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Cosan Limited (CZZ): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

12/4/2013 7:00:00 AM
Referenced Stocks:CZZ

Cosan's second-quarter 2014 net income was R$104 million versus a loss of R$202 million in the year-ago quarter. Revenues inched up 0.9% as higher fuel sales were partially offset by a decline in sugar sales. Sugarcane crushing increased 13% while sugar production rose 13.7%. Energy cogeneration revenues soared 108% while Transportation revenues were down 20%. For 2014, management maintained EBITDA guidance in the R$4.15 R$4.65 billion range. Also, the proposed Rumo-ALL merger will enable Cosan to gain an easy access to ALL's transportation services. However, rising costs and expenses, adverse impacts of unfavorable weather conditions and higher debt levels might impede the company's growth. Considering these, we maintain a Neutral recommendation on Cosan.


S o Paulo, Brazil-based Cosan Limited (CZZ) was incorporated in Bermuda in Aug 2007. The company was established as the controlling shareholder of Cosan S.A., a Brazilian company, after a corporate restructuring of the Cosan Group in Brazil. Cosan Limited currently holds roughly 62.3% of the controlling shares of Cosan S.A.

Cosan S.A. is engaged in the cultivation, harvesting and processing of sugarcane, which is the main raw material used to produce sugar and ethanol. Cosan is the world's largest producer and processor of sugarcane, having crushed approximately 61.4 million tons of sugarcane during 2013. It is not only the largest sugar producer in Brazil, but also the third-largest in the world. Further, the company is the largest ethanol producer in Brazil and the fifth-largest in the world, besides being the largest exporter of ethanol.

Cosan reports its results under the following heads: Raizen Energia (Sugar, Ethanol and Cogeneration), Raizen Combustiveis (Fuels Distribution), Comgas (Distribution of Natural Gas), Rumo (Logistics Operations), Radar (Investments in Agricultural Land), Cosan Lubrificantes (Lubricants and Specialties) and Other Business (Corporate Structure, Other Investments).

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