Raizen $2 billion impairment reflects financial issues, not operational challenges, executives say (updated)

Cosan

13/02/2026 15:21

Adds uncertainty about Raizen's ability to keep operating in paragraphs 1, 4-5; analyst comment in paragraph 6 Adds comments from Scotiabank in paragraph 6

Raizen reports record quarterly net loss of 15.6 billion reais

Debt rises to 55.3 billion reais

Financial situation causing "significant undertainty"

SAO PAULO, Feb 13 (Reuters) - Brazil's Raizen has no operational problems and its third-quarter impairment of 11.1 billion reais ($2.12 billion) reflects financial challenges but does not affect liquidity, executives said on Friday, after the company warned of "significant uncertainty" about the firm's ability to continue operating.

Late on Thursday, Raizen - a joint venture between owners Shell SHEL.L and Brazilian conglomerate Cosan CSAN3.SA - reported a record quarterly net loss of 15.6 billion reais for the third quarter of the 2025/26 crop year, significantly wider than the 2.57 billion reais loss a year earlier.

The sugar and ethanol producer has amassed billions in net debt - 55.3 billion reais at December 31, up from 38.6 billion at the end of 2024 - and recorded a string of quarterly losses after heavy investments were met by challenges such as erratic weather and wildfires which led to weaker agricultural yields and lower crushing volumes.

"Obviously, resolving the company's capital structure by reducing debt is an absolute priority," CEO Nelson Gomes said on a conference call on Friday.

"SIGNIFICANT UNCERTAINTY"

In its financial statement for the quarter, Raizen warned its current financial situation was the cause of "significant uncertainty related to operational continuity" and that the company's capital structure "remains under pressure from the current level of indebtedness and related financial charges."

In a note, Scotiabank said the reported results were "entirely eclipsed" by the disclosure, adding that Raizen's investment case has "shifted from an operational turnaround story to a distressed restructuring play."

 Agencies S&P Global and Fitch this week slashed their credit ratings on Raizen after it appointed legal and financial advisors.

TECHNICAL REVISION

The impairment "reflects exclusively a technical revision of impairment testing assumptions, related to deferred tax assets, recoverable taxes, goodwill and other non-financial assets", Raizen said in a statement, adding that it had no cash effect.

It said it expects capital expenditure for the financial year to be 3 billion reais lower than initially expected while achieving savings of 600 million reais in the first nine months of its financial year, which runs from April to March based on Brazil's sugarcane cycle.

Gomes said the business would not comment on market speculation about options open to the company, its creditors, and its owners to turn Raizen's fortunes around.

However, he said that both Shell and Cosan had pledged to contribute capital to help "definitively" solve Raizen's issues, adding that plans to sell the company's assets in Argentina should reach completion by the end of this year.

Earlier this week, Reuters reported that Swiss-founded energy and commodity company Mercuria Energy Group was advancing in talks to buy the Argentine assets for more than $1 billion. Both Raizen and Mercuria declined to comment on the matter.

($1 = 5.2221 reais)

(Reporting by Roberto Samora and Oliver Griffin; Additional reporting by Isabel Teles; Writing by Oliver Griffin
Editing by Tomasz Janowski, Kirsten Donovan)

((oliver.griffin@thomsonreuters.com; +55 11 95361-2170))