Cosan SA (CSAN) 2022 Q1 法說會逐字稿

[Interpreted] Good morning, ladies and gentlemen, and thank you for waiting. Welcome to the Cosan's Conference Call to discuss the results of the first quarter of 2022. Today with us, we have Mr. Luis Henrique Guimaraes, CEO; Mr. Ricardo Lewin, CFO and IRO; and Ms. Ana Luisa Perina, IR manager. We would like to inform you that this event is being recorded and it has simultaneous translation in English. (Operator Instructions)

Before proceeding, let me mention that forward-looking statements that may be made during this presentation regarding the company's business prospects, operating and financial projections and goals based on beliefs and assumptions of Cosan's management as well as information currently available to the company.

Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they relate to future events and therefore depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the company's future result and may lead to results that differ materially from those expressed in such forward-looking statements.

Now I would like to turn the conference over to Mr. Ricardo Lewin. Please, Mr. Ricardo, you may proceed.

Good afternoon, and thank you for joining us in Cosan's earnings conference call for the first quarter of 2022. With me today, we have Luis Henrique, our CEO; and Ana Luisa Perina, our IR Manager.

Let's start today's presentation with the financial and operating highlights of each business. Our presentation is very concise since our listed subsidiaries have already reported their results and held their calls with the market.

Let's start on Slide #4 with Raizen. Since this quarter closes the '21 to '22 crop year, I will focus on the highlights for the year. We set a new record for adjusted EBITDA, supported by a significant improvement in the operational performance of Raizen, within the guidance range shared with the market. In renewables, the better prices and maximization of gains from sales boosted a strong result. And as you all are aware, we are advancing in our plan to expand the supply of clean and renewable energy.

With the recent announcements, our pipeline already includes the construction of a second biogas plant scheduled for 2023 as well another 3 E2G plants in addition to the one already operating on a commercial scale, which should be ready in 2023 and 2024. In sugar, we also had important rise in sales price and continued to increase our share of direct sales to destination. This partially offset the lower volumes, which were affected by the crop setback and by the carryover of inventories to the coming months seeking to maximize profitability.

In marketing and services, EBITDA grew over 50% with better returns and higher volumes across all segments, benefiting from the good opportunities to expand the network in Brazil and in the Latin America operations.

Let's go to Slide #5, which shows the results of Compass Gas & Energia. The slight reduction in Comgas sales volume in the quarter reflects the weaker demand from the industrial segment caused by already expected scheduled maintenance shutdowns at clients. This impact was offset by growth in the commercial, residential and automotive segments and by the addition of the volumes distributed by Sulgas consolidated from January on.

Meanwhile, EBITDA growth was driven by better margins adjusted by inflation and ongoing operating efficiency gains at Comgas as well as by the incorporation of Sulgas.

Going now to Slide #6, you can see the results of Moove. The period was marked by the recovery in lubricant sales volume despite the decline on a year-over-year basis. Remember that the first quarter of last year represents a strong comparison base for lubricant sales volume since its performance was leveraged by the economic recovery after the most critical months of the pandemic, especially in Brazil. Meanwhile, EBITDA captured the continuous improvement in profitability, evidencing Moove's effective cost control and sharp sourcing and pricing strategy despite the more challenging demand scenario in early 2022.

Let's go to Slide #7 to talk about Rumo. Transported volumes registered strong growth in the quarter, mainly in the North operation. The result reflects the anticipation of the soybean season, operating efficiency gains and the ramp-up of the central network operation. As a result, Rumo captured market share gains in the grain export from the Port of Santos, aligned with our marketing strategy.

Meanwhile, EBITDA margins fell from the first quarter last year. The increase in average tariffs wasn't enough to offset the higher variable costs in the quarter, which were pressured mainly by diesel. Even so, the higher fixed costs and expenses lagged inflation, reinforcing the company's capital discipline.

