Always ahead in its Results - Financial and Operational Highlights

CONSOLIDATED RESULTS

During the year, ALL increased (a) total volumes by 10.6%, from 19,929 million RTK in 2005 to 22,047 million RTK in 2006, (b) gross revenue by 17.4%, from R$1,249.3 million in 2005 to R$1,466.5 million in 2006, (c) EBITDA by 11.7%, from R$457.9 million in 2005 to R$511.3 million in 2006 and (d) EBITDAR by 22.7%, from R$481.8 million in 2005 to R$591.1 million in 2006. ALL’s two largest business units, Agricultural Commodities and Industrial Products, accounted for 98% of the incremental EBITDAR of R$109.2 million in 2006, with growth rates of 26.9% and 20.2% respectively, when compared to 2005. EBITDA in the year, recorded by the Highway Services business unit, shifted from R$5.9 million in 2005 to R$8.5 million in 2006. The products that contributed most for EBITDA growth were soybean, sugar, corn and fertilizers in agricultural commodities and pulp and paper, containers and steel products in industrialized products.

We continued to improve our EBITDAR margins, which increased more than two percentage points, from 44.3% in 2005 to 46.5% in 2006. Margin increases occurred in all lines of businesses and were a result of the operational leverage, the increase in the freight average value, increase in diesel price and continued productivity gains.

ALL’s consolidated net income increased by 0.9% in 2006, reaching R$172.7 million compared to R$171.2 million in 2005, mainly due to the increase in EBITDA, partially offset by interest expenses in view of an increase in leverage. The Net Debt/EBITDA ratio grew from 0.2X in 2005 to 3.8X in 2006, mainly reflecting the acquisition of Brasil Ferrovias, which was highly leveraged. The net
debt/shareholders’ equity ratio rose from 0.1X to 1.1X in the same period.

Since its privatization in 1997, more than R$1.4 billion was destined to new technologies, assets, operations and training. In 2006, the consolidated investments totaled R$312 million, versus R$255.3 million in 2005, with a 22% growth. The increase in investments of Brazilian operations reflects: (a) the acquisition and refurbishment of second-hand locomotives in the United States; (b) higher investments in return of profile and maintenance of track; (c) the acquisition of new trucks and (d) logistic systems. In Argentina, total investments increased from R$23.5 million in 2005 to R$29.3 million in 2006, mainly due to the increase in expansion investments in locomotives and railcars.

ALL BRASIL

In 2006, ALL Brasil’s net income reached R$162.0 million, 18.5% lower than the R$198.8 million posted in 2005. The reduction was a result of (i) the increase in financial expenses due to the higher leverage with the acquisition of Brasil Ferrovias, and (ii) the provisions of R$55 million for losses with a possible sale of Geodex and R$18.8 million related to receivables from Ferropar, partially offset by the EBITDA growth in the period.

Gross revenue from Brazilian operations increased by 20.1%, from R$1,092.0 million to R$1,312.0 million, while total transported volume climbed from 15.8 billion RTK to 17.7 billion RTK in 2006. EBITDAR posted a 25.1% growth, increasing from R$436.8 million in 2005 to R$546.7 million in 2006, with a growth of 2.0 percentage points in EBITDAR Margin, from 46.8% in 2005 to 48.8% in 2006. The significant growth of EBITDAR and EBITDAR Margin reflects a high operational leverage of the business and strict cost controls.

Below, 2006 results opened by business unit.

AGRICULTURAL COMMODITIES BUSINESS UNIT

The volume of agricultural commodities increased by 13.4% in 2006, from 10,192 million RTK in 2005 to 11,554 million RTK, in spite of the interruptions occurred in May in our rail network due to protests of farmers against the domestic agricultural policy. This result was favored by the strong growth in the crop of Rio Grande do Sul in 2006, which in 2005 was almost destroyed by the strong drought in the State.

At the end of the year, our market share fell from 68% in 2005 to 64% in 2006, due to the better market conditions in our coverage area, mainly in the State of Rio Grande do Sul, where the crop had an increase of nearly 50% in 2006. Exports of agricultural commodities through the ports served by ALL increased by 24.9% in 2006 when compared to 2005, while ALL’s volume in these ports increased by 17.1% in the same period. The volume growth was a result mainly of increases in sugar (38%), soybean (37%), corn (40%) and fertilizers (18%).

