São Martinho (SMTO3) Q1 2026 earnings summary

Executive summary

• Net revenue for Q1 FY2025/26 reached R$1.86 billion, up 13% year-over-year, driven by strong ethanol and DDGS sales despite lower sugarcane crushing and sugar prices.

• Adjusted EBITDA rose 19.7% to R$805.0 million, with margin expanding to 43.3%, while EBIT was R$331.1 million, one-third from corn operations.

• Net income declined 40.9% to R$62.8 million, impacted by mark-to-market losses on biological assets and higher finance costs.

• Major CAPEX projects include R$1.1 billion for a new corn ethanol plant and warehouse, and total Capex guidance for 2025/26 was raised to R$3.0 billion.

• Acquisition of 10,600ha of biological assets from Santa Elisa/Raízen for R$242 million aims to secure cane supply and dilute fixed costs.

Financial highlights

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

• EBITDA rose 19.7% quarter-on-quarter, and cash income totaled R$157.0 million, up 11.8% year-over-year.

• Gross profit declined to R$432.6 million from R$512.2 million year-over-year, with gross margin at 23.3% versus 31.2% last year.

• Finance costs increased to R$275.6 million, up from R$257.3 million year-over-year.

• Net margin decreased to 3.4% from 6.5% in 1Q25.

Outlook and guidance

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

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

• The company expects stable production for the 2025/26 crop season, despite a fire at the Iracema Unit that may reduce daily capacity by up to 30% for that unit.

• Additional R$86 million will be invested in crop treatments to preserve future productivity.

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