Good morning, ladies and gentlemen. At this time, we'd like to welcome everyone to Cosan S.A.'s Fourth Quarter and Fiscal Year of 2019 Results conference call. Today with us, we have Mr. Felipe Casali, Investor Relations Executive Manager, and Mr. João Arthur Souza, Head of Finance. We would like to inform you that this event is recorded and all participants will be in a listen-only mode during the company's presentation. After Cosan's remarks, there will be a question and answer session for industry analysts. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. The audio and a slideshow of this presentation are available through live webcast at ir.cosan.com.br. These slides can also be downloaded from the webcast platform.
Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Cosan's management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Cosan and could cause the results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Felipe Casali. Mr. Casali, you may begin the call.
Good morning and w elcome to Cosan S.A.'s Fourth Quarter 2019 and Full- Year 2019 earnings conference call. The year was an important one for Brazil. Pension reform was approved by Congress. Inflation remained under control, partially due to still low economic growth, allowing real interest rates to reach record lows in recent history. Our businesses proved their strength against volatility. We delivered solid results, with 12% increase in pro forma adjusted EBITDA to BRL 5.6 billion. Comgás and Moove were the highlights, both slightly above the top end of our guidance range due to better performance, especially in the 4Q2019. Guidance for Raízen Energia remains the same and follows the crop year, which will end in March 2020. Let's move to slide four to discuss the results of each business unit, starting with Raízen Combustíveis Brasil.
As discussed in our last conference call, demand for fuels posted a gradual recovery in second half of 2019. Brazil's total volume grew by 4% last year, considering the ANP figures. Again, Raízen grew above the industry average. The total volume sold rose 5% both in the quarter and in the year. Sales measured in gasoline equivalent increased 6% in the auto cycle, and the gasoline sales were the highlight given the contraction in previous quarters. Ethanol sales also remained strong, yet the fuel was above 70% parity in most states, implying demand resilience. Regarding diesel sales, Raízen remained focused on increasing its customer base, always targeting the adequate profitability. Aviation sales dropped due to the winding up of one of our commercial clients. Raízen Combustíveis' adjusted EBITDA rose 16% to BRL 951 million in the quarter, maintaining the usual seasonality, with fourth quarter being the strongest one.
In addition to the higher volume sold this year, or actually this quarter, we captured opportunities through Raízen's efficient supply strategy. This includes not only the inventory management, but imports, a structural component of that strategy. Adjusted EBITDA grew 3.5% to BRL 2.9 billion in 2019, in line with revised guidance. It's worth noting that we adjusted the positive effect of BRL 1.1 billion from the formation of Raízen Conveniências joint venture. Since November 2019, the segment results are no longer consolidated by Raízen Combustíveis, being now recognized as equity pickup. A quick reminder here, Raízen Conveniências will focus on accelerating the implementation of the C store services on service stations under the traditional Select brand franchising model, while also developing the proximity store model with the OXXO brand.
During the first three years, we expect to add around 500 new stores in total, and these will require higher investments and expenses. Raízen Combustíveis' CapEx this quarter totaled BRL 250 million in maintenance, conversion, renewal of contracts with clients, as well as infrastructure. Moving to slide five to discuss Raízen Argentina's results. Note that we report these results in U.S. dollars, which is the functional currency of the downstream operation in Argentina. Our first year of operations was challenging amid a worsening political and economic scenario, and fuel and oil prices freezing. The refinery processed, 79,000 bbl/d , resuming operations under scheduled maintenance in previous quarters. Despite the complex scenario, diesel and gasoline sales rose 10% year-over-year, reflecting the commercial efforts and expansion of the service station's network. The aviation sales performance reflects lower demand for flights in that period.
Adjusted EBITDA totaled $80 million in 4Q19. Besides higher volume of gasoline and diesel sold, a gradual unwinding of price freeze contributed to a non-recurring gain of $13 million in the quarter. In 2019, adjusted EBITDA reached $195 million. Investments totaled $15 million in the quarter and $84 million in the year end, most of which to maintaining and improving the refining operation. In the next slide, we present Raízen Energia's results. Since this is the third quarter of 2019-2020 crop year, I will focus on quarterly results. Crushing season ended around November and reached 16 million tons, in line with the previous crop, but below expectations. Here, it's worth noting that despite improved agricultural productivity, Raízen faced lower sugarcane availability, mainly on those mills acquired over the last three years.
