Cosan Reports Weak 4Q (CZZ)

Zacks

Brazilian sugar and ethanol producer, Cosan Limited (CZZ) released its fourth quarter and fiscal year 2012 financial results on May 30. Fourth quarter net income plummeted 66% to R$102.5 million (US$57.9 million).

In the fiscal year 2012, the company registered a 151% year-over-year increase with net income settling at R$1,181.3 million (US$699.0 million).

Revenue

Cosan’s net operating revenue jumped 25.7% year over year to R$5,793.9 million (US$3,273.4 million).

Sugar revenue in the quarter decreased 32.4% to R$665.6 million (US$376.0 million) in the quarter while Ethanol sales went down by 25.0% to R$501.5 million (US$283.3 million).

In the fiscal year 2012, total revenue settled at R$24,096.9 million (US$14,258.5 million), an increase of 33.4% year over year. However, results failed to gain momentum and lagged behind the Zacks Consensus Estimate of US$24,033 million.

In the fiscal year 2012, sugar production inched up 1.2% year over year to 3.969 million tons. However, adverse weather conditions in the fourth quarter resulted in a 2.4% decline in crushed sugar volume. All of the 24 mills remained closed in the fourth quarter registering nil crushed volumes.

Margins

Cost of goods, as a percentage of revenue, soared 13.6 percentage points to 88.9% and also registered a 48.4% increase year over year, leading to gross margin of 11.1% in the fourth quarter. Selling and general and administrative expenses, as a percentage of revenue, plummeted 80 basis points to 8.4%. Operating margins declined 13.2% percentage points to 2.5% in the quarter.

Balance Sheet/Cash Flow

Exiting the fourth quarter of 2012, Cosan’s cash and cash equivalents (including restricted cash) increased 27.5% sequentially to R$1,748.4 million (US$960.7 million) while long-term debt increased 1.5% to R$4,659.2 million (US$2,560.0 million).

Cash flow from operations in the quarter was $1,174.3 million (US$663.4 million), down 23.8% year over year. Capital spending went down by 46.0% to R$503.4 million (US$284.4 million).

Outlook

For fiscal year 2013, management anticipates that consolidated net revenue would be in the range of R$26.0-R$29.0 billion; EBITDA in the range of R$2.2-R$2.5 billion and capital expenditure in the range of R$2.1-R$2.4 billion.

Raizen Energia: For the fiscal year 2013, management expects crushed sugarcane volumes to range within 52-55 million tons, sugar volume sold within 3.9-4.2 million tons, and ethanol volume sold within 1.85-2.05 billion litres. Volume of energy sold is expected to range within 1.65-1.85 million MW. EBITDA is likely to be within R$2.2-R$2.5 billion range.

Raizen Combustiveis: For the fiscal year 2013, management expects fuel volume sold to be within the 21.0-23.0 billion litre range and EBITDA to be within R$1.3-R$1.5 billion range.

Rumo: For the fiscal year 2013, management feels that volume of loading would range within 8.0-10.0 million tons and EBITDA in the range of R$0.28-R$0.31 billion range.

Other Business: For the fiscal year 2013, management estimates volume of lubricants and base oil sold to be within 0.22-0.26 billion litres.

COSAN LTD-A (CZZ): Free Stock Analysis Report

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