Raízen S.A. (RAIZ4) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for waiting. Welcome to Raízen's Third Quarter 2024, '25 Crop Year Earnings Presentation. This presentation is being recorded, and the replay will be available at the company's IR website at ri.raizen.com.br/en and at Raízen's official YouTube channel. [Operator Instructions] The presentation video will be in Portuguese with simultaneous interpretation into English. [Operator Instructions] Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operating and financial projections and goals, other beliefs and assumptions of Raízen's Executive Board, based on the information currently available. These statements may involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should be aware that events related to the macroeconomic scenario, the industry and other factors could cause results to differ materially from those expressed in the respective forward-looking statements. Today, we are joined by the following company executives. Nelson Gomes, CEO; Rafael Bergman, CFO and Investor Relations Officer; and Phillipe Casale, Head of IR. Now I will turn the conference over to Mr. Casale. You may begin the presentation.

Good morning, everyone. Welcome to Raízen's earnings presentation. Before we begin, let me point out that detailed information about nonrecurring impact is available in our earnings release to provide a better understanding of our business value creation potential. Now let's move on to the key highlights of the quarter, starting with Sugar and Renewables. The crushing season is nearly finished, and our agro-industrial indicators have experienced an impact compared to the previous crop year. Dry weather and wildfires have affected a large portion of the Center-South region, and as a consequence, impacted sugarcane crop development and yield. The decline in cane quality pose challenges for sugar crystallization and production, resulting in a lower sugar mix year-over-year. Despite the decrease in sugar equivalent production volume, and the lower contribution from trading results this crop year, the pace of own sugar and ethanol sales accelerated over the year, contributing to the expansion of adjusted EBITDA. In the sugar market, we have ramped up shipments, capturing the benefits of our strategic positioning. Our outlook remains constructive. We are hedging sugar prices at levels that should support healthy profitability over the next 2 crop years. In Renewables, despite the lower mix of specialty ethanol due to the reduced export volumes, domestic market prices improved in the quarter. Gasoline parity is now approaching 70%, and we expect an increase in demand due to a potential rise in ethanol blending to 30%, reduced market informality with the implementation of a single-stage tax system for biofuels and stricter enforcement and penalties for noncompliance with RenovaBio targets. Our strategy is to enhance ethanol value by expanding specialty ethanol sales to global clients at premium prices. In E2G, we are close to opening two new second-generation ethanol plants, which are in the final stages of commissioning. Two additional plants were scheduled to come online in the coming years, with a construction pace in line with capital structure management. For now, we are focusing on ensuring stability, consistency and operational safety, while maximizing production in the next crop year, and increasing the segment's contribution to the company's results. In electricity, price movements offset the lower co-generated volumes due to reduced bagasse availability this crop year. Now moving on to the highlights in Mobility. We are strengthening our fuel distribution operations, prioritizing our Shell network centrality and customers, to ensure healthy levels of profitability, both in Brazil and in our operations in Argentina and Paraguay. Our LatAm operations saw another quarter of resilience. We expanded the Shell service station network and increased sales volumes compared to the previous year. Our efficient supply and trading management kept healthy margins in the business, adding resilience to the market dynamics. Adjusted EBITDA was lower year-on-year due to the strong base from the previous year, driven by the start of price pass-throughs and an improved business environment in Argentina. We continue to direct cash generation in the country towards modernizing the Buenos Aires refinery and reducing debt. In Brazil, we faced a challenging business environment with greater competitiveness in the diesel market. The increase in biodiesel prices impacted our supply strategy, leading to more formality and unfair competition related to noncompliance with the mandatory blending requirements. Nevertheless, our profitability remained healthy. We advanced in implementing the Shell Integrated Offering, strengthening our resale competitiveness and contributing to margin expansion compared to the previous quarter. Year-over-year, the reduction in profitability is mainly reflects of the lower contribution from oil products, trading operations, as well as the strong comparison base due to the diesel shortage in Q3 of the previous year. Now let's move on to the highlights of Raízen's consolidated and financial results. The contraction in adjusted EBITDA for the quarter and year-to-date primarily reflects the less favorable Mobility scenario, as previously mentioned. And the lower contribution from trading results in sugar, ethanol and byproducts. Regarding cash flow, the main effect during the quarter stemmed from lower operating cash generation, working capital management, including inventory positioning during this period of the crop year, and a reduction in supply agreements as well as fluctuations in customer advances. As a result, the leverage and debt levels at the end of the quarter were driven by lower operating cash generation and adjusted EBITDA over the last 12 months, seasonality and variations in working capital lines and higher investment levels towards project completion, which have required more capital up to this point, but are expected to start dropping as of the next crop year. It's important to highlight that the concentration of amortization at the end of the crop year is mainly related to working capital lines contracted annually to support the typical Sugar and Renewables business seasonality. These maturities will be addressed with the usual cash generation from the last quarter and refinancing, which is already in progress. This will ensure that we strike a balance between the liquidity profile and Raízen's debt levels. We reaffirm our commitment to optimizing our capital structure and reducing debt, thus ensuring sustainable value generation for our shareholders. Thank you all for joining us today.

