Thilo Mannhardt - CEO Andre Pires de Oliveira Dias - CFO.

Frank McGann - Bank of America Merrill Lynch Christian Audi - Santander Wesley Bernabe - Banco do Brasil.

Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to Ultrapar's 3Q15 Results Conference Call. There is also a simultaneous webcast that may be accessed through Ultrapar's website at www.ultra.com.br/ri. Please feel free to flip through the slides during the conference call. Today with us we have Mr.

Thilo Mannhardt, Ultrapar's Chief Executive Officer; and Mr. Andre Pires de Oliveira Dias, Chief Financial and Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the Company's presentation.

After Ultrapar's remarks are completed, there will be a question-and-answer session. At that time further instructions will be given. [Operator Instructions]. We remind you that questions which will be answered during the Q&A session may be posted in advance in the webcast. A replay of this call will be available for one week.

Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ultrapar Management and on information currently available to the Company.

They involve risks, uncertainties and assumptions, because they relate to future events and therefore depend on circumstances that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Ultrapar and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Mannhardt. Mr.

Mannhardt, you may now begin the conference..

Thank you very much. Good afternoon to everybody. I would like to thank you all for your attendance in this conference call. It is a pleasure to talk to you. For today's meeting, we have prepared a presentation that will follow the agenda you may see in slide 3.

As we usually do in the third quarter, we held today our Investors Meeting in Brazil, so the presentation today is a bit longer to address certain additional aspects of our business.

I would start by presenting our trajectory from the perspective of strategy, management and corporate governance which allowed us to grow, create value and boost our businesses. After my presentation Andre Pires, my colleague and CFO of Ultra, will comment on the performance of each business and also on the trends for the next 12 to 15 months.

In the end of the presentation, we will share with you some thoughts on our priorities and views for the coming years, followed by the already indicated Q&A session. I ask you all to kindly move to slide number five.

Ultrapar is a multi-business company that is present in the day-to-day life of Brazilians, with Ipiranga, Oxiteno, Ultragaz and Ultracargo and more recently with Extrafarma as well all shown on this slide.

Thanks to the hard work and extreme dedication of our team, we achieved leadership positions in the markets we operate at and consequently we stand out as one of Brazil's largest companies. If you move to slide six, I'd like to highlight the main attributes that characterize our businesses and that contributed to our growth over time.

These attributes represent Ultra's working philosophy and the main characteristics of our businesses. It's a unique combination that makes us more solid, where our businesses are partly of resilience nature and partly leveraged on the economic growth.

This combination is not merely a matter of checks, it was designed and conceived in order to ensure a consistent growth over many years. Throughout our history, we looked for strategic moves in businesses where Ultra could develop competitive advantages and which could match the characteristics of our businesses.

Then being resilience, leveraged on the economic growth, room for differentiation through innovation and potential for true leadership in these segments. In this regard, consolidation and formalization processes contribute towards aspiring the mentioned leadership.

For many of you that have been with us for years, I believe you identify these attributes in our businesses and the competitive advantages that have been developed. For example, Oxiteno's focus on specialty chemicals, resilience in the LPG market, growth of the retail pharmacy sector, our full-service station strategy at Ipiranga, among others.

But I'll talk about each of them more specifically, as we move forward. Moving to slide seven, we have talked about the attributes of our business and now, as we move to the mentioned chart, we would like to highlight and talk about relevant aspects for our developments of corporate governance and how it influences our management and growth.

We have a corporate governance structure that values the alignment of interests, the structure that dates back to the 80s of last century.

In other words, it has been developed over 35 years since the entrepreneur, Pierre Eagle, son of the founder and then Ultra's leading manager decided to professionalize its management team and make its main executives shareholders. In those days, it was Mr. Paulo Cunha, Mr. Lucio de Castro and Mr. Helio Beltrao.

These executives together with those who became shareholders in the 1990s, among them, my predecessor, Mr. Pedro Wongtschowski, have led the Company and the main initiatives since then.

After the IPO, the new share-based compensation plan was implemented in 2003 for the new generation of then executives, the framework of which remains pretty much the same till this day. Also in the early 2000s, variable compensation based on economic value growth was implemented, strengthening alignments and extending the mindsets to the teams.

We seek high control and transparency standards which allow us to barely detect any deviations in the processes. We have established culture of dialog and sharing, the centralized financial area is part of day-to-day business strengthening the check and balances in the system. We have a simple and lean management structure.

We promote management by proximity and we make the business grow without making the structure become more and more complex. Me and my six fellow Executive Board Members sit close to each other and maintain constant conversations.

