Business partners |GRI 102-9, 103-2|

Sugarcane producers

Committed to investing significantly in practices that benefit our sugarcane suppliers and strengthen our relationship with them, since the previous crop year, we have been developing a new position for Programa Cultivar (Cultivate Program).

Unprecedented in the sugar and ethanol industry, the initiative offers innovations that enable better results ─ in both productivity and profitability ─ through technologies and tools that are revolutionizing the business of our sugarcane suppliers.

Among the available tools are Academia de Produtividade (Productivity Academy), which promotes the sharing of experiences about agricultural techniques in order to maximize productivity; and Agricultural Support, which allows producers to obtain an agricultural recommendation through the collection and analysis of their soil. This front also provided technology for Integrated Pest Monitoring (MIP - Monitoramento Integrado de Pragas).

The program also provides access to initiatives intended for multiplication of financial benefits, business management, and development of the agro-businessman. In addition to extending the partnership with the Getulio Vargas Foundation (FGV) for the regions of Bauru (SP) and Jataí (GO), the program now includes Fórum de Sucessores (Successors Forum), which mobilizes partner successors in the development and improvement of their skills for the sugarcane business.

The program has a unique and innovative platform that focuses on developing producers. By offering a portfolio of benefits and services to support agricultural advancement and the business environment, we take an important step towards continuously creating shared value in our chain.

Another program dedicated especially to sugarcane producers is ELO, carried out in partnership with two internationally recognized institutions ─ Imaflora and Solidaridad ─ which seeks to involve the public in initiatives related to economic sustainability, environmental responsibility, and respect for human and worker’s rights.

Participants are evaluated and classified according to the level of performance in environmental, social, and economic indicators. On the social pillar, topics such as work hours, worker assistance infrastructure, minimum hiring age, safe use of agrochemicals, remuneration conditions, accommodations, and transportation are included. In economic indicators, the right to land use and lease and partnership agreements are analyzed. On the environmental pillar, the efficient use of natural resources is the main issue addressed with suppliers.

Practices such as the use of selective insecticides and the use of biological control, for example, are checked by sustainability managers during visits to the farms. The ELO team also assesses compliance with standards that regulate Permanent Preservation Areas (PPAs), Legal Reserves, and illegal deforestation.

After classification, each supplier receives an action plan with priorities for improving their performance. Monitoring is carried out periodically by a team dedicated exclusively to the project and, after mapping the demands in the field, they conduct, among other activities, training, technical visits, and business contacts, in partnership with regional associations, whose role is to assist producers in various aspects: technical, legal, management, etc.

Currently, 2,000 producers participate in the ELO Program, which is 89% of the total number of suppliers and 99% of the volume of third-party sugarcane.* However, the impacted audience is even greater when considering the regional population that is indirectly benefited, since the production creates job opportunities and is responsible for contributing to the economic and social development of those cities.

* Data does not include spot sales of sugarcane.

Since the launch, in 2014/2015, significant results have been identified regarding the use of best practices, such as adequacy of processes regarding the workers, storage and disposal of chemicals and packaging, and the use and handling of agrochemicals.

The synergy between the ELO Program and initiatives by associations of sugarcane producers increases engagement and adoption of sustainable practices in the sugar and ethanol chain. In this sense, we can highlight actions promoted with two associations affiliated with the Sugarcane Planters Organization of the Central-Southern Region of Brazil (ORPLANA):

Top Cana Project | In partnership with the Sugarcane Suppliers Association of Guariba (SOCICANA), in the State of São Paulo, visits were made to 120 associated producers, of which nearly 50 also participate in the ELO Program.

Muda Cana Pilot Project | The Sugarcane Suppliers Association of the Western Paulista Region (AFCOP) supports its associates, most of which supply sugarcane to our units. Started in pilot mode in 2017, it has already offered training on Health and Safety and other topics.

Carriers

Safe operation

We are one of Brazil’s main fuel distributors, a position gained and maintained thanks to the work of committed partners, with whom we establish performance standards and develop initiatives to preserve the safety of the professionals involved in these operations.

About 4,000 drivers from companies that provide service to us drive 3,300 trucks on roads and highways throughout the country. This fleet travels approximately 250 million kilometers a year, equivalent to 500,000 trips from Rio de Janeiro to São Paulo.

