São Martinho (SMTO3) Q3 2025 earnings summary

Executive summary

• Fires in August 2024 led to a 5% drop in crushing, a 7% decline in yield, and a 9% decrease in sugar production year-over-year, while ethanol production increased 8.9% and corn ethanol rose 27%, with corn processing at full capacity.

• Adjusted EBITDA reached R$1,058.4 million in 3Q25 (+50.4% vs. 3Q24), with margin of 57.4%, driven by ethanol performance and tax credits; 9M25 Adjusted EBITDA was R$2,673.8 million (+39.5%).

• Net income fell 25% year-over-year in 3Q25, mainly due to the end of Copersucar warrant installments, despite EBITDA growth.

• Net revenue rose 14.6% in 3Q25 to R$1,845.0 million, and 21.4% in 9M25 to R$5,460.3 million, led by higher ethanol sales and prices.

• Operations focus on sugarcane cultivation, sugar, ethanol, by-products, electric power, and real estate ventures, with 70% of sugarcane sourced from owned or related land.

Financial highlights

• Adjusted EBIT was R$514.1 million in 3Q25 (+105.4% vs. 3Q24), margin 27.9%; 9M25 Adjusted EBIT was R$1,319.1 million (+72.7%).

• Cash income in 3Q25 was R$186.4 million; 9M25 cash income was R$631.6 million (-8.8%).

• Gross margin for 9M25 was 27.8% (down 2.0 p.p. year-over-year); net margin was 8.3% (down 10.7 p.p.).

• Net debt/EBITDA LTM increased to 1.66x in Mar 2024, then improved to 1.34x at Dec 2024 as net debt reached R$5.1 billion.

• Net income for the period was R$451,690 thousand, down from R$848,997 thousand year-over-year.

Outlook and guidance

• Ethanol cost expected to drop significantly next year with a normalized harvest and no fire effects.

• Sugar hedged for 2024/25: ~170,000 tons at R$2,399/ton; for 2025/26: ~499,000 tons at R$2,556/ton.

• Maintenance CapEx for next year estimated at around BRL 2 billion, with other projects under review based on interest rate scenarios.

• No significant impact on production guidance for the 2024/2025 crop season despite fires affecting 20,000 hectares; R$70 million to be invested in crop treatments.

• Expansion and modernization projects ongoing, including new harvesters, biomethane, and crystallization capacity.