Financial soundness is the trace of the company that has been kept for many years and is a key element underpinning any decision.

If you were to hear any of our discussions on investments, cash generation, dividends, you would know how much we value long-term financial soundness which is the cornerstone for financial discipline and necessary to be ready for new opportunities.

The combination of these four elements of our corporate governance allows people to work with a high level of delegation, acting with an owner's mindset with the ideal that Ultra is our Company, not the place where we work, thus encouraging each person to take the best decision for the Company.

They also make our decision-making processes faster which is a differentiating element in management, mainly in large corporations. This creates a favorable environment to prospect, analyze and make good investments.

As a result, we keep continuous prospecting and analysis process, so that we may be ready to seize good opportunities that come along, but this does obviously require patience. The mortality rate of project is high, but those we committed to were actually thoroughly analyzed. Finally, we conducted detailed planning of execution.

We've teams with great experience in integrating acquisitions and making investments. We may quote as an example the acquisition of Texaco and Uniao Terminais in 2008 and 2009 and the international acquisitions in the U.S. and Uruguay in 2012 which were all immediately integrated into our operations.

We also have a more recent example with the transition of Extrafarma which was not attached to a previously existing business structure, but integrated as a new business into Ultrapar. To sum up, Ultrapar's corporate governance structure results in an increasingly solid, profitable and enduring company today.

Before talking specifically about each business, I would like to highlight another aspect behind everything that happens in the Company. Moving to slide 8, I will give you an overview on our people management philosophy. People strategy is based on a strong culture which at Ultra is very influenced by our multi-business characteristics.

Looking ahead, we need to continuously build future leadership and leaders do not just learn to be leader of a company such as Ultra by fate, it is necessary to keep a very solid program for young professionals to give career opportunities, to combine experiences and provide tools for the development of people.

Only then, we will have readiness to challenges and for leadership succession of current and next leaders. It is a continuous process. Reinforcing what we said in the preceding slide about corporate governance, I would like to return to the point of alignment of interests.

One of the means to translate the alignment of interests in people management is applying a meritocratic approach based on facts and on clarity of objectives. We also encourage a sustainable entrepreneurial behavior and own our mindsets and the identification and search for opportunities and not so obvious path also characterize our team.

Without such behavior, we probably would not have entered the fuel market eight years ago, neither the retail pharmacy market last year, we brought in this slide two example of these pillars for our people strategy.

We're currently promoting a new program for leadership development of very high quality which currently includes the participation of 140 executives and will be extended to other leaders next year.

We have increasingly encouraged and promoted internal movements, among different areas and businesses, expanding the professional scope of individuals and promoting the exchange of best practices. In 2014, 1,000 internal movements were made, that is 1,000 employees of Ultra had the possibility to make a career move and assume new challenges.

Now, moving to slide nine, let me talk a moment about Ipiranga strategy, highlighting our actions to strengthen the initiatives of differentiation in convenience and services. As mentioned in our attributes, constant innovation is one of the pillars of our growth trajectory.

This is materialized in several ways at Ipiranga and the most notorious way of our strategy of differentiation is convenience and services, helping to increase the flow, customer satisfaction and loyalty.

With this strategy, customers have higher value-added products and services, while resellers are provided with an additional source of revenue and differentiating positioning, thus maximizing the value creation of the chain as a whole. This philosophy has been successfully applied through some marketing campaigns.

The most famous campaigns are, Ask at the Ipiranga Service Station and Ipiranga, the Complete Place Waiting for You. These campaigns summarize the value proposition to our customers. In this slide, we show some of the several initiatives that strengthened Ipiranga's attributes of differentiation in convenience and services.

I do not want to talk about all of that, but it is worth emphasizing some of that. Am/pm stores are present in 25% of Ipiranga stations. Being an important source to increase the service station and the satisfaction and loyalty of our customers.

We also have the largest bakery network in Brazil and we've an innovative beverage purchasing experience, the BeerCave launched last year and with more than 170 open stores. I would also like to highlight two novelties in am/pm stores.

Am/pm is bringing new store concepts, expected to be launched until the end of this year, supporting the strategy of differentiation and innovation. It is an am/pm superstore as we call it, a model for resellers of urban service stations, operating 24 hours a day with an expanded range of products and services.

For instance, we will have flowers, fruits and vegetables in addition to what we usually see in conventional stores, increasing the assortment of items we need in our neighborhood. For the ones from Sao Paulo, stay tuned to the works in Ipiranga Service Station at Avenida dos Bandeirantes where we will have a superstore and an Extrafarma.

