we pull out of unnecessary investments that are investments that do not change the strategy or the competitive advantage of the business, then yes, you need more return. An investment that is necessary or increases a broader competitive advantage, you accept lower return. When it is discretionary, you are going towards a new business. Today, we do not need to build a new business. It is not going to improve Ultrapar because it creates synergies and gives benefits to the existing businesses. We do not need a new investment in order to improve our portfolio.
Bruno Montanari from Morgan Stanley. Two follow-ups. What about the minorities? You said that this would be a public company and this would be a strategic investor if the same dogma persists. How could a strategic partner help Ultragaz, Ipiranga, and the opportunities of new businesses if something major emerges that checks all the boxes regarding what you mentioned, if this level of leverage could be forgiven in a short period of time because you have a good opportunity ahead of you?
Now, thinking about your second question because I forgot your first question. Our leverage level, we are below one time, we are 0.9. This is just a reference. It is not a straitjacket. If there is an investment project that increases our leverage, if we have a good visibility of de-leveraging in the short run, there is no problem in being above. This is not a straitjacket. Right now, we believe that this is the best leverage point. It is all going to depend on the circumstances.
If there is a project and there is an investment where we can deleverage quickly, we can surpass this level. Your first question, I can even answer. At the end, Rodrigo, we need discipline. Our governance is complex. The new market is an etereus partner. You know what kind of reports come with it. A strategic partner, a bad strategic partner is really bad. [Non-English content] You can verify, understand to see if this partner is aligned. We have no biases here against a strategic partner, if it is a good partner that adds up to the company, because extra money is always valuable.
Two additional points. We can do this. We do not need to do this, and to bring a partner in just because of capital does not make sense because of our level of leverage. We do not need the capital. Of course, if we bring in a new partner, it is to do better what we already do. Now, if we have a partner that can contribute, well, okay. But we have partners in all our operations of Chevron, Krispy Kreme, and we also have partners, and we operate very well with them.
Okay. We are coming to an end. Our Q and A session has come to an end. I would like to thank all the officers for the presentation, all the participants in person, everyone that is online. We have over 400 people connected online. Thank you very much for your availability. I hope this was a fruitful presentation. Questions that were not answered will be answered by the IR team. We are at your disposal, and it was a pleasure to be with you. We will serve lunch on the ninth floor, and we will have a Q and A session in other.