Before we begin the Q&A session, I will turn it over to Raízen CEO, Mr. Nelson Gomes for his remarks.

Good morning, everyone. Welcome to Raízen's earnings call. Thank you for joining us, and before we begin the Q&A session, I'd just like to make a few opening remarks, about the first 90 days, since I joined Raízen. Raízen's story has had a few cycles over time. And it's important to recognize those cycles and to highlight a few of their characteristics. I would like to start by talking about the first cycle, which started when Raízen was first set up in 2011 and went through to about 2016. That was an integration cycle, when we created a new business model that focused on synergy, the integration of two very different businesses and the creation of an organizational culture that was quite unique. It combines culture features from Esso, Shell and Cosan. At that time, we focused our operation on -- our concentration on operating excellence and execution excellence. In the second cycle and that started in 2017 and lasted until last year 2024. We had a massive growth cycle. We went through an IPO in 2021, and it basically focused on huge and diverse acquisitions, which complemented our portfolio. So let me mention a few of them. As an example, we acquired Shell's operation in Argentina and Paraguay, then the lubricants operation. We had the joint venture with the NÓS Group, Tonon, failing Biosev was acquired. We expanded our power business through the acquisition of Gera and WX. In addition to the acquisitions, we have also gone into new businesses such as E2G and biogas. And we have also expanded our trading portfolio considerably. And in the last 2 years, during that cycle, we invested in recovering our sugarcane crop yield in Raízen's agricultural segment. That cycle has brought a lot of complexity, a lot of distraction to our organization and increase in our organizational structure and therefore, an increase in costs. And at the end, an increase in our debt, which obviously was compounded due to the macro scenario. The rapid increase in interest rates has brought us a considerable sense of urgency right now, so that we can take all necessary actions to bring the company back to a stable and balanced position. In the last 90 days, we have also seen the Mobility business performed excellently, very high-quality assets, highly qualified people and agricultural yield that has resulted from the investments that we've made over the last few years. So bearing all that in mind, we are now beginning a new cycle, which will focus much more on value creation. In the next crop beginning on the 1st of April, we will start the company's new cycle, beginning with a cultural change. A new way of doing things, that will be much simpler. So simplification is a part of our culture from now on. We'll simplify our structure, our internal processes, our portfolio and even the way we talk to the market. We will also be focusing on operating efficiency, execution, both in safety and security as well as discipline when it comes to our investments. We will also be focusing on collaboration. We will be working in an increasingly more integrated fashion at the company. And when it comes to value creation and business, that will mean focusing on our core business, going over our assets portfolio, creating more value to our shareholders as well as optimizing our capital structure. So what have we been doing in the last quarter, over the last 90 days? And what are we doing in the current quarter? We have concluded the restructuring of this organization's first level. We've brought in the people we needed to bring in, and that means considerable simplification even in the number of people who report to me. We're very clear about the three lines of business within Raízen, one of them being Sugar and Renewables, or IAB -- EAB in Portuguese, ethanol, sugar and energy (sic) [ bioenergy ]. Mobility Brazil and Mobility Argentina. We have reduced our trading scope. We have interrupted some of our operations that are not part of our core business. Our core is sugar, ethanol and origination of everything we need to distribute through our service station network. We have started going over our portfolio index with a view to reducing our debt. So I think that goes to show at least -- it does to us very clearly Raízen's cycles ever since it was first founded, in 2011. It also goes to show the company's next cycle, which will begin on the 1st of April 2025, with the next crop. So I think we can now begin the Q&A session. Thank you.

[Operator Instructions] The first question is from Gabriel Barra from Citi.

