RSUL4 Riosulense

Metalúrgica Riosulense S.A., currently positioned in the market under the RIO brand, is a publicly held company with shares traded on B3, under the tickers RSUL3 (common) and RSUL4 (preferred). Founded in April 1946 in the city of Rio do Sul, in the state of Santa Catarina, the company has established its track record as a manufacturer of metal components mainly geared toward the automotive sector. The headquarters is located in the Barra do Trombudo neighborhood, in the same municipality, and the company also maintains a branch in São Cristóvão do Sul, in facilities linked to the Prison Fund. Its shares have been listed on the Brazilian stock market since 1988 and, as of 2010, began to be included in category “A”, which comprises issuers with both common and preferred shares admitted to trading.

Historically, Riosulense has developed expertise in casting and machining special iron and steel alloys, aimed at internal combustion engine applications and other mechanical systems. In 2014, the company became the first Brazilian foundry to obtain the international certificate of the Transportation and Power Generation program, aimed at suppliers to the railway and power generation industries, highlighting its focus on technical and quality requirements to serve OEMs and operators in these segments. In 2019, the company underwent a rebranding process, adopting the RIO brand, and inaugurated a Prototype Factory with 3D printing technology, reinforcing its product development capabilities and the detailing of complex geometries in metal components.

Riosulense’s business model is predominantly based on the manufacturing and sale of components for vehicle engines and systems, serving light vehicles, utility vehicles, trucks, agricultural machinery, motorcycles, as well as railway and naval applications. The company operates with two main revenue streams: sale of products manufactured in-house and resale of complementary automotive items. In 2024, sales of its own products accounted for about 91% of net operating revenue, while resale accounted for approximately 9%, indicating the predominance of industrial activity and metallurgical processing. This profile positions the company as a relevant supplier both for automakers and for the auto parts aftermarket, with integrated operations in different links of the automotive value chain.

Riosulense’s industrial portfolio covers a set of critical components for engines and support systems, with a focus on high dimensional precision and mechanical strength. Its main products include valve guides and seats, valve tappets, engine mounts, cylinder liners and steel shoulders, intended for use in combustion engines, load transmission and structural systems. On the resale front, the company sells a broader line of engine items, including pistons, valves, connecting rods, head bolts, bearings, camshafts, timing kits, rings, reamers and gasket sets, among others. This combination of in-house manufacturing and resale allows the company to provide complete solutions for engine repair and maintenance in different types of vehicles.

From a market segment perspective, Riosulense structures its activities into five main fronts: auto parts replacement, automakers, exports, railway and agricultural. In 2024, the replacement market accounted for 58.56% of total sales, consolidating itself as the main revenue driver, followed by direct supply to automakers, with 25.33%. Exports accounted for 8.09% of revenue, while the railway and agricultural markets accounted for 3.76% and 4.27%, respectively. One of the company’s main customers is Mercedes-Benz, which accounted for 14.32% of net revenue in 2024 in the automaker segment, demonstrating significant exposure to major global commercial vehicle manufacturers.

Riosulense’s production structure is characterized by intensive metallurgical processes and high-precision machining operations. The company uses melting furnaces, mixers, casting machines, deburring equipment, conventional and CNC lathes, milling machines and machining centers, as well as grinders and lines dedicated to different product families. The processes include casting, quality testing, cleaning, deburring, diameter adjustment, precision machining, heat treatment and finishing, with quality control at multiple stages. The main raw materials include pig iron, steel and cast iron scrap, special alloys, silicon brass tubes and secondary inputs such as sand, resins, electrodes, oils, abrasives and cutting tools, forming a supply chain typically associated with the foundry and machining industry.

Riosulense’s geographic footprint is predominantly domestic, with commercial activities in all Brazilian states, supported by a network of sales representatives and direct sales in some regions, such as Greater São Paulo, Santa Catarina, Rio Grande do Sul, Sergipe and Triângulo Mineiro. Distribution in the domestic market is mainly carried out by road, while exports use sea, road and air transport. In 2024, approximately 90.73% of the company’s net revenue came from Brazil, with the remainder from foreign sales. Among the international markets served, standout countries include the United States, Germany, Italy, China, United Arab Emirates, Paraguay and Turkey, in addition to other destinations in Europe, the Americas, Asia and Africa, totaling exports to more than 25 countries.

In terms of regulation and licensing, Riosulense is subject to municipal, state and federal legislation applicable to industrial activities, including safety, environmental and controlled product use requirements. To operate, it maintains a location and operating permit, a health license for the cafeteria, a Fire Department inspection certificate, an environmental license issued by the state environmental agency of Santa Catarina and a Federal Police operating license for the use of controlled chemicals, in accordance with specific legislation. The company also monitors changes stemming from Brazilian tax reform, assessing the impact of new tax rules on its operations and internal processes.

In environmental, social and corporate governance matters, Riosulense adopts an environmental management system aligned with ISO 14001, with policies aimed at reducing adverse environmental impacts, preventing pollution, complying with current environmental legislation and properly managing waste and hazardous materials. The company maintains departments dedicated to quality, environment, health and safety, responsible for guiding the storage, treatment and disposal of inputs with contamination risk, as well as for ensuring working conditions for employees. The company has set up an internal ESG committee and hired a specialized consultancy to develop its first sustainability report, based on Global Reporting Initiative (GRI) guidelines and future adherence to IFRS S1 and IFRS S2 requirements. Ongoing initiatives include the preparation of a materiality matrix, the definition of key ESG performance indicators and a greenhouse gas emissions inventory, as well as plans for external assurance of sustainability information from upcoming disclosure cycles.

Riosulense’s corporate governance includes efforts to protect brands and intangible assets, with registration and renewal of the “RIOSULENSE” and “RIO” trademarks with the Brazilian Patent and Trademark Office in different classes, with terms renewable every ten years. The company states that it does not make financial contributions to political parties, candidates or initiatives aimed at directly influencing public policies. In its supplier relations, it adopts guidelines for ethical, professional and transparent relationships, seeking to approve multiple supply sources to reduce dependence on a few suppliers, although there are still specific items with concentrated supply, a situation the company seeks to mitigate by developing new supply alternatives.

As an issuer of shares traded on B3, Riosulense combines the profile of a metallurgical manufacturer specialized in components for engines and automotive systems with a relevant presence in the replacement market and supply to automakers. Its operations in niches such as railway and agricultural, together with its base of industrial customers in Brazil and abroad, position the company as an auto parts producer with a strong emphasis on casting and machining metal alloys, exposed both to the automotive industry cycle and to the dynamics of investment in transportation and agricultural machinery.