Jalles Machado (JALL3) Q3 2025 earnings summary

Executive summary

• Achieved record sugarcane crushing (7.87 million tons, +7.1% YoY) and sugar production (448,200 tons, +19.7% YoY), with strong operational improvements and higher harvested area, despite severe weather challenges impacting productivity and TRS quality.

• Recurring results and cash earnings were positive, but net profit was negative due to significant non-cash mark-to-market losses on debt and hedging, with 3Q25 net loss of R$73.5 million and cash profit of R$31.7 million (+117.1% YoY).

• Adjusted EBITDA for 3Q25 was R$385.9 million (+16.0% YoY), with margin of 52.1%, and EBIT margin for the first nine months was 19.4%, totaling BRL 326 million.

• Sugar and ethanol markets experienced strong consumption and price recovery, with commercial sugar and ethanol volumes up and strategic inventory carryover supporting off-season sales.

• Expansion projects at Jalles and Otávio Lage units are nearly complete, with only minor investments remaining, and a new VHP sugar mill at Santa Vitória now operational.

Financial highlights

• Gross revenue in 3Q25 was R$824.1 million (+43.4% YoY); net revenue for 9 months reached R$1,684.3 million, up from R$1,406.9 million year-over-year.

• Gross profit increased to R$577.9 million from R$271.7 million YoY; gross margin in 3Q25 improved to 25.9% from -17.4%.

• Adjusted EBIT for 3Q25 was R$129.4 million (+88.1% YoY); adjusted EBITDA R$385.9 million (+16.0% YoY).

• Net loss for the period was R$42.1 million, mainly due to R$168.4 million in non-cash hedge and MTM losses.

• Cash profit improved to R$31.7 million from R$14 million, excluding non-cash effects.

Outlook and guidance

• Ethanol supply is expected to decrease next crop year, supporting higher prices, and sugar prices fixed for 2024/25 to 2027/28 are above historical averages.

• Productivity at Santa Vitória is targeted to recover to 79 by 2026-2027, with crushing volume aiming for 2.7 million tons.

• E30 (30% anhydrous ethanol blend) approval is anticipated for the 2025-2026 crop year, potentially boosting ethanol demand.

• Management is investing in expanding sugarcane fields and constructing a new sugar plant to increase production and flexibility.

• Deferred tax assets are expected to be realized as profitability improves with increased capacity utilization.