After a billion-real-loss and debt surge, shares of sugar producer Raizen have hit a record low.
The shares of Brazilian sugarcane processing company Raizen fell to a new record low after the company reported a loss of 1.8 billion Brazilian reais ($333.12million) for the first three months of the 2025/26 harvest year.
Why it's important
Shell and Brazilian conglomerate Cosan control Raizen, the largest sugar producer in the world. The company faces high debt and operational challenges.
By the Numbers
Raizen's core profits fell 23.4% on an annual basis to 1.89 billion reais. This was below the 2.16 billion reais expected by LSEG analysts. The company's leverage ratio increased from 2.3 to 4.5, while its net debt rose by 55.8%.
What's Next?
Raizen is taking measures to reduce its debt, including divestitures. It has also shut down a major mill. On a conference call, the firm's CFO informed analysts that divestitures would continue and updates are likely to be provided in the next quarters.
Management said that due to weather problems, the company expects to crush sugarcane in 2025/26 at a level between 72 and 75 million tons.
MARKET REACTION
Raizen's share price plunged by up to 15%, reaching a new low. This is their worst ever day. The stock was the worst-performing on Brazil's Bovespa Index, which traded almost flat.
KEY QUOTES
BTG Pactual analysts weren't impressed, as Raizen's operational pre-view last month indicated lower profitability due to lower yields, higher unit costs and maintenance stops at an Argentine refining plant.
They added that "With a debt cost of 1.6 billion reals in the third quarter (6.2 billion annually), Raizen must accelerate the process of deleveraging." ($1 = 5.4034 Reais) (Reporting and editing by Gabriel Araujo, Richard Chang and Gabriel Araujo)
(source: Reuters)
