August 14, 2019 / 11:18 PM / 2 months ago

UPDATE 1-Dreyfus sugar unit Biosev quarterly loss narrows on currency, cost cuts

(Adds earnings details, comments from executives)

By Marcelo Teixeira

SAO PAULO, Aug 14 (Reuters) - Biosev SA, the Brazilian sugar and ethanol maker controlled by Louis Dreyfus , posted a quarterly loss of 169 million reais ($41.72 million) on Wednesday, 66.7% smaller than a year ago, on positive currency effects as well as cost cuts, the company said.

Biosev said it crushed 10.88 million tonnes of sugarcane in the quarter, 3.4% less than in the same period last year, mostly due to a late start to the harvest. But agricultural yields were up 3.8 percent, to 88.4 tonnes of cane per hectare, which signals a possible larger final crush for the current season.

The company reached a record cane allocation to ethanol production for this period, at 66.3%, optimizing installations to produce more of the biofuel which currently gives larger financial return than sugar.

Adjusted Ebitda, a measure of cash generation, increased 13% from the same quarter last year to 291 million reais.

“We managed to increase Ebitda even crushing less cane in the period, which shows the impact of our cost cuts,” said Juan José Blanchard, the chief executive, in a brief interview to comment on earnings.

He said the record ethanol production mix in the quarter was possible due to recent investments the company made to increase capacity to produce the fuel, with new distillation equipment in some of the mills.

Others in the sector, such as Raízen and Sao Martinho, have smaller flexibility to produce more ethanol, Biosev said.

The Dreyfus unit is stocking up on sugar to carry forward, since it has longer hedging positions.

It does not expect a recovery in sugar prices soon. “The ongoing support that India gives to its sugar sector will limit any upside for prices,” said commercial director Dorothea Soule.

$1 = 4.0513 Brazilian reais Reporting by Marcelo Teixeira, editing by G Crosse and Sandra Maler

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