CZZ The role of CZZ. Controlling and governing operating entities and optimizing capital allocation COSAN LIMITED CSAN3 RLOG3

Transcription

1 COSAN DAY 2016

2 DISCLAIMER This presentation contains estimates and forward-looking statements regarding our strategy and opportunities for future growth. Such information is mainly based on our current expectations and estimates or projections of future events and trends, which affect or may affect our business and results of operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. Our estimates and forward-looking statements may be influenced by the following factors, among others: (1) general economic, political, demographic and business conditions in Brazil and particularly in the geographic markets we serve; (2) inflation, depreciation and devaluation of the real; (3) competitive developments in the ethanol and sugar industries; (4) our ability to implement our capital expenditure plan, including our ability to arrange financing when required and on reasonable terms; (5) our ability to compete and conduct our businesses in the future; (6) changes in customer demand; (7) changes in our businesses; (8) government interventions resulting in changes in the economy, taxes, rates or regulatory environment; and (9) other factors that may affect our financial condition, liquidity and results of our operations. The words believe, may, will, estimate, continue, anticipate, intend, expect and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only as of the date they were made and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above the estimates and forward-looking statements discussed in this presentation might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to the factors mentioned above. Because of these uncertainties you should not make any investment decision based on these estimates and forward-looking statements.

3 MARCOS LUTZ CEO

4 CZZ The role of CZZ Controlling and governing operating entities and optimizing capital allocation COSAN LIMITED CSAN3 RLOG3 50.0% 50.0% 61.3% 100% 37.7% 26.3% Combustíveis Fuels Distribution Energia Sugar, Ethanol & Cogenaration Natural Gas Distribution Lubricants Land Development Logistics Infrastructure Energy Logistics

5 CZZ Managing the Portfolio Hard-to-replicate portfolio Brazilian consumer market exposure Business resilience vs Brazilian macro scenario Global demand exposure Combustíveis Energia USD related revenues + BRL based costs Aligned with macro trends energy efficiency carbon emission reduction Scalability Large entry barriers with an adequate balance between: Energy and Logistics; Local and Global economic exposure; Risks and Returns.

6 CZZ PORTFOLIO: Energy Keep growing in a challenging business environment Further expand network and optimize supply strategies Maximize non-fuels revenues Improve returns regardless of commodity cycle Cost reduction through operational excellence Maximize use of biomass - Cogen, trading, 2G ethanol Focus on residential and commercial segments Network saturation and new gas applications Steady cash flow Established platform in Brazil/international expansion Product - higher technology trend Leveraging partnerships

7 CZZ PORTFOLIO: Logistics Low demand risk Large entry barriers Most efficient logistics alternative in Brazil Long term focus on cost reduction and capacity increase

8 we delivered the guidance for the 6th year in a row despite of the challenging macro scenario. CZZ Managing the Portfolio Improved operational performance resulting from focus, accountability and business independence. Cosan S/A Consolidated Raízen Combutíveis Comgás Guidance 2015 (jan-dec/15) Actual 2015 (jan-dec/15) Pro forma Net Revenue (BRL Mln) 42,000 45,000 43,667 Pro forma EBITDA (BRL Mln) 4,000 4,300 4,230 EBITDA (BRL Mln) 2,300 2,500 2,517 CAPEX (BRL Mln) EBITDA Normalized (BRL Mln) 1,350 1,450 1,378 EBITDA IFRS (BRL Mln) 1,500 1,700 1,530 CAPEX (BRL Mln) Lubricants EBITDA (BRL Mln) Radar EBITDA (BRL Mln) Rumo ALL Raízen Energia EBITDA (BRL Mln) 1,750 2,000 1,918 Recurring CAPEX (BRL Mln) Expansion CAPEX (BRL Mln) 900 1,000 1,111 Guidance 2015/16 Crop Year (apr-mar) EBITDA (BRL Mln) 3,200 3,400 CAPEX (BRL Mln) 1,700 1,800

9 CZZ Managing the Portfolio Ability to attract human resources aspiring highest levels of operational excellence LTIF LTIF LTIF LTIF Note: LTIF = Lost Time Injury Frequency

10 MARCELO MARTINS CFO

11 CZZ Status of Proposed Corporate Restructuring/Simplification We set a target to simplify the corporate structure Comgas Spin-off Deleverage to 2.5x in 2015 Divestment of the land portfolio Performance of underlying business Reducing tax inefficiencies Simplification of the releases, easy/clear metrics for each business at the operational level Reconciliation of the cash flows and ROIC Market conditions prevented natural gas business spin off.