Moving on, Slide #8 shows the results of Cosan. As discussed in each business, our portfolio delivered solid results in the quarter despite the challenges. In Corporate, the expenses were in line with expectations. At Cosan Investimentos, EBITDA was represented mainly by the revenues from the leasing of agricultural land by Radar. The other companies are start-ups and projects in the preoperational stage, and therefore, on a combined basis represent negative EBITDA, which offset part of Radar. As a result, pro forma EBITDA grew due to the better operating performance of Rumo and Compass.

Meanwhile, the net income was affected by higher financial expenses in all Cosan businesses, which accompanied the rise of interest rates. And Cosan's consolidated investments in the quarter increased year-over-year, mainly due to the higher expenditures at Raizen, including now Biosev, and at Compass, partially offset by lower CapEx at Rumo.

Let's go to Slide #9, which shows our group's financial highlights. We conducted liability management actions throughout the entire group. The sequential reductions in gross debt is explained by the prepayment of 2025 bonds at Rumo and by amortizations at Raizen. The net debt-EBITDA came 2x, within the ideal range for the group, reflecting the significant EBITDA growth in the last 12 months.

Meanwhile, cash flow registered nearly half the burn in the first quarter last year, representing important improvements supported by funding operations at Compass and higher operating cash generation at Raizen from sales of inventory. These effects were partially offset by the expenditures with the acquisition of Sulgas and with the second installment for the acquisition of the Port of Sao Luis by Cosan Investimentos.

Although not related to the quarter, I would like to reinforce some subsequent events for the quarter. First, the shareholders' meeting in April approved a distribution of BRL 800 million in dividends for 2021 that will be paid on May 20, complementing the BRL 700 million in interim dividends paid in December.

We also concluded Cosan's fourth debenture issue, raising BRL 1.5 billion in 2 series, 1 for 6 years and the other for 10 years. The proceeds will be used to replace and reinforce our cash position following the transactions carried out in recent months, such as the acquisitions of Radar and the Port of Sao Luis. Also in May, a new stock buyback program was approved to replace the previous one, which provides for the maximum repurchase of 110 million shares over the next 18 months. Remember that part of this quantity of shares was contracted through total return swap operations as reported monthly.

Before closing, I want to go over some recent events in our EESG agenda on Slide #10. In April, we published our annual sustainability report, which will keep readers up to date on the progress made in our ESG journey during 2021. I invite you to read the report, which is available on our website. In addition to Cosan, Compass also published its report. And soon, the reports of other businesses will be made available.

We also celebrated all companies in our portfolio becoming signatories to the Global Compact, an UN initiative to encourage companies to adopt responsible corporate, social and sustainability policies. In April, Raizen carried out its first issue of sustainability-linked debentures linked to ESG targets, which raised BRL 1.2 billion. And Rumo made important advance in the risk rating of ESG performance assigned by Sustainalytics, which improved from high to medium.

Lastly, I want to invite you all again to participate in our Cosan Day on May 26, which will be live streamed with simultaneous translation.

And that concludes my presentation, and we are all available to clarify your questions. Thank you.

[Interpreted] (Operator Instructions) The first question is from Ms. Isabella Simonato.

[Interpreted] I have a question about Cosan Corporate, the holding company. It's interesting because when we look at the dividend payout compared to what you have in terms of debt service and potential investments, obviously, one quarter is not enough to give you a good reading of the whole year. So that's why I wanted to ask you, could you let us know how you see that equation at the level of the holding company in terms of dividend flow that it can receive versus a more expensive debt service with higher interest rates?

You also mentioned you'll be making more investments this year, but there's CapEx from investments and there are also buybacks as well as other things that you can do. So could you give us an overview of how you're seeing that?

And also, as a follow-up question. There's a liquidity and float size issue at Raizen. Could you give us an update on how you're thinking about that structure?

[Interpreted] Lewin, please help me out and add anything you might think is necessary. As you know, the presentation was short. So we're here to answer your questions, myself and Lewin. We're keeping the same discipline, as always. We've done everything to make sure that we can address the debt service, and there's room for buybacks as well.

