Marcos Lutz - Chief Executive Officer Marcelo Martins - Chief Financial Officer and Investor Relations Officer Guilherme Machado - Investor Relations Manager.

Christian Audi - Santander Ravi Jain - HSBC Paulo Valaci - Brasil Plural Rodrigo Mugaburu - Morgan Stanley Gustavo Allevato - Santander.

Good morning ladies and gentlemen. At this time we would like to welcome everyone to Cosan's Third Quarter of 2014 Results Conference Call. Today with us we have Mr. Marcos Lutz, CEO; Mr. Marcelo Martins, CFO and Investor Relations Officer; and Mr. Guilherme Machado, Investor Relations Manager.

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 slideshow of this presentation are available through live webcast at www.cosan.com.br/ir. The slides can also be downloaded from the webcast platform.

Before proceeding let me mention that forward-looking statements will be made under the Safe Harbor of the Securities Litigation Reform Act of 1996. 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 results to differ materially from those expressed in such forward-looking statements. Now, I will turn the conference over to Mr. Martins, sir, you may begin your conference..

Thank you, good morning everyone. I would like to start call with the pro forma consolidated highlights for Cosan. We had in this quarter a net positive increase in net revenues of 8% which jumped from R$9.5 billion to R$10.3 billion in this quarter. We have seen some volatility amongst the various businesses that form the portfolio of Cosan.

The most relevant and positive impact came from the fuel distribution business at Raízen which was enough to compensate some negative impacts on the net revenues coming from the energy business at Raízen and Comgás as well.

Despite the increase in the net revenues, we saw a reduction in the EBIDA of 12% from R$1.2 billion to R$1.06 billion in this quarter mainly as a function of the postponement of shipment of sugar and ethanol in Raízen Energia, a lower transportation revenue in Rumo. We also saw a reduction in EBTIDA margin from 12.6% to 10.3% in this quarter.

Net income also went down to R$ 50 million from R$206 million last year and the main reason for that negative impact is basically the impact on the exchange rate variance on the debt of Raízen and also higher financial expenses at Cosan SA.

Just wanted to remember that most of our debt sitting at Cosan SA, was hedged to Real except for the perpetual bond in the outstanding amount of $500 million. Now moving to the different businesses, I would like to start with Raízen Combustíveis of the fuels business.

We saw an increase or a jump in the volume sold of 6% from 6.1 billion to 6.5 billion liters. We also saw a jump in the prices of roughly 6% which caused an impact or a positive impact of 13% in the net revenues of the Company from R$12.7 billion to R$14.3 billion during this quarter.

The EBITDA also increased 13% from R$483 million to R$546 million in this quarter and the EBITDA margin remained stable at 3.8% in comparison with the same quarter in 2013. As for Raízen Energia, we saw a reduction in the sugarcane crushed, in the volume of sugarcane crushed of 9% from 26.8 million to 24.

5 million tons in this quarter is a function mainly of the very dry weather that has been impacted the production of sugarcane and as a consequence of sugar and ethanol on the Southeast region of Brazil. We also had as I said a negative impact on the sugar production of 12% from 2.1 million to 1.9 million tons of sugar being produced in this quarter.

Ethanol production went slightly up 2% from 884 million liters to 903 million liters in this quarter. We also saw a very positive impact on the price of energy sold mainly in the spot market which jumped from R$170 million to R$258 million per megawatt hour in the third quarter of 2014.

TSR has function of the drought which ended up concentrating more sugar sucrose in the sugarcane saw a positive impact of 4% from R$135 to R$140 kilos per ton. The net revenue went down 28% to R$2.3 billion in this quarter and the EBITDA also went down 30% reaching R$630 million with an EBITDA margin of 27%.

What we have been doing is we have been adjusting the EBITDA by the biological assets variance during the quarter and in this quarter we had an impact of 64.6 which would lead the EBITDA to roughly R$700 million if it was not for the biological asset variation during the quarter.

In terms of the hedging of sugar, we had 2.6 million tons hedged for this crop year and 566,000 tons for next year at an average price of 17.94 cents per pound for this year and 17.44 cents for next year at an exchange rate of 2.38 cents for this year, and 2.66 cents for the year of 2015, 2016.

Now moving to Comgás, we saw a jump in volume of 5% even though it was a positive variance. We have been in terms of the volumes sold for both the residential and the industrial segments, we’ve been under what we had planned for this quarter of the year as a function of slower economic activity and also the drought in the State of São Paulo.

