|Brazil Petrobras 1Q profit falls on oil price slide|
|Written by public relations Dept./Gh|
|Wednesday, 13 May 2009 09:33|
RIO DE JANEIRO (Dow Jones)--Brazilian state-run energy giant Petroleo Brasileiro (PBR) recorded a 20% year-on-year slide in first-quarter net profits as the global economic slowdown slashed international oil prices and undercut domestic demand.
Petrobras registered a first-quarter net profit of 5.82 billion Brazilian reals ($2.83 billion), down from BRL7.24 billion in the year-ago quarter, the company said late Monday.
“The lower profit was primarily because of the fall in oil prices on the international market, which was reflected not only in domestic sales but also in exports,” CFO Almir Barbassa said during a press conference.
Petrobras, however, outperformed market expectations as Latin America’s largest company was expected to report first-quarter net profits of BRL5.2 billion, according to five analysts polled by Dow Jones Newswires.
The company also recorded revenues of BRL42.6 billion in the first quarter, down 9% from BRL46.8 billion in the first quarter of 2008. Earnings before interest, taxes, depreciation and amortization in the first quarter were BRL13.4 billion, down from BRL14.18 billion in the year-ago quarter.
“The fluctuation in oil prices affects us a great deal because we’re both importers and exporters of oil, and we negotiate on the basis of international prices,” Barbassa said.
While the company boosted exports to compensate for slack domestic demand, it still wasn’t enough to offset a 13% decline in local sales, Barbassa said.
“It’s bad for us because the domestic market is more convenient for us,” Barbassa said. Petrobras has also benefited from the increase to fuel prices the company made in May 2008, which it has maintained rather than pass along the subsequent slide in international oil prices to consumers.
Also crimping Petrobras’ bottom line were increased foreign-exchange losses and interest payments, Barbassa said. Petrobras had BRL848 million in financial losses in the first quarter versus a loss of BRL235 million in the year-ago quarter, the company said.
The company’s net debt level rose 4% at the first quarter to BRL50.78 billion from BRL48.82 billion at the end of 2008, according to Petrobras.
The company’s operating results, however, improved from the disappointing fourth quarter as the lower international oil prices made imported products cheaper, Barbassa said.
Operating costs also eased during the quarter, as the decline in international oil prices also led to decreases in the royalties Petrobras pays the government.
Lifting costs, including government participation, slid to $14.69 a barrel in the first quarter, down 41% from $24.82 in the year-ago quarter. Lifting costs were also 19% lower from the fourth quarter’s $18.11, Petrobras said.
Cost pressures, however, were continuing to show signs of improvement in the second quarter, Barbassa added. “Some segments are showing signs of further decreases,” Barbassa said.
For example, shipping costs have decreased in the second quarter, Barbassa noted. The results didn’t show as many costs gains because first-quarter costs were still more closely linked to the fourth quarter, which reflected oil prices nearer their July peak, Barbassa said.
Petrobras shares ended 0.2% lower at BRL32.93 amid a round of profit-taking Monday on the Sao Paulo Stock Exchange. The shares, however, outperformed the broader market as measured by the Ibovespa stocks index, which closed down 0.8% at 50,976 points.
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