12 CSAN3 Capital Allocation Higher free cash generation, capex reduction and deleveraging EBITDA PRO FORMA (R$ Bln) FREE CASH FLOW TO EQUITY PROFORMA (R$ Bln) CAPEX PRO FORMA (R$ Bln) NET DEBT (R$ Bln)

13 CSAN3 Capital Allocation Increased returns (ROIC) Combustíveis Energia CSAN3 Pro forma

14 CZZ Capital Allocation Strategy Dividends Capital Structure Focus on ROIC

15 CZZ Looking ahead Cosan S/A Consolidated Raízen Combutíveis Comgás Guidance 2016 (jan dec/16) Pro forma Net Revenue (BRL Mln) 45,000 48,000 Pro forma EBITDA (BRL Mln) 4,250 4,800 EBITDA (BRL Mln) 2,350 2,700 CAPEX (BRL Mln) EBITDA Normalized (BRL Mln) 1,350 1,450 EBITDA IFRS (BRL Mln) 1,400 1,600 CAPEX (BRL Mln) Lubricants EBITDA (BRL Mln) Radar EBITDA (BRL Mln) Rumo Raízen Energia EBITDA (BRL Mln) 2,300 2,500 Recurring CAPEX (BRL Mln) Expansion CAPEX (BRL Mln) 1,000 1,200 Preliminary Guidance Crop year 2016/17 (apr/16 mar/17) Volume of Sugarcane crushed ( 000 tons) 60,000 64,000 EBITDA (BRL Mln) 3,300 3,600 CAPEX (BRL Mln) 1,800 2,000

16 VASCO DIAS LUIS HENRIQUE GUIMARÃES

17 ENERGY FUELS RAÍZEN The JV, five years later Raízen was formed back in 2011 combining two very different companies with two very different business... Brand repositioning Logistics optimization Cost cutting Sustainable growth Conclusion of expansion cycle Operational efficiency Focus on returns five years later in a rather challenging business environment Raízen successfully developed a performance driven culture combining the best of its shareholders while refreshing the company with best practices and people.

18 RAÍZEN Return to shareholders EBITDA (BRL Bln) Cash Generation (EBITDA CAPEX) (BRL Bln) ~2x Note: Excludes Biological Asset and Hedge Accounting effects. 2010/11 consider Cosan and Shell fuels results combined. Note: EBITDA excludes Biological Asset and Hedge Accounting effects. Dividends (BRL Bln) Accidents (LTIF) 85% Note: LTIF = Lost Time Injury Frequency. Note: Considers 100% of Raízen s results, under Raízen s perspective.

19 FUELS DISTRIBUTION

20 RAÍZEN COMBUSTÍVEIS Setting Up the Backbone After formation, Raízen expanded its logistics and optimized cost structure CAPEX (BRL Mln): Infrastructure investment = 20% of Total CAPEX RECENT INVESTMENTS IN INFRASTRUCTURE Marabá New terminal Porto Nacional New terminal Note: CAPEX considers 100% of Raízen s investments, including acquisitions SG&A (BRL/cbm) Rondonópolis New terminal Ourinhos New terminal Note: Values in 2015 real terms Campo Grande Terminal Reactivation Detour Paulínia New infrastructure

21 RAÍZEN COMBUSTÍVEIS Focusing on Growth Focus on growth increased from 2013 onwards Service stations & Market share Volume growth (Mln cbm) Note: The analysis excludes greases and lubricants Highest throughput per station (Thousand cbm/month) Note: Volumes based on Sindicom methodology. Volume growth vs Market Note: The analysis excludes greases and lubricants

22 RAÍZEN COMBUSTÍVEIS Brand Positioning and New Products...strengthened brand positioning in the country and developed new products 5,682 Fuel stations (+ 6% vs. 2014) 251 cbm/station (highest in the industry) Exclusive at Shell Stations 460 thousand users Best seller Premium gasoline Launch of V-Power Nitro and Racing The only Premium ethanol Best seller Premium diesel Up to 60% less NOX & 80% less particulate emissions 951 Select stores Highest C-store ticket in Brazil #1 loyalty program for truck drivers Fleet Management

23 RAÍZEN COMBUSTÍVEIS 2x EBITDA in 5 Years EBITDA doubled reaching BRL 2.5 bln in EBITDA (BRL Bln) EBIT (BRL Bln) 17% 19% Note: Considers 100% of Raízen s results, under Cosan s perspective.

24 RAÍZEN COMBUSTÍVEIS Returns targeting high returns supported by roll-out of rebate agreement.

25 RAÍZEN COMBUSTÍVEIS Addressing a Challenging Environment Fuels distribution enjoyed great momentum. Improved regulation created a healthy competitive environment while credit and wealth increased demand well above GDP... Fleet vs Consumption (yoy%) Unit consumption (L/car) GDP vs Diesel consumption (yoy%) Source: ANP and Raízen s estimates Source: ANP and Raízen s estimates Source: ANP and IBGE...scenario will be different in the next couple of years: limited growth in a mature market.

