São Martinho (SMTO3) Q1 2025 earnings summary

Executive summary

• Net revenue reached R$1.655 billion in Q1 24/25, up 22.3% year-over-year, driven by higher sugar prices and volumes, with sugar production up 26.4% and ethanol up 17.2%, despite lower ethanol prices.

• Adjusted EBITDA rose 20.7% to R$672.3 million, with a margin of 40.6%; Adjusted EBIT margin improved to 18.6%.

• Net income declined sharply, falling 51.7% to R$106.3 million, mainly due to non-cash impacts from mark-to-market on swaps and biological asset revaluation.

• Strong operational performance included a 16.6% increase in sugarcane crushing to 8.85 million tons and a 19.5% rise in corn processing to 124,100 tons.

• Hydrous ethanol sales mix improved, supporting higher cash conversion and margin.

Financial highlights

• Adjusted EBITDA margin was 40.6%, and Adjusted EBIT margin reached 18.6%.

• Net income was impacted by a BRL 3.2 million negative mark-to-market on swaps and a significant drop in biological asset revaluation.

• Sugar cash margin improved by nearly 10 percentage points to 25.1%.

• Gross profit was R$512.2 million, with a gross margin of 31.2%.

• Financial results showed a loss of R$328.1 million, up 104% year-over-year.

Outlook and guidance

• Corn ethanol EBIT and EBITDA expected to reach BRL 250–300 million for the full year, with Q1 not representative due to high-cost inventory and low DDGS sales.

• Sugar price hedges for 2024/25 cover ~729,000 tons at R$2,454/ton and 76% of own cane for the next three quarters; close to 90% hedged for the full crop year.

• Forward corn delivery costs expected to decrease 21% versus 1Q25.

• Operational performance aligns with published guidance, with sugarcane crushing and corn processing at full capacity.