Fixed Assets

2014 has been a difficult year for Brazil sugar and ethanol industry, due to a substantial gap between buyers’ and sellers’ ideas of the value of sugar and ethanol assets. The gap is likely to be bridged by a decline in sellers’ target prices.

photo of sugarcane transport in Brazil

A severe drought has impacted cane yields and output, reducing revenues and hampering efforts to reduce costs. Sustained pressure on margins on top of an already bleak backdrop—heavy debts and, for more recent entrants to the sector, frustrated expectations—means that a number of companies want or need to seek an equity injection, or to sell out altogether.

While these potential sellers are convinced that the valuation of their businesses should incorporate upturns in the sugar and ethanol markets, today’s potential buyers are very conservative in valuing acquisition targets.

Read more for the details of how to manage risk and identify opportunites within Brazil's sugar and ethanol markets.

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