Ultrapar Participações S.A. — 2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021; filed May 10, 2022. This is an annual report, not a standalone fourth-quarter filing. Financial statements are prepared under IFRS as issued by the IASB. Comparative 2020 and 2019 results were re-presented to show Oxiteno and Extrafarma as discontinued operations.
Business context
Ultrapar is a Brazilian holding company whose continuing businesses are Ipiranga fuel distribution, Ultragaz LPG distribution, Ultracargo liquid-bulk storage, and abastece aí digital payments. The company is refocusing on energy and infrastructure. ConectCar was sold in October 2021; Oxiteno’s sale closed April 1, 2022; and Extrafarma remained subject to Brazilian antitrust approval as of the filing date.
Key financial results
Amounts below are in R$ millions unless stated otherwise. Continuing-operations comparisons use the re-presented 2020 figures.
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue from sales and services, continuing operations | 109,732.8 | 74,058.1 | +48% |
| Cost of products and services sold | 104,828.0 | 70,056.4 | +50% |
| Gross profit | 4,904.9 | 4,001.6 | +23% |
| Gross margin | 4.5% | 5.4% | Down |
| Operating income before finance and equity-method results | 1,787.0 | 1,546.0 | +16% |
| Net financial expense | (762.7) | (550.3) | Expense increased 39% |
| Profit from continuing operations | 818.6 | 647.1 | +27% |
| Profit from discontinued operations | 65.3 | 280.6 | −77% |
| Profit for the year | 883.9 | 927.7 | −5% |
| Net income attributable to Ultrapar shareholders | 850.5 | 893.4 | −5% |
Continuing-operations operating margin was approximately 1.6% versus 2.1% in 2020; net margin was approximately 0.7% versus 0.9%. The filing reports no clear consolidated EBITDA value in the supplied text.
- Segment revenue: Ipiranga R$99,382.6 million (+50%); Ultragaz R$9,744.7 million (+32%); Ultracargo R$713.1 million (+11%); abastece aí R$84.7 million (+392%). Segment figures are presented on an unconsolidated basis and include intercompany transactions.
- Ipiranga’s fuel volume rose 5% to 22.5 million cubic meters. Ultragaz LPG volume declined 1% to 1.714 million tons. Ultracargo’s storage capacity reached 983 thousand cubic meters, including its new Vila do Conde terminal.
- The 2021 discontinued-operations result included a R$427.5 million Extrafarma impairment before tax effects; net impairment was R$282.2 million. The filing attributes the lower overall annual profit mainly to this impairment.
Cash flow, debt and liquidity
- Net cash from operating activities of continuing operations was R$1,603.4 million, down 29% from R$2,264.0 million, with management citing higher fuel and LPG costs. Total operating cash flow, including discontinued operations, was R$2,586.0 million.
- Continuing-operations investing cash flow was positive R$882.9 million, mainly reflecting net redemptions of financial investments; continuing-operations financing cash flow was negative R$2,802.6 million.
- Cash and cash equivalents at year-end were R$2,668.1 million consolidated, including R$2,280.1 million in continuing operations and R$388.0 million in discontinued operations. The filing separately cites R$4,084.2 million in cash, cash equivalents and short-term investments for liquidity comparison with 2022 debt maturities.
- Consolidated debt, including swap-related unrealized losses, was R$16,377.6 million, down from R$17,376.2 million in 2020. Debt due in 2022 was R$2,866.1 million on the principal maturity schedule; estimated debt service over the next 12 months was R$3,605.4 million including interest. Management stated liquidity and working capital were sufficient for current needs.
- Planned contractual cash requirements over five years were approximately R$14.9 billion, including debt principal and interest. The company’s 2021 investment plan was R$1.891 billion; reported additions to property, plant and equipment and intangible assets were R$1.426 billion across continuing and discontinued businesses.
Material changes, outlook and unusual items
- Revenue growth largely reflected higher fuel, ethanol and LPG prices, alongside recovering demand and higher volumes at Ipiranga. Cost of sales increased faster than revenue, compressing gross margin. Higher interest rates and unfavorable foreign-exchange hedge fair-value results contributed to the larger net financial expense.
- Ultrapar’s portfolio shift is material. The Oxiteno transaction closed after year-end for an initial payment of US$1.326 billion, subject to final working-capital and net-debt adjustments, plus US$150 million due in April 2024. Extrafarma’s R$700 million proposed sale remained contingent on approval; CADE’s General Superintendent recommended approval subject to remedies, pending Tribunal review. ConectCar was sold for R$165 million; the company recorded a R$76.5 million gain.
- No specific consolidated financial guidance was provided. Management describes a focus on energy and infrastructure, capital discipline, logistics investment, cost efficiency, and growth in digital payments. It also flags an uncertain 2022 environment, including Brazilian elections, inflation and interest rates, commodity volatility, and the Russia-Ukraine conflict.
- Key risks include dependence on Petrobras for most fuel and LPG supply, competitive pressure and thin distribution margins, currency and interest-rate exposure, Brazilian political and economic volatility, regulatory and environmental obligations, and interruption or safety risks at operating facilities.
- Possible-loss legal proceedings totaled R$3.31 billion at year-end and were not provisioned; recorded provisions for tax, civil, environmental, regulatory and labor risks were R$932.2 million. The 2015 Ultracargo Santos fire has remaining negotiations over alleged environmental damages beyond the TAC amounts already paid; further payments were not then provisioned.
- A January 2021 ransomware incident temporarily disrupted systems and involved theft of proprietary data. Critical systems were restored. The filing’s disclosures differ on cyber insurance coverage: one section says coverage ended in July 2021, while another says the company had no cyber insurance as of the report date.
- The financial-statement audit opinion was unqualified, but KPMG issued an adverse opinion on internal control over financial reporting. Material weaknesses concerned income-tax provision review controls and controls over inventory information at third-party facilities. Management outlined remediation measures planned for the next annual assessment.
Most important facts for investors to verify
- Progress and final consideration for the Extrafarma sale, including CADE’s final decision and any working-capital or net-debt adjustments; also confirm receipt and use of Oxiteno sale proceeds and the deferred payment terms.
- Debt maturities, refinancing plans, and liquidity after the 2022 obligations; reconcile the filing’s different cash and investment figures and assess exposure to floating rates and foreign exchange.
- Remediation and independent testing of the disclosed material weaknesses, especially tax-provision calculations and third-party inventory controls.
- Potential cash exposure from the R$3.31 billion possible-loss proceedings, the R$932.2 million recorded provisions, and remaining Santos fire-related claims.
- Cyber incident consequences and the actual status and scope of cyber insurance; the filing text is inconsistent on coverage.
- Underlying profitability and margins after portfolio disposals, including EBITDA and leverage measures, for which the supplied filing text does not provide a clear consolidated value.