Raízen's focus is to enhance the efficiency in agricultural yield through investments, which should increase sugarcane availability starting next crop year, 2021. Raízen prioritized ethanol production in the mix this year, ending the crushing season at 51% of the total. Speaking of sales, let's start with sugar. We accelerated sales in the quarter in line with sugar commercialization strategy, aiming at maximizing profitability. Shipments were relatively lower during the first two quarters of the crop year. Volumes will be even stronger in the fourth quarter of the crop year, as shown in the sugar graph. Average sales prices in Real were 20% higher in the quarter on the back of good hedging in Real terms. Moving to ethanol, sales volume came in 20% lower this quarter, also in line with the crop commercialization strategy.
A relevant amount of the biofuel sales was left to the inter-crop season, seeking higher profitability as demand remains strong. Average price came in 11% higher than previous crop, explained by favorable prices in the domestic market, as well as higher export volume in the period. Hedging of part of the ethanol sales also contributed to higher average prices this quarter. Now, moving to electricity, note that results are impacted by W-X, which is Raízen's electricity trading company. Our own volume sold came in 7% higher in the quarter. Average sales prices were positively affected by favorable prices in the spot market. Before discussing the EBITDA, I would like to highlight that the unit cash cost, already normalized by the Consecana effects, increased to 2%, reflecting the product mix with higher production of white sugar and inflation specifically this quarter.
Adjusted EBITDA came in at BRL 628 million in the 4Q2019, 25% lower than 4Q2018 due to lower volume of ethanol sold. Higher average prices partially offset these effects. As for sugar hedging, export volumes are fixed at BRL 0.55 per pound, and for the 2021 crop season, we already hedged around 55% with an average price of BRL 0.61 per pound, a lmost 10% higher if you compare to this year. Recent improvement in sugar prices combined with the Brazilian BRL depreciation generated good opportunities to increase hedging. There is an increasing consensus that leading producing countries faced favorable or actually unfavorable climate affecting their production, especially in India and Thailand. In Brazil, the demand for ethanol remains strong, sustaining a good remuneration still.
The outlook for 2021 crop year is that the mix will be slightly more balanced between sugar versus ethanol compared to the last two crop years. Raízen keeps close track of market dynamics, always capturing opportunities to improve sugar and ethanol profitability, optimizing its strategy and commercialization mix throughout the year. Lastly, CapEx totaled BRL 656 million in the quarter with higher inter-crop maintenance figures as crushing period ending earlier this crop year compared to the previous one. It's in line with the guidance. Now let's discuss Comgás on slide seven. Natural gas sales volume fell 3% in the 4Q2019 and 1% in the year, on account of lower demands from specific industrial sectors served by Comgás. On the other hand, commercial sales grew 2% in the quarter and 3% in the 2019.
In the residential segment, sales came in line with the 4Q2018 and rose by 1% in the year, driven by the addition of 103,000 new clients. Normalized adjusted EBITDA totaled BRL 507 million in the quarter and BRL 2.2 billion in 2019, driven by a more favorable sales mix with greater share of residential and commercial segments, as well as margins adjusted by inflation. Regulatory current account recovered, ending the year with BRL 5 million position in favor of Comgás' clients. Comgás invested BRL 299 million in the quarter and BRL 899 million in the year, in line with the CapEx plan, accelerating investments after the conclusion of the tariff review process. Now let's move to slide eight, improve of the finished product sales performance in Brazil and abroad bolstered Moove adjusted EBITDA totaling BRL 83 million in the 4Q2019 and BRL 321 million in 2019.
Total sales volume grew 13% in the quarter and 15% in the year as a result of the company's consistent sales strategy and growth across all countries. Let's move to the right side of the slide, and Cosan's corporate segment reported a G&A expense of BRL 64 million in the 4Q2019 and BRL 227 million in 2019, in line with additional communication and marketing expenses expected for the year and general expenses concentrated in the period. In addition, as highlighted in the 3Q2019, the migration of the share-based compensation plan to the stock grant plan resulted in an additional and non-recurring expense of BRL 36 million in the 3Q2019.