I want to see everyone there. Another new model is the am/pm concept developed for resellers of highway service stations, providing a complete food service with restaurants, snack bars, cafeteria, convenient stores besides Wi-Fi and recharge services.

Another initiative we brought last year is the am/pm suprimentos ensuring franchisees more efficiency product sorting, restocking and in the acquisition cost of the product baskets traded. Am/pm suprimentos currently operates distribution centers in Rio de Janeiro, Parana and more recently in Sao Paulo.

With the status of being the largest loyalty program in Brazil, Kilometer de Vantagens is the case of success on the strategy of differentiation designed by Ipiranga, with a view to obtain customer loyalty. Today, this program has more than 20 million participants and is an important relationship platform for the Company.

ConectCar is another well-known initiative with more than 500,000 users and growing at significant pace. I suppose you have seen our new strategic partner in ConectCar, Itau Unibanco, with whom we will discuss after the transaction is completed, the future plans for this business.

We talked about Ipiranga's differentiation strategy and now moving to slide 10, we can comment about the growth of our service station network. Since 2011, Ipiranga has invested nearly R$2 billion in the expansion of the network of stations in Brazil. This was only to expand the network.

We're not including the expansion of the logistics infrastructure and maintenance and we continue investing in such expansion because we believe in our strategy. Efforts are mainly focused on Kunene where the market grows above the national average and where there is higher potential for the conversion of unbranded service stations.

In September, we had more than 7,200 service stations and the growth rate in the number of service stations in Kunene region was 10% compared to the rate of 2% in South and Southeast regions.

That is, we also continue investing in South and South East regions, these investments in new service stations and converting unbranded service stations have allowed the company to grow above market in the reseller segment, obtaining an improved sales mix, as shown in the graph in the center of the slide.

Another positive factor is the increased formalization of the fuel market. Ethanol market presented an evolution over the year in terms of informality. In 2013, for instance, PIS and COFINS taxes on ethanol were changed which we believe have contributed to improve the competitive environments.

Our investments in conversion of unbranded service stations also contributed to a reduction in the level of informality in the industry. The graph in the right side of this slide is a proxy over time to demonstrate the level of informality in the industry. The higher the percentage, the better the competitive environment.

Let me now move to slide number 11 and talk about Oxiteno. Oxiteno has a very strong positioning in Latin America. It is the only producer of ethylene oxide in Brazil or fatty alcohols in Latin America, always with production capability superior to the domestic demand.

Over its more than 40 years of experience, Oxiteno developed and improved deep knowledge of the technology in the surfactants markets. This is essential to continue differentiating in the highly dynamic markets from the product launch view such as the cosmetics market.

We have been permanently investing in the development of new applications based on innovation and the use of renewable raw materials. These are products with wide appeal in the personal care and beauty segment which has been one of the pillars of our marketing strategy.

At the end of the last decade, we also invested in capacity expansions in Brazil and now we're prepared to continue growing without large local investments. This factor together with our increasing focus on specialty chemicals with sales volume with greater added value provides us with a very solid operating position.

And this gives us the opportunity to deepen our process of geographical expansion. For instance, we have just announced $100 million investment in a [indiscernible] plant in the United States.

This investment is in line with our international expansion strategy which allows us to, first, diversify the raw material base with a naphtha-based basis in Brazil and the shale gas base in the United States.

Secondly, explore the technology exchange among different locations, besides having access to the world's largest, top select market in more competitive cost not only in terms of raw materials, but also in logistics.

Moving to slide 12, I would like to highlight two noticeable aspects in Ultragaz, resilience and the continuous search for differentiation in the bottled segment and diversification of solutions and optimization of the search for customers in the bulk segment. LPG business has two segments, bottled and bulk.

Bottle segment is a business with extremely resilient volumes because it is mainly used for cooking and households. Therefore, it is a good of first necessity. Ultragaz has also been investing in differentiations through the innovation in resellers and customer relationships. On the left side, you can observe some initiatives.

One of them is Ultragaz Connect, an application which is already a reality in Brazil that enables consumers to order LPG through their mobiles and provide more flexibility, convenience and safety at the time of purchase. The purchase order is directly sent to Ultragaz or resellers vehicles closest to the customer locations.

Since its launch, we had about 180,000 transactions through this trail set channel already. Ultragaz was also pioneered in, a coupon printed in partners POSS such as supermarkets, truck stores and bakeries among others which grant the consumer the right to exchange the P13 bottle through this Ultragaz or resellers. In 2014, 800,000 coupons were sold.

