Raízen: da maior usina de açúcar ao maior desastre financeiro brasileiro.

Raízen, the largest sugar producer in the world, is facing financial struggles after its debt increased 56% last year and the company burned through R$7 billion in the first quarter of 2023. The company's stock price plummeted to R$1.02, its lowest level ever, after the CEO announced the company is considering an injection of capital. The company's capitalization was viewed as a remote possibility by most analysts, but the CEO of Cosan, the company that controls Raízen, has now stated that the company is open to external investment.

Title: Raízen Faces Financial Crisis Amidst Debt Surge and Share Price Plummet

Raízen, Brazil's largest sugar producer, is grappling with severe financial difficulties. In the first quarter of 2023, the company reported a debt increase of 56% and burned through R$7 billion. These challenges led to a dramatic decline in Raízen's stock price, which hit an all-time low of R$1.02 following the announcement that the company is considering a capital injection.

The financial woes of Raízen, a joint venture between Brazil's Cosan SA and London-based Shell Plc, were exacerbated by its ambitious growth plans. The company's spending almost doubled over the past four years, while rising interest rates pushed its debt levels significantly higher. By the end of June 2023, Raízen's net debt stood at R$49 billion, up from R$31.6 billion a year earlier [1].

Chief Financial Officer Rafael Bergman revealed on Thursday that Raízen is "in active talks" for a capital injection to address its debt issues. This announcement sent shares tumbling by as much as 15% in São Paulo, marking the biggest drop since the company's initial public offering (IPO) in 2021. The stock price now stands at a fraction of its record high of R$7.60, reached on its first day of trading [1].

The need for fresh capital represents a significant shift in strategy for Raízen. Traditionally, Cosan, the controlling company, has been reluctant to dilute its power and influence by accepting outside investment. However, Chief Executive Officer Marcelo Martins has indicated that the company is now open to external investment, provided the new partner aligns with Cosan's and Shell's strategic vision [1].

Analysts at UBS BB led by Matheus Enfeldt have noted that while a capital injection could potentially clear the way for investors to regain interest in the stock, it also represents a significant overhang and potential dilution for current shareholders [1].

Raízen's struggles extend beyond its debt issues. The company's bets on second-generation biofuels, traceable sugar, and sustainable aviation fuel have yet to yield positive results. Additionally, the acquisition of Louis Dreyfus Holding BV's Biosev, a Brazilian sugar business, has not been as profitable as expected [1].

In response to its financial difficulties, Raízen has initiated a management overhaul and begun selling assets. The company has already disposed of its Leme sugar mill in Piracicaba and 55 units that generated electricity from renewable sources. Further asset divestments are planned, including mills in Mato Grosso do Sul state and the group's oil refinery and gas stations in Argentina [1].

The financial health of Cosan, the parent company of Raízen, is also a concern. Analysts expect the upcoming Q2 2025 earnings report to reveal challenging financial conditions, with revenue and net profit under pressure. The outlook for Cosan is bearish, with the company struggling to navigate economic pressures and operational inefficiencies [2].

As Raízen and Cosan navigate their financial challenges, stakeholders are advised to brace for potential downside risks. The upcoming earnings report for Cosan may further highlight the ongoing financial struggles, and investors should remain cautious.

References:
[1] https://www.bloomberg.com/news/articles/2025-08-15/how-brazil-s-sugar-powerhouse-raizen-became-a-penny-stock
[2] https://www.ainvest.com/news/cosan-csan-q2-2025-earnings-preview-downside-risk-financial-struggles-2508/