Investing.com - The holding company Simpar (BVMF:SIMH3) released its balance sheet for the second quarter of this year with a net profit of R$100 million, a decrease of 53% compared to the same period in 2022. The company, which operates in Brazil, South America and South Africa, directs the strategies of seven independent operations: JSL, Movida (BVMF:MOVI3), Vamos, CS Brasil, Automob, Banco BBC Digital and CS Infra.
Gross revenue, net service revenue and Ebitda were all records. Gross revenue reached R$8.4 million, an annual increase of 42%, while net service revenue totaled R$6 billion, an increase of 46% in the same analysis. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) stood at R$2.3 billion, a year-on-year increase of 33%. Leverage as measured by net debt to EBITDA rose 0.1x compared to 2Q22, to 3.7x, or 3.4x in the normalized criteria.
According to Denys Ferrez, Simpar's CFO, net profit was pressured by financial expenses, due to the current level of interest rates. With the monetary easing cycle, this indicator is expected to gradually improve. Check out the interview:
Investing.com - The company posted record gross revenue, net revenue and EBITDA for the year. What drove these gains?
Denys Ferrez - We've always had a recurrence of investment, which basically drives our growth. Last year, we made advance purchases of operating assets to take advantage of commercial conditions, so this takes a bit away from the traditional rhythm. But now, despite having reduced the volume of capex, we are implementing that anticipation. So this expansion is the result of the benefits generated by these investments, most of which, in the case of our group, are linked to long-term contracts.
Inv.com - Despite the significant rise in EBITDA, profit fell, for what reasons?
Ferrez - We have a higher volume and a higher financial burden. As far as the country is concerned, June was the peak, because now there's been an interest rate cut. So there's more interest and a new phase for Movida. After having grown significantly in the last 24 months, Movida entered 2023 seeking operational efficiency, seeking to adjust its fleet mix, but coming from a successive adjustment of increased depreciation, which impacts profit. In terms of profit, I see it as a company preparing to deliver its return, its invested capital in a normal way from 2024 onwards. 2022 also had the benefit of selling used cars at an unexpected price, better than expected because we experienced inflation. So this event no longer exists. There was a slowdown in the country and a consequent need to adjust depreciation, which we think has already peaked, as well as this interest rate story. So this all adds up to a lower result.
On the positive side, the company had an important contribution in this quarter from our M&A activity, which saw a benefit from one of the acquisitions that was made recently. So it's the mix of these events that explains our number, but the other two factors were more relevant, bringing the figure down.
Inv.com - With Movida under pressure, as mentioned, from the subsidiaries, what was the positive highlight?
Ferrez - JSL has had a sequence of very consistent results, developing with a great deal of discipline in its capital allocation, whether organically or through acquisition activities. It's a company that many people haven't had the time, the opportunity to see the size of the transformation it has been making since it went public. With its financial strength, JSL's structuring in terms of scale is much greater than the usual profile of logistics companies in Brazil. It can offer more security and more capacity to invest in new projects for existing and new clients. It's a leader with a very unique profile of scale in the country. I think it's doing very well and has everything it needs to keep delivering.
In addition, Vamos has been keeping up its pace in the rental sector and its rental opportunities, and it has a dealership, the largest agricultural machinery network in the country. On the agricultural side, there's a specific dynamic of demand that very much follows the lines of incentives for farmers, which weren't available in the second quarter, so Vamos' full potential wasn't visible because of this slowdown on the professional side.
Movida, on the other hand, I'd say is on the upswing in terms of its commitment to adjusting its fleet and improving its operational efficiency, so it has improved its occupancy rate and the unit price of its fleet. As we're here building the future of the company, not just the photograph, I think it's also on the right track. I also think that doubling the fleet even in a scenario of car shortages was important because whoever was leading this sector was busy with the merger. So there was room to bring new customers to Movida's base.
Inv.com - Have you made any changes to your strategy for paying out dividends or any other message you'd like to send to investors at this time?
Ferrez - M&A activity continues to be very responsible. There are clear opportunities, but we are always very selective. I see an opportunity for the group's continued growth, because I understand that what we offer has value when everything is going well, but also in more difficult scenarios, because much of what we do helps to gain productivity, deallocate capital from non-core business and this has structurally allowed us to develop. We're going to continue to allocate capital responsibly and deliver. This makes me believe that our level of capital and return on invested capital will tend to improve next year.
Link to the article: https://br.investing.com/news/stock-market-news/holding-simpar-simh3-reporta-lucro-de-r100-milhoes-cfo-detalha-balanco-1143701