São Martinho (SMTO3) Q2 2025 earnings summary

Executive summary

• Net income rose 37% quarter on quarter, driven by higher sugar and ethanol volumes and improved ethanol prices, despite a 3% drop in sugar prices compared to the previous quarter.

• Net revenue rose 27.6% year-over-year in 2Q25 to R$1,960.5 million, driven by higher ethanol and sugar sales volumes and prices, despite lower sugar prices.

• Achieved stable total recoverable sugar (TRS) production despite 1% less cane crushed, offset by a 1.3% increase in TRS per ton compared to the previous year.

• Fires impacted nearly 2 million tons of sugarcane, shifting the production mix toward more ethanol and less sugar.

• Shifted product mix with 15.2% less sugar and 14.6% more ethanol produced year-over-year.

Financial highlights

• Adjusted EBITDA reached R$943.1 million (+44.0% vs. 2Q24), with a margin of 48.1%.

• Net revenue rose to R$1,960.5M in 2Q25, up 27.6% year-over-year.

• Corn ethanol plant contributed BRL 55 million in EBITDA year to date, expected to account for 10% of full-year EBITDA.

• Cash cost for sugar was down 7% compared to the previous six months; ethanol costs remained flat, but operating margin dropped.

• Sugar prices hedged for the crop year; 100% of sugar already hedged, with some repurchases due to lower production.

Outlook and guidance

• CapEx guidance increased by 12% to R$2.8 billion, mainly due to fire-related crop treatment, expanded planting, irrigation, and biomethane projects.

• Sugar production guidance cut to 1.32 million tons (-15.2%), ethanol raised to 1.26 million m³ (+14.6%), prioritizing ethanol due to fire impacts.

• Corn processing guidance increased to 500,000 tons (+1.0%), with ethanol output at 210,200 m³ (+5.1%).

• Sugar-ethanol mix expected at 39%-61%, reflecting a strategic shift toward ethanol.

• For the next crop year, if rainfall remains normal, crushing could approach record levels.