Odebrecht Agroindustrial achieved a new level of production in the 2015/2016 crop year. With crushed 29.3 million tons of sugarcane at our six Production Clusters, which represents an increase of 23% from the previous crop year and surpassed by 6% our target for the period of 27.5 million tons. From April this year to March 2017, our goal is to deliver total sugarcane crushing volume of 31 million tons.
The production of ethanol (both anhydrous and hydrous) amounted to 2 billion liters, an increase of 29% from the previous crop year. Meanwhile, VHP sugar production amounted to 455 kton, down 5% from 2014/2015. We also sold 2,100 GWh of power, which is generated from sugarcane bagasse, an increase of 39% in the same comparison.
Crushing and CLT
Ethanol production ('000 m³)
VHP sugar production (‘000 tons)
Electricity trading (GWh)
On the agricultural front, we continued to prioritize the harvesting of sugarcane within 18 months, which ensures high yields and plantation quality and reduces the need to employ capital. The indicator Tons of Sugar per Hectare (TSH), which measures sugarcane yield and quality, registered improvement of 11.8% from the previous crop year. The planted area in the crop year was 46,000 hectares, of which 84% was represented by newly replanted fields.
Last year we concluded the expansion project at the Eldorado Unit located in Rio Brilhante, Mato Grosso do Sul, which now has the world's largest mill and a dryer for anhydrous ethanol production. Investment in the project amounted to approximately R$300 million and resulted in a 66% expansion in crushing capacity at the Eldorado Cluster to 3.5 million tons, from 2.1 million tons in 2008.
Given our strong focus on better utilizing our resources and to respond to the economic and financial challenges of the sugar and ethanol industry, in the last crop year we decelerated our industrial operations at the Alcídia Unit in Teodoro Sampaio, São Paulo. The agricultural activities were maintained, with the sugarcane harvested transported to the Conquista do Pontal Unit in Mirante do Paranapanema, São Paulo. This protected the jobs of Team Members in the agricultural, maintenance and administrative areas and around 70% of the Team Members in the industrial area were migrated to new positions at other units of the Company.
The interaction and alignment among the supply, logistics and commercial areas are some of our key competitive advantages and help to ensure that our Clients receive integrated service with low costs and high efficiency. Our integrated management model also enabled us to optimize the contracting of products and services and to accelerate our decision-making processes to support the Company's commercial needs.
Crop planting ('000 hectares)
Ratoon sugarcane tillering ('000 hectares)
TCH and TSH
Opportunities and Growth
The sugar and ethanol industry, which has been suffering a crisis in recent years due to the lack of public policies to encourage ethanol consumption in Brazil, began to show signs of a recovery in the 2015/2016 crop year, supported by factors such as a recovery in sugar prices in export markets and higher gasoline prices in the domestic market. The higher rate of PIS/Cofins taxes and the reinstatement of the CIDE tax on gasoline in 2015 enabled hydrous ethanol to regain its competitiveness for Brazilian consumers. In addition, the increase in the percentage of anhydrous ethanol in the gasoline blend, from 25% to 27%, also leveraged the industry's growth.
This scenario supported growth in our net revenue of 45% and in our EBITDA of 200% compared to the previous crop year. To take advantage of market opportunities and strengthen the Company's cash structure, we concentrated our efforts in actions to reduce costs and improve our outbound logistics to support product distribution. We also sought to anticipate the sale of products to Clients in order to maximize revenue and optimize resource allocation. Value added at Odebrecht Agroindustrial amounted to R$1.7 billion, increasing 28% from the amount in the 2014/2015 crop year, mainly due to the growth in sales revenue. G4-9Click here to learn more about this aspect in the GRI Supplement G4-EC1Click here to learn more about this aspect in the GRI Supplement
Net revenue (R$ million)
Operating Cash Generation (OCG) (R$ million)
For our ethanol sales, which grew approximately 29% on the prior crop year, we expanded the use of transportation modes other than road freight, such as the ethanol pipeline that already connects the Uberaba Terminal in Minas Gerais to the Paulínia Refinery in the state of São Paulo, and the cabotage system. We also entered into a commercial cooperation agreement with one of the largest groups in the U.S. petrochemical industry to import and export biofuel, for which we adopted a combined cargo model with Braskem (another company of the Odebrecht Group) that reduces our maritime freight costs by 15%.
In the energy segment, our power sales completely fulfilled the long-term contracts signed at the auctions in the regulated market, and we also sold power in the free market to take advantage of opportunities early in the crop year arising from peaks in the PLD price used as a reference for short-term power sales.
Another highlight of the year was the production, for the first time ever, of refined sugar for Biocom, an Angolan producer of sugar, ethanol and energy.
Renegotiation with creditors strengthens financial structure G4-9Click here to learn more about this aspect in the GRI Supplement
Begun in 2015, the financial restructuring and strengthening of the capital structure of Odebrecht Agroindustrial was concluded in the first half of 2016 and involved its local and foreign creditors.
The operation consisted of new investments by the Odebrecht Group in the amount of approximately R$6 billion. Of this amount, R$1.5 billion will be via a capital injection, R$2.5 billion will be injected exclusively to amortize debt and another R$2 billion will come from the transfer of the energy assets that previously had been allocated to Odebrecht Energia Renovável.
At the close of the 2015/2016 crop year, our net debt stood at R$11.5 billion, of which 64.8% matures as from 2017. The operation not only demonstrates the confidence of the Shareholders in our Business and the importance of ethanol as a renewable source for Brazil’s energy matrix, but also enabled financing terms to be adjusted to the Company's cash generation capacity to ensure that the investments in the agricultural and industrial operations were maintained.
Similar to all companies in Brazil’s sugar and ethanol industry, over the last five years we have been adversely affected by a lack of government policies and actions to improve the competitiveness of ethanol in relation to fossil fuels and to encourage the adoption of renewable energy sources. Despite this scenario, our investment in the two acquired units and in the seven greenfield units amounted to over R$10 billion.