MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
We are a leading global ethanol and sugar company in terms of production with low-cost, large-scale and
integrated operations in Brazil. Our production is based on sugarcane, a competitive and viable feedstock for
ethanol, sugar and energy because of its low production cost and high energy efficiency ratio relative to other
ethanol sources, such as corn and sugarbeet. We believe that we are:
• Sugarcane: the largest grower and processor of sugarcane in the world, having crushed 36.2 million tons in
fiscal year 2007 and 27.9 million tons in fiscal year 2006 (planted on approximately 572,000 hectares, of
which approximately 50% is leased by us, 40% is supplier owned and 10% is company owned);
• Ethanol: the largest ethanol producer in Brazil and the second largest in the world, having produced 326.7
million gallons (1.2 billion liters) in fiscal year 2007 and 241.7 million gallons (915.0 million liters) in
fiscal year 2006, and the largest exporter of ethanol in the world, having exported 72.6 million gallons
(274.7 million liters) in fiscal year 2007 and 61.0 million gallons (230.9 million liters) in fiscal year 2006;
and
• Sugar: the largest sugar producer in Brazil and one of the three largest sugar producers in the world, having
produced 3.2 million tons in fiscal year 2007 and 2.3 million tons of sugar in fiscal year 2006, and the
largest exporter of sugar in the world, having exported 2.8 million tons in fiscal year 2007 and 2.1 million
tons in fiscal year 2006.
We operate 17 mills, two refineries, two port facilities and numerous warehouses. All of these facilities are
located in the Center-South region of Brazil, which is one of the world’s most productive sugarcane regions
primarily because of its favorable soil, topography and climate, nearby research and development organizations and
infrastructure facilities.
In fiscal year 2007, we sold 349.3 million gallons (1,322.1 million liters) of ethanol and 3,240.5 thousand tons
of sugar. In the same fiscal year, we had net sales of US$1,679.1 million comprising 61.4% of sugar, 32.8% of
ethanol and 5.7% of other products and services. Exports represented 60.4% of our net sales in the period. In the sixmonth
period ended October 31, 2007, we sold 142.1 million gallons (537.7 million liters) of ethanol and 1,647.8
thousand tons of sugar. In the same period, we had net sales of US$629.3 million comprising 61.3% of sugar, 28.2%
of ethanol and 10.5% of other products and services. Exports represented 59.3% of our net sales in the period.