Ultragaz's consumer also accumulates kilometers de Vantagens using the loyalty program of Ipiranga by purchasing P13 bottles. He may also redeem credits to purchase gas with discount besides exchanging kilometers de Vantagens with other products and services offered by the program.

To-date, more than 2 million of these kilometers were actually accumulated. In the bulk segment, Ultragaz has been working to optimize the capture of new customers.

The essence of this initiative is to make the capture more assertive with the use of digital intelligence and geolocation, through the work of a team of business consultants and data analysis, the focus is on mapping customers with an appropriate profile and a great probability of using LPG in bulk segment, particularly small and medium-sized enterprises and agribusinesses.

Since 2014, Ultragaz has been applying a new model for bulk facilities. The redesigned process reduces on average one-third of the time of installation with significant cost savings to the Company and agility for the respective customers.

I would also like to highlight the diversification of solutions for different uses of LPG for instance in asphalt plants, drying of grains and seeds, car washing, aviary heating and special gases which is a new propellants developed for aerosol spray for products such as the deodorants, paints, insecticides and hair spray.

This positioning closer to the customer was reflected in our recent campaign to reposition the brand with a slogan [indiscernible]. Moving to slide 13, we will talk about Ultracargo. Ultracargo is the largest liquid bulk storage company in Brazil handling about 6 million tons of products on an annual basis.

This position was achieved in part due to organic growth and in part through acquisitions, most of them in 2008 with the purchase of Uniao Terminais which doubled Ultracargo size. We're located in the main port terminals of Brazil with operations in six different of those shown on the right side of the graph.

This geographical footprint is unparalleled in this segment and provides us with flexibility and operational agility. Covering the North and Northeast regions of Brazil, we have terminals in Itaqui, Suape and Aratu. In the Southeast and South regions of the Brazilian coast, in turn we operate in Rio de Janeiro, Santos and Paranagua.

Ultracargo focuses its strategy on port operations which as we know is a segment with long-term investment opportunities mainly due to the demand for logistics infrastructure in Brazil. And moving now to slide 14, let's talk a moment about retail pharmacy business about Extrafarma. In February last year, we incorporated Extrafarma into Ultra.

As we said at that time, the retail pharmacy segment has the attributes we seek in our business. Resilience in view of the demographic aspect, the aging Brazilian population drives the demand in the truck market, growth, potential for consolidation. The top 10 in this segment have less than 40% of the market.

In addition, Extrafarma was a chain of 180 stores when it came to us. That is an excellent local scale with a competent team that builds the chain from scratch and a very, very strong brand. This was our entrance point into the segment. From there, we devised an expansion plan and we have a very interesting and exciting project ahead of us.

We currently have already over 240 stores. To grow in fast and sustainable manner, we choose to further strengthen our retail platform. The several initiatives implemented are on the left side of the slide.

We have put some pictures to illustrate our new quality standard for stores which offer a better shopping experience, with better qualified teams, improved visual communications and consumer support as the focus of attention.

To this end, we invest in researchers, in training teams and in a program involving all store managers with a goal of implementing a culture of entrepreneurship and owner mindset. We also made progress in the display and communication of products. This picture on the bottom left shows an example with nail polish management.

We reduced the number of SKUs, removed the bottles from the plastic packaging for easier handling by the customer, rearranged accessory products and all this led to a significant sales increase in this class of products. We're replicating this approach in various products across our chain.

Some initiatives are still being or about to be implemented as listed on the right side of the slide. We will have, for example, a new store model and architecture, a new brand for Extrafarma. We're entering new states and we'll have the pilot store in Sao Paulo as we mentioned in Ipiranga.

This type of action makes store management more effective, allowing Extrafarma to speed up its growth with a more robust retail model. Let me now hand over to Andre Pires, who will present the performance of each business and in addition, the trends for the next months. And he will also finish by adding some additional considerations to you.

Andre, over to you..

Thank you, Thilo. Good afternoon, everybody. I would like to thank you all for participating in this conference call. As you may know, this is my first results conference call for Ultrapar. I took the position of CFO on July 20. And since then I have participated in an intensive process of integration.

It has been a very rich period for me and I have witnessed the resilience of Ultra's business model and the outstanding professional capability of our people. I will - after Thilo's presentation on strategy, I will comment on the performance of each business and also on the trends for the next 12 to 15 minutes.

So going to slide 16, let's begin our presentation with Ultrapar's historical performance. Ultrapar even though having undergone various economic cycles presented between 2006 and 2015 an annual growth of 35% in net sales of 24% growth in EBITDA and a 19% growth in net earnings.