Before beginning to provide services, carriers undergo a rigorous approval process. Initially, we show them the Raízen Transport Guide (MTR - Manual de Transportes Raízen), which provides rules and guidelines that support our management model. Carriers have time to become familiar with the material and carry out a self-inspection, submitted for our consideration. |GRI 103-2|

Thus, we observe the potential level of service and carry out our own evaluation, where we map gaps and define action plans. Over a predetermined period ─ on average from 6 months to 1 year ─ we monitor the evolution of the company, which is hired when the desired level is reached.

Supporting this audience includes remote monitoring of drivers through a telemetry system, which records information such as distances traveled, speed on the road, clutch actuation time, sudden braking or acceleration, vehicle stop time, fuel level, engine temperature and rotations, and others.

As of the 2018/2019 crop year, only tanker trucks equipped with cameras and voice alert routing will be allowed to transport fuel. Each vehicle will be equipped with four cameras in order to ensure compliance with safe driving procedures and clarify cases of theft or accidents.

Voice alert routing consists of a technology that works through GPS and tablets to transmit to drivers alert messages about speed, critical points, roundabouts, schools, etc. In this way, drivers may adjust how they drive and the speed, since the tool accurately indicates the risks on the road.

For the safety of this audience, we conduct annual inspections at the carriers hired focusing on Health, Safety, and Environment (HSE). Only carriers with performance above 85% may operate. As a result of the inspections, action plans are generated, monitored by our team of advisors, and reviewed and managed by the HSE Committee of the Logistics Department.

Among the recognition mechanisms is the Truck Rodeo, an event in which 50 drivers, with the support of their families, show their skills driving a tanker truck. Drivers must perform a routine of five maneuver precision tests in a maximum time of seven minutes. Participation is associated with fulfillment of the requirements in terms of health and safety throughout the year.

The initiative is part of the "Zero Accident" campaign, focusing on meritocracy. Every quarter, 12 vouchers of BRL 1,000 are drawn only for drivers who recorded zero accidents and zero violations during the period.

We define specific training that drivers of carriers must attend, among which are Defensive Driving, Driver Induction Training (TIM - Treinamento de Indução de Motoristas), to train drivers who will operate with hazardous products, and Descida de Serra (Downhill), which emphasizes caution when driving a tanker truck under these conditions.

Mutual benefits

With the objective of promoting savings to our partners, we have developed Project One, an important logistical support tool for partners. In 2017/2018, we also began the program called Clube de Compras (Purchasing Club), with strong potential to strengthen our relationship with carriers. The initiative was structured with the goal of improving the truck fleet management of these companies. It consists of a partnership with manufacturers for fleet renewal, collectively, with the guarantee of better commercial conditions for both vehicle purchasing and support and maintenance.

For us, we guarantee the use of a new, safer, and more efficient fleet. For our partners, we preserve the financial health of their business and assist them in order to provide continuity of a quality operation. We expect that, by the end of the 2018/2019 crop year, at least 15% of the fleet under our service will come from this project.

We also have in place the program called Clube Irmão Caminhoneiro Shell, a pioneering relationship program that provides benefits to those who live their lives on the road and are fundamental to distribution and logistics operations.

Network of service stations

For dealers, the main value proposition initiative is the Integrated Offer, through which we offer several benefits and develop a complete marketing plan, with a calendar of promotional actions. With optional adherence, the program already has 3,691 participants - 81% of the stations eligible to the program.

On our consumer experience front, we developed a unique way of doing business. We provide to our dealers a number of training courses and tools in order to train the more than 31,000 attendants at the service stations and convenience stores so that they can offer the best service to consumers of the Shell brand, turning Shell's Humanology concept real at every interaction, in all service stations, every day

Our portfolio includes Shell Select as the brand of our convenience stores, which offers dealers a competitive advantage with strong potential for gaining new customers and winning their loyalty.

In 2017/2018, we introduced a new store format, with the highest technology available in the market. The space has been completely remodeled to make the operation simpler and the consumer experience more intuitive. The goal is to create value to the business and significant savings for the franchisee. The products and promotions are communicated on digital platforms, developed according to the profile of our network and in line with the major dates on our calendar, in order to attract consumers.

