By Brazil Stock Guide – Ultrapar (B3: UGPA3) cut leverage from 3.5x to 1.9x net debt/EBITDA after divesting non-core assets and consolidating Hidrovias do Brasil. The holding set a minimum return hurdle of 20% for new projects and said government social initiatives such as the Gás do Povo program will have limited impact on profitability but meaningful effects on volumes.
Average debt costs dropped to 108% of the CDI benchmark, while portfolio diversification accelerated: Ipiranga now accounts for 48% of EBITDA, down from 72% in 2019, while Ultragaz, Ultracargo and Hidrovias together contribute 44%. At the Ultra Day 2025 event on Friday, September 19, executives stressed that since 2021 the group has screened more than 85 opportunities but closed only eight, underscoring strict capital discipline.
“Recovering volumes comes before margins. In an environment with less illegality, the whole sector benefits,” said Leonardo Linden, CEO of Ipiranga, referring to the Carbono Oculto crackdown in São Paulo, which targeted 350 entities, 1,000 fuel stations and uncovered BRL 8 billion ($1.5 billion) in tax evasion.
New and old investments
The Hidrovias do Brasil acquisition was flagged as a strategic bet. Ultrapar replaced 90% of the logistics company’s top management and is rolling out its “Ultra management model” to improve governance and efficiency, while also backing Brazil’s push to expand hydro routes in the northern grain corridor.
As part of a broader portfolio reshaping since 2021, Ultrapar divested several non-core assets: Oxiteno, sold to Indorama for $1.3 billion in 2022; Extrafarma, sold to Pague Menos for BRL 737 million ($140 million) in 2021; and its stake in ConectCar, a vehicle tag company for automatic payments at tolls and parking lots. The cash from these sales helped reduce leverage and reposition the group around four core businesses.
Ultrapar’s portfolio today includes Ipiranga, one of Brazil’s largest fuel distributors with over 5,800 stations and a 16.7% market share; Ultragaz, the country’s leading LPG distributor supplying 11 million households and holding 22.5% of the market; Ultracargo, Brazil’s biggest liquid bulk storage operator with strategic port terminals; and Hidrovias do Brasil, a logistics company focused on river transport, grain exports and fertilizer imports in the Amazon and southern corridors.
Illegal fuel trade weighs on Ipiranga
Executives stressed that fuel tax evasion continues to erode volumes and margins. Between 2021 and 2025, irregular distributors increased their share of the Brazilian market from 12% to 29%, while Ipiranga’s share fell from 48% to 40%. Management expects volume recovery to precede margin rebound as enforcement strengthens.
Ultragaz, which serves 11 million households, estimates the Gás do Povo subsidy program could add 60 to 70 million cylinders per year to a market of 450 million. “It is a smart design, with moderate profitability impact but significant for expanding access,” said Tabajara Bertelli, CEO of Ultragaz. The company has criticized regulatory proposals to end brand protection and allow fractional refilling, which it views as safety and investment risks.
Outlook
CFO Alexandre Palhares said leverage at 1.9x gives Ultrapar room to grow selectively. The company expects efficiency gains across businesses while maintaining its investment-grade rating, two notches above Brazil’s sovereign score at S&P.
“Brazil needs regulatory predictability and clear rules to ensure fair competition. Only then will we unlock investments, protect essential sectors and deliver efficiency for the country,” said Marcos Lutz, chairman of Ultrapar, noting that the so-called custo Brasil amounts to BRL 1.6 trillion per year, or about 20% of GDP.
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