The company’s financial results released on November 14 highlight a challenging operational environment, marked by weaker volumes in sugar and ethanol sales, pressure on margins especially in Argentina, and elevated debt costs exacerbated by rising interest rates. Raízen’s adjusted EBITDA declined 12.8% year-over-year to R$3.3 billion, falling short of internal goals and Bloomberg consensus estimates, which had projected R$3.92 billion. Meanwhile, net revenue dropped 17.8% to R$59.9 billion, reflecting reduced sales volume and pricing pressure.
The operating performance was hit particularly hard by lower volumes in the Ethanol, Sugar and Bioenergy (EAB) segment, which suffered from ongoing productivity issues in the agricultural base. Raízen cited the lingering effects of drought and wildfires from the previous crop cycle, which impaired cane productivity and increased fixed costs per unit of output. Although the total cane crushed remained roughly stable at approximately 58.5 million tons for the first half of the season, unfavorable weather conditions delayed the start of harvesting and pressured margins.
In response to market volatility, Raízen emphasized its strategy of prioritizing sugar over ethanol within its product mix to capture upside from favorable sugar price hedges. The company has already fixed prices for nearly half of the upcoming 2026/27 sugar crop at competitive levels, seeking to shield future revenues from price fluctuations. Ethanol sales saw some relief through a near 11% rise in average selling price despite reduced volumes, bolstered in part by growth in second-generation ethanol production, where volumes more than doubled thanks to operational ramp-up at newer facilities.
Geographically, Raízen’s fuel distribution segment presented divergent results. While the Brazilian market showed volume growth and margin improvements—supported by a crackdown on illegal fuel sales and expansion of premium product lines—the Argentine operations suffered from currency devaluation and high inflation, which compressed margins and complicated pricing strategies despite increased volumes.
Financially, the company’s net debt has surged, reaching R$53.4 billion by the end of the quarter, with net debt to adjusted EBITDA leverage rising to 5.1 times, up from 2.6 times a year earlier. Raízen has been actively reshaping its capital structure by replacing short-term working capital instruments with longer-term, more cost-efficient debt, and advancing asset sales valued at around R$5 billion, with roughly R$1 billion already received. These moves aim to improve liquidity and reduce refinancing risks amid a challenging macroeconomic backdrop. Capital expenditures were cut by nearly 30% in the quarter as part of the company’s disciplined investment approach focused on maintaining operational safety and boosting productivity.
Market reaction was swift, with Raízen shares dropping approximately 5.7% shortly after the earnings release, reflecting investor apprehension over the company’s elevated leverage and profitability pressures. Nonetheless, some analysts view the restructuring and deleveraging efforts positively, noting that despite operational headwinds, Raízen continues to exhibit solid cost control and efficiency gains, particularly in Brazil’s fuel distribution business.
Leadership changes accompany these financial developments. Notably, Lorival Luz, formerly finance executive at BRF, is set to assume the role of Raízen’s Chief Financial Officer starting December 1, replacing Rafael Bergman, who will transition to a financial role at controlling shareholder Cosan. These executive shifts underline the broader strategic transformation underway within the company.
As Raízen navigates persistent agricultural and market volatility, alongside a complex debt profile, its efforts to simplify the business portfolio, optimize costs, and strengthen the financial foundation will be critical to restoring profitability and investor confidence in the coming cycles.
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This article was curated and published as part of our South American energy market coverage.
