Cosan Posts Weak 4Q13 Earnings

Zacks

Brazilian sugar and ethanol producer, Cosan Limited (CZZ) reported disappointing results for the fourth quarter of 2013 as its adjusted net income plummeted 86.2% year over year to R$29.7 million (US$14.9 million).

For the fiscal year 2013, Cosan’s adjusted net income came in at R$638.2 million (US$317.5 million), up 51.3% over the year-ago quarter’s earnings.

Revenue

Top-line result for Cosan was quite impressive. Net revenue in the fourth quarter 2013 was R$8,461.5 million (US$4,230.8 million), up 46.0% year over year.

Fuel sales in the quarter went up 9.7% year over year while sugar sales saw a 76.8% increase to R$1,176.7 million (US$588.4 million) in the quarter. Ethanol sales were up 121.3% to R$1,109.9 million (US$555.0 million).

All of the 24 mills operated during the quarter have a crushing capacity of 66 million tons of sugarcane per crop year. Sugar production in fiscal 2013 grew 4.9% year over year to 4.162 million tons while crushed sugar volume increased 6.2% to 56.2 million tons.

Energy cogeneration revenues in the quarter were R$13.1 million (US$6.6 million), up roughly 910.7%. Total gas sales volume jumped 15.1%. Rumo registered about 139.8% and 109.6% increase in revenues derived from its Transportation and Loading businesses, respectively.

Radar reported a 23.5% decline in its revenues as no properties were sold in the quarter while a majority of the revenues came from leasing activities.  
       
For 2013, net revenue of Cosan was approximately R$30,016.5 million (US$14,933.6 million), representing a 28.3% year-over-year growth.

Margins

Cosan’s cost of goods, as a percentage of revenues, was down 100 basis points year over year to 87.8% and also registered a 49.6% year-over-year increase, leading to a gross margin of 12.2% in the quarter. Selling, general and administrative expenses, as a percentage of revenues, decreased 10 basis points to 8.1%. Operating margins in the quarter was 5.5%.
 
Balance Sheet/Cash Flow

Exiting the fiscal fourth quarter of 2013, cash and cash equivalents (including restricted cash) of Cosan was approximately R$2,585.8 million (US$1,280.1 million), up 6.8% sequentially. Long-term debt went down 3.6% to R$9,665.2 million (US$4,784.8 million).

Cash flow from operations in the quarter was $1,237.5 million (US$618.8 million) while capital spending went up by 43.9% to R$724.3 million (US$362.2 million).
 
Outlook

Management of Cosan provided its guidance for the fiscal year 2014. Net revenue is expected to be within the R$35.0-R$38.0 billion range; EBITDA in the range of R$3.95-R$4.35 billion and capital expenditure within the R$3.1-R$3.35 billion range. Guidance for Cosan’s segments is discussed below:

Raizen Energia: Management expects crushed sugarcane volumes to be approximately within 59.0-62.0 million tons, sugar volume sold within 4.3-4.6 million tons, and ethanol volume sold within 2.1-2.3 billion litres. Volume of energy sold is expected to range within 1.9-2.1 million MW. EBITDA is likely to be within the R$2.4-R$2.7 billion range.

Raizen Combustiveis: Fuel volume sold is likely to be within the 22.5-24.0 billion litre range and EBITDA to be within the R$1.6-R$1.8 billion range.

Rumo: Volume of loading is expected to range within 8.5-10.5 million tons and EBITDA within the R$0.33-R$0.37 billion range.

Radar: EBITDA is expected to be within the R$0.14-R$0.16 billion range.

Other Business: Volume of lubricants and base oil sold is likely to be within 0.27-0.31 billion litres.

Comgas: Volume of gas sold is likely to be within 5.2-5.7 million cbm while EBITDA is expected to be within R$1.4-R$1.6 billion range.

Cosan currently has a Zacks Rank #2 (Buy). Other players to watch out for in the industry are Gruma S.A.B. de CV (GMK), Monsanto Company (MON) and Syngenta AG (SYT).
 

Read the Full Research Report on CZZ

Read the Full Research Report on SYT

Read the Full Research Report on MON

Read the Full Research Report on GMK

Zacks Investment Research



More From Zacks.com

Rates

View Comments (0)