Investor Presentaiton
Macroeconomic and industry scenario
The highlight of the 2019/2020 crop
year was the somewhat modest
economic growth recorded in 2019.
Gross Domestic Product (GDP) ended
2019 with growth of 1.1%. According
to the Brazilian Census Bureau (IBGE),
agriculture and livestock, which has a
5% weighting in the GDP calculation,
advanced by 1.3%, while industry
recorded a mere 0.5% in the period.
The Broad National Consumer Price
Index (IPCA) for the year was 4.31%,
slightly above the inflation target set
by the Central Bank of Brazil (Central
Bank), of 4.25%, but within the
tolerance interval of 2.75% and 5.75%.
With inflation under control, the basic
interest rate of the Brazilian economy
fell from 6.5% in April 2019, to 3.75%
at the end of the 2019/2020 crop
year, helping the industry to manage
its financial expenses, as well as the
impacts of the company's debt.
Industry scenario
On the international oil scenario,
2019 saw the possibility of a global
economic recession in the wake of the
trade war between the United States
and China. Concerns about the effect
of this conflict on the demand for oil
forced the prices of Brent up to the
US$50-70/barrel bracket between
May and December, further bolstered
by the production quota agreement
of the Organization of the Petroleum
Exporting Countries (OPEC+) and
sanctions by the United States
against the economies of Iran
and Venezuela.
At the end of the 2019/2020 crop
year and the beginning of 2020/2021,
the industry was affected by the
COVID-19 pandemic and oil price
dispute between Saudi Arabia and
Russia. These factors reduced the
demand for ethanol and gasoline by
30% and affected the prices of Brent
crude, which fell to US$22.74/barrel
at the end of March 2020, the lowest
price level in almost 20 years. Brent
ended the crop year at an average
price of US$61.00/barrel, 13.7% below
the average recorded during the
previous cycle.
In the case of the automotive
industry, the Brazilian market for
light vehicles grew by 3.6% in the
2019/2020 crop year, according to the
National Association of Automotive
Vehicle Manufacturers (Anfavea).
Of the registrations in question,
87% were for flex fuel and 2.7% for
gasoline-powered vehicles, a total of
89.7% Otto cycle fleet (light vehicles
that run on gasoline and/or ethanol).
The crop year saw fuel consumption
reach the equivalent of 53.6 billion
liters of gasoline, up by 3.3% over
the previous crop year, which had
been adversely affected by the truck
drivers' strike.
Higher gasoline prices at the
refineries in the period and their
transfer to the pumps - led to new
records in production and sales of
hydrous ethanol. During the year,
there was an increase of 9.6% in
the volume of imported ethanol,
reaching 1.6 million m3 of which 88.8%
originated in the USA.
High gasoline
prices at the
refineries led
to a record
volumes of
hydrous ethanol
production
and sales in
the period
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