SMTO3

São Martinho S.A., traded on B3 under the ticker SMTO3, is one of the leading companies in Brazil’s sugar-energy sector, with a century-long track record tied to the Ometto family and the countryside of the state of São Paulo. Its origins date back to 1914, with the first sugarcane mill at Sítio Olaria, evolving over the following decades with expansion into sugar and alcohol production. Key milestones include the acquisition of the Iracema Unit in 1937, the development of sugar production in 1946, and the incorporation of the São Martinho Unit in Pradópolis (SP) in 1949, which would become one of the largest sugarcane processing plants in the world. From the 2000s onwards, the company went through a process of management unification and professionalization, culminating in its IPO on B3 in 2007 and in an expansion cycle that included the inauguration of the Boa Vista Unit in Goiás in 2008 and the acquisition of control of the Santa Cruz Unit in 2014. This history combines organic growth, investments in agricultural and industrial technology, and consolidation moves in the sector.

São Martinho’s business model is integrated around sugarcane and, more recently, corn, covering the production and commercialization of sugar, ethanol, electricity and agro-industrial byproducts. According to its corporate purpose, the company operates in sugarcane industrialization, manufacturing and trading of sugar and alcohol and their derivatives, cogeneration of electricity, agricultural and livestock activities, as well as the import and export of goods and raw materials. It also participates in the manufacturing and commercialization of chemical and organic products, additives and supplements for animal nutrition, and may hold equity interests in other businesses. In the 2024/25 crop year, the company reported net revenue of R$ 7.2 billion, with a very balanced contribution between ethanol and sugar, each accounting for 45% of revenue, while electricity accounted for 3% and other products for 6%, showing a portfolio concentrated in biofuels and sugar, with ancillary revenues from energy and derivatives.

Operationally, São Martinho structures its activities around four plants: São Martinho (Pradópolis/SP), Iracema (Iracemápolis/SP), Santa Cruz (Américo Brasiliense/SP) and Boa Vista (Quirinópolis/GO). The São Martinho, Iracema and Santa Cruz units are flexible, able to direct production to either sugar or ethanol, while the Boa Vista Plant is dedicated to ethanol and cogeneration. The company has installed capacity to process 24.5 million tons of sugarcane per crop year, distributed among the units, and cogeneration capacity of approximately 1.1 TWh of energy per crop year from sugarcane bagasse. In the 2024/25 crop year, around 22 million tons of sugarcane were processed, resulting in production of 1.329 million tons of sugar and 1.221 million m³ of ethanol, of which just over 1 million m³ came from sugarcane and around 213 thousand m³ from corn processing. The company also reached a mechanized harvesting rate close to 100% and managed an agricultural area of approximately 350 thousand hectares, combining owned land and areas belonging to agricultural partners.

São Martinho’s product portfolio is composed mainly of VHP (Very High Polarization) sugar, a standard widely used in the international market, and ethanol in different specifications. In sugar, the company focuses on producing raw sugar for export and the domestic market, with VHP as its main benchmark. In ethanol, it produces hydrous ethanol, intended for direct use in flex-fuel vehicles, anhydrous ethanol, used as a gasoline additive, and industrial ethanol, consumed by paints, cosmetics and alcoholic beverage industries. From the 2023/24 crop year onwards, it began producing corn ethanol at a plant attached to the Boa Vista Unit, adding ethanol, DDGS (a high-digestibility protein byproduct for animal feed) and corn oil to its portfolio. Among the sugarcane chain byproducts, the company highlights yeast for animal feed, fusel oil and bagasse used for steam and electricity generation, with surplus power sold mainly to orange juice producers. The company also maintains a real estate business arm with occasional development projects in municipalities where it operates, although this activity represents a marginal share of total revenue.

São Martinho’s markets combine a strong domestic presence with significant exposure to international commodity trade. In the 2024/25 crop year, revenue was split between the domestic market, at around R$ 3.86 billion, and the foreign market, at approximately R$ 3.3 billion. In Brazil, sales are concentrated in sugar, ethanol and electricity, as well as yeast, DDGS, CBIOs (Decarbonization Credits) and other derivatives. In the foreign market, sugar is the main product, followed by ethanol, with customers in countries such as Singapore, France, Switzerland, Japan, the United States and the United Kingdom. The company relies primarily on the rail network to ship sugar, enhancing its logistical competitiveness in exports, while ethanol is sold to distributors that, for the most part, pick up the product directly at the plants located in the country’s main sugar-energy hubs. As of March 31, 2025, the company had two customers that each accounted for more than 10% of its net revenue, totaling 42% of revenue, concentrated in the sugar and ethanol segments, underscoring the importance of large trading companies and distributors in its client base.

São Martinho’s production base is strongly integrated with agricultural activity, focusing on land partnership and lease agreements, as well as owned areas for sugarcane cultivation. These contracts generally last for the duration of a sugarcane cycle and are automatically renewable, with partner remuneration based on the TRS (total recoverable sugars, ATR in Portuguese) content of the cane under the Consecana system, which reflects average prices calculated by CEPEA/ESALQ. The company has invested in mechanization for decades and was a pioneer in developing planting and harvesting equipment, resulting in virtually fully mechanized harvesting of raw cane, without burning, with positive impacts on productivity, costs and emissions reduction. The agricultural cycle combines different sugarcane varieties and planting periods throughout the year, with the sugarcane fields having an average useful life of around seven years and annual renewal of a portion of the planted area. This integration between agricultural technology, soil and water management and industrial processes is a key element in achieving high yields and ensuring a stable supply of raw material for the mills.

From a regulatory standpoint, São Martinho’s activities involve extensive interaction with municipal, state and federal agencies, covering areas such as environment, energy, water resources, biofuels, sanitary surveillance and agriculture. The company depends on licenses and authorizations from entities such as CETESB, DAEE, SEMAD, SEMIL, IBAMA, ANA, ANEEL, ANP, MAPA and ANVISA, among others, and must also comply with labor, tax, antitrust, securities and specific regulations for electricity and biofuel production. All operating units hold valid licenses, and rural areas comply with the requirements of the Forest Code and the Rural Environmental Registry. São Martinho also participates in sector public policies such as RenovaBio, issuing and trading CBIOs linked to the production of lower-carbon-intensity biofuels, and maintains institutional relations with government bodies based on transparency and regulatory compliance.

On environmental, social and governance fronts, São Martinho adopts a series of practices and certifications that reflect the integration of these topics into its business model. All four mills hold ISO 14001 and Bonsucro certifications, ensuring global standards for environmental management and sustainability specific to the sugar-energy sector, from sugarcane cultivation through to sugar and ethanol production. The São Martinho and Santa Cruz units also hold ISCC EU and ISCC CORSIA certifications, which enable the company to supply biofuels to demanding markets, including the sustainable aviation fuel segment. The company is a signatory to the Agro-Environmental Protocol in the state of São Paulo, promotes the rational use of water resources, waste management, preservation of fauna and flora, and environmental education projects such as “Viva a Natureza” and the Sustainability Education Centers, which have already received tens of thousands of visitors. On the social side, it stands out for a high level of compliance with legal quotas for people with disabilities and apprentices, as well as adherence to the UN Global Compact and the Women’s Empowerment Principles, in addition to adopting a Code of Ethics that sets conduct guidelines for employees, suppliers, customers and other stakeholders. These elements, together with its history of agricultural and industrial innovation, help define São Martinho’s profile as a large-scale sugar-energy company with a relevant presence in the capital markets through its SMTO3 shares on B3.