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Good afternoon, and welcome to the Unipar's First Quarter 2024 Earnings Conference Call. Today, we have here with us, Rodrigo Cannaval, the CEO; and Alexandre Jerussalmy, the CFO, and Director of Investor Relations and the IR team. This event is being recorded. [Operator Instructions]. The presentation can be accessed through the MZiQ platform and in the company's website ri.unipar.com. The slide stack will be controlled by you, and the audio of this event will be available on the company's website after event.
After the presentation, we will start with the questions and answer session. Questions can now be posted via webcast and will be addressed either throughout the session or after the conference is over by the IR team.
Before we proceed, we would like to clarify that any potential statements eventually made during this conference regarding business prospects, projections, operational and financial goals, constitute the beliefs and assumptions of the company's management as well as information currently available at Unipar. Forward-looking statements are no performance guarantor and involve risks, uncertainties and assumptions as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions and other operating factors can affect Unipar's future results and could lead to results that are materially different from the ones expressed in such future conditions.
Let me now give the floor to Rodrigo Cannaval, who's going to start with his presentation.
Please, Rodrigo, proceed.
Good afternoon, ladies and gentlemen. Just before we open our conference call on operating and financial results for the first quarter of 2024, I would like on behalf of Unipar to express our empathy and solidarity with all the people from the State of Rio Grande do Sul and their beloved ones deeply affected by the floods that are plaguing the southern part of Brazil. We all touched by this tragedy. And let me emphasize that we are all engaged in contributing to the population of the state. We have analyzed internally on what will be the best way to contribute, and we realized that our participation could be very valuable through the donation of cleaning and sanitizing products to hospitals, schools and shelter homes. We are now working in order to make this front feasible through local partners, obviously observing the logistical challenges that are still present. This is the right time for everyone to contribute.
Now let's start with our presentation. And let me start by highlighting that we've just formalized our executive team last April, starting by myself, who took over on April 18, the presidency and the leadership of this company. We have also hired our two Financial and Investor Relations Officer, Alexandre Jerussalmy, who is going to be here with us during this call, and it's going to be his first teleconference call.
Together with Alexandre de Castro who has been already announced in the position of Chief Commercial Officer, we hope to work with all the leadership and employees in order to continue with our strategy. Strategy that aims to continue growing sustainably, being reliable in everything we do.
So during this first quarter, we observed the continuation of global instability scenario. That put considerable pressure on supply chains and inflation. And if we observe the petrochemical market in Brazil, we have been facing a huge pressure from the import share that has been growing gradually in recent years. And just recently, it has reached close to 50% of total consumption in the country. That comes to play at the same time that the idleness in Brazil's chemical industry that used to generate jobs and local investment has reached 36% in the first quarter. The North American chemicals is one of the main of offenders because it comes on the benefit having significantly lower production costs than the ones here in Brazil and much cheaper raw materials and natural gas. The sector here in Brazil has been working in order to recover its competitiveness, acting through its associations, together with the federal government and Mercosur. But our role as a company is definitely doing our homework. We are focused on our day by day in doing our operational excellence and being resilient. Our results for this quarter reflects our success.
In Argentina, we have been following this recent period of implementation of the new economic policies promoted by the new elected government. And that has caused the reduction in economic activity in the short term. The Argentine consumer market has shown low activity in important sectors for our operations, such as public works and civil construction are on a standstill. Now regarding international price references, there was a slight increase in the prices during the first quarter compared to the Q4 of 2023. But still, remaining at very low levels, reflecting in this downward cycle.
In the first quarter, the average utilization rate of Unipar's production capacity was 83%. That level already considers the increased capacity of Santo André, the weather event in Argentina and the slowdown of the Argentinian market. It is also worth noting that our electrolysis production in Brazil has reached the company's second highest historical level, with a total of 120,000 tons in the quarter. And even in this downturn, we still maintain our long-term strategic view, investing in structuring projects, aiming at improving our performance and resilience. And all of that is still aligned with our sustainability pillar.
We are pretty much aligned with the technology modernization schedule of the Cubatão plant, with the highest CapEx of Unipar's history, reaching BRL 1 billion expected to be completed in 2025. Once this project is ready, we will have the largest membrane operation in South America, in addition to bringing efficiency and operational gains and competitiveness as well as a reduction of 70,000 tons of CO2 per year.
Our new Camacari unit in Bahia is also within schedule with an estimated startup for the last quarter of this year. Let me now turn the floor to Alexandre Jerussalmy. Good afternoon, Alexandre.
