Cosan (NYSE: CSAN) reported a second-quarter 2026 net loss of 320 million BRL, significantly improved from the prior year due to better financial results and reduced administrative costs. The holding company cut expanded net debt by 20% to 9.2 billion BRL, driven largely by proceeds from its subsidiary Compass’s initial public offering.

Financial Performance and Deleveraging

The company’s expanded gross debt stood at 16.5 billion BRL at the end of Q2 2026, down approximately 9 billion BRL from Q4 2025 and 2.7 billion BRL from Q1 2026. This reduction reflects active liability management, including bond payments and early amortizations totaling nearly 9 billion BRL through June. Proceeds from Compass’s secondary offering generated 2.3 billion BRL in net funds for Cosan, while dividends received from investees added 399 million BRL in the quarter.

General and administrative expenses fell 36% in the first half of 2026 compared to the same period in 2025, saving 49 million BRL. Management attributed this efficiency to ongoing structural simplification efforts, including the announced delisting of ADSs from the NYSE to reduce regulatory costs.

Strategic Divestments and Operations

Cosan announced the sale of part of Radar’s land portfolio in Mato Grosso for 1.85 billion BRL, with Cosan’s indirect stake valued at approximately 586 million BRL. Closing is expected by October 30, 2026. Additionally, an exclusive letter of intent was signed for the full divestment of Porto São Luís, including a 300 million BRL closing payment and potential earn-outs.

Operational highlights included:

• Rumo: Transported 23.8 billion RTK, up 9% YoY, with EBITDA stable at 2.3 billion BRL.
• Compass: EBITDA rose 5% YoY despite lower industrial consumption, offset by strong residential and commercial segments.
• Moove: EBITDA more than doubled QoQ amid supply constraints from the Strait of Hormuz closure, though it remained 6% below Q2 2025 due to non-recurring insurance gains in the prior year.

What the Numbers Show

The divergence between Cosan’s improving balance sheet and its temporary decline in the debt service coverage ratio highlights the timing mismatch of cash flows. While net debt fell sharply, the coverage ratio ended at 0.2x on an LTM basis, down 0.2x QoQ. Management noted this was driven by the seasonality of dividend distributions, which are concentrated in the second half of the year, rather than operational weakness. The company projects the ratio to reach between 0.8x and 1.2x by year-end 2026 as these distributions normalize and debt reduction benefits fully accrue.

Management and Structural Changes

Cosan announced significant leadership changes, including the departure of long-term executives Maria Rita and Rafael Bergman, and the return of former executive Cesario. These moves align with the strategy to streamline operations and reduce overhead. Additionally, Hyezen secured approval for its out-of-court reorganization plan with adherence from 81.6% of financial creditors, marking a key step in its turnaround.