Net revenues went down 2% from R$1.68 to R$1.64 billion mainly as a function of the reduction in construction revenues due to a lower investment in this quarter relative to the same quarter of last year. EBITDA went up 2% from R$369 million to R$377 million at an EBTIDA margin of 23% now compared to 22% last year.

Rumo had a big jump in the volume loaded at the port of 10% from 2.8 million to 3.1 million tons during this quarter this was a very, very substantial increase in the volume loaded but it was not enough to offset a reduction in the volume of sugar effectively transported during this quarter so as a result we had a negative impact on the net revenues of 21%, a negative reduction of 21% compared to the same quarter of last year reaching R$260 million of revenues in this quarter.

As a consequence EBTIDA also went down by 25% reaching R$86 million with an EBTIDA margin of 33.1% during this quarter. For the lubricants business we had an increase of 4% in volume sold mainly of base oil which was enough to offset a drop in the sale of finished lubes.

We saw a 6% jump in net revenues that reached R$430 million during this quarter and a jump of 17% in EBTIDA resulting in R$31 million compared to R$26 million in the third quarter of 2013.

For Radar, we saw an increase of 69% in net revenues reaching R$27 million mainly as a function of the sale of properties that took place during this quarter but we had a negative impact in EBITDA because of the decrease in the land portfolio valuation in comparison with the same quarter of 2013.

Now moving to the net debt position of the company, we had an increase in the leverage to 2.9 times which was basically a function of the interest of the, I am sorry FX negative variance or negative impact on the Real during this quarter, therefore we ended up increasing our net debt position but the maturity profile of the debt is still very, very reasonable with 91% of the debt maturing in the long term and it’s also worth mentioning that the cost of debt for Cosan was reduced in comparison with the same quarter of last year mainly as a function of a debt refinancing that took place this year.

We have also adjusted the guidance for this year of 2014 mainly as a result in the case of Cosan consolidated of a reduction in the projection for the sugarcane crushed at Raízen, we’re very much at the end of our crop season with a few mills still crushing, it’s fair to assume that the actual volume of sugarcane crushed will stay between 57 million and 58 million tons during this year.

The volume of sugar sold will also come down and we are projecting something in the range of 4.1 million to 4.3 million tons and the volume of ethenol sold should be between 1.9 million and 2.1 billion liters during this quarter.

We are projecting a pro forma EBTIDA on a consolidated – pro forma consolidated basis for Cosan between R$4 billion and R$4.3 billion and a pro forma CapEx between R$2.4 billion and R$2.7 billion.

We have also revised the guidance for Rumo for both the volume of sugar loaded which should be between 10.5 million and 11.5 million tons and EBITDA which should be between R$290 million and R$310 million.

We are doing that mainly as the impact of the reduction in the sugar transported during this quarter and which will have a broader impact in the year will have a negative impact on the EBITDA of Rumo.

For Radar, we are projecting an EBITDA between R$140 million and R$150 million Cosan Lubricants an EBITDA of 110 and 140 with a total volume sold between 265 million and 285 million liters during this year of 2014.

For Comgás, the only number that we are adjusting is the projected CapEx for this year which should be between R$600 million and R$700 million. I would like to turn it back to now for our Q&A session. Thank you..

Thank you. We will now begin the question-and-answer session for investors and analysts. (Operator Instructions) Our first question comes from Christian Audi with Santander..

Thank you, hello Marcos and rest of the team. I had a few questions.

The first one Marcelo on your last point about leveraging, I know one of your focus has been on de leveraging, so I was wondering if you could comment on what your targets for net debt to EBITDA is and how soon you think you can get there, the second question was related to Comgás and the ongoing tariff discussions.

Are you concerned with recent discussions related to a potential change in the methodology used to review of the tariffs and then lastly on the fuel distribution segment, I was wondering if you could talk about your outlook for margins, we’ve had several changes now with the market GDP not growing as much, among others so I was wondering should we expect that 2015 of more stable margins relative to what we saw in this quarter or do you still expect upside and then lastly, can you just talk about what’s specifically your targets for opening of new convenience stores, you have 930 now, how many do you expect and next year in the same for gas stations please? Thanks..

Alright, Christian. Well, in terms of your first question, we have certainly a lower target for a net debt to EBITDA ratio which we have also indicated to the market to be for Raízen of roughly two times, which is pretty much where they are today.

In terms of the consolidated EBITDA for Cosan on a pro forma basis, we think that it will end up being higher than two times even because as you know well once we start consolidating ALL if we have a transaction approved by CADE that number should be higher.