Thank you, Rodrigo. Good afternoon. Good afternoon, everyone. It is an honor and a pleasure for me to be here with you this afternoon for the earnings conference call of the first quarter of 2024. And this presentation is available at the MZiQ platform as well as on our own Unipar RI platform. So let me talk to you a little bit about the net revenue. And bear in mind that our figures have been impacted by the IAS 29 accounting standard. And -- so we -- because of the implementation of the standards, we are going to mention the results in an adjusted manner.
So as I said, we have basically reached BRL 1.136 billion. We had a reduction of 8% below the revenue of Q4 of last year. And that reduction mainly occurred due to the lower production and sales volumes in Argentina. And bear in mind that Argentina experienced a climate event in December last year, specifically in the area of Bahia Blanca. And because of this event, we had a shutdown of our plant, and not only our plant, but many other plants in the region and causing a blackout. And we had this gradual resumption of the Argentinian plant in January and February. In mid-February, our plant was already running under normal activity.
Well, in terms of sales volume, we've had a constant volume from one quarter to the next. And that was basically due to the very good performance exhibited here in Brazil in the first quarter of this year. As Rodrigo just mentioned, we had a record, which was the second largest electrolysis volume here in Brazil were reaching 120,000 tons. So with this very good Brazilian performance and a good performance in Argentina still under the effects of the climate event, our turnover represented 77% of the total revenue. And in Argentina, that represented 23%. Whilst in the previous quarter, it actually represented 33%.
In terms of prices, our prices are still under pressure despite the slight recovery that we experienced in the quarter. But this is still characteristic of a downward cycle in values that are still under pressure.
Now moving to the EBITDA figures. Our adjusted EBITDA was of BRL 232 million, which was somewhat in line with the previous quarters. And our EBITDA margin has maintained -- or was maintained in 20%. And I would like to pause here and say that a 20% EBITDA margin in this downward cycle and also considering this drop on Argentinian production is another very good example of resilience of our business model here at Unipar. With regards to the net profit, for the first quarter of 2024, we had a drop vis-a-vis the last quarter. And if we compare the figures, it's 65%. Now if we exclude the positive effect of the fiscal credit from Lei do Bem collection of BRL 46 million, then this drop is 51%. So again, the net profit of the first quarter was BRL 56 million.
Now moving to the next slide, when we check the capital structure and the equity structure and we start with the cash flow, we had this operational cash generation of BRL 25 million. And we also had some annual expenses that we incurred during this quarter, basically renewing policy -- insurance policies with specific taxes that are paid once a year, and we also had BRL 75 million with income tax and social contribution, BRL 98 million with CapEx, and we have captured a fund in line of BRL 500 million, and we also did the dividend distribution of BRL 109 million in this last quarter. So altogether, if we sum of all those effects, we had a very positive cash valuation of BRL 115 million. That was our cash balance. And we finished the month of March with BRL 2.261 billion in cash, which represents a net debt of BRL 351 million. So if we compare it to the last 12 months EBITDA that reflects a leverage ratio of 0.37x, and with an average term of debt of 3.25 years. So debt average term is something that we hope to work in the coming months in order to have it stretched.
And just recently in April in our shareholders' assembly, we had a decision to distribute bonuses to our shareholders from 1 to 10 and so that increase in the capital share of BRL 242 million was approved. And so this share bonus in the proportion of 1 new share for every 10 shares was what we did. And with this movement, we had a readjustment in the company's net equity reserve accounts.
So in summary, our resilience has been tested and we've presented a cash generation with the debt profile was considerably adequate with the healthy leverage ratio. And with that, we are pretty ready to catch potential growing opportunities that will present to Unipar and the market.
So with that, I would like to pause and give the floor back to Raquel. And let's now move to the Q&A session. Thank you.
And we will now start with the Q&A session. Questions will be addressed as they are received. And we have here a question from [ Lucido ] who asks about the net profit that was -- had a reduction with regards to the previous semesters. And I wanted to know what are the expectations with regards to the net profit?
Thank you, [ Lucido ], for the question. And so the net profit of the first quarter actually suffered the effects of the accounting standard, which is IAS 29. The total effect of the first quarter was of [ BRL 6 to BRL 7 million ]. So indeed, from one quarter to the next. We have some variation in those effects of the standard application, and we have some exchange rate variations. And obviously, whenever we look at the first quarter, we also had the effects of an EBITDA under -- still under pressure given this petrochemical downward cycle that at some point will indeed be reverted. So in a nutshell, that's what explains the main variations with regards to the level of net profit that we had in the first quarter.
