{"id":95054,"date":"2025-07-25T11:34:27","date_gmt":"2025-07-25T14:34:27","guid":{"rendered":"https:\/\/murray.adv.br\/?p=95054"},"modified":"2025-07-25T11:50:55","modified_gmt":"2025-07-25T14:50:55","slug":"corn-ethanol-producer-fs-resumes-expansion-with-r2bn-investment","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/corn-ethanol-producer-fs-resumes-expansion-with-r2bn-investment\/","title":{"rendered":"Corn ethanol producer FS resumes expansion with R$2bn investment"},"content":{"rendered":"
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Company to build new plant in Mato Grosso following financial recovery<\/strong><\/em><\/h6>\n<\/div>\n<\/div>\n
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07\/25\/2025<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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FS, Brazil\u2019s second-largest corn ethanol producer, has resumed its expansion strategy after a three-year pause marked by financial strain. The company announced on Thursday (24) a R$2 billion investment to build its fourth corn ethanol plant, to be located in Campo Novo do Parecis, in the state of Mato Grosso.<\/p>\n<\/div>\n

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The decision to move forward with expansion follows two crop years of financial tightening, during which FS faced rising debt levels stemming from earlier investments amid reduced cash flow. At the close of the 2023\/24 harvest, the company\u2019s leverage ratio (net debt to EBITDA) stood at 6.34 times, increasing to 7.39 times by the end of the first quarter of the 2024\/25 crop year.<\/p>\n<\/div>\n

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However, that ratio dropped to 2.52 times by the end of the most recent harvest, supported by a rebound in ethanol prices and higher sales volumes.<\/p>\n<\/div>\n

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With healthier finances and rising demand anticipated due to a higher ethanol blend in gasoline, FS decided the time was right to revive its growth strategy.<\/p>\n<\/div>\n

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Construction of the new plant began in June and is scheduled for completion by December 2026. Once operational, the facility will have an annual production capacity of 540 million liters of ethanol, 350,000 tonnes of DDG and DDGS (animal feed co-products), 69,000 tonnes of corn oil, and 56,000 megawatt-hours (MWh) of electricity.<\/p>\n<\/div>\n

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In a statement, CEO Rafael Abud said the decision to invest in Campo Novo do Parecis was \u201creinforced by the approval of the Future Fuel project, which paved the way for E30 and soon E35.\u201d Starting August 1, Brazil will increase the mandatory blend of anhydrous ethanol in gasoline from 27% to 30%.<\/p>\n<\/div>\n

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Despite the operational improvements, FS still lacks access to lower-cost credit lines. In its latest rating review on July 1, Moody\u2019s reaffirmed the company\u2019s \u201cAA-.br\u201d rating on the national scale and \u201cBa3\u201d globally, but with a negative outlook, citing persistent inflation and high interest rates in Brazil.<\/p>\n<\/div>\n

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Moody\u2019s noted that while FS has reduced its leverage, the company\u2019s interest coverage remains under pressure, and any new funding raised in the domestic market is likely to come at a higher cost. In the most recent harvest, FS\u2019s interest coverage ratio (EBIT to interest expenses) was 1.7 times\u2014typically considered insufficient, as the market expects this metric to exceed 2.0 times for financial comfort.<\/p>\n<\/div>\n

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The new investment will raise FS\u2019s capital expenditures this season. Last season, the company spent R$370.9 million on expansion-related capex, primarily for incremental capacity improvements at its existing facilities. Even with those investments, FS posted R$1.32 billion in net operating cash flow after capex.<\/p>\n<\/div>\n

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The company\u2019s growth plan also includes a fifth plant in Quer\u00eancia (Mato Grosso), where preliminary work such as site grading and basic infrastructure is already underway. FS has yet to disclose the investment amount or financing details for that project. The company also declined to comment on how it plans to finance the fourth plant or what return on investment it expects.<\/p>\n

*By\u00a0Camila Souza Ramos, Globo Rural\u00a0\u2014 S\u00e3o Paulo<\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com\/<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

<\/section>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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