High LeverageSustained high debt levels raise interest and refinancing strain, reducing financial flexibility for capex or working capital. In a cyclical industry, elevated leverage magnifies downside risk if sugar/ethanol realizations weaken or cane costs rise, pressuring long-term solvency.
Volatile Operating Cash FlowInconsistent cash generation undermines the firm's ability to fund operations, service debt, and invest in maintenance or expansion without external funding. Persistent cash volatility makes planning harder and raises the probability of liquidity-driven constraints over coming quarters.
Declining Margins And Revenue VolatilityFalling gross and net margins alongside revenue declines signal structural cost pressure or adverse pricing dynamics (cane costs, sugar prices). Unless structural efficiencies or higher-value product mix are achieved, profitability and cash generation may remain impaired over the medium term.