São Martinho (SMTO3) Q1 2025 earnings summary

Executive summary

• Net revenue for 1Q25 rose 22.3% year-over-year to R$1,655 million, driven by higher sugar prices and volumes, with ethanol output up 17.2% and sugar up 26.4%, though net income fell 51.7% to R$106.3 million due to non-cash impacts from debt swap mark-to-market and biological asset fair value changes.

• Adjusted EBITDA increased 20.7% to R$672.3 million, with a margin of 40.6%, and Adjusted EBIT rose 42.7% to R$307.7 million, margin at 18.6%.

• Gross profit was R$512.2 million, gross margin at 31.2%, nearly flat year-over-year.

• Comprehensive income totaled R$36.0 million, down from R$321.6 million in the same quarter last year.

• Favorable weather and full-capacity corn plant drove strong production growth.

Financial highlights

• Net revenue reached R$1.65 billion, up 22.3% from 1Q24, with Adjusted EBITDA at R$672.3 million, a 20.7% increase year-over-year.

• Adjusted EBIT margin improved by 2.7 p.p. to 18.6%; gross margin was 31.2%.

• Net income dropped 51.7% to R$106.3 million, mainly due to non-cash financial adjustments and biological asset impacts.

• Finance result was a net expense of R$328.1 million, up from R$160.8 million year-over-year, mainly due to higher finance costs and negative derivatives results.

• Basic and diluted EPS was R$0.3137, down from R$0.6359 year-over-year.

Outlook and guidance

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

• Sugar price hedges for 2024/25 cover ~729,000 tons at R$2,454/ton; for 2025/26, ~179,000 tons at R$2,436/ton.

• Corn crushing in 1Q25 was 124.1 thousand tons, in line with guidance; forward corn delivery costs expected to decrease 21% versus 1Q25.

• Ongoing investments in biogas and irrigation projects, with completion expected in 2025.

• Management continues to monitor geopolitical and climate risks, which may impact future revenue and costs.