Other revenues and expenses composed mainly by legal expenses and contingencies printed BRL 428 million in revenue due to the sale of credit rights and the recognition of a gain related to the exclusion of ICMS from the calculation basis of the PIS/Cofins taxes. This is the state taxes in the federal taxes basis. Let's move to slide nine, C osan S.A.'s pro forma adjusted EBITDA reached BRL 1.4 billion in the 4Q2019 and BRL 5.6 billion in the year, reflecting growth across all lines of business. The net income totaled BRL 793 million in the 4Q19 and BRL 2.4 billion in 2019, including a non-recurring gain from Raízen Conveniências joint venture. Even excluding this effect, adjusted net income rose 24% to BRL 1.6 billion. Free cash flow to equity totaled BRL 2.4 billion in the quarter.
Main effects were in operating cash flow, the cash generation increased at Comgás, and there was a cash inflow of BRL 410 million in Cosan Corporate, reflecting the sale of credit rights during the third and the fourth quarters. The cash effect of the credit right sale of the third quarter was actually recognized this quarter. Cash flow from investments, expenditures increased at Comgás, and Cosan Corporate received BRL 1.5 billion related to the Comgás' capital reduction. Raízen Combustíveis also paid the last installment related to the acquisition of the asset in Argentina, totaling BRL 675 billion. That's considering the Cosan's 50% stake in Raízen. In cash flow from financing, funds were raised by Raízen and Comgás. The free cash flow to shareholders totaled BRL 4.5 billion in 2019.
Pro forma gross debt rose 14% in the 4Q from previous quarters due to the fundraising of BRL 2.9 billion by Raízen and BRL 2 billion by Comgás. The cost of debt stood at 111% of the CDI on a pro forma basis or 119% of the CDI if we exclude Raízen. The pro forma leverage ratio after the usual current account adjustments at Comgás and leasing liabilities ended 2019 in line at 2x net debt to EBITDA. Now let's move to the next slide to discuss our expectations for 2020. Better performance of Brazil's economy, supported by unprecedented levels of cost of capital, combined with our consistent strategy, should contribute to another year of EBITDA growth in all business lines. For Raízen Combustíveis Brasil, we estimate an EBITDA between BRL 2.8 billion to BRL 3 billion.
This year's scenario should be similar to what we saw in 2019, meaning challenges and opportunities due to volatility. Demand should be in line with GDP, somewhat around 3% growth. As already mentioned, the convenience store result will no longer be consolidated in EBITDA, being now recognized under equity pickup in proportion to the 50% stake that Raízen Combustíveis has in the JV. CapEx should also come in line with last year. We focus on expansion and renewal of the services stations network, as well as infrastructure investment. At Raízen, Argentina, we expect an EBITDA between $160 million to $200 million, reflecting the economic instability of the country. At Comgás, EBITDA, normalized EBITDA, is estimated to range between BRL 2.25 billion to BRL 2.4 billion, in line with the regulatory plan approved by ARSESP, the regulatory agency.
At Moove, improved performance in Brazil and international operations should boost EBITDA in 2020 with a BRL 330 million-BRL 350 million range. At Raízen Energia, before discussing our projections for the next crop, we are reiterating the guidance for 2019/2020 crop, which ends in March, targeting the lower end of the guidance range. Regarding the 2021 crop year, we are disclosing preliminary guidance since Raízen's budget process is still underway. Crushing should improve compared to the last two years. EBITDA should also post another year of growth since prices are pointing to better levels, and CapEx should remain between BRL 2.85 billion to BRL 3.05 billion. That leads to Cosan's pro forma EBITDA between BRL 5.8 billion and BRL 6.4 billion. To conclude the presentation, a quick update on ESG efforts and disclosure. In 2019, we increased our engagement with several agencies answering the CDP questionnaires while applying to both B3 and Dow Jones sustainability indexes.
