Large sugar-energy groups have potential to invest $ 20 billion by 2030
For MBAgro Associate Partner Giovana Araújo, high-growth scenario relies on constructive sugar, ethanol and CBios prices – plus better agricultural productivity
At the same time as the sugar and ethanol industry is struggling to obtain credit and even the largest companies report falling financial results , the prospect of change is near. There are projections that point to a global sugar production deficit as early as 2019/20 and the RenovaBio program is expected to bring additional revenue to the companies with the decarbonization credits (CBios).
During the NovaCana Ethanol Conference 2019, held in São Paulo, associate partner of consulting firm MBAgro, Giovana Araújo, calculated the investment potential for the best sugar-energy groups – which can reach up to R $ 19.8 billion – and pointed out perspectives for the application of values. For this, she considered a ten-year horizon and two possible scenarios: one low and one high growth.
To this end, it considers the best companies in the sample followed by MBAgro, which is equivalent to approximately 50% of sugarcane crushing in the 2018/19 crop. “It is an inaccurate photograph, but it is suitable for exercise,” he says during the event held in September.
Araújo notes that even within a sample that already considers the healthiest sugar-energy groups, there is a large dispersion of results – a feature that has often been pointed out in the industry .
For her, the merger and acquisition operations should come precisely from the companies that, within this group, have the best performances. Thus, as the average leverage of the sample is 2.2 times, Araújo made its calculations based on companies that presented results below this value in 2018/19. These companies accounted for 23.7% of the South Central milling in the period.
– Characteristics of low and high growth scenarios in the ethanol sector
– Possible value levers for increased investments
– Sector investment capacity considering different scenarios
– Investment routes and asset valuation within different market contexts