By Brazil Stock Guide — Rumo (B3: RAIL3), Brazil’s largest freight railway operator, reported a net profit of R$439 million ($83 million) in the third quarter of 2026, up 5.6% from a year earlier. However, the results revealed mounting pressure on operating margins, declining adjusted earnings and a nearly 20% increase in net debt, as the company moves ahead with a restructuring that has already eliminated approximately 570 positions, including employees and outsourced workers.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 4.2% year-on-year to R$2.22 billion, while the adjusted EBITDA margin narrowed to 56.1% from 60.6%. Net revenue rose 3.5% to R$3.95 billion, supported by higher freight volumes, but the cost of services increased 8.1%, outpacing revenue growth.
The gap between operating performance and reported net profit was also evident in the company’s adjusted figures. Excluding impairment charges related to its Southern Railway Network, adjusted net income declined 17.4% to R$605 million from R$733 million. Impairment charges fell to R$166 million from R$317 million a year earlier, helping support reported earnings despite weaker underlying profitability.
Cost pressures were particularly pronounced in Rumo’s Northern Operations, its largest business segment. Although freight volumes increased 3.9%, adjusted EBITDA remained virtually unchanged at R$1.91 billion. Fixed costs and administrative expenses rose 19.7%, reflecting the start-up of a new logistics terminal along Brazil’s BR-070 highway, higher maintenance expenses and restructuring costs.
Job cuts and a strategic reset
Rumo said it had eliminated approximately 570 positions, including employees and outsourced workers, primarily in administrative functions and expansion projects. The restructuring resulted in approximately R$23 million in one-off severance expenses during the quarter.
The workforce reduction is part of a broader strategic shift away from the aggressive expansion cycle of recent years toward productivity improvements, stricter capital allocation and stronger cash generation.
“More turnover, not more assets,” management said in its earnings report, summarizing its intention to extract greater productivity from existing infrastructure rather than pursue additional capacity through large-scale investments.
The company has also begun selling non-core assets, including two corporate aircraft, while reviewing spending on facilities, technology, travel and consulting services. Management expects these measures to structurally reduce expenses and increase utilization of its existing railway infrastructure.
Capital expenditures totaled R$1.30 billion in the third quarter, down 11.6% from the same period in 2025. Rumo signaled that investment levels should decline further over the coming quarters, with spending increasingly focused on projects offering adequate returns while maintaining operational safety and reliability.
Net debt climbs to R$17.8 billion
Leverage remains one of the company’s main financial challenges. Net debt reached R$17.83 billion at the end of September, up 19.5% year-on-year. The net debt-to-adjusted EBITDA ratio increased to 2.2 times from 1.9 times a year earlier.
Net financial expenses rose 10.6% to R$926 million. The deterioration primarily reflected higher borrowing costs, with the company carrying substantial debt exposure linked to Brazil’s CDI interbank interest rate benchmark.
Despite those pressures, cash generation after investing activities reached R$636 million during the quarter, an increase of 30.4% from a year earlier. The improvement was supported by lower capital spending on expansion projects.
Freight growth slows as margins come under pressure
Rumo transported 23.9 billion revenue tonne-kilometers (RTK) during the quarter, an increase of 2% from the third quarter of 2025. Growth was constrained by unusually heavy rainfall in September, which disrupted operations at port terminals in Santos and Paranaguá, two major gateways for Brazilian agricultural exports.
In Southern Operations, freight volumes declined 8.2%, largely reflecting weaker sugar exports amid unfavorable international commodity prices. The company booked another R$166 million impairment charge against assets in its Southern Railway Network, whose concession was originally scheduled to expire in February 2027.
Despite operational challenges, Rumo expanded its market share along several strategic freight corridors. Its share of grain shipments originating in Mato Grosso, Brazil’s leading agricultural-producing state, increased to 41% from 36%. At the Port of Santos, the country’s largest port, its market share reached 60%, up three percentage points.
For 2027, Rumo plans to adopt a more selective commercial approach, balancing freight volumes and tariffs rather than pursuing market share gains at the expense of profitability. The strategy reflects expectations of more moderate demand growth and the prospect that an increasing share of agricultural production in Brazil’s Center-West region will be absorbed by the expanding domestic biofuels industry rather than exported.
The strategic reset also comes with a leadership decision. In a statement released on Thursday, November 12, Rumo said its board had confirmed Daniel Rockenbach as permanent chief executive officer. Rockenbach had served as interim CEO since July 20, and his appointment extends through the company’s 2028 annual shareholders’ meeting.
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