26 RAÍZEN COMBUSTÍVEIS Addressing a Challenging Environment Focus on network expansion through white flags conversion... WHITE FLAGS VOLUME SHARE IN % North 23% Northeast White Flags 20% of total sales 30% Midwest 19% Southeast 18,000 stations 24% South

27 RAÍZEN COMBUSTÍVEIS Addressing a Challenging Environment Increasing supply and operational efficiency remains top priority Supply strategy Ethanol Imports Logistics Cost Discipline Technology Processes New tools and systems

28 RAÍZEN COMBUSTÍVEIS Addressing a Challenging Environment Higher focus on non-fuels aims at further increasing throughput per station while improving customer experience FUELS VS NON FUELS EBITDA EVOLUTION (BRL Bln) CONVENIENCE STORES PAYMENT METHODS Highest ticket per store Expansion fast track: Product offer Operational simplification Food and non-food logistics Sem Parar exclusivity for 42 months Acelera start of rollout Expers fuels management for B2B

29 ENERGY

30 RAÍZEN ENERGIA Harvesting Long-Term Initiatives There has been a significant change in the way we run the sugar & ethanol business over the last 10 years... LTIF Note: EBITDA excludes Biological Asset and Hedge Accounting effects.

31 RAÍZEN ENERGIA Harvesting Long-Term Initiatives... targeting higher returns regardless of commodities cycle CRUSHING Stand-alone management of 24 mills Technical expertise Sector-based benchmark VALUE CREATION Portfolio approach Diversity of skills Benchmarking expertise: Agricultural Industrial Logistics Technology Performance Based remuneration

32 RAÍZEN ENERGIA Benchmarking Efficiency Brazil continues to be lowest cost sugar producer and we aim at being the most efficient player locally... PRODUCTION COST (c$/lb, ex-mill) AGRICULTURAL PRODUCTIVITY (TSR/HC) Source: Raízen s estimates based on consulting companies PRODUCTION COST (c$/lb, ex-mill) Source: UNICA Source: Raízen s estimates based on consulting companies

33 RAÍZEN ENERGIA Reducing Unit Cost Planting + Agricultural Logistics + Industrial Cost 80% of cost base... PLANTING AND MAINTAINING (BRL Mln) CLT (BRL/ton) INDUSTRIAL COST (BRL/ton) CAGR -5% CAGR -6% Note: CLT = Cutting, Loading and Transportation Note: Estimated results in 2015 /16 real terms, under Raízen s perspective....and focus on agricultural, industrial and logistics productivity yielding results.

34 RAÍZEN ENERGIA New Reference for Capex and Opex 2015/16 crop year sets new reference for Capex and Opex going forward CAPEX + OPEX (BRL Bln) CAGR -5% CAPEX (BRL Bln) Mln TC Note: Results in 2015/16 real terms, under Raízen s perspective.

35 RAÍZEN ENERGIA Improving Returns 2015/16 crop year pointing to improved returns EBIT/TSR SOLD (BRL/ton) ROIC (%) Actual 2015/16 Real term prices ROIC ROIC (2015/16 Real term prices) Note: Adjusted EBIT excludes Biological Asset and Hedge Accounting effects.

36 RAÍZEN ENERGIA Keeping the pace Centralized logistics Leveraging new technologies Continued internal and external benchmarking Capacity utilization including higher use of biomass Go to market alternatives

37 RAÍZEN ENERGIA Ready to harvest Focus on increasing returns... SUGAR UPCYCLE WORLD SUGAR S&D (mln ton) ETHANOL UPCYCLE AVERAGE PRICES AT THE PUMP (BRL/l) ethanol/gasoline parity under 70% Source: Consulting Companies SUGAR PRICES IN BRL AND USD Source: ANP AVERAGE PRICES TO THE PRODUCERS (BRL/l) Source: CEPEA-Esalq Source: CEPEA-Esalq... envisioning more favorable scenario in the coming years

38 NELSON GOMES

39 COMGÁS Heart of the Brazilian Gas Market Comgás concession area concentrates 26% of the Brazilian GDP (~USD610 billion) and is in a privileged position in terms of gas supply alternatives BRAZIL BOLIVIA Santa Cruz de La Sierra G G G G ARGENTINA Corumbá Campo Grande Campinas Curitiba São Paulo Rio de Janeiro G G G Florianópolis Porto Alegre 177 municipalities Less than 1% of the Brazilian area Brazil s largest distributor of natural gas 30% of all natural gas distributed in Brazil G G Bolivia Brazil Pipeline Petrobras Pipelines Gas reserve LNG Terminal High demographic density Population of 29,6 million 8.2 million households

40 COMGÁS Operational Excellence Comgás invested BRL 3.2 billion over the last 5 years, BRL 2.0 billion since Cosan took over, to reach 1.5 million customers in its concession area HSSE - LTIF CUSTOMERS (thousands) LTIF: Lost Time Injury Frequency per 1,000,000 man hours NETWORK (km) CAPEX (BRL mln) * * RETAP project...operational efficiency allowed the company to continue connecting more than 100 thousand new customers per year, while reducing CAPEX.