We published our sustainability report in accordance with GRI guidelines while crossing each material topic of our businesses with United Nations Sustainability Development Guidelines. Regarding governance, we updated our code of conduct, grounded on respect, ethics, and transparency principles. This concludes our presentation. We'll now take any questions you may have. Thank you.
Thank you. We will now begin the question and answer session for investors and analysts. If you have a question, please press star one on your telephone. If your question is answered during the session, you may remove it from the line by pressing star two. We ask that you use the handset when asking the question in order to maintain excellent sound quality. Please stand by while we collect the questions. Our first question comes from Isabella Simonato, Bank of America.
Thank you. Good morning, everyone. Good morning, Felipe, and m y questions are related to the guidance for 2020, because, as you said, I think despite the volatility, the environment seems to be better for most of the divisions, but especially for Raízen, right? When we look at the implied growth of EBITDA, especially for the fuel distribution part, in our view, it seems a little bit conservative. As you said, volume growth could be in line with GDP and we are seeing solid demand in fuel prices. Can you go over a little bit the premises, the assumptions you used in the guidance, since the implied growth seems a little bit too low in our view. Thank you.
Isabella, thank you for your question. I will start here just pointing one thing that we need the market to bear in mind. This year in the EBITDA guidance, we do not consider the BRL 70 million EBITDA coming from the convenience stores that the EBITDA of 2019 that impacted the results. It's not going to be consolidated anymore in the Raízen Combustíveis as it was. From now on or actually since the closing of the JV in November, the results of the convenience store segment is now coming through equity pickup and the net income. Besides all the OPEX and the CapEx that this entity, this segment will do. We are not considering around BRL 70 million that impacted the EBITDA last year.
Let me start with that. Talking about the guidance as a whole, we have consistently been building this guidance with the best assumptions we have at the moment, and that's not different now. Comparison base for 2019 growth was also weaker if we bear in mind that the volume growth in Brazil, and this is using ANP figures, was 4%. If we exclude or we adjust the base of 2018 with the truckers strike, we're talking about a 1% volume growth, so t his is one thing. In fact, the second half of 2019 showed some organic growth, which helps volumes in the business environment. In 2020, we can expect a little better in terms of demand. We are estimating what is embedded on our guidance is somewhere around GDP growth for volumes. This is what basically we are looking for the volumes here.
We again, consistency delivery, another quite good year for Raízen Combustíveis.
When we think about margins for fuel distribution, because when we look at EBITDA growth, even excluding the BRL 17 million, the margin expansion implied is not significant. How are you thinking about margins for this year?
As we always say, the driver for margins growth is essentially the volumes growth and our ability to have a scale leverage that the volume growth brings to the table. This is what we are focusing in terms of margins, right? We have to remember that inflation is at a different level than what we've seen in the past as well, and we have a commitment here to pass through inflations on the margins. This is what in terms of the EBITDA. One thing, just to do a quick analysis here. If we look at the midpoint of the guidance, considering this adjustment of the convenience stores EBITDA, we're talking about a 3.5% growth at the midpoint of the guidance and a 7% growth at the top range of the guidance, which is a scenario that we look.
This is just to bear in mind here these adjustments or this impact of the convenience stores.
Thank you.
Our next question comes from Luiz Carvalho, UBS.
Hi, Felipe. Thanks for the time. I have basically two questions here. The first one, if you can comment about the new potential investments, and more specifically about the refining strategy, how you're preparing, you know, Cosan to actually participate in this deal, and then the color you can provide. The second one, also on the pipelines as you just required, actually filed the requirements for a potential environmental license for one of the pipelines. I would like to have a bit more visibility on the future investments. The second one, it's about Comgás. If you can comment about the receivables that were confirmed late last year, you know, in terms of the timing, and also the potential way of these receivables are going to be confirmed to the company. I understand that is not going to be cash, but potentially extension of the concession.
What are the latest on this front? Thank you.
Luiz, thank you. Thanks for your question. Regarding the refinery, there's no news since our last conference call, and Marcos Lutz, CEO of Cosan, disclosed a little bit what is our view. The binding process, just an update here, the binding process has been postponed to May 2020 due to the complexity and the amount of information that needs to be analyzed, so r eally nothing really changing in terms of our view to this deal. We are reviewing and understanding here the processing, if we can have an angle to monetize and use our short and trading capacity, and actively looking for good investments with the adequate return. There's no big news on the refinery side. In terms of the pipes, specifically on Rota 4 or Route 4, the project license, it's been licensed for almost four years now since we first started.
