BR's focus is distribution, not refining, and search is to be the most profitable, says CEO

Now privatized, BR Distribuidora, the largest fuel distribution company in Brazil, wants to become also the most profitable in the sector and has no plans to buy refineries from Ex-controladora Petrobras, said the CEO of the company Rafael Grisolia on Thursday (1). "About capital allocation, something that is very clear, it is very important to understand that the vocation of BR is distribution, has no knowledge to enter into refining. This (refining) is not our expertise, it is not our aspiration, "said the CEO of the company when questioned in teleconference with analysts if the distributor could evaluate the refining assets of its ex-controladora. In May, after assuming the post, Grisolia stated that BR had a duty to "look" at the process of selling refineries by Petrobras "under different angles". The state approved this year's studies for the sale of eight refineries that add up to processing capacity of about 1.1 million barrels/day of oil. "From the refinery gate to the front, all the business is ours, the whole part after is our function... Who has tanking are the distributors, we do inventory management, logistics delivery... "He added, noting that the company's focus will be" after the refinery gate ". The executives were also questioned by analysts about a fall in the gross margin in the second quarter, to 5.4% of net revenues, before 7.1% in the first quarter and 5.6% in the same period last year. According to CFO André Natal, there was a worsening of the loss of market share at the beginning of the year, and to try to resume "market share" the company reduced its margins, which no longer happens. Profit of BR Distribuidora grows 14.8%, for R $302 million in the 2nd quarter Asked about margin prospects, he said he could not give guidance on the subject, but quoted the average of the semester, 6.2%, ante 6.1% in the same period last year, as a "best reference". BR leads a highly concentrated market, but has been receiving new weight players, such as Glencore and Vitol multinationals, who have made acquisitions in the sector. The company's main competitors are Raízen, Shell's joint venture with Cosan, and Ipiranga, from Ultrapar group. Vitol, by the way, announced on the eve the purchase of 50% of the Brazilian group GDE, an important distributor in the country. Despite the decline in the margin, the company reported an increase of almost 15% in its net income in the second quarter to R $302 million. ' No joke ' After being repeatedly questioned by analysts on margins versus market share, the president of BR stated that "We really want the best profitability and the biggest ' market share '". "It's no joke, no, we have to get the maximum," he added, citing a plan of ten broader initiatives of the company to be more profitable, which involves "an efficient pricing system (pricing), sourcing (" origination "of products), Logistics optimization, expense management, people development and management, marketing and relationship, asset management, convenience, lubricants and financial services and loyalty. " "So the initiatives are joint, in network of posts, the value proposition of BR is the best, we have a strong brand, we have logistic capacity to have the best ' sourcing ', import capacity...", stated. He stressed that, with privatization, which took place in July, the company can accelerate initiatives to increase profitability. "Even being the largest distributor in Brazil, I am not the most profitable," he noted. Executives stated that the privatized company will have even more agility in the process of its hiring, since it will no longer need to follow the state law. "The company already works by following the best market practices, this connects with the management of expenses, revision of contracts that are signed, we are making new negotiations," he said, adding that the marketing programs and image of the posts are being Revisited. The CFO, in turn, stressed that the company now achieves better contracts, because it no longer needs to make hits with long deadlines, since it has more agility of hiring being privatized.