This article first appeared on GuruFocus .
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Sugar Volume Growth:Increased by 32%.
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Ethanol Sales Volume Growth:Increased by 37%.
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EBITDA Growth:Increased by 41% compared to the last half year.
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EBITDA Margin:Approximately 49%.
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EBIT Margin:22%.
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Cash Income (Q4 '25/'26):BRL338 million.
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Corn Ethanol Production:521,000 tons.
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Corn Cost:BRL53 per bag, 7% lower than last year.
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Corn Ethanol EBITDA:BRL400 million, 76% increase.
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Corn Ethanol EBITDA Margin:36%.
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Sugar Cost:Approximately BRL1,750 per ton.
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Sugar Hedged Price:BRL2,100 per ton.
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Ethanol Margin:6.8%.
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CapEx Guidance:BRL2 billion, 1.3% increase.
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Maintenance CapEx:Includes crop treatment, planting, and off-season maintenance.
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Corn Purchase Volume (March):309,000 tons at BRL54 per bag.
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Expected Sugarcane Volume Growth:10.7%.
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TRS Production Growth:2.5%.
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Santa Elisa Acquisition Impact:Harvesting about 400,000 tons this year.
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Release Date: May 26, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Sao Martinho SA ( BSP:SMTO3 ) reported a significant increase in sugar and ethanol sales volumes, with sugar volumes up 32% and ethanol sales up 37% year-over-year.
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The company achieved a strong EBITDA growth of 41% compared to the previous year, with an EBITDA margin close to 49%.
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Corn ethanol production reached 521,000 tons, in line with guidance, and posted higher margins due to lower corn costs and improved efficiency.
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The company has a robust hedging strategy in place, protecting margins despite fluctuations in sugar and ethanol prices.
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Sao Martinho SA ( BSP:SMTO3 ) maintains a strong financial position with low debt levels, allowing it to navigate challenging market conditions effectively.
Negative Points
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The company experienced a significant drop in ethanol prices at the start of the crop year, which was unexpected and impacted margins.
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Sugar prices have been under pressure due to market expectations of increased production, leading to potential margin compression.
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The company anticipates a 5% reduction in corn processing volume due to the need for plant interconnection, impacting ethanol and DDG production.
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There is a risk of increased costs due to inflation in labor and fertilizers, with only 60% of fertilizer costs hedged at lower prices.
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The potential impact of El Nino could complicate the crop year, affecting sugarcane yield and TRS levels, which could impact production and profitability.
Q & A Highlights
Q: Can you provide an update on your sugar hedging strategy and the impact of ethanol prices on your operations? A: Felipe Vicchiato, CFO, explained that approximately 60% of their own cane is hedged, which is considered a safe level given current risks. The company is monitoring the market closely and will adjust the mix as needed. Regarding ethanol, they were surprised by the significant price drop at the start of the crop year but expect margins to stabilize soon.
Q: What are your plans for capital allocation, considering the current market conditions? A: Felipe Vicchiato stated that they concluded their buyback program and do not plan to initiate another due to market liquidity concerns. The focus will be on optimizing existing sugar and ethanol assets and investing in the corn ethanol plant in Goias.
Q: Can you elaborate on the BRL2 billion maintenance CapEx and its components? A: The CapEx includes 100% of the Santa Elisa acreage, which is now part of their sugarcane field. This amount is the new normal due to increased acreage and inflation. Diesel costs are minimal, while fertilizers account for BRL250 million to BRL350 million, with 60% already hedged.
Q: How do you anticipate El Nino affecting your operations and the global sugar market? A: Felipe Vicchiato mentioned that they are accelerating crushing to mitigate potential impacts of El Nino. They aim to complete crushing by November, with room to extend into December if needed. El Nino could affect TRS and sugar production, but global impacts on India and Thailand could support sugar prices.
Q: What is your outlook on ethanol exports given current global fuel prices? A: Sao Martinho is exploring export opportunities, especially for ethanol used in other applications. However, they must consider working capital implications due to tax credits. They expect a reduction in domestic ethanol supply by the end of the crop year due to exports.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
