São Martinho (SMTO3) Q4 2024 earnings summary

Executive summary

• Achieved record sugarcane crushing of 23.1M tons (+15.2% YoY) and record sugar production, driving 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, and corn operations ran at full capacity; corn processing increased 26.7% YoY, with significant growth in DDGS and corn oil production.

• 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.

• Net income reached R$1,476.3M in 12M24 (+45.3% YoY), supported by non-recurring Copersucar warrant recognition.

• Drier and hotter weather led to lower yields in some areas, but higher own-cane share improved cost dilution.

Financial highlights

• Net revenue in 4Q24 was R$2,423.0M (+33.4% YoY); 12M24 net revenue reached R$6,922.3M (+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$1,154.1M (+25.8% YoY, margin 47.6%); 12M24 Adjusted EBITDA was R$3,070.2M (-8.5% YoY, margin 44.4%).

• Net income for the period was R$1,476.3M in 12M24, with adjusted net income excluding non-recurring effects at around R$150M.

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

• Sugar margin increased by 7.7 p.p. to 9.8%, while ethanol margins were flat or negative due to low prices.

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$2.5B, with increased 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.

• Expectation of improved corn-based ethanol EBITDA due to 25% lower corn costs and full plant utilization.

• Ethanol demand is recovering, with expectations to reach 70% parity by September.