Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cosan SA (CSAN, Financial) has been disciplined in capital allocation and improving leverage through liability and portfolio management, especially in a high-interest rate environment.
- The company successfully completed several strategic transactions, including the acquisition of Compagas and the sale of Norgás, enhancing its portfolio management.
- Rumo experienced higher volumes and tariffs, resulting in increased margins and market share gains in the Port of Santos.
- Moove achieved a 9% EBITDA increase quarter-on-quarter despite lower volumes, supported by a strong product mix and commercial strategy.
- Cosan SA (CSAN) improved its debt maturity profile to 6.4 years and reduced the average cost of debt, benefiting from favorable debt capital market conditions in Brazil.
Negative Points
- Cosan SA (CSAN) reported a decrease in net income compared to the previous year, primarily due to lower dividends from Vale and the impact of Cosan's shares.
- The company experienced a slight increase in safety incidents during the quarter, although it remains within acceptable levels.
- Raizen faced challenges with reduced sugarcane crushing levels due to drier weather and fires, as well as lower ethanol prices impacting EBITDA.
- The debt service coverage ratio decreased slightly, raising concerns about future dividend sources and the need for portfolio management to maintain financial health.
- The company faced challenges in executing IPOs for Moove and Compass due to market conditions, impacting potential liquidity events.
Q & A Highlights
Q: Can you explain the recent management changes at Raizen and what can be expected under your leadership?
A: Nelson Gomes, Cosan SA: The changes were made to refocus Raizen on its core business, such as mobility and sugar and ethanol, and to simplify its structure. This decision was made in agreement with our partner, Shell, to ensure that investments yield appropriate returns to shareholders.
Q: How do you view the debt service coverage ratio and its future trajectory?
A: Rodrigo Alves, Cosan SA: The current ratio is close to the minimum level, and we recognize the urgency to improve it. We are focusing on portfolio management to achieve a healthier level, ideally between 1.5 and 2, without relying on extraordinary dividends.
Q: What are the strategic plans for Moove and Compass regarding potential IPOs?
A: Nelson Gomes, Cosan SA: We decided against IPOs due to market conditions but remain open to private placements if they offer the right valuation. We are also considering liquidity events for both companies, especially given CVC's interest in exiting Moove.
Q: How do you perceive the impact of the US elections on your liability management for 2027?
A: Rodrigo Alves, Cosan SA: The US elections did not directly impact our liability management. The year has been volatile due to interest rate fluctuations, but our operations have been successful, focusing on comparable costs in the domestic market.
Q: What does it mean for a company to be part of the Cosan Group, and how does Cosan contribute to its subsidiaries?
A: Nelson Gomes, Cosan SA: Being part of Cosan means access to a unique management model and culture that unlocks shareholder value. We work closely with subsidiaries to identify opportunities and unlock value, maintaining a track record of successful asset management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
