São Martinho (SMTO3) Q1 2026 earnings summary

Executive summary

• Net revenue increased by 12.2% year-over-year to BRL 1,857.5 million, driven by strong ethanol and DDGS sales, despite lower sugarcane crushing and sugar production due to adverse weather and lower yields.

• Adjusted EBITDA rose 19.7% to BRL 805.0 million, with margin expanding 2.7 p.p. to 43.3% compared to 1Q25.

• Net income declined 40.9% to BRL 62.8 million, impacted by mark-to-market losses on biological assets and timing of Interest on Equity payments.

• Major CAPEX projects include R$1.1 billion for a new corn ethanol plant and warehouse, and R$242 million for acquisition of 10,600ha of biological assets from Santa Elisa, aiming to secure cane supply and dilute fixed costs.

Financial highlights

• Adjusted EBIT was BRL 331.1 million (+7.6% vs. 1Q25), with a margin of 17.8%.

• Cash income totaled BRL 157.0 million, up 11.8% year-over-year.

• Corn-based ethanol EBIT reached R$87 million, with robust margins supported by lower corn costs and high plant utilization.

• Cash COGS increased 10.4% to BRL 926.6 million, mainly due to higher ethanol sales and increased corn processing costs.

• Financial result (cash) was an expense of BRL 124.8 million, up 26.5% year-over-year due to higher Selic rates.

Outlook and guidance

• Total Capex guidance for 2025/26 crop year updated to BRL 3.0 billion, reflecting expansion in corn ethanol and acquisition of biological assets.

• Maintenance Capex guidance unchanged at BRL 1,990.5 million.

• Ethanol prices are expected to recover post-crop year, with parity projected to improve to 60-70% by year-end.

• Sugar production in Brazil's center-south is forecasted below market consensus, with management expecting under 39 million tons due to adverse weather and fires.

• Guidance for crushing remains as anticipated, with a potential shortfall of up to 2%.