Razen, the worlds largest sugarcane processor, co-owned by Cosan and Shell, faces one of its toughest years yet.
The companys operational preview for the fourth quarter of the 2024/25 harvest was released on April 24, 2025.It shows a sharp decline in sugarcane crushing, production, and sales.
The figures reveal the real story: operational setbacks, mounting financial pressure, and a strategic shift in Brazils bioenergy landscape.Razens sugarcane crushing for the 2024/25 harvest reached just 77.5 million tonnes, falling 6% short of even its most pessimistic estimates.
Drought and widespread fires hit 7% of the crop, cutting both volume and quality.This led to a 27% year-on-year drop in crushing during the third quarter and a 30% fall in the fourth quarter compared to the previous year.
The companys sugar sales for the fourth quarter dropped nearly 50% year-on-year, while ethanol sales also declined.Second-generation ethanol (E2G) production, a key innovation for Razen, fell 15.74% in the same period.
These declines came at a time when cash flow was critical, with high interest rates squeezing the companys finances.Razen Faces Heavy Losses and Strategic Shifts Amid Brazils Bioenergy Downturn.
(Photo Internet reproduction)Razen posted a net loss of R$2.57 billion ($428M) in the third quarter of the 2024/25 season, reversing a R$793 million ($132M) profit from the previous year.
Adjusted EBITDA fell 20.5% to R$3.12 billion ($520M), missing expectations.Razens Financial CrossroadsDespite a 14% rise in net revenue to R$66.87 billion ($11.145B), higher costs and surging administrative expenses eroded profitability.
The companys leverage ratio jumped to 3 times EBITDA, up from 1.9 times a year earlier, signaling growing debt pressure.Razens market capitalization dropped by R$18.7 billion ($3.117B), nearly 48%, over the past year.
The companys net debt reached R$35.9 billion ($5.983B), or 2.6 times its adjusted EBITDA.These numbers reflect the companys struggle to balance ambitious expansion with financial sustainability.
Facing these challenges, Razen has begun selling non-core assets and is considering selling stakes in its second-generation ethanol plants.The company aims to raise capital and reduce debt, consolidating E2G assets into a new business unit and seeking joint venture partners.
Razens E2G technology, which uses sugarcane residue, increases ethanol production efficiency by 50%.The company recently opened the worlds largest E2G plant at Bonfim, with an annual capacity of 82 million liters, 80% of which is already contracted.Despite these innovations, the companys decision to withdraw financial guidance for the current harvest season has added uncertainty.
This move has pushed shares to record lows.Razens story is one of a market leader forced to adapt quickly, caught between operational adversity, financial strain, and the need for strategic realignment.
The companys next moves will define its future in Brazils volatile bioenergy sector.