Cosan S.A. ADS

Good morning, everyone. Thank you for waiting and welcome to COSAN's earnings conference call for the fourth quarter and the year 2022. Simultaneous translation will be available during the session. To use it, please click on the interpretation button at the bottom of the screen and choose your preferred language, Portuguese or English. Those listening to the video conference in English have the option to mute the original audio in Portuguese by clicking on Mute Original Audio. The video conference is being recorded and will be available on the company's IR website at cosan.com.br, where the full material of our earnings call can be found. You can also download the presentation in English from the chat icon. During the company's presentation, All participants will have their microphones disabled. The question and answer session will start after the presentation. Please note that the information contained in this presentation and in statements that may be made during the earnings call regarding Cozum's business prospects, projections, and operating and financial goals constitute the beliefs and assumptions of the company's management, as well as information currently available to them. Forward-looking considerations are not a guarantee of performance. They involve risks, uncertainties and assumptions, as they refer to future events and, therefore, depend on circumstances that may or may not occur. Overall economic conditions, market conditions and other operating factors may affect Cosan's future performance and lead to results that differ materially from those expressed in such forward-looking statements. Today, with us, we have Mr. Luiz Henrique Guimarães, CEO, and Ricardo Levin, CFO and IRO. I will now turn it over to Mr. Ricardo Levin.

