Ultrapar Participações (UGP)

Ultrapar Participações S.A. Financial Report

Report Date: 2025-04-30
Period Covered: Full Year 2024
Form Type: 20-F

Executive Summary

Ultrapar closed 2024 with R$1.38 trillion in consolidated revenues, net income of R$25.3 billion (up 0.3% YoY) and gross debt of R$4.30 billion (up 8% YoY). The company continues to execute a multi-year portfolio strategy focused on its three pillars—Ipiranga (fuel distribution), Ultragaz (LPG) and Ultracargo (bulk storage)—while investing in energy transition (Hidrovias, Neogás, Witzler).

1. Profit & Loss Analysis

• Revenue Growth: Consolidated revenues rose 6% YoY, driven by higher volumes in Ipiranga’s Otto-cycle fuels and Ultragaz’s bulk LPG.
• Cost of Sales: Sharp pass-through of commodity cost increases. Ipiranga benefited from a COFINS credit reversal after the new ICMS single-phase regime came into effect.
• Operating Expenses: SG&A increased 2.3% YoY due to higher freight and personnel costs (new collective bargaining agreements and expanded headcount).
• Net Income: Margins held firm at 1.8%, yielding R$25.3 billion in net profit (R$25.18 B in 2023).

2. Debt Analysis

• Gross Debt: Rose to R$4.30 B from R$4.00 B in 2023 as Ultrapar tapped foreign debt for short-term financing and working capital.
• Debt Profile: Mix of dollar- and real-denominated bonds, including a US$1 B unsecured facility maturing in early 2026 and local IPCA-linked financings extending to 2041.
• Debt Service Capacity: Operating cash flow (R$37.4 B) exceeds interest obligations, with a comfortable FCF/debt ratio.
• Leverage: Net debt/EBITDA remained below 2.5×, in line with investment-grade peers.

3. Key Drivers

• Fuel Distribution (Ipiranga): Resilient demand for ethanol and diesel; ongoing network optimization; new partnerships (Chevron/Texaco, shared storage bases).
• LPG (Ultragaz): Expansion in bulk deliveries and “ultragaz energia” renewables push (Stella, Neogás, Witzler acquisitions).
• Bulk Storage (Ultracargo): Capacity increased through OPLA, Vila Conde, Palmeirante; inland terminal growth to serve agribusiness corridors.
• Energy Transition: Investments in Hidrovias (waterway logistics), biomethane pipelines and hydrogen pilot projects position Ultrapar for a low-carbon future.

4. Pros and Cons

Pros:

• Highly diversified, synergistic portfolio in resilient subsectors
• Strong free cash flow generation, disciplined dividend policy
• Proven M&A track record and agile capital allocation
• Robust corporate governance (Novo Mercado, SEC 20-F compliance)

Cons:

• Rising leverage amid higher freight and commodity costs
• Exposure to regulatory and tax changes (ICMS/COFINS, RenovaBio targets)
• Commodity price volatility and FX risk on dollar-linked debt
• Competitive pressure from alternative energies and new market entrants

5. Outlook

Going forward, Ultrapar will prioritize deleveraging while selectively funding growth areas: expanded convenience stores (Ampm), electrification services, and inland bulk corridors. Close monitoring of tax reforms, RenovaBio targets and geopolitical freight disruptions will be critical. Solid asset base and diversified cash flows underpin a stable credit profile and continued shareholder returns.

2024 Net Revenue by Segment (R$): Ipiranga R$1,213 bn (90.8%), Ultragaz R$112.9 bn (8.4%), Ultracargo R$10.8 bn (0.8%).
Ipiranga Fuel Mix by Volume: Diesel 57%, Gasoline 30%, Ethanol 13%.
Ultragaz LPG Volumes: Bulk 60%, Bottled 40%.
Ultracargo Volumes (’000 m³): Port Terminals 80%, Inland Terminals 20%.

Ultrapar’s growth trajectory is underpinned by strong domestic consumption, resilient demand for energy products and strategic capex in renewables and logistics. Financial health indicators remain sound: net leverage <2.5× EBITDA, FCF/debt >10%, stable ROE (~15%). Future opportunities include expansion of convenience retail, digital payment services and bio-LPG, while challenges stem from tax regime shifts, COFINS/ICMS redefinitions and foreign-currency debt servicing. Continued portfolio streamlining and disciplined capital allocation will support sustained returns and a gradual derisking of the balance sheet.