The first store implementing the new concept was inaugurated in Jardim Marajoara, in the southern region of the city of São Paulo (SP). To have coffee or schedule a meeting, the space has become a support point for the best customer service, seeking practicality and diversified services.

We also invested in logistics improvements in order to streamline the operation, which is safer, more agile, and at a more competitive cost. With new product options and personalized service, store franchisees have at their disposal the Shell Select Purchasing Portal, which centralizes orders, deadlines, and prices in one place. In addition, we are implementing a fleet of delivery trucks exclusively for the Shell Select network, with GPS monitoring in real time.

Talking with the Dealer (CCR - Conversando com o Revendedor) are meetings held periodically to answer questions, identify demands, and define action plans. In 2017/2018, meetings were held in Rio de Janeiro (RJ), Recife (PE), Belo Horizonte (MG), Fortaleza (CE), Curitiba (PR), and Campinas (SP). Among the main topics addressed were measures that have impacted the dynamics of the resale market, such as the increase in PIS/COFINS for gasoline and diesel, and Petrobras's new pricing policy in refineries, combating fraud, payment methods, convenience stores, promotional campaigns, and others.

The Humanology concept also guides the relationship with dealers. The best dealers are awarded annually, within the program called Você Conquista, with an unforgettable experience. In 2017/2018, they traveled to Lisbon, Portugal, where the award ceremony was held, hosted by famous television actors. At the time, there were 18 highlights in the categories City Stations, Highway Stations, Convenience Stores, Health, Safety and Environment (HSE), and Aviation. Sugarcane producers participating in Programa Cultivar were also awarded. For the next crop year, the destination of the event has already been defined: London, England.

Over 30 dealers have embarked on the Knowledge Journey. They spent four days in Florida visiting stations and companies from different business segments. The group had the opportunity to learn about the best practices of global companies that are capable of generating innovation and new opportunities for their businesses.

Supply chain

We have contracts with over 6,000 suppliers of equipment, materials, and services. The main relationship tool we use with this audience is our Suppliers Portal. Through the channel, those who wish to join our supply team may register, as described step-by-step here.|GRI 103-2|

We have in place guides and policies that summarize the requirements for accident prevention and inadequate working conditions that could cause damage to the environment, our properties, or our employees and third parties. In addition, all suppliers adhere to our Code of Conduct and are committed to our Term of Clauses and General Conditions.

Every month, our procurement team checks documentation of the companies hired and, in the case of irregularities, a block from new contracts is put in place until the issue is resolved. Recidivism can lead to cancellation of existing contracts.

We evaluate the Certificates of Good Standings (CNDs) of suppliers that present high risk to our production process and whether they are included in the list of slave labor, published by the Ministry of Labor and Employment (MTE). Aspects related to quality and delivery timeliness are also evaluated. For those who do not present good performance, meetings are held to record a formal action plan.

In compliance with our anti-corruption practices, we check the National Registry of Punished Companies (CNEP) and the National Registry of Blacklisted and Suspended Companies (CEIS) on a monthly basis. A supplier included on any of these lists will not be permitted to register. Suppliers with the worst indices are checked, especially in terms of Health, Safety and Environment (HSE) ─ with whom measures and actions are established to correct and prevent the problems identified.

Teams at the production units and terminals are also trained to report cases of noncompliance, facilitating the development of action plans for both parties.

In order to ensure better governance and minimize risks of disrupted supply, in 2017/2018, we started a process to monitor strategic suppliers based on the continuous analysis of the financial behavior of our suppliers in the market in which they operate.

In addition, a quarterly identification procedure was established for partners who find themselves in judicial reorganization proceedings, as well as companies involved in cases of corruption. The records are forwarded for analysis by the responsible business area. In the absence of a structured risk mitigation plan, we continue blocking the supplier from registering.

For more information on suppliers and business partners, click here. |GRI 204-1, 308-1, 308-2, 407-1, 408-1, 409-1, 414-1, 414-2|

Clients

Humanology

Far beyond the stations.

In 2017/2018, we introduced the new positioning of the Shell brand on broadcast and cable TV throughout the country, and on digital media. The goal was to strengthen the relationship with consumers, going beyond fueling at the station.

Under the concept "Humanology: another Shell technology," we communicate the importance of human relations. At Shell, this means offering the best technology in products and services and providing humanized customer service.

