SAO PAULO, Feb 9 (Reuters) - Brazil’s Sao Martinho sugar and ethanol group said October-to-December net profit grew 66 percent from a year ago to 54.6 million reais ($19.7 million), crediting improved sales of sugar and biomass electricity.
Sao Martinho started its financial year in April with the start of the 2014/2015 cane crush. Sugar output rose 25 percent to 1.23 million tonnes over the nine-month crushing season that ended in December.
Ethanol production also rose, 13 percent for anhydrous and 40 percent for hydrous, the company said. Energy sales rose by 63 percent to 720,000 megawatt-hours.
The company reported the surge in output despite a drought that drove the cane crush down 4 percent below the previous season to 569.3 million tonnes, according to the cane industry association Unica.
Sao Martinho was the first to report quarterly results among Brazil’s biggest listed sugar companies, including Cosan’s Raizen, Tereos International’s Guarani and Louis Dreyfus’ Biosev.
Other big producers are expected to show exceptional jumps in revenue from energy sales as spot market prices more than doubled from the year before to roughly 800 reais/MWh for most of 2014 due to a severe drought that has drained hydroelectric reservoirs.
The company is holding larger-than-normal stocks of sugar and ethanol, as are many financially sound mills. Sao Martinho and others expect better returns from both sugar and ethanol sales through 2015.
Sao Martinho has 350,410 tonnes of sugar, up 50 percent from the end of 2013, and 335.8 million liters of ethanol, up 83 percent from a year ago.
The company said it and the broader sugar and ethanol sector expect to benefit in future quarters from recent developments that will support prices and demand for ethanol.
The government will raise the ethanol blend in gasoline to 27 percent from the current 25 percent in the second half of February and it raised taxes on gasoline, which will allow mills to raise their ethanol prices without eroding market share.
Brazil’s second most populous state, Minas Gerais, also lowered a tax on ethanol, which is expected to further raise demand for the fuel, Sao Martinho said. (Reporting by Reese Ewing; Editing by Ken Wills)