But in any case, I think that – what we would probably like to do is first focus on the businesses, because they have different profiles and therefore the debt profile of those businesses should be different but in any case we are certainly aligned with the idea of reducing the leverage of the company.

As I said before the debt profile is okay, it’s reasonable, it’s actually good in the sense that most of the debt is long term and the cost of debt relative to other companies of our size is very good too in Brazil.

I mean in terms of a reference to CDI it’s probably somewhere between 100%, 110% of the CDI which is a very reasonable cost for a long term debt profile like the one we have.

Having said that, the purpose of the management of the company is to reduce debt over time, it’s hard to do it when you see spikes in the exchange rate but the way we are going to achieve it is probably by selling assets that are considered to be non-core for us. Let me just make it clear before you misunderstand me.

I am not saying that we will sell businesses but we could eventually dispose assets like land for instance or land that we don’t consider it to be core and use the proceeds for that sale of land to pay dividend and reduce debt. It’s something that we will achieve over time.

We have a plan already outlined for the reduction of debt in addition to the sale of assets we’ll also increase dividend pay outs from the companies and the idea is that we are going to use those proceeds or part of those proceed to de leverage the Company.

As I said we are not going to get in time in a short term but we will certainly reduce this leverage over time. I would like to turn it back to….

Very quickly a follow-up..

Yes..

Is there any space to sell underperforming mills or market or is it just difficult to do that at this point in time?.

We are not considering shutting down mills at this point in time. We wouldn’t rule out any possibility but it is not basically in the pipeline considering shutting down mills at this point in time..

Christian, well I understood in terms of selling mills, we don’t see also a buyer’s market so again this is also not part of the pipeline because of that, according to your question in Comgás, again we are observing the processing, the regulatory process.

We are still comfortable with it but I would like to remind that this, I mean we have always the option to move, I mean to make more or less investment in the next cycle, we always have the option to adapt the Company to let’s say a more cash cow generation of capital company versus a large investment growth Company and obviously the cycle will be what it is, let’s say the framework after we negotiate for the next cycle will be what it is and we will adapt to maximize on it.

Our view is at the end that make sense and is aligned with let’s say the state’s policy, the State of São Paulo policy cycle with larger investments, so we should basically have let’s say this process going through the beginning of let’s say the first quarter of next year but I would like to remind that the communicated regulatory or let’s say the communicated plan for the State of São Paulo is to double the participation of the natural gas in the São Paulo energy matrix is to also reduce 25% relative to 2005 emissions which have a very good play for natural gas substitution or entering natural gas in the matrix and ethanol in the matrix.

And the third again this is a gas policy which is again goes to say the State of São Paulo a strong expansion and also finding other ways of supply natural gas for the networks in the São Paulo state, so the three of them are communicated in public and those are 100% aligned with what we believe and we believe the regulatory plan that will result from the negotiation at this point will be on those lines, so at the end that’s kind of our view, if the question is if we are comfortable with the process or not, I will say we are comfortable with the process..

Yes, it was more work, I was just a bit surprised you know potential discussion about changing if you will the rules of the game thus laid in the process, is a process that’s ongoing that you have been working hard at and it was just surprising to me that there are speculation and discussion about potential changes to methodology kind of laid in the game if you will that since the way, do you feel that adds little bit more of regulatory risk?.

At the end this process is an open process where anybody, you can actually go to a public audience like that and make your point and propose a new methodology, I mean this is a open process, so this normally bring speculation.

It is natural that actually everybody let’s say all the heavy users on the industry and everybody that some saying around natural gas do participate on this process and that’s part of the game.

You’ll have to keep in mind though that whatever is there, I mean we have a contract, and whatever is there defines to us what should be our conduct in the next five years, this can be again in two main categories will be more like say low growth, higher dividend type of land for next five years or higher growth, lower dividend type of policy for the next five years.

So whatever results from that again we’ll for instance if we go for let’s say lower revenues will be also higher dividend and lower investment.

So at the end, that framework is set so I think this as an umbrella should make you comfortable with the process as a whole but having said that I don’t see any change versus what we discussed in person when we last met.

I mean we are comfortable with the process and we believe that in line with our wishes, I think the state will also want the expansion, want the growth on the process because we believe that natural gas will be more abundant at the end of the next cycle and the state should prepare its infrastructure for that and we are the main player for this so in the end that’s the core of this discussion..

Okay..

Okay and for your last question again we will keep our process ongoing in terms of convenience stores. Again, we should meet the target of 1500 on the three year plan..

