Q1 2026 Sao Martinho SA Earnings Call (English, Portuguese) Transcript
Key Points
- Sao Martinho SA (BSP:SMTO3) reported a significant increase in cash income, growing from BRL46 million last year to BRL157 million.
- The company has seen a 22% and 17% increase in corn-based ethanol DGGS product volumes, indicating strong market acceptance.
- Sao Martinho SA has secured 90% of the corn volume needed for the crop year, which should help maintain stable margins.
- The company announced a major CapEx investment of 1.1 billion barrels for an industrial plant and warehouse, enhancing its production capabilities.
- Sao Martinho SA's new corn-based ethanol plant is expected to have a robust return, with a projected internal rate of return above 20%.
- The sugar segment experienced an 8% drop in pricing compared to the previous quarter, impacting overall results.
- Margins for sugar cane ethanol are negative by 2% due to increased costs.
- The company anticipates a shortfall in sugar production due to adverse climatic conditions, which could affect future revenues.
- Sao Martinho SA's unit cash cost for sugar cane production is expected to remain high, similar to last year, due to lower-than-expected productivity.
- The company faces challenges in the ethanol market, with current prices close to 63% of parity, indicating potential pressure on margins.
(spoken in foreign language)
But when you look at these two items and the cash income, you see that there was some growth going from BRL46 million last year to BRL157 millions. Here we have the product highlights. One important highlights, as I mentioned, was corn-based ethanol DGGS is also a product that was up 22% and 17%. In terms of volume sold last year, we were still gaining market share, and customers were testing the product, but today the product is well accepted across the board by all of our clients, and that's why pricing is better. And in the case of sugar, the the 8% drop, when compared to the previous quarter, is mainly attributed to the fact that last quarter. Hatch was above $0.20 and it was the best for in be all terms in our results. That's why the comparison now seems slightly worse.
Now next slide. Now here we talked to product margins, speaking about sugar cane. At the end, the margin was 14.4% for sugar cane. I mean,
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