ADM Archer Daniels Midland Company

Cosan Limited (CZZ) posted encouraging results for the fourth quarter 2011, registering year- over-year increases in revenue and net income. Net income in the quarter was R$480.9 million, up 63.6% year over year. For the fiscal year 2011, net income plummeted 26.8% year over year to R$771.6 million.

Revenue

Considering the top line, net revenue (excluding eliminations) in the quarter totaled R$4,609.3 million (US$2,776.7 million), up 4.9% year over year and above the Zacks Consensus Estimate of US$2,304 million. For the fiscal year, net revenue jumped 17.8% year over year to R$18,063.5 million (US$10,502.0 million). Fiscal year revenue was above the Zacks Consensus Estimate of US$10,026 million.

In the fourth quarter, CAA (Cosan Acucar e Alcool) 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 Logistica) 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 Combustiveis 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.

Margins

Cost of goods sold plummeted 5.7% year over year to R$3,472.2 million. Selling expenses shot up by 21.2% to R$272.5 million while general and administrative expenses fell by 13.5% year over year to R$150.0 million.

In the reported quarter, EBITDA soared 63.7% year on year to R$1,057.5 million and accounted for 22.9% of net sales. EBIT was R$721.8 million with a margin of 15.7%, up 730 basis points year over year.

Balance Sheet/Cash Flow

Exiting the fourth quarter 2011, Cosan’s cash and cash equivalents (including restricted cash) increased 16.3% year over year to R$1,254.1 million while debt soared by 22.2% to R$6,516.8 million.

Capital spending in the fiscal year 2011 was R$3,037.2 million, up 19.3% year over year.

Outlook

For fiscal year 2012, management anticipates that net revenue would be in the range of R$25.5-R$27.5 billion; EBITDA in the range of R$1.8-R$2.2 billion and capital expenditure in the range of R$2.0-R$2.3 billion.

In June 2011, Cosan announced the completion of the corporate reorganization as a result of a joint venture with Shell. The venture gave rise to Raizen Energia Participacoes S.A., the world´s largest sugar, ethanol and cogeneration producer out of sugarcane and Raizen Combustiveis S.A., one of the largest fuel distributors in the Brazilian market.

Raizen Energia: For the fiscal year 2012, management anticipates crushed cane volumes to range within 56-60 million tons, sugar volume sold within 4.2-4.6 million tons, and ethanol volume sold within 2.1-2.3 billion litres. Volume of energy sold is expected to range within 1.4-1.6 million MW. EBITDA is likely to be within R$1.9-R$2.3 billion range.

Raizen Combustiveis: For the fiscal year 2012, management anticipates fuel volume sold to be within the 21.0-23.0 billion litre range and EBITDA to be within R$0.85-R$1.05 billion range.

Cosan Ltd. is one of the world’s largest producers of sugar and ethanol. It faces stiff competition from rivals like Archer Daniels Midland Company(ADM) and Copersucar - Cooperativa de Produtores.

 
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