As you will have noted, we have approved our buyback program at the level of the subsidiaries and the holding company. We can continue with the buybacks as soon as it's unblocked. In terms of investments, there are no major investments at the holding level with the exception of the Radar payment installments. In terms of mining, we have concluded the ports and the next capitalization event is further down the line if and when the mining quality issues and everything else is sorted. So that's what we have ahead of us in 2022. And the rest of the CapEx has been resolved with all the other companies with cash generation, fundraising and growth at Moove, Compass, Raizen and Rumo, with very good liquidity level.

In terms of Raizen's liquidity, that's always something we look at very careful. We want to get 15% float at the company, and we're working with B3. When the time is right, we have some commitments. And there also sales by shareholders that may have bought something via Biosev. We're also keeping an eye on that, where Cosan and partners, Shell and the company. So it's an opportunity. It will be done at the right time. And we'll make sure that our receivables flow minus the debt service and Radar's CapEx are all addressed with the opportunities we see in our portfolio companies and the holding company.

Lewin, would you like to add anything?

[Interpreted] Yes, just about the first point, please. Obviously, we have the 3 pillars: new investment, share buyback and dividends at the holding company. And as you said, we do have that new buyback program. We have 30 million in shares, which are open. We have the commitment at the TRS. And if we have any opportunities -- obviously, when these programs are open, we do buyback when good opportunities present themselves.

And what we're missing is the fact that we're also looking at the company's leveraging. We have those 3 fronts, but we look at our leveraging and we always keep it at 2, 2.5, which is what we always set as our limit. And let's not forget that we concluded the quarter with very low leveraging of 2x the EBITDA.

[Interpreted] That's very clear. Just as a follow-up, please. Considering that equation, can we think there will be a drop in Cosan Corporate net debt? Or would that be marginal?

[Interpreted] Now -- well, let's think in terms of leveraging, Isa. Obviously, we're not disclosing our guidance, but the objective is to keep it at the level I mentioned. What we did do recently was -- and I talked about this in other events -- was to issue some additional debt, but -- with that, we should do our liability management considering some of the debts we have. So we will be keeping a stellar level of indebtedness.

[Interpreted] Next question is from Mr. Christian Audi from Santander.

[Interpreted] Luis, I have a question about the market dynamics as a whole. We now see high inflation rate pressure going on. So I'd like to hear from you what your concerns are when it comes to this inflation pressure? And what you have been doing to make sure your strategy can face these dynamics, which looks like will continue for the rest of the year?

[Interpreted] That's a great question, Christian. It's almost like you've been attending our management team meeting because we've been talking about that for a long time. Marcelo talked about some of our capital allocation decisions, leaving some of the businesses we were intending to do, which we really liked. And that had to do with the capital increase and concerns about costs. Obviously, also the ability to make sure that our management -- and this is a key topic for all companies, not only in Brazil, but around the world.

And our inflation number, we're trained for that. Any manager who is younger than 40 doesn't know what inflation (technical difficulty) We've been discussing what we're going to do. We're looking at costs, and we're also looking at passing this over. This is key. Freight competitiveness in case of Rumo. Turnover in case of Raizen. So sometimes they take a while to happen, but they end up happening in the market as a whole.

So over the last few years, given our investments, our projects and how we've been developing our procurement, always focusing on improving quality, amount competence systems, we've been putting a lot of effort into increasing synergy among the companies that -- by shared items. So services ranging from IT, security services, we've been capturing significant savings and there's been relevant cost avoidance as well. So we've been reducing since the last pricing. So that's our #1 priority, not just for the CEO, but for everyone in the company in terms of allocation of resources.