Shell always does its best for consumers to leave its service stations feeling better than when they arrived. After all, the company consistently works to obtain the highest technological advances, first-class service, and quality in fueling, oil change, and convenience products - all this with empathy and consideration to impress consumers. Therefore, humanology means knowing consumers, understanding their needs and delighting in the details.

In addition to reinforcing the strategy of offering experiences that make the consumer journey more enjoyable, the concept guided the various actions we have developed. Shell Open Air is one of them. The event, sponsored by the Shell brand is considered the largest open-air film festival in the world and, in 2017, it was held in June in Rio de Janeiro and in November in São Paulo. In 2018, the event will once again be held in the capital cities of Rio de Janeiro (in May) and São Paulo (in September).

Another initiative was the improvement of the payment feature of Shell Box, which made everything more practical and technological. Now all we have to do is open the app, enter the payment code and authorize the transaction before fueling is complete. Every time they fill their tanks, users are also earning points, which can be redeemed for miles or fuel discounts - every liter of regular gasoline is worth one point and every liter of Shell V-Power is worth twice as much.

Created in October 2016, Shell Box posted a 20% growth a month in the number of payments and an increase in the number of loyalty customers per month. In the 2017/2018 harvest, the app experienced its greatest evolution since its launch. Screens were created to make browsing simpler and more intuitive and highlight other features, such as the payment feature itself and promotions.

Currently, the app can be used in more than 2,000 Shell stations across Brazil and is aligned with the new consumer profile: people connected to the digital world.

For the executive aviation audience, we have in place the Shell Aeroclass, a loyalty and relationship program conducted in partnership with Netpoints. The initiative rewards aircraft pilots and mechanics who use our products. They accumulate points that may be redeemed for over 30,000 awards. This audience may also use the AeroClass App ─ available for iOS and Android smartphones in app stores. With this functionality, you can schedule fillups, know which airports have Shell Aviation fuels, and consult weather information to guide flight planning. Learn more here.

Satisfaction survey |GRI 102-44, 103-2, 103-3|

Between November 2017 and January 2018, we conducted surveys to measure ethanol and sugar client satisfaction, establish a history for tracking our evolution, and identify opportunities in those markets.

We adopted the Net Promoter Score (NPS) methodology, which aims to assertively measure consumer satisfaction and loyalty, in addition to enabling benchmarking due to wide use by several corporations.

Consolidation

Specifically in the segments of Aviation, Retail, and Business to Business (B2B), every month we gather a group of clients to respond to the Index5 survey, whose results are audited by an independent company. In 2017/2018, overall satisfaction was 94.9% in Aviation and 94.8% in Retail and B2B.

Quality assurance

Certifications and registrations |GRI 102-12|

We have certifications and registrations that attest to the quality of our products and the excellence of our processes:

1 Offices
2 The terminals in Sinop (MT), Cascavel (PR), Santa Maria (RS), and Miritituba (PA) are scheduled for 2019.

Evolution in Bonsucro certification

Bonsucro is a voluntary international certification dedicated to increasing sustainability in the sugar and ethanol sector through an external audit process in order to comply with the best environmental, social, and economic criteria for cultivating sugarcane and producing its co-products. |GRI 102-12|

We continuously seek to promote these criteria into our operations and across the value chain by engaging our partners in the sustainability journey through the ELO Program, thereby ensuring that all players are aligned with best social and environmental practices.

In 2017/2018, the Santa Helena, Ipaussu and São Francisco units obtained the Bonsucro certification, totaling 20 production units with the seal. |GRI 102-12|

* The decrease in the volume of certified sugarcane is due to a strategic decision to transfer part of the volume of Bonsucro certified sugarcane from partners to the ELO program. This movement does not generate impacts on fulfilling social and environmental criteria, since the ELO Program has the same level of requirement and includes an external assurance process.

100% quality at the distribution terminals

At the end of the first half of 2017, we obtained the best result in quality of the fuel marketed under the Fuel Quality Monitoring Program (PMQC), created in 1998 by the National Agency of Petroleum, Natural Gas, and Biofuels (ANP), to evaluate the product going from pump to engines.

We recorded 98.8% automotive fuel compliance, leading the quality aspect in the distribution industry, and ahead of the main competitors.

