By Brazil Stock Guide – Raízen (B3: RAIZ4) said it is entering a more aggressive phase of deleveraging after a quarter marked by stronger fuel margins, weaker agricultural yields and a smaller industrial footprint. Executives stressed that reducing debt remains the company’s top priority, combining asset sales, CAPEX cuts and structural cost discipline, while controlling shareholders Shell and Cosan evaluate alternatives to strengthen the capital structure.
Fuel distribution in Brazil continued to anchor the quarter. Diesel, lubricants and premium gasoline supported margin gains, helped by a crackdown on illegal fuel practices that restored more rational pricing. However, the sugar, ethanol and bioenergy division posted weaker results due to lower agricultural productivity, reduced dilution of fixed costs and the absence of last year’s non-recurring tax credits. The company reiterated that its guidance of 72–75 million tonnes of cane already factors in plant closures and hibernation.
“From our perspective, these assets couldn’t generate operating cash to pay for their own recurring CAPEX,” CFO Rafael Bergman said, explaining why Raízen sold or hibernated six plants in the past year. He said the EBITDA impact of divestments should be neutral this season, while roughly R$5 billion (US$880 million) in proceeds directly support debt reduction.
A Leaner Industrial Base Supports the Deleveraging Push
Raízen now operates 24 plants, down from 30 last year, after selling or hibernating units that did not meet internal cash-generation thresholds. The cane originally allocated to Santa Elisa was sold to third parties after the mid-season shutdown. Executives said cost dilution should improve once agricultural productivity recovers in 2026. The mix of proprietary cane will remain between 52% and 54% of the total supply.
CEO Nelson Gomes said the enforcement actions against “hidden carbon” schemes restored fairness to Brazil’s fuel market and should help Raízen recover volumes lost to irregular operators. He added that internal levers — including lower freight expenses, more efficient supply and stronger penetration of Shell V-Power fuels — should support margins into early 2026.
Capital Structure Moves to the Center of the Story
Analysts pressed the company on leverage, which could rise again next season if the sugar-ethanol cycle tightens. Gomes said Shell and Cosan are reviewing alternatives to reinforce Raízen’s capital structure but noted that the discussions occur at the shareholder level. He emphasized that management continues to focus on operational self-help: cost cuts, productivity gains and divestments to reduce net debt over time.
Working capital efficiency also supports deleveraging. Raízen replaced short-term supplier financing and customer advances with longer-term debt, reducing refinancing risk and stabilizing liquidity. Cash totaled more than R$18 billion (US$3.2 billion) at the end of September, and the company secured a US$1 billion revolving credit facility with a five-year term to buffer harvest-cycle volatility.
CAPEX Cuts Become Structural as Projects Wind Down
Executives said 2025–26 CAPEX will approach the lower end of the R$9–9.8 billion (US$1.6–1.7 billion) range after the reprioritization announced in May. Investments now focus on agro-industrial efficiency, safety, E2G expansion and upgrades at the Buenos Aires refinery. Bergman said CAPEX should decline again in 2026 as projects conclude, aided by roughly R$1 billion (US$175 million) in avoided CAPEX from divested assets.
Raízen also narrowed the scope of its trading unit. The company will continue selling its own sugar and ethanol and sourcing diesel, gasoline and ethanol for the Shell network and B2B clients, but it is exiting non-core trading activities that carried higher cost and complexity.
Fuel Distribution Remains the Strongest Engine in a High-Leverage Environment
Fuel distribution is now Raízen’s most resilient segment. Volume growth in diesel and lubricants, combined with premium-fuel mix gains, lifted margins. Executives said the regulatory crackdown will continue to reduce distortions that previously penalized formal distributors, while internal optimization should reinforce performance next year.
EAB remains the weak link, with agricultural fields still recovering from last year’s droughts and fires. The company expects productivity to improve gradually in 2026 as replanted areas mature and rainfall normalizes, but it avoided forecasting a record harvest.
Management Transition but Strategy Remains Intact
Gomes confirmed that CFO Rafael Bergman will move to Cosan as part of a broader succession plan triggered by changes at the parent company. Lorival Luz will assume the CFO role at Raízen in December. Gomes praised Bergman for strengthening liquidity and building a robust finance team, saying the transition preserves continuity in Raízen’s debt-reduction and efficiency strategy.