07/06/2010 11h25

With more cash, plants already plan investments

Valor Econômico

The largest companies in the sugar and alcohol sector managed to fatten their cash this year taking advantage of the prices of the sugar in the 2009/10 harvest and of the high prices of the alcohol in the domestic market in the period between harvests.  The balance sheets of the publicly held companies show Cosan, São Martinho and Açúcar Guarani together had cash generation of R$ 2.4 billion (US$ 1.2 billion), more than double the three registered together at the end of the 2008/09 cycle. Of that total, only Cosan Açúcar e Álcool generated R$ 1.7 billion (US$ 863 million) (including the effect of the Hedge operations), the best result of the history of the company.  The value goes up to R$ 2 billion (US$ 1.02 billion) if other companies of the group, such as Cosan Combustíveis e Lubrificantes (CCL) are taken into account.

It is expected that the current harvest, 2010/11, also offers good profitability and liquidity to the plants.  "The performance in the season will greatly depend on the hedge strategy of each company.  But, in general, it tends to be a fairer market [in terms of price]", says Rubens Ometto, Chairman of the Board of Directors of Cosan.  The performance of the company that also had record net income of R$ 986 million (US$ 500.6 million), led to a reduction in the ratio between net debt and cash generation of 3.3 times last December to 2.5 times in March this year - despite all investments made, such as the acquisition of NovAmerica and Esso.  "We will continue our investments, such as the cogeneration project, besides those aimed at logistics and the food area", says Marcos Lutz, President of Cosan.

São Martinho and Açúcar Guarani also had record cash generation.  But it is the partnership with Petrobras Biocombustíveis that will leverage the investments of both companies, after two years of relative stagnation in the increase of the installed capacity.  The Government company will inject more than R$ 2 billion (US$ 1.1 billion) in its two new partners in the coming months - R$ 1.6 billion (US$ 889 million) in Açúcar Guarani and R$ 420 million (US$ 233 million) in São Martinho.  With that major investment, Açúcar Guarani should, therefore, take advantage of its own cash, generated this last harvest, to reduce its indebtedness.  As regards São Martinho, which transferred half of its net debt to the new ethanol company created with Petrobras - Nova Fronteira Bioenergia -, it will be more comfortable to resume the plan of growing in the State of São Paulo.