Bloomberg News

Dedini Expects Boost in 2012 Sales on New Cane Mills in Brazil

December 15, 2011

Dec. 15 (Bloomberg) -- Dedini SA Industrias de Base, the Brazilian maker of heavy equipment, expects revenue to increase as much as 10 percent next year, largely on sales to ethanol producers that may expand production capacity to meet demand for the renewable fuel.

Sales of equipment related to sugar-cane processing have generated 65 percent to 70 percent of the company’s revenue over the past eight years, Piracicaba, Brazil-based Dedini said today by e-mail.

Cane-processing equipment will account for less than half the company’s sales this year, said Jose Luiz Oliverio, Dedini’s vice president of technology and development, and total 2011 revenue will be about 1 billion reais ($538 million).

Brazilian cane companies, which curtailed investment in mills after the 2008 credit crisis, may commit more funds to new projects at the end of next year to meet demand from the country’s growing fleet of cars that can run on gasoline or straight ethanol, Oliverio said. Revenue from cane-processing equipment may account for 60 percent of Dedini’s sales in 2012.

“The capacity that’s installed today isn’t enough to meet demand,” Oliverio said in a telephone interview. “The last time a decision was made to build a new mill was 2007.”

Brazil needs more cane mills, Salim Morsy, an analyst at Bloomberg New Energy Finance’s Sao Paulo office, said yesterday in an e-mail.

“Historical investment trends in Brazilian greenfield ethanol projects certainly suggest that new mills should be built in the coming years to serve growing fuel demand,” Morsy said.

Ethanol Pipeline

A 1,300-kilometer (808-mile) ethanol pipeline that Logum Logistica SA is developing to connect Brazil’s center west region to traditional consumption centers in Sao Paulo and Rio de Janeiro will also drive investments, Morsy said. The project is scheduled to be complete by 2016, he said.

Brazil will need to build as many as 150 new mills worth 45 billion reais by 2020, Oliverio said. Three consecutive poor harvests have masked the need for new mills, he said.

“You just can’t see it because there’s too little cane,” he said. Brazil will crush about 570 million metric tons of cane this harvest compared with 630 million tons last year. As harvests improve the capacity shortage will become more visible.

--Editors: Will Wade, Charles Siler

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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