Sao Martinho's Sugar-Ethanol Profits Drop 50%

Net profit at Sao Martinho SA , one of Brazil's biggest sugar and ethanol groups, was 6.4 million reais ($2.9 million) in the quarter ended March 31, down 50 percent from the year-earlier period, the company said in a filing on Monday night.

The results for the final financial quarter of the company's 2013/14 cane crop season were hurt by the acquisition of Boa Vista milling assets formerly controlled by Biosev, a local sugar and ethanol unit of global commodities company Louis Dreyfus.

The company's debt to EBITDA ratio remained stable in the quarter at 2.02, roughly the same as a year earlier and in the previous quarter. Net revenue was up 3 percent from the year-before quarter at 320.3 million reais.

For the year, Sao Martinho posted a record net profit of 135 million reais, up 85 percent from the previous year. Brazil's main center-south cane region is coming off crushing a record 596 million tonne crop.

The performance of milling groups in the current season will likely be hurt by a drought early this year. The cane crush, which was forecast at 600 million to 620 million tonnes in December, is now more likely come in at 580 million to 570 million tonnes, according to market forecasts.

The company, whose shareholders include the state-run oil company Petrobras, crushed 15.6 million tonnes of cane in the past season, up 21 percent from the previous year.

Brazilian cane milling groups have been struggling over the past two to three years to generate consistent profits as margins for sugar and ethanol sales continue to be weak, largely due to global overproduction of sugar and price controls on automobile fuels in Brazil.

(Reporting by Reese Ewing; Editing by Peter Galloway)