JPM-Sao Martinho FY 1Q26 Conf Call Highlights；More Details on the New Com Ethanol Unit-20250812

Sao Martinho just hosted its conference call – please find the highlights below:

•Center South Harvest Outlook: 39mtons of Sugar Seem Fairer. Thecompany believes that sugar production should hover around 39mtons in theregion this season, though it was noted that the market is still working withsomething closer to 41mtons as consensus. Mgmt believes that by mid-September/October, this tighter supply should materialize and serve as acatalyst for sugar prices, though there has already been news of some millsperforming a ‘wash-out’ of contracts due to lower cane quality.

•More Details on the Santa Elisa Asset Purchase:‘Very Confident.’ Thecompany is highly confident in its ability to extract value from the assets, withmgmt noting that it had already considered buying the full mill a couple of yearsago, and that it is very familiar with the asset. 800 ktons should be quiteachievable within two seasons according to mgmt, potentially allowing SaoMartinho to reach 25 mtons of crushing by then. It was noted that avg age ofthe plantation is within SMTO’s standards, but there are 2k hectares that willhave to be re-planted (thus explaining the 600 to 800 ktons ramp-up).

•The company is seeing a shift in Bz CS towards more ethanol production,due to lower sugar prices and higher freight costs. São Martinho's mix strategyremains undisclosed but will focus on profitability. In this context, SãoMartinho's initial estimates of a reduction in cash production costs forsugarcane relative to the previous year have been adjusted. Due to lower-than-expected productivity in the company’s own sugarcane fields, it will likely beunable to absorb inflation as planned, with mgmt now forecasting flattish y/ycash costs for SMTO.