Now listed on B3’s Novo Mercado, the company expects to capture more earnings with improved market conditions

São Paulo, August 31, 2023 – The caravan is passing by at an ever faster pace, but certain things never lose their symbolism. For those who participate in or follow the stock market, ringing the bell at B3 is one of them. And yesterday it was Kepler Weber’s turn to do the honors and start trading for the second time in its history, 43 years after going public.

The event in the center of São Paulo brought together executives and employees and marked the company’s entry into the Novo Mercado. But it also sounded like the start of a new harvest (2023/24), which for the leader in equipment and solutions for post-harvesting grains in Latin America, with net revenue of more than R$ 600 million in the first half of the year, has already started promisingly: the outlook is for another record harvest and recovery of margins in the field.

With sharp fluctuations in input prices and falling prices for commodities such as soybeans and corn, producers have held off on selling their crops for the 2022/23 harvest, and the country’s well-known deficit in agricultural storage capacity has once again become a major concern. At Kepler Weber, based in Panambi (RS), this logistical knot, in times of improved market conditions, has begun to result in new sales.

“Our phone has never stopped ringing, but we’re now seeing the resumption of business,” Piero Abbondi, the company’s CEO, told IM Business. Producers, cooperatives and agro-industries are among Kepler Weber’s clients, and the entry into force of the 2023/24 Harvest Plan in July, coupled with the beginning of the fall in the basic interest rate (Selic), were the push that was needed to stimulate investments in relieving their logistical bottlenecks.

A large part of the new orders are being placed by producers and cooperatives that have access to the Program for the Construction and Expansion of Warehouses (PCA). Fueled by funds from the National Bank for Economic and Social Development (BNDES), which cover up to 100% of the items that can be financed – the limit per beneficiary varies from R$25 million to R$50 million – the PCA has R$6.65 billion in the current Safra Plan, with a payment term of up to 12 years and interest of between 7% and 8.5% per year.

In 2022/23, R$5.13 billion were programmed, but only R$2.8 billion were contracted due to market turbulence. “When the scenario is favorable and there are no problems with the flow of funds [from the BNDES], up to 70% of our sales are linked to the PCA,” said Abbondi. The executive believes that this harvest there will be no surplus funds from the official program.

Another area in firm demand is transshipment terminal projects on railroads and new facilities in ports. Abbondi prefers not to give details, but among the customers investing in Kepler Weber equipment and solutions are the Paraná cooperative Cocamar, corn ethanol producer FS and logistics giant Rumo.

With the logistical problems observed in the 2022/23 harvest, rural producers are also investing more in spare parts and services. “In the countryside, the situation is no longer worrying but critical,” said the CEO. He pointed out that, in Brazil, 14% of the total storage capacity is on farms, while in the United States, for example, the percentage reaches 50%.

Faced with the still adverse market, in the second quarter of this year the net revenue of Kepler Weber, whose main shareholders are Trigono Capital (20.8%), Família Heller (11.6%), Tarpon Investimentos (8.6%) and Morgan Stanley (5.3%), fell 21.9% compared to the same period in 2022, to R$281.2 million. Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) fell 48.6%, to R$50.8 million, and adjusted net income fell 56.3%, to R$27.6 million.

Given the economic climate, the performance was considered positive by the company’s management. And the comparison base is high, so much so that the results were the second best in history for the period. Among the highlights between April and June, the company highlighted the sale of a project in Paraguay and another in Uruguay, worth a total of R$12.3 million, and the sale of a R$26.9 million project to double a port terminal in northern Brazil.

To reduce dependence on the PCA, recalled Julio Toledo Piza, chairman of Kepler Weber, the company also concluded the structuring of an Investment Fund for Agro-Industrial Production Chains (Fiagro) at the end of last year, to finance the construction of grain processing and storage units.

The fund will offer around R$300 million – up to R$210 million will come from the BNDES and up to R$30 million from BTG Pactual – and just under R$10 million has been contracted so far. According to Piza, operations are also expected to accelerate on this front as the outlook improves.

That’s why the bell rang louder yesterday at B3. With the favorable scenario and the benefits inherent in joining the Novo Mercado, such as the possibility of attracting bets from new funds and foreign investors in the company’s shares, the outlook is for gains in liquidity and appreciation of shares, noted CFO Paulo Polezi. This year, despite the difficult market, Kepler Weber’s shares have risen by more than 20% so far.