Cosan Limited CZZ reported weak fourth-quarter 2016 results, with bottom line reporting net loss of R$ 38.1 million ($ 11.5 million). The company had posted net earnings of R$ 356.7 million ($ 92.6 million) in the year-ago quarter and R$ 158.2 million ($ 48.8 million) in the previous quarter.
For 2016, the company reported net earnings of R$ 277.8 million ($ 79.6 million), down 31.5% year over year.
Revenues
In the quarter, Cosan generated revenues of approximately R$ 2,785.9 million ($ 844.2 million), decreasing 17% year over year.
The company operates under two business segments: Cosan S.A. and Cosan Logistica S.A. While the former includes Raizen Energia, Raizen Combustiveis, Comgas, Moove and Cosan Corporate, the latter comprises the Rumo Logistica business.
Fuel volumes sold decreased 2.9% year over year due to lower sales volume of ethanol, diesel and aviation, partially offset by increase in volumes of gasoline and other products.
Revenues from sugar sales decreased 13% year over year, while that from ethanol sales grew 1%. Energy cogeneration revenues declined 9% year over year.
Total natural gas sales volume fell 8.6% year over year. Revenues from Moove fell 2.5%.
For 2016, the company’s revenues totaled R$ 12,518.1 million ($ 3,586.8 million), increasing 1.3% year over year.
Margins
In the quarter, Cosan’s cost of sales and services declined 6.6% year over year, representing 79.7% of net revenue compared with 70.8% in the year-ago quarter. Gross margin decreased 890 basis points (bps) year over year to 20.3%. Selling, general and administrative expenses grew 9.3% to R$ 548.8 million ($ 166.3 million), representing 19.7% of net operating revenues. Financial expenses totaled R$ 725.8 million ($ 219.9 million).
Balance Sheet
Exiting the fourth quarter, Cosan had cash and cash equivalents of R$ 4,500 million ($ 1,384.6 million), up from R$ 3,148 million ($ 968.6 million) in the previous quarter. Loans and financing increased 3.1% sequentially to R$ 18,338 million ($ 5,642.5 million).
Outlook: For 2017, Cosan anticipates pro forma net revenue to be R$ 45-R$ 48 billion for Cosan S.A., while earnings before interest, tax, depreciation and amortization (“EBITDA”) are projected to be within R$ 4.75-R$ 5.25 billion. Guidance for Cosan S.A.’s and Rumo’s businesses is discussed below:
Raizen Energia (guidance for crop year Apr 2017-Mar 2018): Management expects crushed sugarcane volumes within approximately 59-63 million tons. Sugar volume produced will likely come in a range of 4.3-4.7 million tons.
Guidance for ethanol volume produced is in the range of 2.0-2.3 billion liters, while volume of energy sold is expected within 2.0-2.2 million MWh. EBITDA is likely to come within R$ 3.9-R$ 4.3 billion, while capital spending is anticipated within R$ 2.1-R$ 2.4 billion.
Raizen Combustiveis: EBITDA is predicted in a range of R$ 2.7-R$ 3.0 billion and capital expenditure within R$ 800-R$ 1,000 million.
Moove: EBITDA is expected in the R$ 140-R$ 160 million range.
Comgas: Volume of gas sold is likely to fall within 4-4.3 million cbm, while EBITDA is projected in a range of R$ 1.55-R$ 1.65 billion. Capital expenditure is likely to come within R$ 450-R$ 500 million.
Rumo: EBITDA is predicted in a range of R$ 2.6-R$ 2.8 billion and capital expenditure within R$ 2-R$ 2.2 billion.
Cosan Limited Price and Consensus
Cosan Limited Price and Consensus | Cosan Limited Quote
Zacks Rank & Other Stocks to Consider
With a market capitalization of approximately $ 2.5 billion, Cosan presently carries a Zacks Rank #2 (Buy). Other favorably ranked stocks in the industry include Cal-Maine Foods, Inc. CALM , Monsanto Company MON and The Andersons, Inc. ANDE .Each stocks carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here .
Cal-Maine Foods, Inc.’s bottom-line estimates for fiscal 2017 and fiscal 2018 have been revised upward over the last 60 days. Average earnings surprise for the last four quarters is a positive 25.14%.
Monsanto Company’s earnings expectations for fiscal 2017 and fiscal 2018 have improved over the past 60 days. Average earnings surprise for the last four quarters is a positive 309.71%.
The Andersons, Inc.’s earnings estimates for 2017 have been revised upward in the last 60 days.
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