And the cost of opportunities is something we consider, competition, repricing to make sure that we have the right thing that is compatible with the return on our investment for the industry we operate in. So that's our #1 priority. It's not just in Brazil. It's around the world. We're here to say -- this is here to stay for a while. So I can tell you that both in our long-term projects as well as recurring cost activities, we will be doing our homework to mitigate these cost effects and to accelerate whenever possible and wherever the competitive environment allows us to pass on the margins to the business.

[Interpreted] Great. The second question is, there is a risk that the administration might be changing. So I'd like to hear from you whether there are any industries that you are more concerned about if there is a change in government and any ensuing regulatory changes that might make some businesses harder? So do you see any risk in that sense?

[Interpreted] Well, once again, this looks like an election between 2 former presidents. So it's something we've seen before in terms of direction, ways of thinking. We're familiar with it. We've been through it before. And the reality is that we operate in industries that have an impact on society as a whole. It's a structural industry that allows Brazil to be more competitive in different business areas.

So we look at a glass half full. So despite the global challenges, Brazil is in a very relevant competitive position. Considering the planet's decarbonization, nobody has any doubt that it is necessary. It's already happening. There's also the war between Russia and Ukraine, which will take a while. And so Brazil is very well positioned because it is the main protein and food additional supplier. Rumo has a very good strategic position in renewables, in oil. So we're in a great position.

There's no risk of war, polarization, moving from A to B outside the internal situation, obviously. And these are industry that -- when commodity prices go up, they are affected, obviously. But since -- in most cases, our companies add value to the equation, so logistics, credit. I'm not directly impacted. We don't own the land. We don't own specific assets. We have control over the land lease. So that's a very relevant position.

If there are any major interventions, which we don't think will happen, but we are in a position -- that doesn't make us that exposed in terms of import taxes, export taxes or any other artificial pricing mechanisms, because that sometimes can be a temptation. We're well positioned in terms of regulatory issues, the railway authorizations, both local and federal, and gas policies as well. We also have our concessions in the Paulista Network or with Comgas.

So lots of things have happened over the last 2 or 3 years that have reduced our exposure to these risks. So I don't really think whether A or B wins that we'll have a problem. I think there's a great opportunity for Brazil to consolidate its position as a great supplier of major commodities of the future in this new geopolitical design and configuration we see happening around the world.

But obviously, we're paying attention to all that. We have close dialogue with the different levels of the legislative and the executive branches. And I'd say, it's business as usual at the moment. It doesn't matter whether they're orthodox or heterodox ideas and it doesn't matter where they come from. If you look at what's happened over the last many years, these things tend to move towards a solution that makes sense. Along the way -- sometimes it's not the most direct way. The tax on diesel. There are different opinions on different sides, but I believe it will converge towards something that makes sense. There will be a correction cycle with some instability. But the state and federal government will strike a balance, I'm sure.

But only -- the debate and the fact that things are evolving is very positive. It's like Brazil: 2 steps forward, one step back. But at least in the areas where we operate, things seem to be moving forward, and I believe they will continue to do so.

[Interpreted] That's great. Just as a follow-up to Ricardo. In terms of buyback, how do you see Cosan buybacks? You said you might buy some Raizen shares. How do you see that dynamics between buying back Cosan shares versus Raizen shares? Could you give us some color on that, please?

[Interpreted] Of course. Well, the buyback decision -- obviously, we could do Cosan share buybacks, Rumo and Raizen. This is publicly held information. We did BRL 250 million worth of share buybacks by Rumo. This is a financial decision. We have our models. And we'll buy as we see opportunities to get attractive returns, obviously. So whenever we see attractive returns in a specific company, we buy back based on our models.

[Interpreted] Next question is from Mr. Marcelo from Credit Suisse.

[Interpreted] Congratulations on the results. I have a couple of questions. One is a follow-up to Christian's question about Gaspetro and the regas terminal. You've already mentioned that Compass adds value. So it's not necessarily linked to the price of the molecule. But given the level of volatility in international prices, do you see any challenges or difficulties for that terminal to be successful, to be installed and to be up and running according to what you had thought originally?