We are moving to have an approvable project in the environment license at some point in time. There's no news regarding this project as of now as well. In terms of Comgás, what we know from now is the same information we stated here the last conference call. We know it's a non-tariff adjustment, but the agency needs to state by May, this year, how that's going to be a deal. There is no news on that front as well.
Okay. No news. Thank you.
Our next question comes from Régis Cardoso, Credit Suisse.
Hi, everyone, g ood morning, Felipe, a few questions on my side, s till on the Combustíveis, and looking forward. You commented you expect volume growth in line with GDP, but you've gained some market share throughout 2019, which means that if you were to maintain the same market share and the market grow in line with the GDP, call it 3%, I would expect Raízen to grow faster or to grow more than just GDP. If you could just comment on that, if you meant market growing GDP or just your volume growing GDP. In that guidance you've provided for the Combustíveis, do you by any means expect any sort of difficulty in the competitive environment with lower margins and so on, or do you say it's mostly an effect of the JV deconsolidation, maybe inventory loss in the first quarter now?
Those two questions in regards to the guidance. On a different topic, if we look into what's been the dynamics in the market so far, it appears that the first quarter 2020 might be a quarter of inventory loss, right? We've seen these very volatile results, fourth quarter very strong, maybe the other way around in 2020. Do you agree with that? Likewise, it appears there is still some arbitrage opportunity for imports in the first quarter 2020. Do you see it the same way? The dynamics for the replacement margins or the competitive environment now in the first quarter, is it any better or any worse than fourth quarter? Just to summarize on the first topic, guidance, do you expect any market share loss? Do you expect any future competition?
On the first quarter so far, inventory losses, gains on imports, and if you've seen any changes in the replacement margins dynamics. Thank you.
Régis, I'll try to get all of your questions here, and thank you for them. First, in terms of market share, and this is something we have been saying consistently here, that market share is a consequence of the performance, and we have been pretty consistent on that. If you think about Cosan's or Raízen's results or volume growth in the past few years, we have been outperforming the average volume growth of the industry. Our base of comparison is also different than the average of the industry again. There's no target of market share here. Again, this is a consequence of the performance. In terms of the market environment. The competitiveness is still showing in non-conventional players, right? I'm talking here about tax evasion, quality of products, and so on. The ethanol demand being higher at some point in time helps on these dynamics.
After three years of rejection, the fuel market reacted in the second half of 2019, which, as I mentioned before, helps to improve market environment. This is the scenario that we saw in the second half, and probably, including GDP, is likely better than last year. We're going to see some volume growth as well in 2020. In terms of inventory, volatility will keep bringing challenges and opportunities to our strategy, and we are ready to navigate in any scenario with the infrastructure and efficiency that we have in our business. This is what I can tell you. As you know, imports, inventory gains, and losses are part of the game, and we have done the investments to be efficient on that front.
Felipe, if I may, just a follow-up. You mean 3% volume growth in Raízen, right? Not the market as a whole.
Yes, t hat's what's implied in our guidance here.
Thanks, and i f I may, just one last one on Energia. Can you comment on why has CapEx grown faster than EBITDA, particularly if you've hedged at such a high price in the next harvest?
Regis, we are doing some catch up in terms of productivity in some of the areas, as we mentioned in the conference call. Specifically, those areas that we recently acquired, they suffered with lower productivity. Implied within the guidance, we have an increase in the biological asset investment, so meaning renewal and planting of sugarcane, in order to capture better productivity in the following years. That can be seen already for the next year, where we have implied a growth on the total sugarcane crush.
Okay. All right, v ery clear. Thank you.
Our next question comes from Thiago Duarte, BTG.