I'll focus on the main points. It's really interesting to hear you, Nelson, on the priorities. We've been talking to the team about them. So it's important to hear about them, from the company. What I'd like to understand is the company's leveraging. I think you are focusing on adjusting your capital structure in a difficult scenario, high interest rates, the debt going up. You've already talked about your strategy and how we're going to do that at the company looking forward. So I'd like to hear from you on a couple of points, please. First, what is the time line for that? How long can we consider for that turnaround process? How long will it take for that process to take place? And how should we look at your debt looking forward, considering the company's leveraging level right now, it seems a bit higher than you're comfortable with. You mentioned your assets and cutting down costs and going back to basics from now on. But considering the high interest rates, it's quite a challenging scenario for cash generation and considering the company's valuation and divestment, depending on the size and the valuation that might not bring leveraging back to an ideal level. So if you could provide us with more color on how you're going to make your leveraging go back to a stable level? And at what level would you be feeling comfortable next year? That will be very helpful.

Gabriel, this is Rafael. Thank you for your question and comments. Well, it will be a journey that will begin with the new crop year, '25, '26, as Nelson said, our priorities are very clear. We will be focusing on efficiency and simplification. There's also the matter of recognizing that the starting point of this journey is a very tough year, as you said, there was a serious weather impact on our agricultural activities. So we'll have an effect of operating recovery and the results of our efficiency and portfolio review initiatives, as Nelson said. As for revising our portfolio, we're going to be very diligent when it comes to that to make sure that we have the right value for our assets. We have great assets in our portfolio, and we will seek the best value for them. So we're beginning on that journey. It's not a short-term journey. I think it's important to mention that, Gabriel. So in '25, '26, we will be beginning on that journey, focusing on decreasing burning cash. There will be a cycle of high investments. And based on those investments, leveraging has increased. And in this cycle, that's beginning now, we will not be starting any new growth projects. In '25 '26, we will be focusing on continuing to build our two E2G plants, which have already started to be built. So we'll continue to be constructive and the second phase of investments in the Argentinian refinery. It's a good business. It's a profitable business. So those are the only growth projects for '25, '26. We will not have any new initiatives. So that already means looking at the company's major numbers that will decrease our CapEx disbursement. Obviously, that's been one of the reasons why the company has been burning cash. And let me just highlight also, Gabriel, in terms of focusing our capital structure optimization, aiming at higher portfolio efficiency, not starting any growth projects. And this cycle will also begin with the decision of not making shareholders' payout a priority because we want to preserve cash and improve the company's capital structure. So there are many initiatives that will begin to have an effect in the '25, '26 crop year, focusing on no longer burning cash. And we'll begin to see the effects of those initiatives with free cash generation. I've given you a longer answer to your question, but please let me know if you have any follow-up questions.

That was very clear, Bergman. Just a quick point, I'm curious about the CapEx, we should consider a much lower CapEx number than the last few years. But, in terms of maintenance CapEx, would you adjust it -- adjust your maintenance CapEx for sugar and ethanol over the next 1 or 2 years to maybe save some of that cash flow? Or is that not on your radar right now?

Well, Gabriel, we know that we've made decisions in the past that have left to unless -- to undesired consequences in terms of productivity. So we will keep the recurring CapEx at a healthy level to make sure that assets remain secure and productive and that goes to both businesses, ethanol, sugar, bioenergy and Mobility. So we will be preserving the size of the business, the business safety, security and productivity.

The next question is from Mr. Matheus Enfeldt from UBS.

My question is almost a follow-up question to the previous question. Looking at market numbers, there are roughly BRL 14 million (sic) [ billion ] in terms of Raízen EBITDA looking forward. The CapEx is BRL 10 billion and the net debt dropped to BRL 40 billion at a 15% interest rate, so BRL 6 billion per year, BRL 14 billion, minus BRL 10 billion, minus BRL 6 billion. The market is expecting the company to use up close to BRL 2 billion cash a year. That's not counting financial costs, taxes. So Barra mentioned three points in his previous question. So the three points are increasing OpEx and CapEx efficiency. It sounds like you've been doing that very well already in the first 90 days, but how much of that cost have you had in terms of improving OpEx looking at '25, '26 because we've only seen the negative side of that. We haven't seen the positive side for next year. Second point is divestments. You've already mentioned that. So I will focus on it and a potential capital increase. There have been some news in the media that depending on the size, it could be a silver bullet, knowing that you need to cut down your debt to strike a balance. So just to conclude my question, do you think the market has the wrong expectations? Will there be any OpEx or CapEx improvements that could be a positive surprise? And can you potentially give us some numbers on that? And how do you think those three avenues can create value for the company, so we can have a better idea about what's going to happen in '25,'26.

