Jalles Machado (JALL3) Q2 2025 earnings summary

Executive summary

• Sugar mill in Santa Vitória began operations, increasing sugar's share in the product mix and improving productivity year-over-year, despite weather-related challenges impacting yields and quality, especially in Minas Gerais.

• Q2 2024/25 harvest saw increases in grinding (+3.9%), harvested area (+1.7%), and TCH per unit (+2.1%) compared to Q2 2023/24.

• Net income reached R$33.8 million in 2Q25, reversing a R$47.6 million loss in 2Q24, driven by higher sugar sales and improved operational efficiency.

• Market conditions for sugar remain favorable due to global supply deficits and high prices, with Brazil maintaining a dominant position in the global sugar trade.

• Ethanol production and sales benefited from strong domestic demand and favorable price parity at pumps, with inventory levels remaining high.

Financial highlights

• Adjusted EBIT rose 10.5% year-over-year to R$130.2 million in Q2 2024/25, with margin at 24.0%; first half EBIT margin was 20.9% with R$197 million.

• Adjusted EBITDA increased 5.0% to R$320.9 million, but margin fell 6.5p.p. to 59.1%.

• Net debt stood at R$1,796 million, with a net debt/EBITDA ratio of 1.2x and an average debt term of 5.1 years.

• Production costs per ton of sugar equivalent dropped 10.9% year-over-year; in cents per pound, costs fell 18.7% to $0.115/lb.

• Net revenue for 2Q25 was R$542.7 million, up 16.5% year-over-year.

Outlook and guidance

• Sugar prices are expected to remain above historical averages due to tight inventories and global supply constraints.

• CapEx will decrease significantly in 2025/26 as major expansion projects conclude; focus will shift to optimizing existing assets and potentially expanding planted area.

• Management expects robust results in coming quarters from increased ethanol sales and higher sugar prices.

• Guidance for sugar mix will be lower than initially planned due to delays and quality issues, but crushing volumes remain in line with expectations, albeit with a slight downward trend.

• Potential investments in corn ethanol and biomethane are under evaluation, with any new projects likely to begin only from 2027 onward.