Thank you, and good morning, everybody. Good morning, Felipe, João. Actually, I have two follow-ups on the guidances for each of the operating units. The first one is regarding the CapEx for the Raízen Energia segment. You just commented on that, Felipe, a little bit, but if you could just provide us color on two things. Number one, can you break down the expansion CapEx in Raízen Energia in terms of sugarcane renewal? My understanding is that Raízen Energia's maintenance CapEx should be in the rounds of BRL 1.9 billion to BRL 2 billion per year. There's a pretty big expansion and renewal CapEx embedded in the guidance that you guys provided. If you just could give us a little bit more color on how much of that is really going into the renewing of the sugarcane fields.
Aligned with that, you guys used to provide in the past the average age of the sugarcane fields, so if you could just help us with that number, it would help us understanding a little bit more the pace of the renewing and whether this higher CapEx could also be the case for the following years, and the following crops as well, so t hat would be the first question. The second question on the guidance for Raízen Combustíveis. You mentioned your volume growth assumption. Can you talk a little bit of your pricing assumptions, and whether you guys are using the spot price in terms of Brent and ethanol or how you see prices per cubic meter evolving on average for this business unit would be helpful as well. Thank you.
Thiago, thank you for your question. Starting for the last one, p ricing, and the price area at Raízen has been consolidated for a while, right? I'm not going to give you what is the main assumptions, because we look this as an integrated supply and commercialization strategy. This is part of Raízen's, let's say, full strategy for the fields. In terms of your first question, you're right, the average investment of maintenance, which is including renewal, planting, and intercrop maintenance, is around BRL 1.9 billion to BRL 2 billion a year. That's what you can consider for 2019/2020 crop, and also for the next one, t hat's what's embedded for the guidance.
The target here is to bring the average age of the sugarcane fields from 3.9 to somewhere around 3.5 years, which means that we're probably going to have one or two more years of a higher level of investment, which should gradually reduce throughout time.
Felipe, can you just clarify, because since we are seeing in 2019 and now in 2020, the pickup in the CapEx in Raízen Energia, can you just clarify whether we should still see a higher CapEx in the coming years as well? My understanding is that if you are speeding up the sugarcane renewing CapEx over this year and last year only, this higher number should also prevail in the coming years as well, so j ust for us to understand, you know, how fast we should be seeing the CapEx converging to maintenance.
Thiago, yes. I think it's not a one-year thing, of course. That's not how it works in this industry. I'll say a couple of years of this level of renewal and planting being more focused on improving the productivity of our fields.
Thank you.
Our next question comes from Roberto Browne, Morgan Stanley.
Hi, Felipe. Good morning. Thanks for the question. I just have a quick one on Argentina. I'm just trying to better understand what happened in the quarter. I know that there was a $13 million gain, there was no recurring due to the change in the prices in Argentina, but still e ven if we take out that, the results are quite good, close to $70 million in one quarter. Considering this, it looks like that the guidance for the next year is very conservative. Maybe trying to better understand the assumptions you have on that guidance and maybe how recurring the results we saw this quarter, how recurring it can be. Thank you.
Roberto, thank you for your question. In Argentina, it's still a tough economic environment. GDP points to a recession and inflation is too high, so 2019 confirmed that the quality of the asset and some resilience on the diesel and gasoline demands. Our guidance is using the best assumption we have nowadays, right? This $160 million to $200 million EBITDA implies this assumption of a more tough economic environment. At this point in time, this is the best assumption that we have for the Argentina downstream business.
Felipe, were there any other positive surprises in the results of the fourth quarter besides the inventory gains?
No, t his was basically, let's say, th e one-off. There were two price adjustments between November and December, which helps us to recover part of the $55 million loss of the 3Q. This $13 million gain that we have, it's just a recovery of part of what we lost in the 3Q. There was no other, let's say, one-off impact in Argentina. Also, one thing that we can consider is that we have a slightly growth on our network there, with new stations, which also helped on the growth of the volumes.
Very clear. Thank you, Felipe.
Our next question comes from Alexandre Falcao, HSBC.
Hey, guys. Good morning. Thanks for the question. I have actually two. One is, when you design the guidance and the budget, can you walk us through a little bit what's the vision for sugar, and specifically for ethanol? This recent drop because of coronavirus in oil prices, how much is that a factor there or in your guidance or not? What do you think the mix is going to be for this year if these dynamics continue? That's question number one. Second, question number two is, with the, you know, l ower cost of debt in Brazil, do you guys plan to shift a little bit the debt structure more into local debt and a little bit away from U.S. dollar-denominated debt? Thank you.