So we have another question from Pedro Macedo from Meta Asset. And he asks about occupation rates of the plants and whether you understand that -- if Argentina will keep on showing deceleration or not?
Thank you, Pedro. Thank you for your question. Well, you see starting by the Argentina landscape and being frank with you, we have been following this up very attentively. The government has been implementing many efforts in order to lower the inflation, and we had the recomposition of international reserves, the reduction of the reference interest rates of the country and an improvement of the fiscal situation.
So for the coming months, if the government measures are effective and if the reforms are approved by both the upper and lower houses of Senate, there are good expectations of a good economic upturn. And as a natural consequence of that, we hope to have a good demand recovery in order to resume some of the public works that have been halted in the first quarter precisely because of this inflation reduction, right. Give us another minute so that we can check if we have other questions.
Well, we happen to have a question from [ Arthur Lopez ] from Citibank. He has got two questions actually. What basically drove the consumption of the working capital, especially in the accounts receivable? And the impacts of the application of the IAS 29 standards since it doesn't have a cash effect?
Let me start by the last question about the impact of IAS 29 standards without the cash effect. Well, whenever the standard is enforced, it basically does the inflation adjustment in both the liability and the surplus. So in the assets, whenever we have an impact of stock account, for instance, the immobilized and the intangible accounts. Those are the accounts. So indeed, whatever you see those balance this is going to be adjusted, right? And then that has an impact on our statements, but we don't really have a cash effect of those adjustments. So this is what we can say about IAS 29.
Now with regards to the working capital, I mean, with the reduction and the deceleration of the inflation in Argentina, we can say that many clients have started to buy installments or with deferred payment. It used to be upfront. But now for some reason, they are asking for deferred payment terms. So that would be one of the effects. And the other effect is the conversion rate from pesos to reals, our functional currency in Brazil. So those were basically the two effects that have led us to use and to consume working capital in the first quarter.
We have another question from [ Luisa ] from [ Stoxx. ] What is the status of the export processes from Argentina?
Well, the export -- sorry, the exports from Argentina in this moment are slightly more complex. We have 2 ongoing in the maritime field, and for the terrestrial ones, obviously, after the traumatic events that have affected the south part of the country, this has been severely affected. But except for the climate conditions, I mean, the exports for Argentina are normalized.
And we are checking if we have more questions. Right. We do have a question from [ Vidal Valato ] who would like to know whether the company is seizing this very positive and attractive moment from the stocks market and to work with its shares.
Thank you, [ Vidal ] for your question. And I would assume that your question is due to the -- some of the rebuys that we did. The last one actually was in January, right? So I can say that we have been seizing and making the best out of this opportunity. And in a timely manner, we hope to keep on doing that. But obviously, that varies according to the circumstances, and it's not that we have a continuous program to be executed as of yet.
We have another question from Pedro Macedo from Meta Asset. And he asks about the timing of the company's expectation with regards to international prices. And is this quarter the turning point? And what is your expectation towards the end of the year, beginning of '25?
Well, despite we have observed price stability of the PVC of the last quarter of '24 vis-a-vis for the first quarter of '24, towards the last quarter of '23, I mean, it's very unlikely that we're going to have a recovery of international prices on the short term.
Right. We have another question on from Pedro Macedo from Meta Asset, do you have any updates on cost initiatives, because according to him, they consist of margins improving along the year of 2024, right?
Yes. Thank you, Pedro. Well, the company has been continuously investing on cost optimization programs, demonstrating our resilience. We have just announced our solar and wind energy. So that definitely contributes to the reduction of operating costs. We have another ongoing project, which is the Cubatão technological update that is going to contribute to operating cost reduction and contribute with our emissions reduction targets. So those are the main initiatives at the moment that are underway for cost reductions in the company.
Well, in case we have no further questions, we would like to close our Q&A session. We would like to invite you, Rodrigo, to give your final remarks.
Well, we have reached the end of another Unipar results presentation, and before closing, let me reinforce some important points that were covered. So we remain very resilient going through this downward cycle, delivery and quality and consistent results. We continue to invest in the future with structuring projects and addressing the last question that we got from Pedro, our capital structure and access to diverse funding sources are very good levers to ensure our growth with portfolio diversification and also expansion into new geographies, and we remain committed to generating value at Unipar.
I also would like to reinforce our special thanks to partners and collaborators for their commitment in delivering our strategy, and to investors and advisers for their trust and support. We once again express our empathy towards the population of the state of Rio Grande do Sul and their beloved ones. Thank you very much for attending this session. And Alexandre Jerussalmy, welcome to our conference call.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]