This does not mean that everything we will grow constantly forever, but it means that we don't rely on good economic conditions alone to achieve good performance and that resilience in our business model and the execution capability of our leaders many times are able to contract a more challenging operational environments.

It is not by chance also the Ultrapar shares had a strong performance since the IPO, with operational performance influencing the market value of our stock. Shares had an average annual growth of 23% since the IPO, considering the reinvestment of dividends.

In the same period the CDI which is a proxy for the Brazilian risk free rates, the appreciation of the CDI was 14% per year and Ibovespa, the index grew at 9% per year.

Our consistent earnings growth and the resulting cash generation have allowed the company to pay higher dividends with the payout higher than 60% and a dividend yields between 2.5% and 3% on an annualized basis.

Moving to slide 17 and talking specifically about the performance in the 3Q of 2015 and also on the first nine months of 2015, we can observe that during the year Brazilian market economic scenario followed the trend of deterioration, with a combination of above target inflation declining economic activity, climbing interest rates, rising unemployment and a weaker Real as we can see in the graphs to the right.

As already mentioned, even in this environment, we have reached an EBITDA of R$944 million in the third quarter of 2015, up 20% over the third quarter of 2014, mainly due to the EBITDA growth in all business units except Ultracargo. This results evidence the resilience of our business model and Ultra's management capability.

It is worth mentioning that in this quarter, Oxiteno EBITDA growth represented 73% of Ultrapar's EBITDA growth alone. In the nine months of 2015, Ultrapar's EBITDA totaled R$2,776 million, an increase of 24% over the same period of 2014.

Net earnings in the 3Q of 2015 amounted to R$299 million, down 9% from the same period of last year, mainly due to the impact of a higher CDI and exchange rate and also a negative exchange rate changes on financial results. It is important to say that the real was 28% weaker only in this quarter.

In the first nine months of 2015, Ultrapar reported net earnings of R$1.16 billion, 16% higher than the same period of 2014. Our return on equity in turn closed at 17% in September. Moving to slide 18, we will comment in more detail on the performance of our businesses starting with Ipiranga.

Consistently with prior periods, the growth in volume was boosted by an increase in the light vehicles fleet which positively affected light vehicle fuel sales.

As you can see in the top-left chart, the Brazilian vehicle fleet has estimated to grow at the rate of 3% a year even with an estimated drop of 7% in sales of new vehicles which is in fiber's latest estimate. In fact, this is a drop of 27% if you compare to the same period of last year.

In addition to this pillar, Ipiranga is also reaping the fruits of the strategy of differentiation through constant innovation in services and convenience which help increase the flow at the service station and customer satisfaction and loyalty, as mentioned by Thilo in prior slides.

With these elements, Ipiranga sales volume totaled 6,574,000 cubic meters in 3Q 2015, 1% above the 3Q 2014 volume. Sales volume of fuels for light vehicles which we call the Otto cycle increased by 3%, driven by the growth in the vehicle fleet, the investments made in network expansion and the 54% growth in ethanol sales.

Diesel volumes fell by 2% compared to the same period of 2014 due to the economic downturn. In the first nine months of 2015, Ipiranga accumulated sales volume of 19,137,000 cubic meters up 1% over the same period of last year.

The EBITDA reached R$610 million in the third quarter up 10% over the third quarter of 2014, mainly due to the increased sales volume in Otto cycle boosted by investments in the service station network expansion and the strategy of constant innovation in services and convenience in the service stations.

In the first nine months of 2015, EBITDA reached R$1.9 billion, up 21% over the first nine months of 2014. Excluding the non-recurring result of the 1Q of 2015, that includes temporary benefit of inventory gains and import of products and a result of sales of assets, EBITDA would have grown by 12% in the first nine months of 2015.

This third quarter was a good representation of our level of our year-on-year earnings growth in this specific economic scenario. Therefore, the next quarter and the next year will follow the same trends as we saw in the third quarter of 2015.

Moving now to Oxiteno on slide 19, where the sales volume reached 191,000 tons, a 7% decline in comparison to the third quarter of 2014. Breaking down this result, we observe that the volume of commodity sales was 7% lower due to the price and demand volatility.

The volume of sales of specialty chemicals was also 7% lower compared to the same period of last year, due to the contraction of the Brazilian economy and the decision to discontinue a line of products aimed at the latter market. Sales volume in the first nine months of 2015 reached 559,000 tons, down 5% from the nine months of 2014.

In spite of the weaker volume, also a weaker real over the last 12 months contributed to a significant earnings progressions at Oxiteno. The average dollar exchange rate was nearly R$1.30 higher than in the third quarter of 2014.

