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Ale gives up sales to independent gas stations to focus on margins

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Ale, Brazil’s fourth-largest fuel distribution company, reduced businesses with independent gas stations throughout 2021, giving up sales in volume to ensure stronger margins and circumvent the volatility seen in this business since the beginning of the coronavirus pandemic.While 2020 was marked by substantial growth and accelerated conversion of stations - in addition to the unexpected pandemic - the strategy last year was to navigate the more unstable environment "in a smart way," said Fulvius Tomelin, the chief executive of the Glencore-controlled network. "We removed [from the base] clients that do not bring profitability," he told Valor.By limiting its exposure to independent gas stations - those without an exclusive fuel supplier - Ale saw the volume traded decline to 3.1 billion liters of gasoline, ethanol and diesel from about 3.7 billion liters. On average, 5,000 independent customers are served every year by the distribution company in the spot market.At the same time, the EBITDA in the year more than doubled - the unaudited figure was not disclosed - and revenues reached about R$15 billion, the executive said. "We were able to bring profitability without having to allocate working capital."The entire 2021 unsold volume would be distributed by the independent gas stations, and the number of Ale-branded stations continued to expand, said Diego Pires, the company’s head of marketing and retail. In the year, the network, which had 1,400 stations, was expanded by 130 units.The contracts with large consumers also moved forward and, in total, there were around 290 new businesses, considering Ale-branded gas stations and large customers, who contribute with margin and loyalty. The objective for 2022 is to reach at least 300 contracts with large clients."Ale was able to adapt its strategy very quickly to the changing market conditions," Mr. Tomelin said. This agility, the executives say, is largely due to the operational capacity of the distribution company - being part of Glencore, a global trading company, also plays a role as it ensures flexibility in fuel supply.At the end of 2021, when...

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