Sao Martinho: FY4Q26: stronger finish; better crop ahead, but pricing headwinds persist - Neutral

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Sao Martinho: FY4Q26: stronger finish; better crop ahead, but pricing headwinds persist - Neutral

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Sao Martinho

FY4Q26: stronger finish; better crop ahead,

but pricing headwinds persist - Neutral

Reiterate Rating: NEUTRAL | PO: 18.50 BRL | Price: 17.31 BRL

Stronger FY4Q driven by higher ethanol prices, better mg. 26 May 2026

Sao Martinho reported stronger-than-expected FY4Q26 results, with adj. EBITDA of Equity

R$1.1bn, 12% above our estimate, and a 48.8% margin (vs. 44% forecast). Full-year

EBITDA reached R$3.5bn, up 6.8% YoY, with margin down 80bps, as improving cane and

Key Changescorn ethanol margins were offset by flat cane crushing volumes, lower TRS, and weaker

sugar prices. Net Income was R$173mn in 4Q and R$836mn for FY2026 (vs. R$556mn (BRL) Previous Current

in FY2025). Free cash flow was roughly breakeven, reflecting elevated capex of R$2.8bn, Price Obj. 19.00 18.50

driven by M&A and the corn ethanol plant expansion. Reiterate Neutral. 2027E DPS 0.78 0.60

Better ethanol margins offset by declining sugar prices Isabella Simonato >>

Research Analyst

Sugar sales rose 6% YoY in FY26 to 1.4mn tons, driven by a higher sugar mix and easy Merrill Lynch (Brazil)

comp in FY25 (wildfires). However, realized prices fell 7% to R$2,290/ton, with FY27 +55 11 2188 4243 isabella.simonato@bofa.com

hedges below R$2,100/ton, leaving Adj. operating margin flat YoY. Ethanol volumes were

Julia Zaniolo >>

flat YoY, as growth in corn ethanol offset weaker cane ethanol output. Realized prices Research Analyst

increased 7% YoY, supported by a back-loaded sales strategy, with FY4Q prices +4% YoY Merrill Lynch (Brazil) +55 11 2188 4367

and 10% above FY9M averages. As a result, Adj. operating margin went up by 4 p.p. YoY. julia.zaniolo@bofa.com

Fernando Olvera >>