6 de noviembre de 2014 / 1:53 / en 3 años

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.

The sharp drop in the per-hectare yield resulted from a severe drought that began at the beginning of the year across Brazil’s cane belt. Spring rains have resumed for now but nine of the past 10 months have had below-average precipitation.

The dry conditions the quickened harvest since April and the return of rains now near the end of the season will likely prompt an early closing to the crush this month for many mills.

Despite the smaller output from the drought-ridden crop, Cosan has built up ethanol stocks of more than 1 billion liters, up 66 percent from Sept. 30, 2013 but sales are down 37 percent. Sugar stocks are up 45 percent at 1.58 million tonnes with sales down 28 percent.

Meanwhile, sales revenue from Cosan’s fuel distribution division rose 12.5 percent in the quarter on sales of ethanol, gasoline and diesel. And stocks of fuels were down 27 percent from a year ago at the end of the third quarter.

The cost of goods sold for the fuels division also rose 12.8 percent over the same period.

The company’s fuel distribution division is a joint venture known as Raizen Combustiveis with Royal-Dutch Shell. ($1 = 2.51 Brazilian reais) (Reporting by Reese Ewing; Editing by Chris Reese and Lisa Shumaker)

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