SMTO3 São Martinho

São Martinho S.A., traded on B3 under ticker SMTO3, is one of the leading companies in the Brazilian sugar-energy sector, with a century-long trajectory 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 processors 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 a cycle of expansion 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 trajectory 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 sale of sugar, ethanol, electric power, and agro-industrial byproducts. According to its corporate purpose, the company engages in the industrial processing of sugarcane; the manufacture and trade of sugar, alcohol, and their derivatives; cogeneration of electric power; agricultural and livestock activities; as well as the import and export of goods and raw materials. It also participates in the manufacture 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 recorded net revenue of R$ 7.2 billion, with a very balanced contribution between ethanol and sugar, each accounting for 45% of revenue, while electric power accounted for 3% and other products for 6%, evidencing a portfolio concentrated in biofuels and sugar, with ancillary revenues from energy and derivatives.

From an operational standpoint, São Martinho structures its activities around four mills: 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 Mill is dedicated to ethanol and cogeneration. The company has installed capacity to crush 24.5 million tons of cane per crop year across its units, and cogeneration capacity of approximately 1.1 TWh of energy per crop year from bagasse. In the 2024/25 crop year, around 22 million tons of sugarcane were processed, with production of 1.329 million tons of sugar and 1.221 million m³ of ethanol, a little over 1 million m³ from cane and about 213 thousand m³ from corn processing. The company also achieved a harvest mechanization rate close to 100% and managed an agricultural area of approximately 350 thousand hectares, combining owned land and partner areas.

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 the production of raw sugar for export and the domestic market, with VHP as its key reference. In ethanol, it produces hydrous ethanol, used directly in flex-fuel vehicles; anhydrous ethanol, used as an additive to gasoline; and industrial ethanol, consumed by paint, cosmetics, and alcoholic beverage industries. From the 2023/24 crop year, it began producing corn ethanol at a facility attached to the Boa Vista Unit, adding ethanol, DDGS (a high-digestibility protein byproduct for animal feed), and corn oil to its portfolio. Among sugarcane chain byproducts, highlights include yeast for animal feed, fusel oil, and bagasse used for steam and power generation, with surplus sold mainly to orange juice producers. The company also has a real estate arm with occasional project launches in the 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, with about R$ 3.86 billion, and the foreign market, with approximately R$ 3.3 billion. In Brazil, sales are concentrated in sugar, ethanol, and electric power, in addition to 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 mainly uses the rail network to transport sugar, reinforcing its logistics competitiveness in exports, while ethanol is sold to distributors that, for the most part, pick up the product directly at the mills located in Brazil’s main sugar-energy hubs. As of March 31, 2025, the company had two customers each accounting for more than 10% of its net revenue, together representing 42% of revenue, concentrated in sugar and ethanol, underscoring the relevance of large trading houses and distributors in its client base.

São Martinho’s production base is highly integrated with agricultural activity, focused on land partnership and lease contracts, in addition to its own areas for cane cultivation. These contracts generally last for one cane cycle and are automatically renewable, with partner remuneration based on the ATR (total recoverable sugars) content of the cane, according to the Consecana system, which reflects average prices calculated by CEPEA/ESALQ. The company has invested in mechanization for decades, having been a pioneer in the development of planting and harvesting equipment, resulting in an almost fully mechanized harvest of raw cane, without burning, with positive impacts on productivity, costs, and emissions reduction. The agricultural cycle combines different cane varieties and planting periods throughout the year, with an average useful life of sugarcane fields of about seven years and annual renewal of part of the planted area. This integration of agricultural technology, soil and water management, and industrial processes is a central element in achieving high yields and 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, and securities regulations, as well as specific rules for the production of electric power and biofuels. All operational units maintain 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 biofuels with lower carbon intensity, and maintains institutional relations with government bodies guided by transparency and regulatory compliance.

In environmental, social, and governance sustainability, São Martinho adopts a series of practices and certifications that reflect the integration of this agenda into its business model. All four mills hold ISO 14001 and Bonsucro certification, ensuring global standards of environmental management and sector-specific sustainability for the sugar-energy industry, from cane cultivation to sugar and ethanol production. The São Martinho and Santa Cruz units also hold ISCC EU and ISCC CORSIA certifications, enabling 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 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 front, it stands out for its high 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 track record 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 SMTO3 shares on B3.