And opening of gas stations, you are close to 6,000, how do you see that for example in a year like 2015 that from a macro point of view will be a more difficult one?.

We have opened very few in the last years.

What we have done was conversions from white flag, as we have been saying despite of stronger or a weaker economy the conversion is a process that happens because we propose more value to the operator of a white flag than what they have today, so at the end this has a lot to do with let’s say a organized markets where let’s say incentives or tax evasion et cetera it start disappearing because somehow the government is structured in a way that this is, it was more complicated and therefore this is a trend but I have to say the low hanging fruit is pretty much done, so from now on we are talking about smaller sites, we always have large sites that are still on the game and those happens as well but let’s say the bulk of it is pretty much converted but there is growth on this process let’s put a 1% or 2% growth that will come from this for long term because again we still have 40% or so of the sites white flag..

Great.

And then on the margin outlook Marcos you see again given that the macro outlook in the Brazilian gasoline but so much of the Brazilian sum of diesel booking through 2015, you see more of a stable EBITDA per cubic meter environment or there is still upsides for again time for you next year?.

You see we are stable on the core, we see a stable environment where we have some drivers to improve that margin that is – are the non-fuel items and also the V-Power penetration, we launched the V-Power Nitro and this is going well so things like that also help us moving up a little bit.

The core, so the regular gasoline and diesel sales I think is a more stable environment than any time..

Thanks..

Our next question comes from Ravi Jain with HSBC..

Hi.

I had a couple of questions on the energy side of the business, could you just give us, I mean of course it’s little too early but your first initial expectations for the next harvest, I mean do you see a material growth or even assuming a normalized weather should we just expect flat growth in crushing in the Central South region? And the second question will little on the ethenol mix, I mean given an increase in blending and potential let’s say price hike in gasoline or some states like Minas trying to reduce ethanol ICMS tax et cetra.

Do you see a better ethanol mix next year for you as well as the industry?.

I am not sure if I understand what you mean with ethanol mix, if it’s like ethanol on hydro versus hydro ethanol, we see….

On..

What?.

Sorry ethanol versus sugar in that sense would it be still towards ethanol next year?.

Definitely if you have larger price, higher price of gasoline it would push up prices of ethanol that will give more incentive to people to produce ethanol that will divert sugar sucrose to ethanol and therefore lower the production of sugar and therefore increase the price of sugar and therefore cancel that system so at the end, how I normally see those things are somehow communicating markets that in one end a price increase will have a reaction on the other side with the price increase and sugar at the end is so elastic in terms of the bend than fuels that they are kind of the rock on this process where if you have for some reason higher prices in ethanol, sugar will always consume whatever is there in terms of demand, so whatever is needed to pay for that sugar to supply that demand this will be the price of sugar.

So answering your question is I might see, we might see a spike but this is canceled very quickly by price of sugar on the other side. So I don’t see a big changing mix towards ethanol.

We might see a beginning of the crop more ethanol oriented but then you have a reaction on prices of sugar and this changes in the second half already, so that probably the case if we see a price increase of gasoline now, okay.

In terms of production for the next crop, again we don’t see a huge growth even if we have perfect weather, I think normal weather which means raining from now all the way to March will increase production in our fuels definitely where we see specially third party suppliers with less productivity normally because of the weather but also because of under investment on the fuels.

So those guys in many cases at the end of the let’s say six or seven cuts instead of replenishing came straightforward, they are actually doing a year of soybeans or something like that to reduce their fertilization cost to reduce the let’s say capital needed to replant for another cycle of sugarcane, so this somehow removes some land from sugarcane for one year this is also a fact, so I think we will see some growth for next year, but this won’t be a large growth the thing will be a slight growth for next year in terms of production in the Central South of Brazil..

Thank you. That’s very helpful.

One very quick follow on the CapEx in this business, I mean, I think the CapEx right now is your guidance is between 2 billion to 2.2 billion, in the next couple of years, in the next few years, do you see an opportunity to reduce that or is it already at a stable level where this is required in the next couple of years this level of CapEx?.

We see a reduction rend but I think it’s important to note that according to the IFRS rules my operational costs throughout the intercrop are capitalized, so once we have a year like that where we have less crop years and lot more—sorry less crop days and more intercrop days, you switch some of your OpEx towards CapEx so in that we are observing an increase in CapEx because of more days of intercrop that are somehow accounted as CapEx.

