Brazilian sugar and ethanol producer,
) reported weak bottom-line results in fourth-quarter 2013 as its
adjusted net earnings plummeted 32.3% year over year to R$229.8
million (US$101.2 million).
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In 2013, Cosan recorded net earnings of R$261.3 million (US$121.5
million), down 67.9% year over year.
Cosan generated net revenue of R$2,217.8 million (US$977.0
million) in the fourth quarter, up 41.6% year over year. Pro
forma revenue, including the Raizen contribution, was $9,390
million (US$4,136.6 million) in the fourth quarter, reflecting an
increase of 12.0% year over year.
Fuel sales went up 14.8% year over year due primarily to higher
volumes of ethanol and diesel sold in the quarter. Sugar sales
went down 29.9% to R$876.2 million (US$386.0 million) while
ethanol sales were up 11.2% to R$1,042.8 million (US$459.4
All of the 24 mills that operated during the quarter have a
crushing capacity of 65.6 million tons of sugarcane per crop
year. Sugar production in the quarter was down 13.7% year over
year to 1.18 million tons and crushed sugar volume also decreased
9.9% to 16.1 million tons.
Energy cogeneration revenues in the quarter was R$126.1 million
(US$55.6 million), down 60.8% year over year. Total gas sales
volume decreased 5.5% in the quarter. Revenues from Rumo's
Transportation business decreased 12.6% while it increased 14.2%
for Loading business.
Revenues from Cosan Lubrificantes increased 3.7% year over year.
Radar reported a 19.9% increase in revenues.
In 2013, net revenue generated was R$8,867.5 million (US$4,124.4
million) while revenues including Raizen contribution were
R$36,165.2 million (US$16,821.0 million).
Cosan's cost of goods, as a percentage of revenue, was up 20
basis points year over year to 70.6%, leading to a gross margin
of 29.4% in the quarter. Sales, general and administrative
expenses increased 22.4% to R$367.9 million (US$162.1 million).
Exiting fourth-quarter 2013, Cosan's cash and cash equivalents
were approximately R$1,474.6 million (US$627.5 million),
reflecting a sequential increase of 22.7%. Loans and financing
increased 2.5% sequentially to R$8,830.2 million (US$3,757.5
A couple of days before reporting its fourth-quarter 2013
results, Cosan, to gain controlling interest in Latin America's
largest independent logistics company, America Latina Logistica
(ALL), proposed to the latter a stock-merger with its subsidiary,
Rumo Logistica Operadora Multimodal S.A (Rumo).
The incorporation of ALL's shares by Rumo will create the largest
railway and logistics company in Latin America. Existing
shareholders of Rumo and ALL will be allotted a 36.5% and a 63.5%
stake, respectively, in the combined company, with Cosan holding
the right to appoint the majority of the board of directors. The
completion of the transaction is subject to fulfilment of certain
conditions including the approval of ALL's board of directors and
certain regulatory approvals.
The association requires Rumo to be registered as a publicly held
company. For this, Cosan plans to propose to its board of
directors to spin-off its logistics operations from the rest of
the business. Two new companies, Cosan Energia and Cosan
Logistica, will be formed and listed on the exchange. Cosan
Logistica will be responsible for the operations of Rumo
Logistica while Cosan Energia will combine operations of Raizen
Energia, Raizen Combustiveis, Comgas, Radar and Cosan
For 2014, Cosan anticipates earnings before interest, taxes,
depreciation and amortization (EBITDA) to be within the
R$4.15-R$4.65 billion range and capital expenditure to be within
the R$2.5-R$2.8 billion range. Guidance for the company's
segments is discussed below:
Management expects crushed sugarcane volumes to be approximately
within 61.0-63.0 million tons, sugar volume sold within 4.4-4.7
million tons and ethanol volume sold within 2.3-2.6 billion
litres. Volume of energy sold is expected to range within 2.0-2.2
million MW. EBITDA is likely to be within the R$2.3-R$2.7 billion
range, while capital spending is expected to range within
EBITDA is anticipated to be within the R$2.0-R$2.2 billion range
and capital expenditure within the R$750-R$850 million range.
Volume of loading is expected to range within 10.5-12.5 million
tons and EBITDA within the R$0.40-R$0.45 billion range.
EBITDA is expected to be within R$0.17-R$0.20 billion.
Volume of lubricants and base oil sold is likely to be within
0.27-0.31 billion litres. EBITDA is expected to be within the
R$0.14-R$0.17 billion range.
Volume of gas sold is likely to be within 5.2-5.7 million cbm
while EBITDA is expected to be within the R$1.30-R$1.55 billion
range. Capital expenditure is likely to range within
Cosan currently has a market capitalization of $3.2 billion and
carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the
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