Good morning everyone and thank you for participating in Cozum's earnings conference call for the fourth quarter of 2022 and the full year of 2022. With me today I have Luiz Henrique, our CEO. Before going through the numbers, I would like to highlight that, once again, we ended 2002 fulfilling our mission and objectives for the year, even in the face of various challenges, such as strong fluctuations in macroeconomic indicators, climate change, supply chain disorganization, elections in Brazil, in addition to the conflict in Ukraine, all factors that somehow affected global volatility. Our businesses once more showed the ability to navigate different scenarios without losing focus on delivering robust results. We had important achievements in the group that we were able to follow throughout the year, such as the progress in Raiz's second-generation ethanol agenda, the beginning of the execution of HUMU's extension to Lucas do Rio Verde project, the conclusion of the acquisition of Gaspetro by Compass, now rebranded as Comiche, the acquisition of Petrochoice by MUVI, and, as Cousin, the increase in its stake in the land segment and the acquisition of minority stake in Vale. Let's now go through the main financial and operational highlights of each business. Let's start on slide 3 with Haizen. Regarding raising segments, in renewable, there was a higher sales volume of own ethanol and power and a higher average sales price of biofuel, resulting in an EBITDA increase of 31%. In sugar, higher cost pressure margins, leading to a reduction in adjusted EBITDA that amounted to R$118 million. in the quarter, even though the crop year-to-date results show expansion of 7% in EBITDA. In marketing and services, the operation in Brazil, the most relevant in the integrated Latin platform, was significantly affected by the dynamics of the fuel market, with margins pressured, a consequence of price reductions that impacted inventories. and the higher product supply in the market, especially ethanol. As a result, we had a 35% drop in adjusted EBITDA, which reached R$ 880 million in the quarter. It's very important to point out that, with a strong demand from the international market for second-generation ethanol, in addition to the current plant in operation in Piracicaba, we have another three plants under construction, and another five to be built to serve customers worldwide, and the biofuel commercialization contract with Shell until 2037. Let's turn to slide number four, which shows the highlights of HUMU. Humo had an excellent performance both in the fourth quarter of 2022 and in the year, reaching the guidance with a record volume in 2022 of almost 75 billion RTKs, which was driven by the increasing capacity mainly in the north of operation. The company's capacity utilization record also had the following milestones reached last year. 20.5 million tons in cargo at Rondonópolis terminal and unloaded 514,000 rail cars at the port of Santos, in addition to 7 billion RTK in July. It's worth mentioning that RUMO started its first phase of the extension to Lucas do Rio Verde, which is essential to ensure the infrastructure for grain supply and inputs for the global food chain. This first phase consists of a 200 km railway to Campo Verde. Let's turn now to slide number 5, which shows COMPAS figures. Once again, we reported robust results in the quarter and in 2022 at COMPAS, reflecting the consolidation of COMIT's results and the higher volume of natural gas distributed by CONGAS in residential and commercial segments. combined with the effects of inflation adjustment on the margins, which neutralized the declining industrial volumes due to the slowdown in the period. In line with this planning, COMPAS made divestments in some of COMIT's assets, in addition to continuing the investments in the final phase of Greger's Deification Terminal construction, which should begin operations in the second half of this year. Let's turn now to slide number 6, which shows the results of MOVE. MOVE delivered a consistent performance in the fourth quarter 2022 and in the year with EBITDA evolution driven by the growth in sales volume, the profitability of its portfolio and the consolidation of Petrochoice. This result once more reflects the focus on operational efficiency and the assertive execution of the commercial and supply strategy in all regions where MOVE operates. Moving on, slide number 7 shows the consolidated results of COSAN. The main component of the result of COSAN Investimento is the land segment which is composed by Radar, Terros and Janos. The strong growth in EBITDA was driven by the re-evaluation of the portfolio's agricultural properties carried out in the fourth quarter, in addition to losing revenues resulting from the acquisition of additional stakes in tellers and journals in October. In the corporate segment, expenses declined, explained by the exercise of compensation plans in the fourth quarter last year. In addition, adjusted audit operating expenses are composed mainly of legal expenses and contingencies in the fourth quarter of 2022. As a result, adjusted EBITDA increased in the period, mainly driven by the revaluation of agricultural properties and the strong results delivered by HUMO. In a while, adjusted net income grew when compared to the same period last year. Let's go to slide number 8 to talk about Vale. Regarding the acquisition of minority stake in Vale, announced in October, we concluded this quarter the issuance of preferred shares by Cousin 10, owner of 88% of the shares of Compass, and Cousin 9, owner of 39% of the shares of Raizic. With this operation, Bradesco BBI Bank now holds 23.3% of the total capital stock of Cozumdes, and Itaú BBA now holds 26.9% of interest of Cozumnov. On this slide, we present the effects of the acquisition of a stake in Vale on Cozum results. with the aim of ensuring transparency of the recognitions and a normalized comparison basis. Finally, I would like to inform that we made a voluntary statement of the financial statements of Q3 2022 so that they better reflect the impacts of Vale's operation, making the exposure to direct participation of approximately 1.5% and the movement in the appreciation of the stocks and derivative structures in the colorized operations more transparent. Let's go to slide 9, where we present the group's financial highlights. In 2022, we continue with our usual capital discipline, increasingly seeking to optimize capex and increase cost and supply synergies. The increase in gross debt is mainly explained by the contracting of loans used for the acquisition of value shares that computes the color structure as well as market-to-market adjustment of the derivatives in the transaction. Cash generation to equity was higher in this quarter than in the fourth quarter 2021. due to the loans taken out for the acquisition of the shares in Vale, the operating cash generation of Rumo and Compass, and the divestment of the port loading terminal T16 and T19 at Rumo. As a consequence of all that has been said, despite the increase in gross debt, leverage decreased compared to the third quarter 2022 due to the lower net debt and higher EBITDA of the last 12 months. remaining at adequate levels for the group. Before closing, I want to go over our ESG agenda. Please, let's turn to slide number 10. In 2022, we fully complied with the Strategy and Sustainability Committee's agenda and started a common construction for the group on the ESG team. with the aim of revising our materiality and sustainability strategy, resulting in our 2030 ESG vision. Regarding the year's performance, COSEL maintained its participation in the B3 Carbon Efficiency Index and in the B3 Sustainability Index. We also advanced in other important indexes, such as the Dow Jones and the MSCI ESG score, in addition to maintaining an A-grade and leadership position in the CDP and being again selected to be part of the TIVA Women in Leadership Index. as a result of its commitment to creating actions that promote an increasingly diverse and inclusive environment at the holding company. In terms of business, Raizen Compass Human Move received the Gold Seal in the GHG Protocol in the 2022 cycle that refers to 2021 GHG inventories and emissions. Here I conclude my presentation, and now Luis Enrique will make his final remarks. After, we can move on to the Q&A session.

Thank you. Good morning, everyone.