So, in fact what we have done this year as a reduction of our CapEx, you will see that at the end of the crop whenever or all the numbers is somehow closed and finalized after we sell all our inventory and all the cogs that are today in inventory flow through the numbers to the balance sheet, you will see that there was a quite important reduction of the sum of CapEx plus OpEx so the cash generation of the business actually had improved this year but the CapEx line in itself somehow got a little distorted for less days of crop therefore absorbing part of the OpEx that otherwise would be OpEx if the crop was there..

That’s very helpful. Thank you so much..

Welcome..

Our next question comes from Paulo Valaci with Brasil Plural..

Good afternoon, gentlemen, I have two questions if I may, the first one is about fuel demand growth in the third quarter, I was hoping you would outline for us how much of that growth is attributed to the Latina acquisition and how much is actually considered organic growth for the periods so we can get a better idea of what would be a sustainable growth rate going forward and then the second question is about co-generation, we’ve heard in some local media that a change in how the free market electricity prices are calculated could lead to a reduction in the actual free market price, I was hoping you guys could speak to how this may impact your co-generation business that would also be very helpful? Thank you..

Hi, Paulo. The first question is pretty much half and half, okay 2.5% roughly was organic I think close to 3%, out of the six is half Latina, half organic growth.

Organic meaning also some conversation of white flags okay because there is organic that we call internally the same station sales that is also something we grow plus the new sidetrack we add that somehow is organic but not necessarily organic but we are adding market share of new sites, okay but half will be Latina basically half will be those two categories.

The other question was?.

The other question was on co-generation?.

On the co-gen definitely if this passes the spot price will be kept for—again for a while so we have to-date what we call the – let’s say the reference price for any electricity that you produce without selling or let’s say consume without buying which is called (BLD) This was with a gap of 800 and something and there is discussion to reduce that gap, so basically that gap was defined by the highest generation cost which was diesel and in a far away place they have to remove that point of production to reduce that gap to 400 and something, I have to say that almost 90% or 85% of our volume is contracted so not exposed to that BLD.

But we have an impact on our let’s say extra 15% on the BLD side..

Alright, that’s very clear. Thank you..

Our next question comes from Rodrigo Mugaburu with Morgan Stanley..

Hi, good morning. Thank you for the question. I have two questions.

One follow-up on the net debt, I want to understand a little bit better on the fourth quarter we should see at least a reduction due to the spin off right, the Rumo portion of the debt should be out of let’s say 603, is that correct? And then my second question is related to the hedging, that you are hedging the 2.6 million tons hedged, how much that’s represent in relative terms of the total sugar to be full during the year for 2015 crop season? Thank you..

The second one is roughly 86% of the volume sold but again have in mind that this is based on what we project to produce and this can have a variation up or down to the very end of the crop so we never hedge a 100% because you always can actually run a little short on production and you will be over hedged or vice versa.

So that’s the first one, and the second, and the other one, you are right, I think that’s the case, I mean when we spin off Rumo the debt that is in Rumo will be on the other entity..

Okay thank you..

Our next question comes from Gustavo Allevato with Santander.

Hi, guys. Good morning. Thanks for your question. Just a quick follow-up for the lubricant business, is there any room to keep improving this business because we saw some improvement in quarter-over-quarter, so should we expect some improvement for the next quarters? Thank you..

Yes, Gustavo, I think we had two quarters in the beginning of the year that were kind of perfect storms, a combination of very slow demand and mainly because of the Wold Cup that actually was quite a slower on this segment per say but also we have the combination of a higher FX and a higher base oil price, so we have our main raw material going up in more loose market, I mean very soft market without the ability to pass those price increase—those cost increases to the price.

So we had kind of a complicated moment.

We today see the opposite, we see reduction, sharp reduction in base oil price and we see a tighter demand, so we actually are recovering this to the levels that we had before with improvements because I think the operation is more efficient everyday and actually with larger let’s say volumes and more efficient system.

So, yes we are to resume the positive trend we had discounting those two say perfect storm quarters as we noted last quarter as well, so basically we are positive with this business, very sustainable, very steady but that had this impact for once..

Okay thank you..

This concludes today’s question-and-answer session. I would like to invite Mr. Marcelo Martins to proceed with his closing statements, please go ahead, sir..

Thank you very much for participating. And just wanted to remind that on the 21st of November, we are going to have our Investor Day in New York, you should have received the save the date and you should be getting some additional information very soon. Thank you very much. Have a good day..

This concludes Cosan’s audio conference for today. Thank you very much for your participation and have a good day..