São Martinho Reports 51.7% Profit Drop in Q1 2024/25

São Martinho (SMTO3), a prominent Brazilian sugar and ethanol producer, reported a significant decline in its financial performance for the first quarter of the 2024–2025 harvest year.

The company’s net profit decreased by 51.7%, amounting to R$106.32 million ($19.33 million). The downturn was due to non-cash effects from mark-to-market debt swaps and changes in the fair value of biological assets, according to the company.

Despite the drop in net profit, São Martinho‘s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 20.7% compared to the same period in 2023.

The EBITDA reached R$ 672.34 million ($122.24 million). The adjusted EBITDA margin stood at 40.6%.

The company’s financial results were influenced by several factors:

Revenue Growth:

São Martinho’s net revenue for the first quarter of 2025 reached R$ 1.655 billion ($300.91 million). This represents a 22.3% increase compared to the first quarter of 2024.

Better performance in the sugar segment primarily drove this growth. Prices rose by 13.0%, and quantities increased by 5.5%.

However, this was partially offset by a 17.5% decrease in ethanol prices. This occurred despite a 57.9% increase in the volume of biofuel sold.

Cost Management:

General and administrative expenses totaled R$ 97.4 million ($17.71 million) in the first quarter of 2025. This represents a 2.0% increase compared to the same period in 2024.

These variations mainly reflect the recognition of expenses related to labor, services, and fees during the period.

Leverage:

The company’s leverage ratio, measured as net debt over adjusted EBITDA, was 1.27 times at the end of the first quarter of 2025.

São Martinho attributed its quarterly performance to higher sugar prices and increased sales volume, measured in total recoverable sugar (ATR). This was partially offset by lower ethanol prices.

In short, the company continues to navigate the challenges posed by fluctuating commodity prices and market conditions.

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