Brazil's BioSev shuts mill, revises business plan
SAO PAULO, March 20 (Reuters) - Brazil's second-largest sugar and ethanol producer, BioSev SA, which is controlled by French commodities trader Louis Dreyfus, said on Thursday it will pare back its investment plans to align itself with what it considers "a prolonged downward cycle ... and depressed prices" in the sector.
The company's board approved a revised business plan that will have a negative, non-cash flow impact of 740 million reais ($318 million) on the company's balance sheet, according to a securities filing.
The precise impact of the shift in the company's plans will show up on its results for the quarter that will close on March 31. The value of its cane assets is also expected to suffer a downward revision of between 120 million and 180 million reais.
Biosev said it plans to suspend operations at its Jardest mill and transfer its agricultural cane assets from that unit to nearby mills in order to better use its processing capacity.
The company also plans to slash its executive staff by 20 percent to reduce its fixed costs and to restrict short-term discretionary investments, as well as shuffle some of its mills' management teams.
The move by BioSev, which held an initial public offering of shares almost a year ago on the local Bovespa exchange, underscores the strong headwinds Brazil's sugar and ethanol sector have run up against in recent years.
Large milling groups are paring back investments and cutting costs after nearly a decade of rapid expansion on the belief that ethanol would promise substantially better returns than have come to fruition.
($1 = 2.33 reais) (Reporting by Reese Ewing; Editing by Cynthia Osterman)
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