Thanks, Matheus, this is Rafael. Thanks for your question. Your points without presenting any new numbers to the market, the challenges we're faced with. And we will take action to face those challenges. So we are working on efficiency initiatives that will benefit both our operating income, EBITDA as well as CapEx. There are opportunities to increase efficiency in our CapEx. So we're looking at the cash benefits that may come from those efficiency gains. We're also calibrating our investment levels for next year. So we're still discussing it internally and beginning to discuss it with our Board members, obviously, considering high interest rates and no divestment cash procedures, we have a cash challenge for '25, '26. That's why we made the decision to revise our portfolio because in addition to our efficiency initiatives, it could help us in terms of cash and indebtedness in the short term. That will depend on the decisions we make and the time line to implement those decisions so as to create value to shareholders. You mentioned speculations about capital increases. What we can say is that we are focusing on doing our homework. There's quite a lot to be done on those avenues I mentioned. And now is the time to really do our homework to make sure that we deliver on those efficiencies so that we can change strategies and change our culture. So that's what we're doing before we consider any new alternatives.

The next question is from Ms. Monique Greco from Itau.

Rafael, Nelson and Casale. Rafael, I have a question about CapEx. You talked a lot about seeking CapEx efficiency, reducing CapEx internally, what made you make the decision to continue building the two E2G plants? Is the company considering discontinuing those projects until you reach a higher capital structure optimization level? I want to understand the rationale behind choosing to continue to build them. And what kind of CapEx are you expecting for those two plants? That would be great.

Monique, thanks for your question. Well, when we joined the company 3 months ago, we went over the projects without any dogmas and E2G assets that are being built also. So there are two plants that are undergoing commissioning right now. So they should come online soon. And we have two other plants, which are being built right now. They are at different construction stages. They are contracting equipment and services. And looking at where they are right now, it wouldn't make any sense in terms of value if we were to discontinue their construction. Let's not forget that second-generation ethanol continues to be an important choice for the company. These two plants are assets when mature, they will be generating cash that will benefit the company. And as I said to Matheus, now is not the time to start new projects. Now is the time to go over the portfolio we've inherited, make decisions about assets, if there are any assets that don't make sense for our portfolio or if they make more sense to a third party than it does to us. And just to reiterate, we have no intention of beginning to build new assets at this moment.

Could you give us a CapEx estimate for those two plants, how much you're still missing?

Well, in general terms, looking at '25, '26, our estimated CapEx for those two plants is roughly BRL 1.6 billion.

The next question is from Ms. Isabella Simonato from Bank of America.

You've been talking a lot about internal efficiencies. And trading is one of the lines, there seems to be a considerable downsizing of how you're seeing -- how you're looking at trading in the company. And it looks like that may release considerable capital and investment what are the low-hanging fruit you've identified in the last 90 days that might release efficiencies, capital and help you to generate cash organically. So considering the adverse macro scenario, if interest rates go down, considering the debt, what's going to get the company back on track in terms of cash generation in the three core businesses?

Isabella, this is Nelson. I'll start, and Rafael can jump in. Considering efficiencies, in general, there is no silver bullet. There are opportunities in the trading business, as you mentioned. And we can and are reducing our scope and focusing our trading scope on sugar, ethanol and competitive origination of the byproducts that we need to distribute through our service station network. So we're stepping away from other trading activities that we went into in previous years. So yes, there are opportunities there. And that should lead to a considerable reduction in our structure, not only in trading but also back office. There are plenty of integration opportunities. We can simplify our business lines, as I mentioned. We're focusing on simplifying each of our businesses, and making that division between them very clear. We have the Sugar and Renewables business, EAB, is an acronym in Portuguese. We have our Brazil and Argentina Mobility businesses, and each one of them has opportunities for simplification. And that's been proving to be true in the last 90 days and will continue to be true in February and March. There's a lot to be done to that end.