As a result, Oxiteno's EBITDA reached R$212 million in the third quarter of 2015, up 115% over the same period of last year which equals to $313 per ton of EBITDA. In the first nine months of 2015, EBITDA reached R$560 million, up 83% over the first nine months of 2014 with also an EBITDA per ton of R$317.

Now, looking at the fourth quarter, we see that the trend will be maintained. The expected reduction in the volume of specialty chemicals is bound to continue given the weak economic activity.

As for the EBITDA, we expect that the pace of growth of the third quarter compared to last year will be maintained with margins remaining at the level of R$300 per ton which should be maintained as well for 2016 as a whole.

Moving now to Ultragaz on slide number 20, in the third quarter of 2015, Ultragaz sales volume reached 451,000 tons, a 2% decline compared to the third quarter of 2014, mainly as a result of the economic slowdown in the bulk segment, partially offset by commercial initiatives of new resellers.

During the first nine months of 2015, Ultragaz accumulated a sales volume of 1,284,000 tons, remaining at the same levels that we had in the first nine months of 2014. However, Ultragaz EBITDA reached R$103 million, a 16% increase compared to the third quarter of 2014.

Such increase results mainly from commercial initiatives of new resellers in the bottled segment and from investments in capturing new customers in the residential beauty segment partially offsetting the effects of the economic slowdown in the bulk segments.

During the first nine months of 2015, Ultragaz EBITDA reached R$248 million, up 11% when we compare to the first nine months of 2014. For the next quarter, we expect an EBITDA at the same level of the third quarter. For 2016, EBITDA is expected to maintain the same evolution than what we saw in the third quarter.

Moving now to slide number 21 on Ultracargo, our bulk storage businesses. In the third quarter of 2015, Ultracargo's average storage had a 13% reduction over the third quarter of 2014, as a result of the partial stoppage of the Santos terminal due to the fire which occurred in the beginning of April 2015.

Excluding Santos operations, other Ultracargo's terminals reported a stable average storage in the third quarter of 2015 compared to the same period of last year.

Ultracargo's EBITDA reached R$14 million in the third quarter of 2015, a 67% decline compared to the same quarter of last year, mainly to the lower handling due to their partial stoppage of the Santos terminal and also its fire-related expenses.

If we exclude Santos operations, other Ultracargo's terminals reported an EBITDA of R$25 million, a 6% decline compared to the third quarter of 2014, mainly due to lower handling of chemicals resulting from economic slowdown and higher maintenance costs. As an update of the accidents, the activities in the Santos terminal remain partially suspended.

The part of the terminal which suspended operations has a capacity of 185,000 cubic meters, 55% of Ultracargo's capacity in Santos and 22.5% of the company's total capacity. The fire affected 6 tanks which have total capacity of 34,000 cubic meters.

Ultracargo has been performing the first stage of the decommissioning plan of the affected area which consists in removing, transferring and disposing of the remaining products and residues.

At the same time, we have prepared the second stage of the works to present it to the involved authorities in order to obtain the approvals necessary to remove equipment and structures from the terminal affected by the fire. For the current quarter, the same factors that influenced the third quarter remains in the fourth quarter.

Therefore, EBITDA levels shall remain similar to the same level in the third quarter of 2015. During 2016, we also expect to carry out the actions to resume the operations in Santos, completing the decommissioning and the works for the terminal at rehabilitation. Next we will submit an application to obtain licenses with the competent authorities.

Moving to the slide 22, where I'm going to talk about Extrafarma, we finished the third quarter of 2015 with 244 drug stores in the North and Northeast regions of Brazil, an increase of 16% compared to the same level that we had in the third quarter of 2014.

But above the 7% growth that was given by Abrafarma which is the association of pharma producers. In this quarter, as mentioned by Thilo, we opened the first Extrafarma drugstore in an Ipiranga service station in Belem.

By the end of the third quarter of 2015, 17% of the drugstores were under one year of operation versus 15% in the third quarter of 2014. In the third quarter of 2015, Extrafarma's gross revenues reached R$362 million, an 11% increase compared to the same quarter of 2014.

The increase in gross revenues is mainly due to the investments on opening of new drug stores and the increase in stores used with more than one year, the same-store sales and the annual adjustments in the prices of medications authorized by the chamber for the regulation of the medical pharmaceuticals market which we called CMED.