And my other question is about Compass in terms of the [DoD] Gaspetro. Do you have any update in terms of timing of the deal now it's at the competition authority, at CADE? And obviously, you're moving forward and selling some of Gaspetro subsidiaries. So my question is the strategy behind that. Do you see potential expansion of the network in some places? Or will you keep the distributing companies that already have an installed network, and therefore, it would make it easier to implement Comgas successful model? So those are my questions.

[Interpreted] I'll start by the second because I think it's faster. The divestment in assets, it has to do with consistence. We've always said that. We've always said that we weren't acquiring Gaspetro to keep 100% of the operations. It's a key operation power. And it's very healthy to have other players to develop the distribution market, because it's an underdeveloped market in Brazil with the exception of Comgas and the other company in Rio de Janeiro. It's underdeveloped markets. So there are lots of opportunities. But one single player cannot make it happen. So it's about consistence.

So we selected the areas and regions that have the most synergy and ability to absorb our model. And also that makes sense for other players to acquire and will make sense to the negotiation deal that we have already concluded.

And the negotiation -- obviously, the deal is pending CADE's approval. So this should happen by the end of July. That's CADE's deadline to assess this acquisition. It's now left the superintendents with a recommendation with unrestricted approval. So we're very optimistic about it. But obviously, CADE's decision is sovereign in terms of the approval of the deal. But it's been approved by the superintendents. So we'll continue to work with the agency to clarify any questions and to provide them with anything they might need to help the Brazilian market develop and meet the rising demand.

So as a segue to your first question, obviously, all of our plays have a key structural component. It's the same thing we've been doing in the last few years. The extension to Lucas do Rio Verde, Comgas extension, the Paulista Network extension, the natural gas terminal in Sao Paulo, these are key and unique assets in our portfolio. They have great cash generation and results generation for a very long time. So we're very happy about the value generation in the last few years because of the positions that we have consolidated and which are so important to grow with good results in all of these companies.

The terminal, we're talking about a 6-month or a year trade. It's got a strategic position, and it will allow us flexibility, local price negotiation. And let's not forget that all of these deals, the [FRS] deal, the Regas units and the long-term gas supply agreements have done with the commercial conditions of that time. So it's a long-term asset. But it's positive, because right now, we have costs that are much more competitive than they would be if we were starting now, for instance. But we want to maximize the returns of these assets during the cycle as a whole over the years.

So I don't see any difficulties ahead, quite the contrary. That position was built before the crisis, and it's a winning position. So we just need to deliver a working terminal in the first half of next year. So we will continue to have good results. And we're confident that we will do it within the deadline that we have agreed on with the market, our clients, suppliers, and to have another unique position in terms of strategy. We'll have Brazil developed. We'll have Sao Paulo developed. And we will improve the supply of natural gas to the Brazilian energy matrix, which is key.

[Interpreted] Our next question is from Mr. Lucas Ferreira from JPMorgan.

[Interpreted] So as far as I understand it, you've decided to have another official guidance. In general terms and qualitative terms, what can we expect for both stand-alone businesses, Compass and Moove, for 2022 in terms of growth, CapEx -- I'm sorry, CapEx acceleration in all businesses? Can we expect to see that acceleration in the other businesses as well? If you could comment on that in general terms, I'd be grateful.

[Interpreted] Well, Moove and Compass have had compound growth over the last few years that are quite relevant, and we don't see that slowing down. It will continue. So for over a year, looking forward, we will continue to grow. That's what we've been doing. That's how it's been performing. These are fantastic assets. We've been working together with resources that we brought to both businesses whenever required, and there's great opportunity for growth.

It's no secret that we want to increase Moove's international share to grow in the Americas, in North America and in Europe. And we hope to have news soon for everyone. The company is ready for that step. We've had consistent deliveries in the last few years in our LatAm business, Europe business and our small business in the U.S. So we have won the right of growth even more. We just need to match that with a market opportunity. So that's what you can expect from Moove: continued growth and continued expansion in our international presence.