Isabella, let me just jump in and add to what Nelson said. Obviously, those trading decisions have a consequence. And trading does have a potential and historically has added considerable value to our core operations, whether it be by maximizing the value of the products produced by Raízen, sugar and ethanol as well as through competitive origination of the byproducts we need to distribute tools in our operations. So trading is a relevant operation for us. But looking in hindsight, we made the decision to expand that operation, and it went beyond adding value to our operations. So right now, what we're doing is simplifying it to make sure that we focus on what adds the most value. So I just want to make it clear that trading does contribute with value, it doesn't mean it adds positive value every year. So this year has not been a great year for trading. But what we want to do is have a more compatible trading activity to add value to our business. And generally speaking, when we look at Raízen's business, we have sugar, ethanol and energy focusing on efficiency, productivity, and reviewing our portfolio, and that will allow us to come out of that process with more synergies in our portfolio. The fuel distribution business has been a great business. We have a fantastic team, fantastic logistics, great structure, very strong brands. So we can leverage value in our business. And obviously, Argentina is an investment we're very happy with. Our team is managing it with excellence. So it will continue to generate, to create considerable value to the company. Thank you, Isabella.

The next question is from Mr. Thiago Duarte from BTG Pactual.

If we can go back to Nelson's opening remarks about the company cycles. The last cycle you mentioned, Nelson, is a cycle of strong investments in the sugarcane crop. How would you consider that last cycle in light of the reduction in crushing, sugarcane availability? And bear in mind that it was a very unusual year, considering the weather conditions and the wildfires. How optimistic are you about next crop, in light of investments that have been made and considering that the weather looks much better now between the crops and there has been a roughly 7% drop in crushing. So what you're reporting for the '25 crop is not that different to what we've seen in the Center-South as a whole for a company that's made considerable investment in renewing and developing your sugarcane field. So how are you seeing a more stable weather year and sugarcane availability for next crop? That's my first question. And a follow-up question would be about trading. Your intention to focus on your core business is very clear, and stepping away from what's not your core business in sugar, ethanol and byproducts. How will that affect the company's results, in terms of EBITDA? Rafael has already mentioned that the last year, wasn't great. But historically speaking, it has been great. But in terms of capital historically, especially when you increased your trading scope and looking at the balance sheet, you've needed it. So how do you see that impact on the company's results now that you're going to streamline the trading operation?

Thiago. This is Nelson. I'll take your first question on the investment cycle in our agricultural activities and yield, and Rafael can answer your question about trading. This year, as you've mentioned, in your question. There have been one-off climate events that have affected not only us, but the whole Center-South of the country, which were the wildfires and the droughts. So comparatively speaking, the way we see the next crop is obviously more constructive. Which doesn't mean, we don't have a lot to do and plenty of opportunities to tackle at the beginning of the next crop. Now the investments we made in the last cycle, especially in agriculture to increase sugarcane field yield, in our opinion, were excellent investments. When we look at our figures for the first, second, third and fourth sugarcane cuts, yields are very good. And in some cases, are actually the benchmark. So to us, that points to the fact that we have made the right investments in the right places at the right levels. And for that reason, we will maintain our recurring CapEx. We don't want to make the same mistakes that were made in the past. We have reduced the recurring CapEx a few years back and suffered the consequences. So we won't be doing that again. So we're very constructive even if we have a lot to do.

Thanks a lot for your questions, Thiago. I'll take your question about trading. I agree with you. As we simplify our trading scope, and we're talking about reducing the third-party amount considerably that we originate. There was a good strategic rationale behind it, but considering the fact that we're trying to optimize and simplify capital allocation, that will not be a priority for the company. So we will be optimizing capital use and be even more disciplined. Any trading decision has to go through capital availability and the compensation for any capital that is being used. Thank you, Thiago.

The next question is from Mr. Bruno Montanari from Morgan Stanley.

I'd like to hear about your relationship with Cosan, one of your shareholders. Looking at an average of the last few years, Raízen has paid out roughly BRL 2 billion worth of dividends on an annual average. You have mentioned that you will not be prioritizing dividends payout to shareholders. However, on the other side of the table, one of the shareholders also needs to deleverage and dividends are one of the main leverages to do that. So, how is that communication with the shareholders and the Board happening considering this new strategy from the new leadership so that we can make sure that the -- as the company generates cash can be preserved and really put towards deleveraging?

Bruno, this is Rafael. Thanks for your question. Well, let me comment on a couple of key points about the company's situation right now. Well, Nelson has described our plan, and we have been talking about that during this call. This plan is fully supported by all Board members, including the shareholders and co-controllers. So we have full support by the Board for the plan we have shared with you. So that's the main point. The second point is, as the top executives of this company, we have the company's best interest at heart. And obviously, right now, that's the cycle we need to focus on. We need to go back to cash generation and reducing debt. That cycle is not consistent with prioritizing paying out dividends to shareholders. Thank you Bruno.

