Ultrapar Participacoes NYSE: UGP reported higher second-quarter earnings, record operating cash generation and its lowest leverage level since 2008, supported by improved performance across its businesses and particularly strong results at fuel distributor Ipiranga.
CEO Rodrigo Pizzinatto said the company generated BRL 4.8 billion in operating cash flow during the quarter, aided by operating performance and a release of working capital at Ipiranga. The cash generation helped reduce leverage and enabled Ultrapar to bring forward its dividend distribution for the year.
The company approved BRL 1.085 billion in dividends related to the first half, equivalent to BRL 1 per share and a 3.8% dividend yield, according to Pizzinatto. Ultrapar also authorized a share repurchase program for up to 18 million shares.
Consolidated results and capital allocation
CFO Alexandre Palhares said recurring adjusted EBITDA reached BRL 3.657 billion in the second quarter. Net income totaled a company record BRL 1.677 billion, up BRL 527 million, or 46%, from the same quarter a year earlier.
Palhares said higher operating results were partly offset by increased depreciation, amortization and financial expenses, including effects associated with the consolidation of Hidrovias do Brasil in May 2025.
Capital expenditures were BRL 517 million in the quarter. Investment declined at Ultracargo as it nears the end of its expansion cycle and at Hidrovias do Brasil, while spending increased at Ultragaz and Ipiranga, mainly for implementation of a new ERP system.
Operating cash generation totaled BRL 4.789 billion, compared with BRL 939 million in the second quarter of 2025. The figure included BRL 833 million of additional supplier draft-discount contracting. Excluding that effect, operating cash flow would have been BRL 3.956 billion, Palhares said.
Net debt ended the quarter at BRL 8.864 billion, with leverage at 0.9 times EBITDA. The company used its cash generation to reduce gross debt through repayments at Hidrovias do Brasil and Ipiranga.
Addressing capital allocation during the question-and-answer session, Pizzinatto said Ultrapar remains open to investments in existing and new businesses, but is focused on projects with long-term value creation potential. If investment opportunities do not keep pace with operational improvement, the company may increase dividends and continue share repurchases, he said.
Palhares said management views leverage between 1.0 and 1.5 times EBITDA as a comfortable range, especially during periods of market volatility and high interest rates.
Ipiranga benefits from volumes and market changes
Ipiranga sold 6.173 million cubic meters of fuel during the quarter, an 8% increase from a year earlier. Diesel volumes rose 10%, while auto-cycle volumes increased 6%.
The business reported recurring EBITDA of BRL 2.782 billion and an EBITDA margin of BRL 451 per cubic meter. Its network ended the quarter with 5,855 service stations, up 29 from March, after opening 101 stations and closing 72.
Palhares said Ipiranga doubled diesel imports during the first half of 2026 and gained share of Brazil’s total imports, even as overall fuel imports declined. The company said its ability to secure supply during volatility tied to the Middle East conflict helped Ipiranga increase first-half volumes by 8%, compared with market growth of 3%.
The company also cited government action against irregular fuel distributors as a structural improvement in the competitive environment. According to Ultrapar, the market share of distributors classified by Brazil’s ANP regulator as illegal operators fell to 20% from 24.4%, while Ipiranga gained 0.9 percentage point of market share.
For the third quarter, Ultrapar expects Ipiranga’s margins to decline from the second-quarter level and move closer to those recorded in the first quarter. Pizzinatto said the company expects continued benefits from efforts to combat illegal practices, though the effects of Middle East-related supply disruptions remain dependent on supply-and-demand conditions.
Ipiranga CEO Leonardo Linden said the company has received more requests for station branding and white-flag conversions, particularly in markets undergoing changes in competitive conditions. He said Ipiranga intends to maintain investment discipline and does not expect major changes in capital spending.
Ultragaz, Ultracargo and Hidrovias
Ultragaz’s LPG sales volume declined 3% year over year, with bottled LPG down 4% and bulk volumes down 2%. Palhares attributed the bottled segment’s decline to weaker market demand and competition, while lower industrial demand affected bulk sales.
Despite lower volumes, Ultragaz’s recurring EBITDA rose 6% to BRL 468 million, supported by a more favorable LPG sales mix and the absence of BRL 70 million in asset write-offs recorded in the prior-year quarter. The company expects third-quarter EBITDA to be similar to the level reported in the third quarter of 2025.
Ultragaz CEO Tabajara Bertelli said the company is seeking to improve the number and quality of its resellers, with particular focus on organized retail and higher-value customer segments.
At Ultracargo, average installed capacity increased 8% year over year to 1.156 million cubic meters, while cubic meters sold rose 19% as newly installed capacity ramped up. Net revenue increased 7% to BRL 265 million and adjusted EBITDA rose 13% to BRL 159 million. Ultrapar expects third-quarter market conditions and results to be similar to the second quarter.
Hidrovias’ total handled volume fell 14%, primarily because of the November 2025 sale of its coastal navigation operation. On a continuing-operations basis, volume increased 5%. Recurring adjusted EBITDA was BRL 322 million, down 8% overall and down 1% on a continuing-operations basis. The company expects third-quarter performance to be in line with the third quarter of 2025.
About Ultrapar Participacoes (NYSE:UGP)
Ultrapar Participações SA is a Brazilian diversified holding company operating in the downstream energy and chemical sectors. Its Ipiranga unit runs one of Brazil's largest networks of fuel stations, supplying gasoline, ethanol, diesel and convenience-store products to retail and wholesale customers. Through Ultragaz, the company is a leading distributor of liquefied petroleum gas (LPG), offering cylinder and bulk gas solutions for residential, commercial and industrial use across urban and rural regions.
In the specialty chemicals arena, Ultrapar controls Oxiteno, which produces surfactants and specialty chemical formulations for industries such as personal care, oil and gas, agrochemicals and coatings.
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