By Brazil Stock Guide – Raízen (B3: RAIZ4) narrowed its net loss in the first quarter of the 2026/27 crop year, supported by a sharp improvement in fuel distribution and a return to positive cash generation. Higher borrowing costs and accounting effects related to the sale of its Argentine operations, however, kept the Brazilian energy and sugar group deeply in the red.
The company posted a net loss of R$1.64 billion for the April-to-June period, 11% narrower than the R$1.84 billion loss reported a year earlier.
Net revenue rose 4% to R$51.46 billion, while adjusted EBITDA jumped 126.3% to R$3.85 billion. Gross profit more than doubled to R$3.71 billion.
The improvement was more pronounced in continuing operations, where the net loss narrowed 55.3% to R$798 million. Discontinued operations in Argentina contributed a loss of R$844 million, including the business’s operating result and accounting effects related to its planned sale, such as a goodwill write-off, transaction costs, foreign-exchange movements and tax impacts.
Fuel distribution carries the quarter
Fuel distribution in Brazil accounted for approximately 92% of Raízen’s consolidated adjusted EBITDA.
Adjusted EBITDA from the segment surged 269% to R$3.54 billion, from R$959 million a year earlier. Adjusted EBITDA per cubic meter climbed to R$493, compared with R$142 a year ago and R$240 in the previous quarter.
Sales volumes increased 6.6% to 7.18 million cubic meters, driven by gasoline, ethanol and diesel. Segment revenue rose 16.1% to R$44.71 billion.
Raízen attributed the performance to higher volumes, an expanded customer base, improved fixed-cost absorption and gains in commercial, logistics and procurement management during a period of volatile oil prices.
Recurring selling, general and administrative expenses fell 2.3% to R$798 million despite the increase in volumes. According to the company, efficiency measures generated savings equivalent to R$10 per cubic meter, or R$72 million during the quarter.
The scale and speed of the margin expansion make the sustainability of fuel-distribution profitability one of the main issues for investors to monitor in the coming quarters.
Sugar and ethanol remain under pressure
Raízen’s Sugar, Ethanol and Bioenergy division delivered a much weaker performance. Adjusted EBITDA fell 63.1% to R$301 million, while revenue declined 33.3% to R$8.18 billion.
The segment posted a gross loss of R$243 million, compared with a gross profit of R$211 million a year earlier.
Realized sugar prices fell 22.3%, while Raízen’s own sugar sales volumes declined 10.8%. Ethanol volumes increased 24.1%, but average prices dropped 12.2%.
Sugarcane crushing decreased 2% to 19.7 million metric tons as heavier rainfall disrupted harvesting operations. Sugar production fell 13.6%, while ethanol production rose 9.4%, reflecting a shift in the production mix to 46% sugar and 54% ethanol.
Raízen said weaker prices and volumes reduced the division’s EBITDA by a combined R$726 million. That impact was partially offset by R$286 million in efficiency gains and lower costs.
Cash production costs per ton of sugar equivalent fell 18.4%. Excluding the impact of Consecana, the Brazilian pricing mechanism used for sugarcane purchases, costs declined 8.7%.
Cash flow improves, but the comparison is distorted
In its management cash-flow presentation excluding the discontinued Argentine operations, Raízen generated R$3.56 billion in operating cash flow, reversing an outflow of R$10.94 billion a year earlier.
Free cash flow to equity reached a positive R$1.17 billion, compared with a R$6.79 billion outflow in the first quarter of the previous crop year.
The year-on-year comparison, however, benefited from an unusually weak base. Financial working-capital initiatives consumed R$8.87 billion in the prior-year quarter, compared with only R$260 million in the latest period.
Receivables and inventory management helped release cash. Suppliers, by contrast, consumed R$1.14 billion. Raízen acknowledged that the deterioration in its credit profile had put unusual pressure on payment terms offered by some suppliers.
Reported investments fell 32.6% to R$1.05 billion, reflecting tighter capital allocation and lower spending on expansion projects. Raízen’s second-generation ethanol plants at Vale do Rosário and Gasa were approximately 98% and 65% complete, respectively.
Finance costs continue to absorb earnings
Raízen recorded net finance costs of R$2.97 billion, a 42.4% deterioration from the previous year. The cost of gross debt alone increased 56.4% to R$3.16 billion.
Gross debt, including derivatives, stood at R$70.86 billion at the end of June, up 9.1% year on year. Net debt reached R$56.87 billion, an increase of 15.5% from a year earlier, although it declined 2.3% from the previous quarter.
Net leverage improved to 4.8 times adjusted EBITDA, from 5.2 times in March, but remained above the 4.5 times reported a year earlier.
The sequential decline in net debt was largely helped by the reclassification of approximately R$2.2 billion in Argentine liabilities as held for sale. It therefore does not yet reflect any cash proceeds from the transaction.
Consolidated shareholders’ equity remained negative, with the deficit widening to R$10.60 billion from R$8.28 billion in March.
Debt restructuring has yet to flow through the accounts
Raízen’s Brazilian recuperação extrajudicial — a court-ratified out-of-court debt restructuring process — was approved on July 30, after the end of the reporting period. As a result, the plan had no impact on the June financial statements.
Under the 180-day standstill that began in March, payment obligations for principal, interest and other charges on covered debt were suspended. Raízen continued to accrue interest in its accounts without making the corresponding cash payments.
Finance costs were also affected by the accelerated recognition of debt-issuance expenses and fair-value adjustments related to obligations covered by the restructuring plan.
Raízen has agreed to sell its Argentine fuel-distribution operations to Mercuria Energy Group for an estimated US$1.42 billion, including the assumption of the unit’s debt by the buyer. The deal remains subject to customary adjustments and closing conditions.
The company has also agreed to sell the Caarapó sugar and ethanol mill as part of its broader effort to simplify the portfolio and concentrate capital on its core operations.
The quarter marks a meaningful change in the direction of operating performance and cash flow, but it does not yet resolve Raízen’s capital-structure challenge. A sustained recovery will depend on the company proving that fuel-distribution margins are durable, stabilizing its sugar and ethanol business and converting asset sales and the restructuring plan into an effective reduction in debt.
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