Rumo S A : Earnings Releases 1Q23

EARNINGS RELEASE 1Q23

Curitiba, May 4th, 2023 - RUMO S.A. (B3: RAIL3) ("Rumo") announces today its results for the first quarter of 2023 (1Q23). The results are presented on a consolidated basis, in accordance with Brazilian and international accounting rules (IFRS). The comparisons made in this report consider 1Q23 and 1Q22, except when otherwise indicated.

Highlights

• Rumo's transported volume reached 16.1 billion RTK, 11% down from 1Q22.
• Consolidated yield increased by 28%, as a result of the higher competitiveness of the railway mode.
• EBITDA totaled R$1,181 million in 1Q23, a 26% growth in a like-for-like basis1.
• Net income came to R$71 million, fueled by improved yields and margins.
• Financial leverage was 2.2x net debt/ LTM like-for-like EBITDA.
• Capex totaled R$928 million in 1Q23, as planned for the period.

	Summary of financial information			1Q23			1Q22		Chg.%
	(Amounts in BRL mln)
Total transported volume (millions RTK)	16,129		18,108		-10.9%
Logistics solution volume	763		1,237		-38.3%
Net revenue	2,384		2,206		8.1%
	Cost of goods sold	(1,604)		(1,574)	1.9%
Gross profit	780		632		23.5%
Gross margin (%)	32.7%	28.6%	4.1 p.p.
	Sales, general and administrative expenses	(111)		(107)		4.7%
	Other op. revenues (expenses)	9		(55)		>100%
	Equity pickup	1		7		-85.7%
Operational profit	679		478		41.7%
	Depreciation and amortization	502		524		-4.2%
EBITDA	1,181		1,002		17.8%
EBITDA margin (%)	49.5%	45.4%	4.1 p.p.
Net profit (loss)	71		(68)		>100%
Net margin (%)	3.0%	-3.1%	6.1 p.p.
Capex	928		692		34.1%

Earnings Conference Call

May 5, 2023	Investor Relations
E-mail: [e-mail]
Portuguese* - 2:00 (Brasília time)
		Website: ri.rumolog.com
*With simultaneous translation to English
Phone (BR): + 55 (11) 4090 - 1621
[phone] - 8565
Password: RUMO

1 Rumo sold 80% of equity interest in Elevações Portuárias S.A. (Terminals T16 and T19 in Santos) in 4Q22. The result in a like-for-like basis considers a managerial adjustment in 1Q22 (-R$62 million) referring to EBITDA exclusion from Port Loading and inclusion of Equity Income from Investments (20% of net income).

Público

Earnings Release

1Q23

1. 1Q23 Executive Summary

In 1Q23, Rumo's transported volume reached 16.1 billion RTK, down 11% from 1Q22, mainly driven by atypical events recorded in the period, especially: (i) higher frequency of criminal incidents, in the region of Baixada Santista, that compromised the train circulation efficiency heading to the Port of Santos; (ii) soybean harvest delay, and accordingly, the start of exports, due to heavy rainfall in January; and (iii) Paulista Network 7-dayinterdiction to carry out works aiming at promoting greater safety and increase the flow of Monjolinho Stream, in the city of São Carlos.

Volume - Consolidated and by Operation

(Bln RTK)

-10.9%

18.1

-12.9%

16.1

14.4

12.6

-2.5%

-5.8%

2.8 2.7

0.9 0.8

Consolidated

North

South

Container

1Q22 1Q23

Mostly considering the reasons mentioned above, Rumo's share in grains exports via Port of Santos shrank 11.4 p.p. compared to the same year-ago period.

61.1%

12.7

6.0

1.8

1Q22

Grain Exports in Santos - SP

(Mm tons and %)

-11.4 p.p.

+4.2%

-15.3%

49.7%

13.3

5.1

1.5

1Q23

Central Network North Network Market

Source: Orion and Rumo System

Público

Earnings Release

1Q23

The aforementioned atypical events resulted in a 9.6 p.p. lower share in the state of Mato Grosso in 1Q23. The volume exported by Rumo dropped 9.9%, hit by operational constraints in transit time between Rondonópolis (MT) and Santos (SP) and, accordingly, lower capacity utilization in the period.

47.5%

13.4

6.4

Grain Exports in MT

(Mm tons and %)

-9.6 p.p.

+12.9%

-9.9%

38.0%

15.2

5.8

1Q22		1Q23
		Rumo		Market

Source: Orion, Comex Stat, and Rumo System.

Similar to both the state of Mato Grosso and the operation in Santos, share in the state of Goiás was impacted by capacity constraints in the North system. Rumo lost 13.8 p.p. market share, and the volume exported by the Company went down 38.2%.

Grain Exports in GO

(Mm tons and %)

32.3%

3.8

-13.8 p.p.

