Cosan Net Beats Estimates as Fuel Prices Boost Sales

(Corrects Ebitda margin in sixth paragraph.)

Cosan SA Industria & Comercio, which controls the world’s largest sugar-cane processor with Royal Dutch Shell Plc (RDSA), posted profit that beat analysts’ estimates in the fiscal fourth quarter as rising fuel prices boost sales.

Net income of 149.6 million reais ($74.2 million) in the quarter ended March 31 was higher than an expected profit of 133 million reais excluding some items, the average of four analyst estimates compiled by Bloomberg. Profit fell 69 percent from 480.9 million reais a year earlier, Sao Paulo-based Cosan said in a regulatory filing today.

Sales climbed 26 percent to 5.79 billion reais in the quarter from a year earlier after fuel prices increased 7 percent on average, Cosan said. Gasoline, ethanol and diesel represent about two-thirds of Cosan’s revenue.

Cosan jumped 3.2 percent to 29.98 reais at 10:52 a.m. in Sao Paulo, heading to the biggest gain since Sept. 14.

Shell is considering making a $550 million payment for the joint venture with Cosan due in April 2013 earlier, Cosan Chief Financial Officer Marcelo Martins said on a conference call today.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, declined to 6.3 percent of sales, from 22 percent a year earlier, after sugar prices fell. The average price of sugar sold by Cosan in the quarter dropped 19 percent from a year earlier.

Cosan said it expects to process between 52 million and 55 million metric tons of sugar-cane in the year that started April 1. The company will produce as much as 4.2 million tons of sugar and 2.1 billion liters (554 million gallons) of ethanol. It expects to report sales of as much as 29 billion reais this fiscal year.

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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