This was partially offset by lower sales in the telephony, so, if we exclude telecommunications and telephony as the pro-forma same-store sales would have been 9%. In this quarter Extrafarma's EBITDA reached R$6 million an increase of R$4 million compared to the third quarter of 2014.

due to the increase in gross revenues and lower expenses with studies and projects. As mentioned by Thilo in his speech, in 2015. we developed several initiatives aiming devolution of Extrafarma's retail standard, due to such initiatives we opted to slow down the base of opening drug stores, so we can open new drug stores under this new model.

In view of this, we plan to open from 15 to 20 stores as from the fourth quarter on a trend which is expected to continue throughout 2016. The fourth quarter is seasonally stronger in Extrafarma. Therefore, the trend is that EBITDA in the fourth quarter will be higher than the one we presented in the third quarter.

For 2016, EBITDA level in absolute terms is expected to be slightly higher than what we will have this year considering that the expectation of new drug stores opened will double compared to 2015.

Moving now to our closing slides, slide number 24, in our closing remarks for that call the macroeconomic prospects for Brazil do not show signs of recovery much the opposites. Estimates show that the GDP will continue to fall.

Nevertheless, I just presented to you the vision that the general trends for our business for the next year will be maintained which is very positive in light of this scenario. Our vision for the company is not for the next year, it is far wider and so we will continue to invest in our businesses. as this has been the tool for our growth so far.

At Ipiranga, we will continue to invest in the expansion of the distribution network and intensify our differentiation initiatives based on increasing the offer of products, services and convenience.

At Oxiteno, we will keep the focus on innovation with the development of new products and we have the challenge of executing our new project in the U.S.. At Ultragaz, we will keep the focus on the capture of new customers and the constant management of costs and expenses.

At Ultracargo, the priority is to the clarification and management of the impacts arising from the actions in centers without forgetting to consider opportunities from the growing demand for port operations in Brazil. Finally, at Extrafarma, we will keep focused on the expansion of the company and the progress of retail management.

I'm here what we have prepared for you and I thank you once again for attention. We may start now the Q&A session, please. Thank you..

[Operator Instructions]. Our first question comes from Frank McGann of Bank of America Merrill Lynch. Please go ahead..

No, just a kind of a broad question, looking at what is a very difficult overall economic environment right now, you've been able to show very good growth on a very consistent basis for many, many years and the outlook remains still relatively positively.

But I was wondering in terms of allocating capital, in terms of thinking about the growth in your various businesses, are you more cautious now in terms of CapEx and are you likely to - or do you think of your businesses as perhaps having less potential now say than six to 12 months ago and how have your views changed towards your businesses over the last six months or so?.

Obviously, we've always been cautious in terms of focusing on the right opportunities and making sure that our CapEx would increase value for our shareholders over the long period of time. So in that sense, we haven't changed our approach towards CapEx.

It's very clear to us that the economic environment is very challenging, but at the same time we're very confident on the resilience of our business model and also on the execution capability of our leaders.

So obviously, we're looking at the opportunities in terms of organic growth, we're looking at the opportunities in terms of inorganic growth eventually, but keeping the financial discipline that we always had kept when making decisions.

So to summarize, we're not changing or restricting CapEx at this point in times, taking into consideration the economic environment. We continue to see a business that will continue to generate a very healthy cash flow going forward. And therefore, we believe that our strategy will be maintained as it has been in the past..

Our next question comes from Christian Audi of Santander. Please go ahead..

I had a few questions, four to be exact. The first one, maybe Thilo could address this one. You are in a very strong financial position as a company and in a very unique position to be able to look probably at many inorganic growth opportunities.

I was just wondering, are you still as aggressive as before in looking at these inorganic opportunities or given the very low visibility on the economic front, you're just referring to take a more conservative stance as you analyze this? So, that's the first question.

The second question, if maybe you could speak in general terms Andre, about the impact the rising unemployment is having on your business in particular, maybe on Ipiranga.

The third question, have you seen on Ipiranga any changes at all to the positive or negative in your conversion process? Is it becoming more difficult, is it becoming easier to convert the unbranded? And then, lastly, on Oxiteno, you made it very clear in your comments Andre, the guidance of margin of around R$300 per ton.

I was just curious if this is a more of a conservative outlook. Do you think there is depending on FX and end market conditions space for this to be somewhere between R$300 and R$325 or no, you feel very good about the R$300 level? Thanks..

Well, I'll try to address on the order that they have been asked. Question number one, regarding our solid financial position and potential opportunities for M&A or inorganic growth, I believe that our approach remains the same.

Obviously, the scenario, as I said, continues to be very challenging, but also there are a lot of opportunities, that is part of our DNA to analyze these opportunities. We don't have anything specific to talk about at this point, but it's part of our job and it's part of our DNA to evaluate opportunities if they appear.

