Cosan Climbs to Highest Since 2006 as Profit Beats Forecasts

Cosan SA Industria & Comercio rose to the highest in more than six years after the Brazilian sugar producer’s expansion into energy helped push up profit more than analysts forecast.

The shares advanced 3.2 percent to 47.85 reais at the close in Sao Paulo, the highest since August 2006. Brazil’s benchmark index dropped 1 percent.

Net income rose to 342.3 million reais ($174 million) in the quarter ended Dec. 31, from 93.8 million reais a year earlier, according to a statement filed after the close of trading yesterday. That beat the 227.2 million-real average of six estimates compiled by Bloomberg.

“Cosan’s strong results across the board should have a positive impact on shares,” Christian Audi and Vicente Falanga Neto, analysts for Banco Santander SA, wrote in a note to clients today.

Cosan, which shares control of the world’s biggest sugar-cane processor with Royal Dutch Shell Plc, has expanded into fuel distribution and logistics after several acquisitions in the past five years. The company, based in Sao Paulo, completed the 3.4 billion-real purchase of a 60.1 percent stake in Cia. de Gas de Sao Paulo, known as Comgas, in November.

Cosan benefited from “good margins” across all businesses after fuel sales rose and mills stepped up production of sugar and ethanol in the quarter, Auro Rozenbaum, an analyst at Banco Bradesco SA who has a recommendation equivalent to buy on the stock, wrote in a Jan. 30 client note.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, represented 14 percent of sales, compared to 7.8 percent a year ago.

Once purely focused on sugar and ethanol production, the company founded by billionaire Rubens Ometto bought Exxon Mobil Corp.’s Brazilian assets in 2008 and partnered with Shell three years later to become Brazil’s third-largest fuel distributor after Petroleo Brasileiro SA and Ultrapar Participacoes SA.

(Updates share price in second paragraph.)
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