Brazil-based Cosan Ltd. (CZZ) announced its preliminary results for the fourth quarter and fiscal year 2011. Net revenue in the quarter totaled R$4,609.3 million (US$2,776.7 million), up 4.9% year over year. For the fiscal year, net revenue jumped 17.8% year over year to R$18,063.5 million (US$10,502.0 million).
In the fourth quarter, CAA (Cosan Açúcar e Álcool) accounted for approximately 36.3% of the net sales with revenue totaling R$1,674.0 million (US$1,008.4 million), down 10.2% year over year. Sugar revenue plummeted 19.0% to R$985.1 million (US$593.4 million), primarily due to a 0.2% decline in sugar prices and 18.8% fall in sales volume. Ethanol revenue was up 10.7% to R$666.7 million (US$401.6 million) due to a 5.9% decline in volume, offset by a 17.6% increase in prices.
Rumo (Rumo Logística) revenue in the quarter totaled R$84.4 million (US$50.8 million), up 120.4% year over year and accounted for about 1.8% of net sales. The increase was primarily driven by the transportation agreement between Rumo and ALL.
Cosan Combustíveis e Lubrificantes (CCL) revenue was R$2,911.8 million (US$1,754.1 million), a growth of 12.5% year over year and accounted for about 63.2% of net sales. Fuels and Lubes revenue rose by 11.7% and 23.6% year over year, respectively.
Cosan is slated to release its fourth quarter and fiscal year 2011 results on June 6, 2011 after market closes.
Outlook
For fiscal year 2011, management anticipates that revenue would be in the range of R$16.5-R$18.5 billion (unchanged), EBITDA in the range of R$2.0-R$2.2 billion (versus prior expectation of R$2.0-R$2.4 billion), and capital expenditure in the range of R$1.9-R$2.3 billion (unchanged).
Crushed cane volumes are expected to range within 54-58 million tons (unchanged), sugar volume sold within 4.1-4.5 million tons (unchanged), and ethanol volume sold within 2.0-2.2 million litres (unchanged).
Cosan Ltd. owns the major shareholding (roughly 62.5%) of Cosan S.A., one of the world’s largest producers of sugar and ethanol. It is clear that Cosan has been growing through acquisitions and other expansion strategies.
However, the company is highly exposed to the volatility in supply and demand dynamic in domestic and international markets. Ethanol pricing is largely affected by changes in supply and demand for gasoline, while highly regulated market and speculation risks influence sugar prices. Besides, customer concentration risks and susceptibility to currency fluctuations impact the company’s financial results in adverse conditions.
Cosan's prime competitors include Archer Daniels Midland Company (ADM) and Copersucar – Cooperativa de Produtores.
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