The result reflects our team's focus on quality controls and the care we take to ensure that fuels are tested at all phases of the process: receiving, storing, and shipping.

In order to reinforce our commitment to the topic, we held the event called 100% Qualidade (100% Quality), in which we opened our terminals to clients, partners, and authorities in order to present the Raízen quality management standard, raising awareness of the importance of delivering the best product to our clients.

All guidelines are established by the Logistics, Distribution, and Trading Quality Policy, and the procedures are documented for employees in the Operational Practices Guide (MPO).

Movimento Combustível legal (Legal Fuel Movement) |102-12, 103-2, 103-3|

In order to involve society, government, judiciary, and legislators in discussions on illegal activities in the fuel sector, we were one of the supporters of the National Association of Fuel, Lubricants, Logistics, and Convenience Distributors (Plural, former SINDICOM) in the Legal Fuel Movement.

The initiative defends actions that combat fraudulent activities, such as tax evasion, tax defaults, and fraud in the fuel chain.

According to a study by the Getulio Vargas Foundation (FGV), the evasion is so great that it causes an annual loss of BRL 4.8 billion in taxes, an amount that could be invested in health, education, safety, and infrastructure.

Click here to learn more.

Development of the surrounding areas

For a better future.

In addition to creating jobs and driving economies, we seek to promote social transformation in the regions where we operate, expanding opportunities for young adults, adults, and children.

In 2017/2018

Project Capitólio |GRI 102-43, 103-2|

In March 2018, our tool for managing relationships with public authorities and industry associations in the regions where our production units are located entered the test phase.

Structured throughout the crop year, within the scope of Project Capitólio, the initiative consists of connecting several management systems, which will allow for an organized, systematic, and strategic view of the operations, their impacts, and their opportunities in relationships with stakeholders, as well as support for decision-making.

The tool will also be fed with information about interactions received on a communication channel with the whole community. Via a toll-free number, 0800 728 1616, or email fale@raizen.com, anyone (person or legal entity) may contact us to ask questions or record complaints, compliments, or suggestions related to operational, environmental, and social issues associated with our operations.

The purpose of Project Capitólio is to support the External Relations area with information for more efficient interaction with the community, the government, and other strategic stakeholders, focusing on harmonizing operations and the sustainable development of the regions where we operate.

As a result, it is possible to systematize, in all geographies, the practices that should be adopted in relationships with these audiences. The tool will be fully implemented during the 2018/2019 crop year.

All procedures ─ which are systematized through Project Capitólio ─ regarding donations, sponsorships, incentivized projects, and other actions toward local engagement with stakeholders follow the guidelines in our Social Performance Policy.

Governance of incentivized funds |GRI 103-2|

Another gain deriving from the Project Capitólio system will be managing our social investment and related activities more intelligently, since, by cross-referencing data, it is possible to evaluate the criticality of each location and identify priority demands that will guide us when establishing goals and objectives for the actions to be taken.

In addition, planning of social initiatives is guided by our Criticality Tool, which analyzes risks and opportunities. To ensure the proper use of resources from incentive laws, our tax team plans the contribution and evaluates project eligibility, and projects are later classified with the assistance of software and evaluated by the Marketing, Social Responsibility, and Tax teams, as well as by business representatives.

Other software analyzes the performance of the supported initiatives, computing gains for both our business and other stakeholders.

We believe that individual development comes through opportunities for access to education, culture, and sports. For this reason, we have invested in promoting initiatives that contribute to providing these opportunities.

Raízen Foundation |GRI 103-2|

The Raízen Foundation is a non-profit Civil Society Organization of Public Interest (OSCIP), managed by our Social Responsibility team. It is an important instrument for managing projects geared toward relationships with local communities, fostering education, professional training, and social inclusion.

In 2017/2018, the entity continued the initiative called Viver um Conto (Living a Story), which has been held since 2009 with the purpose of offering culture and education to children attending public schools, disseminating values that contribute to building citizenship skills.

The action was carried out in the cities of Valparaíso (SP), Ipaussu (SP), Santa Cruz do Rio Pardo (SP), Bernardino de Campos (SP), Piracicaba (SP), Charqueada (SP) and Jaú, and mobilized 18,913 young people. The appeal of the edition undertaken during this crop year was respect for life. The presentations dealt with day-to-day hazardous situations and taught that simple actions are key to avoiding accidents.