At Compass, we want to conclude Gaspetro's acquisition, hopefully, by the end of July, together with the divestments. So making an acquisition and divesting from 2 assets at the same time. And so we'll start replicating Comgas' successful model, which is what we have already started to do with Sulgas in Rio Grande do Sul. We're already seeing relevant results in terms of expanding the network, residential connections and so on and so forth. And in 2023, we'll have the terminal, which will provide our clients in Sao Paulo with more benefits, as well as future thermal projects by third parties. Third-party thermal projects will have an opportunity to give us competitive projects in the Southeast.

So we continue to deliver growth. And the additional CapEx at Moove will be for potential acquisition. And at Compass, there is no change in Comgas regulatory CapEx. So we'll continue with the regulatory CapEx. And we'll also have the CapEx for the new companies when they are under our management, coupled with the states that are part of the partnership in both businesses. So that's a summary.

There's huge growth capacity. They've been delivering. And Compass is a good dividend payer and it delivers substantial growth. So I don't know if I answered your question.

[Interpreted] This is Ana. I'd just like to add something. Even though Compass' shares are not listed on the stock exchange, we do disclose our results. So in February this year, we did disclose our EBITDA and CapEx projections for Compass. And the EBITDA we expect for 2022 is BRL 3 billion. It was BRL 3.3 billion EBITDA. And CapEx, BRL 1.6 billion to BRL 1.8 billion.

As Luis said, these are the numbers for the ongoing operations, but they exclude the results of potential acquisitions, okay?

[Interpreted] That's a great point, Ana. Let me just reiterate a couple of things that are very important and we take into consideration, especially with regards to capital allocation. It's the unique position of each of these assets because we consider competition, the markets we supply and so on. So when I look at that right now, myself, Marcelo, Lewin, everyone at the holding company, it's the same as I said about Compass and Moove: they have a clear avenue for growth.

And the same applies to what was built in regulatory terms at Rumo in the last 3 years, and a stronger crop and repricing of the cost of capital, the cost of businesses, moving towards traditional freight. And the same applies to Raizen with the expansion of 2G and Petrobras model to position itself and supply the market.

So when we look at all this, obviously, there are concerns about the inflation rate and the country's growth, but our strategic positioning considering everything that's going on around the world is very strong. We are in a very strong position.

[Interpreted] The next question is from Mr. Bruno Montanari.

[Interpreted] I have a couple of follow-up questions, one about Compass and another one about capital allocation. You were very fortunate in the terminal timing at Compass. And do you think that the commercial company in the short to the midterm might be better than you had expected because of this high natural gas volatility? And in terms of capital allocation, when might you think to start reinvesting again? Would it be when you see that inflation rates are going down or interest rates or when you see improvements in the macro economy, because that might be a long process? So I'd like to hear about timing. When the situation improves, at what point of the cycle do you think you'll start investing again?

[Interpreted] I'll start by your first question. Traders and commercial companies love volatility. Brazil and the world are not worried about the price and price levels. It's about having different molecules and for the market to develop faster. So the main accelerator -- or de-accelerator for the short term, it is much better than we had thought because there are no other molecules available in the market. And there aren't enough clients in the market despite the regulation in Sao Paulo, which is our main market, allows it.

So -- but I wouldn't attribute that to price volatility, because price volatility means opportunity for the commercial companies. What's happening is that the market's ability to have free clients on the supply side or on the other side to take on the risk that have potential benefits. But there are risks as well as demand generation, second instant suppliers. It takes time for the market to develop.

And in our opinion -- we've been talking to the regulatory agencies and the ministry. Our focus in terms of the market and the industry is that issues that are blocking the expansion of the free market should be unblocked. Compass, Cosan were very favorable towards having as many free clients as possible as soon as the molecule issue is addressed. And we're focused on distribution efficiency, because that's our core business. And commercial company does have a small share where it makes sense. We'll have lots of others where it makes sense. It's not happening, because it doesn't make sense at the moment.