Agricultural commodities gross revenue increased by 27.3% to R$766.8 million in 2006 against R$602.4 million in 2005, while net revenue increased by 27.3%, from R$520.3 million in 2005 to R$662.2 million in 2006. The average yield, measured by R$/thousand RTK, had a 12.3% rise compared to the previous year, mainly due to: (i) higher prices in our sales agreements, (ii) the transfer of increases in diesel price and (iii) the change in the mix of transported products.

EBITDAR of agricultural commodities increased by 26.9%, from R$304.0 million in 2005 to R$385.6 million, mainly due to the expansion of volume and yield, while the EBITDAR margin decreased from 58.4% to 58.2% in the same period, dropping 0.2 percentage point. EBITDA of the Business Unit (after railcar rental expenses related to new railcars purchased by clients) increased by 10.8%, from R$284.6 million in 2005 to R$315.5 million in 2006, while the EBITDA margin fell 7 percentage points, from 54.7% to 47.6%.

INDUSTRIAL PRODUCTS BUSINESS UNIT

During the year, the volume of the industrial products business unit increased by 9.2%, from 5,627 million RTK in 2005 to 6,142 million RTK in 2006. This increase mainly resulted from a growth in the transported volume of 21.9% in intermodal flows, with market share gains in almost all segments. It is worth pointing out the growth in containers (22.6%), steel products (37.0%) and wood (22.1%). In the fuel, vegetable oil and cement segments – which are almost exclusively transported by railroad in our operation area – our market share is currently high and our performance depends on the industry growth in our coverage area. In this segment, we had a total volume increase of 2.6% in 2006 compared to 2005, with a growth of 11.1% in civil construction, 4.1% in fuels and a reduction of 31.8% in vegetable oils due to the migration of crushing companies from Brazil to Argentina.

Industrial products gross revenue increased by 20.9%, from R$336.0 million in 2005 to R$406.2 million in 2006, pushed by an increase in volume of 9.2% and an increase in yield, measured by R$/thousand RTK, of 10.8%, mainly reflecting the change in the mix of transported products, and an increase in diesel.

EBITDAR of industrial products increased by 20.2% in 2006, from R$126.9 million in 2005 to R$152.5 million, mainly due to increases in volume and average yield. The EBITDAR margin fell 0.3 percentage point in 2006, from 45.4% in 2005 to 45.1%. EBITDA of the Business Unit (after railcar rental expenses related to new railcars purchased by clients) increased by 16.8%, from R$122.3 million in 2005 to R$142.8 million in 2006, while the EBITDA margin dropped 1.5 percentage point, from 43.7% to 42.2%.

HIGHWAY SERVICES BUSINESS UNIT

During 2006, the volume of highway services was negatively affected by the process of changing this strategic unit into a more profitable business. In 2006, we reduced some little profitable operations, as we established higher profitability goals. The change in the client base also resulted in a new mix of flows with smaller average distance and, consequently, smaller total volume and
higher average yield, measured in R$/RK, contributing to a better profitability. For instance, in 2006, we discontinued one of the operations of urban distribution of products of Ambev and, recently, included the transportation of water bottles for Minalba in the State of São Paulo, an operation which has better margins.

The revenue decreased by 9.5% in 2006, reaching R$139.0 million, as a result of a 15.9% reduction in volumes, from 55.9 million RK in 2005 to 47.0 million RK in 2006, partially offset by a 7.6% increase in the average yield. EBITDA of the highway services unit increased by 43.5% in 2006, from R$5.9 million in 2005 to R$8.5 million in 2006, while the EBITDA margin grew from 4.4% in 2005 to 7.1%. The improvement in profitability reflects the discontinuance process of non-profitable operations and the establishment of a minimum return level for new operations.

ARGENTINA OPERATIONS

Gross revenue of ALL Argentina increased by 8.6% in 2006, from P$203.3 million in 2005 to P$220.7 million, due to an increase of 2.5% in the average fee, from P$49.5 per thousand RTK in 2005 to P$50.7 per thousand RTK, and of 5.9% in volume, from 4,110 million RTK in 2005 to 4,352 million RTK. The average fee increase mainly reflects the transfer of inflation, while volume growth resulted in productivity gains, partially offset by a change in the mix of freights - with an increase in the share of lower density products, such as agricultural commodities, and reduction in the share of higher density products, such as stones.

In 2006, the increase in the volume of agricultural commodities stood at 26.5%, from 629.7 million RTK to 796.6 million RTK. In addition to the higher productivity of the rolling stock, the strong increase in the volumes of agricultural commodities during the year reflects: (i) favorable conditions of the crop in Argentina, (ii) the Company’s decision to allocate capacity in the higher margin businesses to the detriment of volumes in lower margin industrial flows.