The crop year was also highlighted by the 9th edition of Recicle Fashion (Recycle Fashion) and the expansion of this initiative to the cities of Ipaussu (SP), Guariba (SP), Barra Bonita (SP), and Valparaíso (SP). The event, aiming to promote the environmental awareness and creativity of children and adolescents, includes a fashion show of secondhand clothing renovated by students from the municipal public school system.

Another action front is training People with Disabilities (PwD), who would like to enter the job market. In Capivari (SP), with the Department of Economic Development and Employment of the municipality, and the Association of Service and Social Assistance of the parish of São Benedito de Capivari (ASAS), 72 spots were opened for three free training courses: residential electrician, forklift operator, and preparation for the job market. Classes were taught at our Mobile Hub, a traveling trailer truck equipped with the necessary infrastructure to offer professional training to people living close to our areas of activity.

In partnership with the National Service of Industrial Learning (SENAI) of Araraquara (SP), we offer 15 spots for each of the courses: Basic Mechanics for Drivers Transporting Sugarcane and for Production Line Feeder. The goal was to develop technical skills in sugarcane vehicle mechanics and in supplying materials to production lines.

Since we initiated training initiatives in 2014/2015, we have already offered 1,560 spots in several courses. Nearly half of the graduates joined our staff.

To learn about other projects, visit the Raízen Foundation website.

Environmental preservation |GRI 103-2|

Preserving nature is thinking about the future.

In order to demonstrate our commitment to minimizing the environmental impacts resulting from our operations, we continuously work on Environmental Management Plans (EMP), one of the requirements for Bonsucro certification. The document, prepared for each unit holding the seal, consists of pre-defined, measurable goals, objectives, and actions in topics monitored by managers.

The commitment to preserving nature is also extended to other units and reinforced by our adherence to the Agro-Environmental Protocol, which establishes additional responsibilities such as protecting and restoring riparian forests, regularizing the Rural Environmental Registry (CAR), and best practices for the use of agricultural inputs in general.

We carry out studies to record the history of biodiversity in agro-industrial areas and to evaluate the interaction of animals with our activities. We also monitor the Permanent Preservation Areas (PPAs) located in our industrial parks, ensuring the preservation of local wildlife and flora.

At our production units, even considering the capacity to generate energy from biomass, we invest in technology for the best operational efficiency and consequent reduction in consumption.

Concerning water, the points of abstraction are monitored so that consumption does not exceed the pre-established targets. In 2017, we won the 12th edition of the Water Conservation and Reuse award of the Industries Federation of the State of São Paulo (FIESP). The achievement refers to the ReduSa (Water Use Reduction) project, implemented during the 2015/2016 crop year.

A pioneer in the sugar and ethanol sector, the purpose of the project is to reduce abstraction and consumption of water from external sources (surface and groundwater) through best practices in water management and water reuse in the production process, including reducing the amount of effluents generated.

Responsible use of the soil is also another of our environmental concerns. Thus, we use only the best preparation and conservation techniques. All planted areas and 90% of harvested areas are operated using the RTK (GPS system), technology that avoids soil compaction. At industrial units, chemicals are stored in suitable locations with containment basins. Employees are trained to conduct inspections and follow all necessary procedures in order to avoid spills.

In order to avoid the risk of spills in logistics operations and service stations, carriers are instructed to deploy their local Health, Safety and Environment (HSE) teams, which work to identify causes and implement preventive measures. At fuel dealers, we conduct surveys to assess the quality of equipment and operations, instructing these partners on how to adopt appropriate management procedures, when applicable.

Click here for more information on social and environmental aspects.|GRI GRI 202-1, 203-1, 303-1, 304-1, 304-2, 306-3, 411-1, 413-1, 413-2|

Financial results |GRI 103-2|

The Brazilian economy showed signs of recovery in the first three months of 2018, which positively impacted our business. Adjusted EBITDA for 2017/2018 increased by 6% compared with the previous crop year (BRL 7.108 billion and BRL 6.676 billion, respectively). This growth is mainly due to the higher volume of all products sold, both by Raízen Energia and by Raízen Combustíveis.