But the origin of the molecule with different pricing, different indexes so that, that market can develop. That's the limiting factor to me, not price volatility, because price volatility can be very productive. And before these crises, we would be highly competitive as we can see in Comgas' deal to have a share, the supply via the terminal, which is highly competitive.

About your second question. Since the end of last year, we had been seeing an acceleration of the cost curve and the curve of cost of capital. But the recent investment by the company is below that. So this return to investing as required. But there's enough capital allocated to projects that we do see, and that places us in a key strategic position.

So Raizen's biogas, the Lucas do Rio Verde extension at Rumo, Moove's entry into Europe and the acceleration of the replication of Comgas' model at the other companies, with Gaspetro, Sulgas -- so we have allocated CapEx. It's relevant CapEx and will generate double-digit returns in all of these businesses. And they will remain at that level. It's about being conservative, where we can see that certain risks are not worthwhile taking out. But obviously, we will continue to grow responsibly and to get assets where we see competitive advantage and an ability to generate results and continue to grow.

[Interpreted] Next question is from Mr. [Matthias] from UBS.

[Interpreted] I have a couple of follow-up questions. I might rephrase the question. First, I'd like to understand how you see Compass as a platform for natural gas. We had talked about natural gas price volatility, Petrogas strong presence in natural gas market with commercial companies falling short of what was expected. So what's changed in the mid to the long term for Compass considering the portfolio that was presented a couple of years ago, considering new opportunities in energy or other gas businesses? So that's my first question.

The second question is also a follow-up question to what has already been said. Considering the whole group -- and I know there's a few different ways of looking at it -- how does the company come to the holding discount? You've made it clear that there is an expectation to buy back at the company or the subsidiaries. Does the company see this as a good moment to leverage buyback considering the discount levels we're seeing? How do you see that?

[Interpreted] I'll start by the second question because it's quite simple. The holding discount is determined by the market. We're not going to dispute whether it's right or wrong. But our portfolio asset's view is that discount should be close to 0. That's part of our portfolio and risk considerations. There are lots -- there's lots of uncertainties around the world. The quality of our assets are all linked to Brazil's competitive advantage, which are independent from the administration. They're all very well positioned considering the profitable decarbonization agenda that we see around the world.

So we'll check market prices and if they make sense or if they don't make sense. And at current levels, we think the market is wrong in terms of pricing. But the market is sovereign. So we will do what we deem important to do. We'll do what we have to do. We have the authorization to buy all 3 papers. They are blocking issues, silent periods. But we will continue to be active as we have been in the last 2 years to make the most of opportunities.

Our view is that the current discount is the discount that the market thinks is right. We're not going to argue about whether that's right or wrong. And the arbitration, we'll see it, whether it's papers from the companies or the holding company.

What was your second question again?

[Interpreted] Compass in the mid to the long term.

[Interpreted] Yes. Clear. Well, look at Compass' main promises over the last few years. It was the Sao Paulo renewal and extension, which was done. The natural gas extension is ongoing, and it will end within the deadline. And geographical expansion to replicate Comgas' model. We've taken the first steps, and we hope to be successful with the conclusion of our investment and divestment in Gaspetro.

Obviously, we also have important matters to address with the commercial company. Unfortunately, because of the market issues we have raised, it's not evolving. But we will be ready when market opportunities arise. We'll continue on the lookout for opportunities. And energy generation projects -- we've always thought about gas project, pipeline projects. It's not our core business to be the main investor in other projects. That comes with our ability to generate the short that we require whenever we have new gas positions in the regions where we operate.

Our core business is distribution with high efficiency. The efficiency that Comgas offers, it's a great opportunity for Brazil, focusing on clients, focusing on efficiency and a balanced portfolio. It will be more balanced than the current portfolio we see in distribution companies. With an industrial component, we're considering other types of consumption that makes our portfolio so robust, and whenever there's an opportunity for natural gas which can be competitive as we see in Sao Paulo with the current gas and ethanol prices. Natural gas is very important for heavy users in terms of number of kilometers.

