Brazil’s largest sugar and ethanol maker Raizen looks at asset sales
Raizen SA, Brazil’s largest sugar and ethanol producer, is considering asset sales and pausing new plant plans to reduce debt amid rising borrowing costs. The company is revising its portfolio and focusing on its core businesses of sugar, ethanol, and fuel distribution in Brazil and Argentina. Raizen also scaled back trading operations and suspended new projects, citing challenges like drought and losses from trading futures contracts.
Raizen SA, Brazil’s largest sugar and ethanol producer, is exploring the possibility of asset sales and pausing plans for new plants as part of an effort to reduce its debt, following a surge in borrowing costs in the country. The company, a joint venture between Brazilian conglomerate Cosan SA and Shell Plc, is undergoing a “profound” revision of its portfolio, according to CEO Nelson Gomes during an earnings call on Monday, reported Bloomberg.
“The rapid increase in interest rates has brought us a considerable sense of urgency right now, so that we can take all necessary actions to bring the company back to a stable and balanced position,” Gomes stated. The CEO did not specify which assets might be sold but emphasized that the company would continue to focus on its core businesses of sugar, ethanol, and fuel distribution in Brazil and Argentina. Additionally, Raizen is scaling back its trading operations, Gomes mentioned.
CFO Rafael Bergman stated that the company will proceed with only two second-generation ethanol plants currently under construction, halting the expansion of previously planned new projects. The company’s sugar production dropped after some of its cane fields were impacted by drought, and also booked a 618 million-real charge from “certain trading operations” involving futures contracts for sugar and ethanol.
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Source : Chinimandi
