Raízen reports 14% revenue growth despite net loss amid sugar production slump
BRAZIL – Raízen SA, Brazil’s largest sugar and ethanol producer, has reported a 14 percent year-on-year increase in net revenue for the third quarter of its 2024/25 season, reaching BRL 66.9 billion (US$11.77B).
The company’s revenue surpassed analysts’ expectations of BRL 62.3 billion (US$10.96B).
However, Raízen posted a net loss of BRL 2.57 billion (US$450.5 million) for the quarter, a sharp contrast to the BRL 793 million profit recorded in the same period last year.
The company attributed the loss to a decline in sugar production caused by drought-affected cane fields and a BRL 618 million (US$108.7M) charge from trading operations involving futures contracts for sugar and ethanol.
The company’s net profit was also impacted by increased financial expenses and other non-recurring effects.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined 20.5% year-on-year to BRL 3.12 billion (US$548.86M), falling short of the BRL 3.42 billion projected by analysts in a LSEG poll.
For the first nine months of the season, Raízen reported total sales of BRL 197.5 billion (US$34.73B), compared to BRL 166.8 billion (US$29.34B) in the previous year.
However, the company recorded a net loss of BRL 1.72 billion (US$302.58M) during this period, compared to a net income of BRL 1.4 billion (US$246.28M) a year earlier.
Raízen’s net debt rose by 22.5 percent in the third quarter to BRL 38.59 billion (US$6.79M).
CEO Nelson Gomes acknowledged that the company’s recent expansion efforts and acquisitions had created a complex structure that now requires streamlining.
“We have already reduced the scope of our trading operations. Our core business is now sugar, ethanol, and the sourcing of our derivatives,” Gomes said during a conference call.
He emphasized that these changes are intended to reduce debt and prepare the company for its next growth cycle, which will begin with the new harvest in April.
Raízen CFO Bergman stated that the company is reviewing its asset portfolio to ensure that any sales are conducted at appropriate valuations. To curb cash burn, the company has decided not to launch new projects, a move that will significantly reduce capital expenditures.
“The only ongoing projects are the construction of two second-generation ethanol plants and the second phase of the refinery in Argentina,” Bergman said.
Raízen’s estimated capital expenditure for the 2025/26 harvest year, beginning in April, is BRL 1.6 billion (US$281.48M).
Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.