Falcao, thank you for the question. The first, in terms of the sugar prices and the dynamics and what is implied in the guidance, I'll say what I said in the call. There's an increasing consensus there that India and Thailand, one of the leading producing countries, are facing unfavorable climate conditions affecting their production, and that's probably part of what is impacting these better sugar prices lately. Brazil, when you see the demand for ethanol, it remains strong, sustaining a good remuneration still, including this inter-crop season, where we're going to have more sales of ethanol including. In the outlook for 2021, is that the mix? It w ill probably be slightly more balanced due to the sugar price recovery, especially if you compare with the past two crops, right? We will keep at Raízen the close track of these market dynamics.
We're probably going to decide a little bit better in terms of the mix throughout the crop, right? We already hedged about 50% to 60% of the sugar to be exported for next year at a pretty good level of prices, which is somewhat 10% higher than the price of this 2019/2020 crop year. We're probably going to be talking about some shift on the production, not only for Raízen, but probably at Brazil as well. We're going to keep, again, a close track of these market dynamics, seeking always to improve the sugar and ethanol profitability, and, of course, optimizing always our strategy of commercialization and mix throughout the crop year. In terms of your second question, it's about the low cost of debt in Brazil. Indeed, if you look at the opcos, we have already done a lot to reduce and to access local market.
We are constantly looking at our liability management within the group. There is nothing we can share as of now, but we are looking very closely into the opportunities, not only at the holdco but at the opcos as well.
Okay, perfect. Thank you.
Our next question comes from Fernanda Cunha, Citibank.
Hi, good morning, everyone. Felipe, I just have two follow-ups on the energy business. The first one is, given that some of your competitors have already received the amount of CBIOs that they will be able to sell for next crop year, can you give us any preliminary guidance of how many CBIOs are you estimating that you will receive with your mills? The second question is, when we get the midpoint of your sugarcane crushing size for next crop year, you are more or less growing 5%. Can you break down how much of this growth is related to better climate conditions and how much is related to improvements in productivity given the investments you have made in the past? Thank you.
Fernanda, first, in terms of the RenovaBio and the CBIOs, we actually are in the process of getting all mills with the registration, or registered. It should be concluded in the next following months or probably by May. We don't have any mills yet registered. Again, we are in the process for all of them. We are not ready to share or give any of the guidance or anything related to the CBIO issues and trading. This is one thing. In terms of the growth of our sugarcane crushing, it's actually a mix of both things. Weather, it's way too early to say how it's going to impact the intercrop. We're just in the half of the intercrop season here.
In terms of the investments, what we have been doing last year in terms of improving the investments on agricultural yields is part also of this crushing growth for next year. This is basically what is embedded there on the guidance.
Okay. On the second question, just a follow-up. Given that you're investing more in planting and treatment, will you reduce the area of harvesting this year? You're just going to concentrate around 15% of the area?
We're probably going to maintain it. It's too early to say, but we're probably going to maintain it.
Okay, t hanks a lot.
Our next question comes from Rodrigo Almeida, Santander.
Hi, Felipe. Hi, everyone. Good morning. I have one quick question on Combustíveis. My question is pretty much related to the inventory gains, the commercialization strategy that you had this quarter. It seems like you had a strong inventory gain. Could you just please help us quantify these inventory gains, and just so we can get a better feeling together with the guidance of what's a normalized EBITDA margin for the business. Thank you.
Rodrigo, we do not disclose this type of information. This is part of the supply, the sourcing, and the commercialization strategy. This is, as we always mention, it's part of the game, and we cannot disclose these effects as of now.
Okay, sure. Thanks.
Thank you. With no further questions, I would like to turn the floor back over to Mr. Felipe Casali for final remarks. Mr. Casali, you may proceed.
Thank you all. We hope to see you in our Investors Day, our Cosan Day, which will be held in São Paulo on March 9th, and in New York on March 13th. Hope to see you all there and thank you everyone for the call.
Thank you. That concludes Cosan's audio conference for today.