April 23, 2020 / 4:14 PM / a month ago

UPDATE 1-Brazil's Cosan CEO sees increased difficulty for some sugar companies

(Adds comments from CEO, context on market situation)

By Marcelo Teixeira

NEW YORK, April 23 (Reuters) - Sugar and ethanol company Cosan SA expects increased financial difficulties for some Brazilian companies in the sector as demand for the biofuel falls and prices for the sweetener hover around a 12-year low .

Cosan Chief Executive Officer Luis Henrique Guimaraes said during a call with analysts and investors on Thursday that opportunities for acquisitions will probably arise as a result of low prices and falling demand, but added the company is not looking at consolidation right now.

Cosan partners Royal Dutch Shell Plc in the 50-50 venture Raizen, the world's largest sugar maker and a leading ethanol producer. Raizen is also one of the largest fuel distributors in Brazil, managing Shell service stations.

"Opportunities will come, as stronger companies will be the ones that survive this situation. We don’t know which ones will not make it; it is early to take positions," Guimaraes said.

The CEO said the company is concentrating in its business rather than looking at M&A possibilities, adding that fuel sales have picked up in Brazil in recent days after a demand fall of around 35% in the first weeks of the coronavirus lockdown.

Guimaraes said Raizen had already hedged over 80% of its sugar sales and 50% of its ethanol sales for the season that started this month in Brazil's center-south.

"It is a tough environment specially for companies that don’t have the discipline to hedge risks."

He said their port terminals in the country are working normally despite the measures taken by governments to prevent the spread of the virus. (Reporting by Marcelo Teixeira Editing by Chizu Nomiyama and Jonathan Oatis)

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