UPDATE 1-Brazil sugar and ethanol group Cosan posts sharp drop in profit
(Adds details of financial results)
SAO PAULO Nov 5 (Reuters) - Brazil's largest sugar and ethanol group Cosan SA said third-quarter profit fell 92 percent as a weaker Brazilian real caused the local-currency value of its debt to rise.
The company recorded net income of 15.2 million reais ($6 million), in the quarter compared with 205.9 million reais a year earlier, according to a filing with Brazil's securities regulator, the CVM.
The company's earnings before interest, taxes, depreciation and amortization, or EBITDA, a measure of the company's ability to generate profit from operations, fell 12 percent to 1.06 billion reais in the three months ended Sept. 30.
Cosan, which has divisions spanning natural gas, fuel distribution, logistics and farm land management, started principally as a sugar and ethanol producer.
The sugar and ethanol industry's outlook remains bleak for future investment under the margin-wrecking fuel-price control policies of the recently re-elected President Dilma Rousseff. By keeping domestic gasoline and diesel prices below world prices, ethanol has become uncompetitive with other Brazilian vehicle fuels.
The company reduced quarterly capital expenditures 14 percent from a year ago to 588.9 million reais.
The sugar, ethanol and biomass generation operations known as Raizen Energia, reduced its sugar production by 12 percent from last year to 1.88 million tonnes in the quarter. Ethanol production was up 2 percent, however. The company manages 24 mills.
The 15 percent drop in the amount of cane yielded by each hectare to 73.8 tonnes jacked up operating costs for Cosan's mills, which had to pay more in harvest and transportation costs to turn cane into sugar or fuel. Diesel-run harvesters collected 85 tonnes a hectare last year. Continuación...