Petrobras' profit declines on lower prices, charges
(Reuters) State-led oil company Petrobras reported Q2 profit fell by nearly a third from a year earlier, missing analysts' expectations as oil prices fell, it took charges for layoffs and the impairment of a refinery.
Petrobras said net income fell 30% to $118 million in the three months ended June 30.
Last year's profit was one of the most anemic quarterly results in the company's recent history. The second-quarter 2016 profit comes after a $395 M loss in the first quarter of this year.
The average profit estimate of eight analysts surveyed by Reuters was $570 M. Estimates, though, ranged from a $1.75 B real profit to a $395 M real loss, as analysts struggled again with a lack of clear Petrobras guidance.
Part of the problem for analysts trying to chart the company's progress is Petrobras' huge debt, Chief Financial Officer Ivan Monteiro told reporters on Thursday. This requires the company to make quick changes to preserve enough cash to pay its obligations.
While total debt has eased 2% since the end of 2015, at $124 billion it is still the largest in the oil industry.
"From our point of view the company is becoming more predictable," Monteiro said. "Clearly we're still facing difficulty because the company's debt level is still very high ... still at a level where we are required to maintain a very high level of liquidity."
After a 26% decline in the average price of benchmark Brent crude oil LCOc1 compared with a year earlier, Petrobras net sales, or total sales minus sales taxes fell 11% from a year earlier to $22.5 B, missing the average survey estimate of $23.3 B.
The $380 M cost of a voluntary dismissal program and $350 M impairment charges for the Comperj refinery, whose construction was halted last year after eating up $13.5 billion of investment, kept costs high even as revenue fell.
As a result, operating profit fell 25% to $2.27 B. If a scaled back Comperj opens as now planned in 2023, it will be more than a decade late and nearly triple its original $5.2 B budget.
Contract fixing, bribery and political kickbacks from the refinery are part of a giant corruption scandal that implicated, and resulted in jail terms for a number of its former senior executives and contractors.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, a measure of a company's ability to generate cash from operations, was little changed rising 2.8% to $6.4B, in line with analysts estimates.
Reporting by Jeb Blount; Additional reporting by Marcelo Teixeira; Editing by Bernard Orr
Comments