Ultrapar's 2025 Q1 Earnings Call: Unpacking Key Contradictions in Regulatory Impact, Market Strategy, and Financial Performance

Regulatory support and impact on Ultragaz, Ipiranga's market share strategy, Ipiranga's cash generation and inventory management, Ultragaz's return on invested capital, tax initiatives and market efficiency are the key contradictions discussed in Ultrapar's latest 2025Q1 earnings call.



Financial Performance Impacted by External Factors:
- Ultrapar's recurring EBITDA totaled BRL1.322 billion in Q1 2025, excluding the negative impact from the share of loss of Hidrovias, with a 9% drop year-over-year.
- The decrease was primarily due to irregularities for tax evasion, such as non-compliance with biodiesel mix requirements and increased imports of naphtha for gasoline.

Hidrovias Operational Improvement:
- Hidrovias' performance improved in Q1 2025 due to better navigation conditions and operational efficiencies, leading to improved results.
- The positive performance was attributed to improved navigability conditions, strategic asset management, and effective operational management.

Ipiranga's Volume Stability and Margin Pressures:
- Ipiranga's volumes sold remained stable compared to Q1 2024, with a 2% reduction in auto cycle and a 1% increase in diesel.
- Margin pressure was a result of biodiesel irregularities, increased imports of naphtha for gasoline, and higher international prices.

Ultragaz's Cost Challenges and Lucrative Opportunities:
- Ultradgaz's EBITDA totaled BRL393 million in Q1 2025, which was 2% lower than the previous year due to increased costs and a less favorable sales mix.
- Despite these challenges, opportunities exist with new energies, and the company expects a marginally higher EBITDA in the second quarter as LPG costs stabilize.

Capital Structure and Strategic Investments:
- Ultrapar raised BRL1.4 billion in debt with a low average cost of 101% of the CDI, extending its financing capacity with development banks.
- The company also completed a BRL1.2 billion capital increase for Hidrovias, enhancing its strategic focus and financial leverage reduction.