41 COMGÁS Financial Performance Comgás financial performance mirrors its operational excellence VOLUME (mlm cbm) OPERATIONAL RESULTS (BRL mln) NET DEBT / EBITDA (BRL mln) DIVIDENDS (BRL mln)

42 COMGÁS Industrial Segment Industrial segment still representing the higher volume among all segments 81% 61% Volume Margin Industrial Production Industrial NG consumption Volume closely related with industrial production 90% volume penetration in the concession area Increased focus on small and medium industry

43 COMGÁS Residential Segment Although representing only 5% of the volume, the residential segment accounts for 25% of the margin contribution 5% 25% Volume Margin Water supply crisis Gas unitary average consumption (m³/month) Water level - Cantareira reservoir More than 100 thousand customers connected per year Saturation 50% penetration in the existing network New applications: Laundries, pool heaters, air conditioning and power generators

44 COMGÁS Commercial Segment Strong focus on the commercial segment resulting on record new customer connections 3% 9% Volume Margin New customers Dedicated sales team Growing volumes with higher margins New applications: pizza ovens, cooling, power generation

45 COMGÁS Tariff review, what is expected Although tariff review is late, regulator has been compliant to the concession agreement regarding annual and extraordinary tariff adjustments... Maintenance of VEM (Minimum Economic Value) WACC properly reflecting current macro scenario Realistic volume forecast Business plan aligned with State Energy Policy reinforcing our confidence on stable regulatory process in the State of São Paulo.

46 COMGÁS Continuous improvement Opportunities to continue expanding our gas distribution business Monetize Saturate Expand Retain

47 RICARDO MUSSA

48 Lubricants Strategy Following global trends Cosan Lubricants is focused on premium products... The right product with efficient distribution CURRENT FLEET NEW VEHICLES Majors reducing exposure Focus and Agility Brazilian Passenger Vehicles Market Source: Consulting Company / Cosan Lubricants BI GROSS MARGIN(1) 80,000 POS Low capital employement 4X Synthetic 2X Semi-Synthetic 1X Mineral (1) Relative Unit Margin... while gaining market share based on distribution efficiency.

49 Lubricants Business Units Organic growth in Brazil Brazil Base Oil distribution Bolivia, Uruguay and Paraguay Comma Oil & Chemicals Spain Consolidated position in Premium products Blending Plant Brazil s largest Base Oil importer Supplied from Brazil Produces own branded lubricants, exports to 40+ countries Started in 2016 CAGR = 3% CAGR = 13% CAGR = 26% CAGR = 1% % Vol ~55-60% Margin + + % Vol ~25-30% Margin + % Vol ~2-3% Margin + + % Vol ~15% Margin Margin and expanding internationally

50 Lubricants Brazil Market Challenge Sales impacted by economic downturn and GPD & LUBES CONSUMPTION IN BRAZIL OIL PRICES (US$/BBL) vs FX (BRL/USD) - AVERAGE...base oil cost up in BRL despite falling oil prices.

51 Lubricants Brazil Key Accounts Cosan Lubricants increased customer portfolio

52 Lubricants Brazil Key Accounts Cosan Lubricants increased customer portfolio CoBrand

53 Lubricants Brazil The Aftermarket Game strengthened positioning in Factory Fill paving the way for future Service Fill Factory Fill by Factory Fill by Factory Fill by 48% 39% 84%

54 Lubricants Brazil Focus on Premium Products increasing our market share and consolidating premium positioning MARKET SHARE (%) vs COMPETITORS SHARE OF PREMIUM PRODUCTS Source: SINDICOM

55 Lubricants Opportunities BRAZIL 2015 MIX (% VOLUME) CAGR = 0,5% CAGR = 2,0% EUROPEAN MARKETS 2015 MIX (% VOLUME) Source: Consulting Company / Cosan Lubricants BI Source: Consulting Company / Cosan Lubricants BI Consolidated market share in Brazil Current margins are relatively low Mobil market share in Spain ~ 1% Structurally higher margins

56 Lubricants Financial Performance Performance of our international operations improved in 2015 especially when measured in BRL terms NET REVENUES (BRL Mln) EBITDA (BRL Mln) VOLUME ( 000 cbm) offsetting weaker performance in Brazil.

57 Lubricants Conclusions Brazil Positioned to profit from market recovery Aligned with technology macro trend International Expansion based on ExxonMobil partnership Leverage proven operational model

58 THANK YOU