Cosan projects growth of up to 20% in 2013

The Cosan group provides a considerable growth for fiscal year 2013. The company expects to achieve net income between $12.81 billion and $14.28 billion, vice president of investor relations of Cosan Marcelo Martins said yesterday. Compared to net sales of fiscal year 2012 ($11.87 billion), it will mean a growth between 8% and 20%, if the estimates are confirmed. This projection does not include revenue of Comgás, which is in process of acquisition by the company.

Martins said the company projects an Ebitda (earnings before interest, taxes, depreciation and amortization) between $1.08 billion and $1.23 billion for 2013. The investments (Capex) should be between $1.03 billion and $1.18 billion.

In the center of the spotlight because of several deals announced this year, the company, which is the largest sugar and ethanol producer in Brazil and one of the largest fuel distributors in the country, proposed in February to enter the control block of América Latina Logística (ALL), acquired assets of lubricants in the UK and announced in April the purchase of 60.1% of shares of Comgás, marking its entry into gas distribution, becoming a group focused on infrastructure and energy.

This week, Cosan went again to the market, this time to announce that its food division, which owns the brands of sugar União and Da Barra, was associated with Camil, the largest rice and bean processing company of South America, and with fund GIF Codajas Participações, run by Gávea Investimentos, in order to create one of the largest food companies in the country.
Cosan reported consolidated net income of $11.87 billion in fiscal year 2012, 33.4% greater than the previous year. The net profit was $1.28 billion, more than three times higher than the $380.19 million achieved in the previous same period. Ebitda almost doubled in the comparison between fiscal years 2011 and 2012, from $1.31 billion to $2.62 billion, reflecting the synergies with the formation of Raízen, a joint venture between Cosan and Shell, founded in July 1, 2011.

The balance of the group’s results pleased the market. Yesterday, the ON securities close to $14.76, up 3.13%. Despite the net income and profit have decreased in the fourth quarter of 2012, analysts said the company delivered good performance, especially in the fuel area.

In the case of Raízen Energia, the agriculture crack that affected the Mid-South sugarcane plantations and its consequent increased costs have also generated an impact on company’s gross profit, which includes the production of sugar, ethanol and energy. Despite the annual renewal of sugarcane areas above 20%, Raízen failed to increase the volume of cane available for grinding in the cycle 2011/12, which reached 52.9 million tons, 2.4% lower than the previous cycle. The numbers of sugarcane grinding for the new crop are still uncertain, but the initial estimate of the company is that they stay between 52 million and 55 million tons.

The company should focus on expansion in the area of fuels through Raízen Combustíveis, in the Midwest, North and Northeast regions, which are markets considered by the company with the greatest growth potential. According to Marcos Lutz, CEO of Cosan, however, the company should not move forward in the country’s market share, currently around 23%. The expectation is to negotiate between 21 billion and 23 billion liters in the fiscal year 2013.

Lutz said the company aims to achieve the investment grade by rating agencies, but imposed no deadline for this. According to Lutz, Raízen should reach this status in the coming months. The executive believes that Cosan has not yet reached the level due to the level of leverage. The company is undergoing changes in its structure, which takes time until settle down, he said.