By Brazil Stock Guide – Rumo (B3: RAIL3) said it is entering a new phase of greater financial discipline after growth in transported volumes failed to translate into higher adjusted EBITDA in the second quarter. The Brazilian rail operator also acknowledged concerns over revenue visibility, cash generation and investment returns, marking a notable shift in tone after years of rapid expansion.
Transported volumes reached 23.8 billion revenue ton-kilometers, or RTK, in the three months through June, up 9.1% from a year earlier. Net revenue grew at a slower pace, rising 6.2% to R$ 3.94 billion, while adjusted EBITDA was virtually flat at R$ 2.27 billion. Adjusted net income fell 5.8% to R$ 688 million.
“Cash preservation is the watchword,” management said in the earnings release. According to Rumo, future investments will need to remain within the limits of the business’s own cash generation, with a more selective approach to expansion and greater emphasis on optimizing existing assets.
The message is unusually direct for an infrastructure company. Rumo said some projects had proved “more complex and more costly than initially planned” and acknowledged “legitimate concerns” over revenue predictability, cash generation and returns on invested capital. The company now plans to review processes, organizational structures and simplification opportunities in an effort to become leaner, more productive and more efficient.
The central challenge in the quarter was converting operational growth into earnings. Average rail yield declined 2.5% year over year, reflecting the price repositioning undertaken to restore competitiveness against trucking. At the same time, variable costs and fixed costs plus administrative expenses each increased by about 9%.
As a result, the adjusted EBITDA margin narrowed to 57.5% from 61.4%. The comparison, however, was partly distorted by approximately R$ 100 million in positive items booked in the second quarter of 2025, including R$ 70 million in business-interruption insurance proceeds related to flooding in Rio Grande do Sul and about R$ 30 million in equity-method income involving Santos Terminal XXXIX. Excluding those effects, Rumo estimates that adjusted EBITDA would have increased 4%.
On a reported basis, net income rose 56% to R$ 520 million. The increase mainly reflected a smaller non-cash impairment charge at the Southern Network, which fell to R$ 168 million from R$ 398 million. By excluding that non-recurring item, adjusted net income presented a less favorable picture, declining by about 6%.
Higher finance costs also weighed on earnings. Net finance costs rose to R$ 765 million from R$ 698 million a year earlier. The cost of net debt increased 25% to R$ 649 million, reflecting a larger debt balance and Brazil’s persistently high interest-rate environment.
Net debt reached R$ 17.3 billion, up 21.8% over 12 months and 2.1% from the first quarter. Leverage remained stable sequentially at 2.1 times net debt to adjusted EBITDA, but was higher than the 1.8 times recorded in June 2025.
That level remains well below the company’s maximum covenant threshold of 3.5 times. Rumo ended June with R$ 5.75 billion in cash and marketable securities, as well as R$ 2.4 billion in committed but undrawn credit facilities. The figures therefore do not point to an immediate liquidity crunch, but they help explain the decision to moderate expansion and prioritize cash generation.
Operating cash flow reached R$ 2.23 billion in the quarter, up just 1%, while capital expenditure increased 14.5% to R$ 1.60 billion. Cash generation after investment spending fell 22% to R$ 647 million. In the first half, it totaled only R$ 233 million, compared with R$ 275 million a year earlier.
Rumo invested R$ 3.37 billion during the first six months of 2026. The company said, however, that second-half capital expenditure will be lower than in the first half, following the concentration of spending at Northern Operations and on the first phase of the Mato Grosso Railway, which began operations in June.
At Northern Operations, Rumo’s main business unit, transported volumes increased 8% to 19.4 billion RTK, but average yield declined 3.4%. Revenue rose 4.1% to R$ 3.16 billion, while adjusted EBITDA edged lower to R$ 1.97 billion. The adjusted EBITDA margin narrowed to 62.4% from 65.2%.
At Southern Operations, volumes increased 14% to 3.3 billion RTK and revenue rose 14.7% to R$ 556 million. Adjusted EBITDA, however, fell 1% to R$ 245 million, partly because the year-earlier comparison included the insurance proceeds booked in 2025. Sugar volumes declined 27%, pressured by historically low prices for the commodity.
Safety indicators also warrant attention. The rail accident rate at Northern Operations increased 54.8% in the quarter and 32.2% in the first half. At Southern Operations, the rate declined 9.4% in the quarter but nearly doubled year to date. Rumo said the incidents were less severe on average and did not have a material impact on available rail capacity.
Alongside the earnings release, Rumo’s board approved a series of related-party agreements. Rumo Malha Sul will enter into contracts with BTG Trading for the rail transportation of grain and, separately, sugar and meal cargoes. Rumo Malha Norte will also enter into an agreement with the commodities trader covering grain and meal transportation.
The board also ratified an earlier agreement with BTG Trading for the purchase and sale of grain transportation services. The meeting minutes did not disclose the contracts’ values, volumes, margins or pricing formulas. Further details are contained in confidential appendices kept at the company’s headquarters.
The board also approved a long-term sugar transportation agreement with Raízen (B3: RAIZ4), covering the 2027/28 through 2035/36 crop years. Another agreement, referred to in the minutes as a Bonificação Porto, or port incentive arrangement, will be signed with Santos Terminal XXXIX to unlock additional capacity along the rail corridor serving the port.
Rumo’s Fiscal Council — a statutory oversight body under Brazilian corporate law — formally recognized BTG Pactual and Perfin as related parties to Rumo as of the second quarter. The two investors joined Cosan’s controlling shareholder group last year alongside businessman Rubens Ometto. In the same passage, the council stressed the importance of independence and the absence of conflicts of interest across the company’s statutory and board advisory committees.
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