Brazil’s Cosan swings to loss on higher debt costs

Brazilian conglomerate Cosan SA (CSAN3.SA) reported a third-quarter net loss on Friday, swinging from a big profit in the same period last year, as the group paid higher interest expenses and saw poor performance in Raizen Energia (RAIZ4.SA).

The conglomerate, which controls companies in sectors ranging from sugarcane to logistics, lost 202 million reais ($37.70 million) in the July to September period, compared with a 3.26 billion reais profit during the same months last year.

During the quarter, Cosan reported cost of debt of 679.3 million reais, a more than 90% spike year-on-year, as Brazil’s interest rate peaked at 13.75%, in addition to the issuance of roughly 8 billion reais in commercial notes.

Weak figures from Raizen, a joint venture with Shell (SHEL.L) that produces ethanol and sugar, also dented Cosan’s bottom line, reflecting consistent price declines for its products.

Stronger performances from freight train unit Rumo SA (RAIL3.SA) and lubricant producer Moove boosted Cosan’s quarterly results, helping achieve 19.3% growth in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), to total 4.10 billion reais.

The figure slightly exceeded analyst estimations polled by Refinitiv of 4.08 billion reais.

Cosan’s financial leverage, measured by the ratio between its net debt and EBITDA from the last 12 months, came in at 3.1, in the three-month period this year, compared to 2.1 in the third quarter of 2021.

In October, the firm controlled by Brazilian billionaire Rubens Ometto, announced a 4.9% stake in mining giant Vale SA (VALE3.SA), which it added could further grow.

($1 = 5.3579 reais)