The volume of industrial products grew by 2.2% in 2006 compared to 2005, due to the allocation of more railcars to the flows of agricultural commodities to the detriment of lower profitable industrial flows - in particular, stones in the civil construction segment.

EBITDAR grew from P$58.2 million in 2005 to P$63.5 million in 2005, or 9.1%, reflecting an increase in volumes and a strong yield growth. In spite of the increase in labor costs due to the negotiation of salaries with labor unions, the EBITDAR margin reached 29.5%, in line with the previous year.

BRASIL FERROVIAS

On May 9, after 6 months of negotiations, we concluded the acquisition of Brasil Ferrovias. After having all the necessary approvals and the compliance with all previous conditions, the operation was concluded on June 16, through the exchange of shares, with no payment in cash. Brasil Ferrovias operates two railroad systems: (i) one narrow gauge next to the rail network of ALL, which connects our current network to the States of Mato Grosso do Sul and São Paulo and to the port of Santos; and (ii) a broad gauge system which connects the State of Mato Grosso to the port of Santos through the State of São Paulo. The two systems are interconnected in Campinas and the railroad that connects Campinas to Santos is a mixed gauge railroad.

The acquisition is an important advance in our strategy of giving ALL access to important markets, such as the State of São Paulo, and to the States of Mato Grosso and Mato Grosso do Sul, which constitute the current Brazilian agricultural frontier, and to the port of Santos, the largest one of the country both in volume of agricultural commodities and in movement of containers. After the acquisition, the share of agricultural commodities in our mix of cargos increased from 50% to 75% of ALL’s total revenue. With time, we should reach once again a higher balance between agricultural and industrial commodities closer to 50/50.

Since May 10 up to December, a transition team of ALL’s executives managed Brasil Ferrovias with the mission to restructure the company and prepare it for the total integration in 2007. Since January 1, 2007, ALL and Brasil Ferrovias are operating in a totally integrated way, with unified teams, systems and rail networks.

In 2006, EBITDAR grew by 6.8%, from R$228.4 million to R$244.0 million and the EBITDAR margin increased by 2.3 percentage points, from 30.9% to 33.2%. The revenue decreased by 1.7%, from R$839.1 million to R$825.0 million and the volume fell 5.8%, from 9,844 million RTK in 2005 to 9,273 million RTK in 2006. In 2H06, period in which Brasil Ferrovias was under the management of ALL, EBITDAR increased by 85.6%, from R$91.9 million in 2H05 to R$170.6 million in 2H06, mainly reflecting a strong reduction in the cost base. Revenue decreased by 5.0%, from R$411.8 million in 2H05 to R$391.4 million due to the drop of volume of 5.9%, from 4,857 million RTK in 2H05 to 4,570 million RTK.

In similar conditions to the ones of ALL after its privatization in 1997, Brasil Ferrovias was a company with weak operating performance, reduced moral and a history of negative results, however with a large growth potential. We have the challenge to restructure Brasil Ferrovias with actions aimed at (i) reaching productivity and safety levels similar to the ones of ALL; (ii) implementing the same culture of obsessive cost control and (iii) reaching compatible levels of volumes and revenues in 2 to 3 years.

In 2H06, we had an important progress towards our main goal concerning Brasil Ferrovias in 2006, which is to create a corporate culture focused on results, as we did in ALL. We are better positioned to complete the restructuring process than we were in 1997, for we count on 9 years of experience of our team. We continue to be confident in the large potential of this opportunity.

CVM Instruction no. 381 as of January 14, 2003

ALL - América Latina Logística S.A. in compliance with the Official Letter/CVM/SEP/ GEA-2/no. 305/05 and CVM Instruction no. 381 as of January 14, 2003 (ratified by the Directive Release /CVM/SEP/SNC/no. 02/2005 as of March 20, 2005) informs the market the services contracted by the Company and carried out by its independent auditor Ernst & Young (“Auditor”) during 2006:

(i) Due diligence services for the acquisition of the companies Brasil Ferrovias S.A. and Novoeste Brasil S.A., based on an agreement entered into in the first quarter of 2006, whose fees and expenses totaled approximately R$800,000.00, with duration of 50 days. These fees represent 44.6% of the total external audit fees;

(ii) Review services of the corporate model resulting from the acquisition of investments in Brasil Ferrovias and Novoeste Brasil, in accordance with the agreement entered into in May 4, 2006 in the amount of R$91,900.00. The service lasted 2 weeks. These fees represented 5% of the total external audit fees.