Raízen Energia ended the 2017/2018 harvest with total crushing of 61.2 million tons of sugarcane, up 3% over the 2016/2017 volume (59.4 million tons). The productivity index, measured using a combination of TRS (Total Recoverable Sugar - per ton of sugarcane crushed in kilograms) and TSH (Tons of Sugarcane Harvested per hectare), was 9.8 ton of TRS/hectare, a 5% reduction compared with the previous harvest due to lower rainfall concentration in the period. Even so, production of sugar equivalent was 6% higher than the previous one - reflecting our constant analysis of profitability per product.

At Raízen Combustíveis, in the first quarter of 2018, the total volume sold was 3% higher YoY, which attests to the assertiveness of our expansion strategy and sustainable relationship with the network of stations. Sales of diesel and aviation fuel grew by 6% and 8% respectively, driven by a stronger economy. In turn, the volume of otto cycle (gasoline + ethanol) sold in the first three months of 2018 was in line with the same period of 2017 (-3% in gasoline equivalent), following the market trend showing a slower recovery in this segment.

Raízen Energia

Raízen Energia's adjusted net income reached BRL 15.5 billion, a 20% increase over the previous harvest. Adjusted EBITDA, in the same comparison, increased by 11%, totaling BRL 4.1 billion, reflecting higher sales volumes, especially ethanol and bioenergy.

Total sugar sales grew 4% in 2017/2018 compared with 2016/2017, reaching BRL 6.166 billion. Total ethanol sales increased by 23% in the crop year, which represents BRL 7.444 billion; and energy cogeneration sales, in turn, totaled BRL 952 million in the period, an increase of 84%.

Cost of goods sold grew 33% to BRL 12.5 billion, as a result of the expansion in sales, partially offset by the 4% decrease in the unit cash cost in the period compared with the 2016/2017 harvest, impacted by the lower CONSECANA, an indicator that directly affects the costs of leasing land and sugarcane from suppliers. Disregarding this impact, cash cost would be BRL 697/ton (+5% compared with 2016/17), affected by the profile of the harvest (longer duration in crushing days and greater mix of third-party sugarcane). When normalized by this effect, cash cost of the current harvest would be stable, absorbing the inflation accumulated in the period and reflecting our continuous search for operational efficiency.

General and administrative sales expenses totaled BRL 1.4 billion (+18%), an increase due to the higher volume sold, as well as one-off expenses due to the incorporation of the Santa Cândida and Paraíso mills in September 2017.

Net profit for the year was BRL 643 million and value added was BRL 4.8 billion, broken down as shown in the chart:

Raízen Energia – Value Added Distribution in the harvest |GRI 201-1|

Click here to access the complete Value Added Statement for Raízen Energia.

Raízen Combustíveis

The total volume sold in the crop year was 3% higher compared with 2016/2017. Sales of diesel grew 6%, and jet fuel (Jet-A 1) and otto cycle (gasoline + ethanol) increased by 0.4% and 1%, respectively.

Adjusted EBITDA reached BRL 2.989 billion (+3%) in 2017/2018, expansion mainly explained by growth in total sales volume.

The network of Shell stations ended the crop year with 6,329 stations, net increase of 286 stations in the last 12 months (6,043 stations at the end of the previous harvest).

The financial result mainly reflects the improvement in the financial expenses line. The appreciation of the US dollar against the Brazilian Real (from BRL 3.1684/USD to BRL 3.3238/USD) had opposite effects on the exchange rate variation and derivatives lines, with a long position in USD future, not impacting the result.

Net profit was BRL 1.669 billion, up from BRL 1.658 billion reported in 2016/2017.

Value added of Raízen Combustíveis totaled BRL 5.5 billion, broken down as shown in the chart.

Raízen Combustíveis – Value Added Distribution in the harvest |GRI 201-1|

Click here to access the complete Value Added Statement for Raízen Combustíveis.

Combined and consolidated

In aggregate and consolidated, our EBITDA totaled BRL 6.320 billion, a reduction of 6% in relation to the previous harvest. Adjusted EBITDA increased by 6% to BRL 7.108 billion in the same period.

Net profit was BRL 2.311 billion, 25% below that reported in 2016/2017 (BRL 3.062 billion).