The next question is from Mr. Lucas Ferreira from JPMorgan.

Good luck on this new cycle, Nelson, Rafael and Phillipe. My question is about, you have been with the company for a short time, but at what stage are you in terms of analyzing or even divesting? Could you share with us which assets will make more sense for divestments? You've sold some of your sugarcane, but in sugar, ethanol, you have a lot of assets and you're operating at below capacity ideal level. So what can we expect? Could you share something to that end with us?

Lucas, this is Rafael. Thanks for your question. Well, I think, first, we can talk about what we have already done with our portfolio. We have announced a transaction with sugarcane and -- plant assets and selling solar energy assets. So those are ongoing, and they will generate cash as those projects are delivered. Now when we're looking what has less synergy with everything that creates synergy for the company. So we'll be looking at the plants to make sure that we have a stronger portfolio with more synergies for the company. And there is no dogma. It's important to say that without speaking about any specific assets, it is our duty to look at the relative value of our assets, how they contribute to the portfolio and the integration value these assets may or may not have when we make those decisions. Obviously, we don't want to burn any assets. So we're going to be diligent when making decisions about divestments. And when looking for the new owners of any assets, we might choose to divest from.

The next question is from Mr. Gustavo Sadka from Bradesco BBI.

Good luck, Nelson and Rafael on this new cycle. My first question is about working capital. Looking at the company's working capital lines year-to-date, it looks like you've used up BRL 15 billion compared to BRL 10 billion last year. So part of that is seasonal and will be coming from the last quarter of the crop year. But looking historically at the sugar and ethanol inventory levels have been dropping year-on-year. And that doesn't seem to explain all of it. So if you could give us some more color in terms of, what kind of cash release can we expect from last quarter? And what led to a higher working capital consumption? And in terms of distribution, looking at this quarter's margin, considering market circumstances, it should have been good, maybe even higher than average. So what was done this quarter that was different? And with the reduction in trading, can we expect less volatility in the business, looking forward.

Gustavo, this is Phillipe. Thanks for the question. Well, considering our cash flow, when you look at the release, there's more information there on what the main moves were. The first one was based on our inventory levels. We always have an inventory carryover from the end of production of the last quarter and the next one between crops. We have accelerated sales between the first and the third semesters of the quarter, so there's a better balance. There is a higher concentration, but our inventory level position, usually, we have our deliveries and shipments in the last quarter of the crop from January to March. So that is one of the effects that you traditionally see having an impact on our working capital and the other lines, which come from suppliers and agreements. There have been some changes since last year in terms of the size of that operation. So that's also in our release as well as some customer advances. There have been some operations in the last few years, and those contribute to that change in the cash flow line, and we are monitoring those on a daily basis to make sure that we have the required capital structure and cash position to operate the business. So that's the reason for those variations. But obviously, we will be looking at the broader scope of the company's capital structure and business needs. All the changes we're making, and the trading reduction has to do with that because there are also carryover inventories, not only from sugar and ethanol, and that reduces volatility in the balance sheet looking forward as well. So obviously, we'll be looking at all options in broad terms when it comes to our capital structure.

Great. So looking at the lines, the more seasonal lines are probably inventory levels and I think inventory levels, right? So the other lines, we shouldn't expect any working capital being released from those, at least not in the short-term, right?

Yes. You also asked a question about Mobility margins, right? Well, on Mobility, this quarter, there was an impact from diesel. Diesel's competitiveness has been affected mainly due to biodiesel prices, obviously, that increases market informality because some players don't comply with the mandatory blending percentages. So obviously, that affects the players that do comply. And it has meant we lost part of the diesel share due to the increase in market and formality. But nevertheless, there has been an increase through our profitability. You saw margins increasing quarter-on-quarter. And obviously, that led to better results in Brazil. We're focusing on keeping our network healthy, competitive, and with the best integrated product and services offer that's in our control. We have full control over the quality of our network and making sure that our network is competitive, so that we can continue to grow and be profitable in this segment.

This concludes the Q&A session. Questions in writing that have not been addressed during the earnings call will be answered by the Investor Relations team. I will now hand the floor back to Mr. Gomes for his closing remarks.

Thank you so much for joining us at this conference call. And we'll see you again at the end of the crop in May this year. Thanks.

Raízen S.A.'s Third Quarter 2024, '25 Crop Year conference call is now concluded. The Investor Relations department is available to answer any further questions. Thank you, and have an excellent afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]