In distribution, specifically fuel distribution, the new model that has been in place of having distributors selling their own products has brought new technology, knowledge, and dynamics. What is bought from Petrobras, not 100% of the demand. So we have created a trading model, so to speak, a sophisticated trading model of supply, of managing the demand, the offer, requiring logistic rearrangements. It brings margins, but in all cases, it also brings more volatility. And this is something that we have to understand.
Rodrigo Pizzinatto: Well, Thiago, let me emphasize that the investments that we have made are not just inland in the countryside areas. We are also strengthening our maritime terminals. It has really improved the results of Ultracargo and the expansions they have better return on investment rates. In the countryside area, as you said, the dynamic is really different. We are speaking about providing logistic solutions. We are speaking about connections with the railway system. It’s not only tanking, really. It is a dynamic of using more of the assets. But in terms of profitability of static tanking, we have a ramp up curve. And this is going to give us a profitability according to the standards that we have set at Ultracargo.
Thiago Duarte: Thank you for your comments. Of the 635 million that is going to be used in expansion, how much of that is involving the maritime operations? How much of that is inland?
Marcos Lutz: 60% countryside, 40% coast operations.
Thiago Duarte: Great. Thank you.
Operator: Our next question comes from Luiz Carvalho, UBS. Please unmute your microphone.
Luiz Carvalho: Hello. Thank you very much for taking my question. And I have two questions. The first one, which is a question that I constantly ask about capital allocation. Now you’ve got to a level of leverage that is very comfortable, close to one time. The company is generating cash. And I would like to know how we can anticipate things in 2024. We’ve seen some assets available in the market, assets that might have some level of synergy and alignment with the company strategy, but I would like to see the perspectives for the future, especially in terms of portfolio diversification or if you have excess cash, would you go more aggressive and then work with investors?
Marcos Lutz: Now, concerning field distribution, I don’t want necessarily to speak only about Ipiranga, Let’s hear, I would like to hear about the market. In the past 10 years, we’ve seen a number of initiatives that had somewhat masked the market, involving carriers and so on. And now talking with distributors and resellers, I think the market seems to be more favorable because the GDP has been increasing maybe, or because there is better coordination of the initiatives, just focusing on more profitability in terms of volume. So maybe Linden can tell us more about his expectations about the market and margins for 2024. Thank you.
Leonardo Linden: I wouldn’t be able to tell you anything that you would like probably. We do have a strategy, but I cannot tell you anything about future capital allocation. The company has a balanced position that provides additional movements. We constantly analyze possibilities of capital allocation in other verticals and we also consider that, if there is no capital allocation required, we can maybe share more dividends. I wouldn’t be able to tell you more than that.
Marcos Lutz: What I can tell you is that we have discipline in the use of our cash because we know how hard it is to generate cash during daily operations, loading trucks and ships and delivering. We are not simply allocate capital for no specific reason. We really do it accordingly and looking for businesses of quality that are aligned with our initiatives. If nothing shows up as a potential opportunity, we would share additional dividends.
Leonardo Linden: Linden speaking. Concerning the expectations for the market, I am optimistic, but carefully. I think you were right. There are factors that are somewhat standardizing the market, so to speak. What Marcus has just said about the opening of the market for imports, for international players, it brings a favorable dynamics to the market combined with the supply by Petrobras. I think it brings positive elements to the market, also tax simplification, not in all products. We still have more to cover, but it has improved already. The level of competitiveness will always be high. This is something we are knowledgeable of. We know we have to work by improving our efficiencies to ensure appropriate competitiveness. But there are also challenges, of course.
Margins will always suffer the impact of arbitration, of inventory levels in the country, and we have to be able to deal with them. In Brazil, there is also the chronic problem of the falsification of fuel of the regular fuel market. But I would say that I am optimistic, but always with care. Business normalization, anticipates really a more stable environment for fuel distribution.
Luiz Carvalho: Great, thank you.
Operator: The next question comes from Gabriel Barra, Citi. Please unmute your microphone.
Gabriel Barra: Hello, thank you very much for taking my question. I have two questions. First, I’d like to understand the margins of the first quarter. So, better than the first quarter last year, but very similar to the average of the year, which was 155 per cubic meter, 160 per cubic meter. When we see the situation of the first quarter, we’ve seen the market trying to capture some gains in inventory levels because of increased in tax. But the fourth quarter, there was a loss of inventory levels. The market had an over demand because of some of the strategies of traders, which tried to carry over the inventory levels to better price scenario in the first quarter of the year. I would like to hear more about that. I don’t know if that gain of margin is part of this number or if it’s not.
Was the fourth quarter very good in trading? And this is not there because of its recurrence. Please tell us more about this dynamic because this is something which is not clear to me. Secondly, I’d like to talk about your tax credit, BRL 560 million in the fourth quarter. I know it also includes internal tests that you run in the end of the year. And this is going to be done in the end of this year as well. But I would like to know how much space and credit you still have to use in upcoming tests. And there is another situation that is also being brought to the courts in terms of judicialization. So tell us more about this number. What else can we expect to be monetized in upcoming years? Thank you.
