São Martinho (SMTO3) Q4 2024 earnings summary

Executive summary

• Record sugarcane crushing of 23.1M tons (+15.2% YoY) and record sugar production drove highest-ever sales volume and net revenue, despite challenging ethanol market conditions and lower ethanol prices.

• TRS production remained stable with higher own cane mix; corn operations ran at full capacity, with corn processing up 26.7% YoY and significant growth in DDGS and corn oil output.

• Net income reached R$1.48 billion (+45% YoY), supported by non-recurring Copersucar warrant recognition and tax incentives.

• The company benefited from significant tax incentives and favorable court rulings, reducing its tax burden and boosting reserves.

• Operational startup of the corn ethanol plant at Boa Vista and completion of the world's largest biomass fluidized-bed boiler improved energy efficiency and sustainability.

Financial highlights

• Net revenue in 4Q24 was R$2.42 billion (+33.4% YoY); 12M24 net revenue reached R$6.92 billion (+4.2% YoY), driven by higher sugar prices (+14.2%) and volumes (+21.4%), offset by lower ethanol prices (-29.1%).

• Adjusted EBITDA in 4Q24 was R$1.15 billion (+25.8% YoY, margin 47.6%); 12M24 Adjusted EBITDA was R$3.07 billion (-8.5% YoY, margin 44.4%).

• Net income for the period was R$1.48 billion (+45% YoY), with EPS at R$4.26.

• Net debt at Mar/24 was R$3.3 billion (-5.5% YoY); leverage at 1.08x Net Debt/Adjusted EBITDA.

• Gross profit was R$1.68 billion, with a gross margin of 24.3%.

Outlook and guidance

• 2024/25 guidance: sugarcane crushing of 22.4M tons (-2.9% YoY), sugar production of 1.56M tons (+5.9%), ethanol production of 1.1M m³ (-0.4%), and corn processing of 495K tons (+26.7%).

• Capex guidance for 2024/25 is R$2.5 billion, with focus on modernization, expansion, and biomethane projects.

• Sugar price hedging covers 88% of expected production at favorable levels; ~665K tons hedged at ~R$2,658/ton.

• Ongoing investments in biogas and irrigation projects are expected to enhance future capacity.

• Management highlights risks from geopolitical conflicts and climate change, which could affect costs and revenues.