November 11, 2016 [OPIS] - Raizen Energia, the joint venture between Shell and Brazil's Cosan that focuses on sugar and ethanol production, recorded adjusted EBITDA of 790.7 million reals in the third quarter of 2016, representing a 5.5% drop versus the same period last year, Cosan reported Wednesday.
Despite better average prices for sugar and ethanol, adjusted EBITDA dropped because of a lower sugar sales volume.
Q3 16 represented the second quarter of the 2016/2017 sugarcane crop year in Brazil’s South Central region. Raizen Energia’s cane crush in the quarter totaled 25.7 million tons, representing a 6% increase versus Q3 15.
The higher crush volume reflects drier weather versus Q3 15, which facilitated harvest activities but adversely affected agricultural productivity, which dropped by 13.4% year on year to 78.4 tons of sugarcane per hectare in Q3 16.
The Total Recoverable Sugars (TRS) index in Q3 16 was 135.5 kilograms per ton of sugarcane processed, down slightly from 136.4 kg/ton in the same period last year.
Raizen Energia continued to focus on maximizing sugar production, which represented 59% of the sugar/ethanol production mix in Q3 16.
Cosan broke down Raizen Energia’s Q3 16 net revenue into three areas: sugar, ethanol and cogeneration.
Sugar: Net revenue in Q3 16 amounted to R$1.44 billion, a year-on-year drop of 1.0%. The average sugar price in the quarter was R$1,227/ton, representing a year-on-year increase of 15.3%. However, the sugar sales volume dropped from 1.369 million tons in Q3 15 to 1.176 million tons in Q3 16, a drop of 14.1%.
Ethanol: Net revenue in Q3 16 was R$1.40 billion, up 24.1% year on year. The sales volume was up 11.7% to 847,000 cubic meters and was supported by an increase in export opportunities, with 471,000 cbm of ethanol going for export compared to 344,000 cbm in Q3 15. The average ethanol price in the quarter was R$1,654/cbm, up 11.0% versus Q3 15 (R$1,490/cbm).
Cogeneration: Net revenue in Q3 16 amounted to R$206.6 million, up 1.8% versus the same period last year. The greater availability of biomass supported the growth in sales volume, which reached 1,089 MWh (up 5.7%). However, the average sales price in the quarter was R$190/MWh, or 3.6% lower than in Q3 15, reflecting lower spot prices.
Looking at where inventories stood at the end of Q3 16, sugar inventories were down by 1.1% year on year to 1.383 million tons, and ethanol inventories were down by 8.7% to 841,000 cbm.