+7.8%

-38.2%

18.5%

4.1

1.2	0.8
	1Q22		1Q23

Rumo		Market

Source: Orion, Comex Stat and Rumo System

Público

Earnings Release

1Q23

The South Operation lost 10.8 p.p. grains market share at the ports of Paranaguá (PR), and São Francisco do Sul (SC), primarily driven by operational constraints caused by a landslide in São Francisco do Sul (SC) mountain range and various deadlocks in unloading operations at the ports, due to heavy rainfall in the region. In addition, higher capacity utilization was recorded to address sugar volume.

Grain Exports in Paranaguá - PR and São Francisco do Sul - SC

(Mm tons and %)

32.2%

6.2

-10.8 p.p.

+16.8%

-22.3%

21.4%

7.3

2.0	1.6
	1Q22		1Q23

	Rumo		Market

Source: Orion and Rumo System

In 1Q23, net revenue totaled R$2,384 million, an 8% year-on-year growth, recording growth in all operations, 5% in the North Operation, 22% in the South Operation, and 15% in the Containers Operation. The higher yields in the period offset lower volumes.

EBITDA totaled R$1,181 million in 1Q23, with an EBITDA margin of 49.5%. In a like-for-like basis, considering sale of terminals T16 and T19 in 4Q22, growth stood at 26%. The variable cost, on the one hand, reflected a 6% fuel price increase and the impacts of higher frequency of criminal incidents resulting in 6% lower energy efficiency and the recording of a provision for take-or-pay liabilities. On the other hand, there was a positive impact due to lower pass-through fee in Ferradura de Santos (SP) stretch since May 2022. Fixed costs and general and administrative expenses were impacted by higher expenditures relating to indemnifications, on the back of operational constraints caused by increased violence. If we exclude these expenditures, fixed costs and general and administrative expenses would have lifted 6%.

Rumo posted a net income of R$71 million in 1Q23. Financial leverage came at 2.2x, and net comprehensive debt of R$9.8 billion.

Regarding the soybean 22/23 crop, specialized consultancies' projections still indicate record harvest in Brazil of 156 million tons, while 95 million tons should be exported. Harvest has been mostly completed, reaching 92% of the cultivated area in the third week of April. With regards to commercialization, although nearly 70 million tons have already been sold, the farmer selling still stands at 47%, nearly 10 p.p. lagging behind the 5-year average. In the states of Mato Grosso and Goiás, wherein harvest has already been concluded, 45 and 18 million tons were produced, of which we estimate that 28 and 10 million tons should be exported, respectively. Combined, the states of Mato Grosso do Sul and Paraná should record 59% production growth, and exports should more than double, approximately an additional 10 million tons.

Público

Earnings Release

1Q23

Concerning the 22/23 corn crop, specialized consultancies´ projections indicate a record harvest of 126 million tons in Brazil, and exports of approximately 49 million tons, 7% and 10% growth versus the previous crop. The states of Mato Grosso and Goiás should produce nearly 50 and 13 million tons and exports should reach 29 and 4 million tons, respectively. In the states of Mato Grosso do Sul and Paraná, production should reach 12 and 17 million tons, respectively. Up to date, projections indicate harvest commencing in the second fortnight of June in the states of the Mid-West region. Commercialization remains sluggish, reaching 19% of expected production, compared to 34% in the same period of previous crop. Production and productivity estimates are subject to reviews, although part of the crop has been sowed out of the planting ideal window, for the time being, the out-of- season corn development remains under favorable conditions.

Brazil's Soybean Production and Exports	Brazil's Corn Production and Exports
(Mm tons)	(Mm tons)

-6.7%

+21.4%

	+6.6%
+35.7%	126
	118

138				156	Crop
		+22.0%
-10.3%	129		Disruption
			20/21
87				95
	78

37

25

41

26

45

28

87
						+10.2%
	+115.3%
								49
						44
21		42				50
33					26		29
	16

20/21	21/22		22/23e	20/2120/21	21/22	22/23e
20/21	21/22		22/23e			21/22	22/23e
Prod		Prod		Prod		Prod		Prod	Prod
		MT Production		Other states production		MT Exports		Other States Exports

Source: IM Rumo /AG Rural / Veeries / Orion / Comex Stat/ IMEA | Note: (e) - estimate

In the environmental, social, and governance (ESG) agenda, on March 20, 2023, Rumo published its Sustainability Report 2022, reporting, amongst other highlights:

• 5% reduction of specific emissions to 13.09 gCO2 eq./ RTK, accounting for a 17% reduction versus 2019, outpacing the goal of a 15% reduction of specific emissions by 2023;
• 25% decrease in the accident severity index and 1,000 days without casualties;
• Engagement survey: 96% of employees affirmed they are proud of working for Rumo.
• 1 year of Rumo Institute's operations, besides other projects and social investments.

Público