As I said before, the financial discipline is a key aspect of our DNA as well. So we will be obviously looking at this very cautiously, but we haven't changed our approach and again if you look at the history of Ultrapar, part of the growth that we had happened through inorganic opportunities.

So, we're not giving that up taking into consideration the economic scenario. The second question which is the impact on rising unemployment specifically for Ipiranga, we continue to see, let's say, a stronger correlation when we look at Otto cycle with the average growth of our fleet.

So clearly, when we look at our fleet growing at the pace around 3% to 4% per annum and when we compare to the Otto cycle, we see that the growth is very similar. So at this point, the rising unemployment hasn't changed this trend so far.

Obviously, it's something that we're monitoring very closely, but we haven't seen any specific impact of the rising unemployment related to the overall volume, the volumes that we're seeing at Ipiranga. Obviously, you probably noticed that in our release, when you look at the mix of the Otto cycle. The mix is different now, right.

I mean there has been a growth in ethanol and there has been a decline in gasoline. So this could have something to do with rising employment as well, but it's marginal, it's not something at this point significant.

The conversion process which is the third question of unbranded service stations, historically, the strategy has been to grow through new, let's say organic investments or greenfields investments in new service stations and the conversion of unbranded stations. So historically, this has been 50-50.

What we're seeing now is let's say are quicker or are accelerating more in the unbranded service stations than investing organically greenfield in new service stations. So you could say that at this point, the focus in conversion is bigger mainly because of the economic environment. But this is opportunistic.

I mean ideally when you look long-term is a 50-50 strategy. But at this point, the conversion I'd say is a little higher than the traditional organic investments. And last but not least on Oxiteno, we're confident on this new threshold of R$300 per ton, it doesn't seem to be conservative.

This is the current level of EBITDA per ton when we take into consideration the current level by exchange rate as well. As you know, this also has some impact when there is major changes in exchange rates, but we're comfortable with this level..

And last follow up changing to the topic of taxation.

Can you just explain why we saw this pick up on the tax rate this quarter versus the past one?.

Christian, those are things that eventually happen one quarter to another. I think you should focus more on the long-term trend. Sometimes you have in a specific quarter higher deferred taxes than current taxes, that has to do with our operations overseas, but this is not a trend.

I believe that it's normal to have some differences between quarter-to-quarter, but when you look over the long period of time, there is definite stability in terms of the overall tax bracket that we have in our results around the 30% level..

So you suggest that we continue to use 30% longer-term..

Yes..

Our next question comes from Wesley Bernabe of Banco do Brasil. Please go ahead..

I have a simple follow-up question for the conference call in Portuguese about Ultracargo. You mentioned that the Company is working on its commission of equipment and it was mentioned that recovery is expected for the next year.

I would like to know do you expect this to happen at the end of the first half or by the end of the year? And the second point is about ConectCar. It was mentioned in the Events, but these are kind of cross-selling strategy by which customers who pay using ConectCar are using scanty fuel and you have now more than 500,000 users.

My point is, what's the level of growth quarter-over-quarter is in the number of users since this strategy has started or how this growth path has changed the system? Thank you..

On Ultracargo, basically what we said there is that we're going to go through a decommissioning phase throughout 2016 and also what we call a rehabilitation of the terminal. Once this is all said and done and this could take all over a good portion of the year, we need to get all the licenses from the authorities who start operating.

So it's very difficult to give you a specific date when this portion of the terminal would be operated. That's why we're not giving you a date. This could take the good portion of 2016 as a whole. On ConectCar, I think the cross-selling initiatives that ConectCar has, it's one of its main strategies.

Obviously, I cannot give you an estimate in terms of number of users and all the other opportunities, because as we've mentioned as well, we just got a new partner that announced the transaction a couple of weeks ago. So the transaction is undergoing all its authorizations in order to be closed. I mean it's going to close in the next few months.

So once this is all said and done, we need to sit down with our new partner and re-discuss and redesign all the business plan for that joint venture. But it's clear for us obviously that this brings a very interesting opportunity in terms of growth potential for this type of product and this type of business..

This concludes the question and answer session. At this time, I would like to turn the floor back over to Mr. Mannhardt for any closing remarks..

Okay. Well, thank you all for participating in the call. I'm looking forward to the next call, when we announce the results of the fourth quarter of 2015. Thank you very much..

Thank you. This concludes today's Ultrapar 3Q15 results conference call. You may disconnect your lines at this time..