So we have been focusing on the main deliverables. We have high-quality partners coming in, Atmos. They're very happy. We're very happy with them. We've been able to capitalize the company to make relevant investments and the divestment as well, which gives us a healthy balance sheet. And now we want to deliver these levers with these 3 components that the project will bring us over the next few years.

[Interpreted] Next question is from Mr. Gabriel Barra from Citibank.

[Interpreted] Most of the questions have been asked. You've been able to simplify your portfolio. And looking forward, one of the main steps to make the portfolio simpler will be to list Compass. As Luisa said, you've brought in some partners via price placement to Compass. So my question is -- it's hard to say, but what are you missing to resume that plan? I think that will continue. Please correct me if I'm wrong. But I believe that will be advantageous to the company.

So obviously, the economy is very volatile at the moment. You have delivered some of the plans that you had mentioned in the IPO. So I'd like to hear from you how you're seeing the future? What would be the sweet spot to continue with your plan?

[Interpreted] Yes. Having Cosan open and listed companies below it is our plan, continues to be so. That's why we listed Raizen. That's why it went public. And Compass has been delivering what it needs to so that the market can see the value. In September 2020, we had the terminal capacity, and being part of successful privatizations such as Petrobras, the extension of the Sao Paulo concession to be able to continue investments and position Sao Paulo as a fantastic -- in a fantastic position with renewables and energy mix.

So we want to have a market that makes sense, and these projects need to be mature. We have assets delivering good results that can be reported. And that will allow us and the market to have a better understanding. It will be down the line, but we haven't changed our plan for Compass or for Moove. The right time will be when the projects have delivered.

Things have been happening concretely, and we're reporting growing results about these projects. So we need pricing to improve. And Moove, we're expanding internationally. That needs to become more mature, and then we'll be able to report results. And together with our partner, CVC, we'll find the right time. But the plan is for all 4 companies to be listed. We haven't changed our plan.

[Interpreted] Thank you. This concludes the question-and-answer question -- session. I will now turn the floor to Mr. Luis Henrique for his closing remarks.

[Interpreted] Thanks, everyone. Thanks for joining us. Thanks for your questions, excellent questions. Thanks for allowing us to talk about the future of the company.

Bottom line, you've heard it, Raizen's call, Rumo's call. We talked a lot about Compass. We talked a lot about Moove. We continue to be very happy with our strategic position. We have a competitive advantage when compared to our main players each in their own segment with unique opportunities and projects to be developed or which are being developed. We have 2 E2G plants being built. The biogas plant will be ready soon. We'll have our final licenses. Moove, it's doing its international expansion. So strong growth agenda despite the fact that we are being conservative when it comes to cost of capital. But we do allocate capital to projects and initiatives that can generate attractive return to our shareholders.

We are completely focused on people because our growth is all about people. We have people in 9 different geographies now with Sulgas. We're present through Raizen, but it used to be downstream. So strong presence in our gas business.

So we want to attract people, develop people, so that we can continue to grow our people and talent pipeline and completely focused on executing our projects. We will deliver these projects to you and to the market at the right time so that we can continue to lead in unique and nonreplicable positions in the market.

We're very excited in a very complex global scenario. But I think Brazil can come out stronger. And we have a very good strategic position in terms of commodities and clean energy mix, in terms of decarbonization. And with companies such as ours and so many others in the country that know how to deal with inflation, know how to deal with volatility and can actually benefit from that owing to our ability to know how to deal with that kind of risk.

It's a complex year, but we're very excited with our results and to be able to deliver these results and continue on our growth journey. Thank you for your trust. Thank you for your support. And I'll see you next quarter.

[Interpreted] Thank you. This concludes Cosan's conference call. Have a nice day.

[Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]