Raízen (RAIZ4) Q2 24/25 earnings summary

Executive summary

• Net revenue rose 23% year-over-year to BRL 72.9 billion, driven by strong sugar segment performance and higher ethanol sales, despite margin compression in Renewables and Mobility.

• Adjusted EBITDA was BRL 3.7 billion, down 2% year-over-year, shaped by accelerated sugar shipments at better prices, lower ethanol exports, and electricity price volatility.

• Adjusted net loss was BRL 96.7 million, compared to a profit of BRL 181.3 million in Q2 23'24, mainly due to lower gross profit and higher income tax expenses.

• Severe droughts and wildfires in Brazil impacted sugarcane productivity, with crushing volume expected at 78.5–80 million tons, outperforming the national decline.

• Expansion in second-generation ethanol (E2G) with Plant #2 operational and Plants #3 and #4 starting commissioning, positioning the company as a global leader in cellulosic ethanol.

Financial highlights

• Adjusted EBITDA was BRL 5,976 million, down 15% year-over-year; adjusted EBITDA margin in Brazil was impacted by fuel oil volatility, with a margin of around BRL 22 per cubic meter, below the target.

• CAPEX totaled BRL 2.4 billion, up 4% year-over-year, focused on E2G expansion and agricultural productivity.

• Monetized tax credits remained above BRL 1 billion for the quarter.

• Free cash flow reflected liability management, business seasonality, and inventory build-up.

• Leverage (Net Debt/Adjusted EBITDA) increased to 2.6x, up from 1.9x, with average debt maturity extended to 6.3 years.

Outlook and guidance

• 2024/25 guidance: Adjusted EBITDA expected at BRL 14.5–15.5 billion (+14% vs. prior year midpoint); CAPEX guidance at BRL 10.5–11.5 billion (-13%).

• Sugarcane crushing projected at 78.5–80 million tons with neutral cost dynamics and more favorable pricing.

• E2G: Four operational plants expected, producing and exporting over 80 million liters of cellulosic ethanol.

• Inventory build-up in Renewables and Mobility segments positions the company to benefit from anticipated higher prices in coming quarters.

• Commitment to reducing leverage by year-end through inventory commercialization.