Tupy (TUPY3.SA): Inflection point ahead on U.S. recovery and margin expansion

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Tupy (TUPY3.SA): Inflection point ahead on U.S. recovery and margin expansion

Tupy (TUPY3.SA)

24 June 2026 Citi Research

Operational outlook

The company is already seeing early signs of recovery, particularly in the U.S., with

freight rates improving and order intake strengthening, trends that should

translate more meaningfully into volumes from 3Q onward. Sales volumes are

currently running above initial expectations across regions. This, combined with

the ramp-up of new contracts (R$600m expected in FY26, with R$100m already

contributing) and ongoing SG&A rationalization, underpins a clear margin

expansion trajectory. Efficiency measures (including workforce rationalization,

production consolidation from Betim to Joinville, and the shutdown of less efficient

lines) are structurally lowering the cost base, with ~R$100m of SG&A savings to be

captured this year. Altogether, these drivers point to improving profitability and

operating leverage ahead.

Tupy’s market is still very fragile in Brazil Semi-Heavy and Heavy truck production

in Brazil is -18% YTD (-14% in May). Therefore, revenues in Brazil were -7% YoY in

1Q26.

Figure 1. Semi-Heavy & Heavy Trucks - Production evolution (units)

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Source: Citi Research, ANFAVEA

On the other hand, there are early positive signs in the U.S. North American freight

volumes, which are positive for Trucks demand, rose 3% MoM in May. The YoY gap

in volumes has narrowed to -1.2%, the smallest gap in 18 months. These are

positive signs that a volume recovery in the 2H26 remains likely. While it may not

be a consumer-led recovery, inventories are tight, tariffs are falling, and the U.S.

dollar is soft, all of which support demand growth for freight.