Brazil's Petrobras Posts Sharp Decline in Earnings
August 11 2016 - 07:40PM
Dow Jones News
RIO DE JANEIRO—Brazil's troubled state-run oil company Petró leo
Brasileiro SA reported Thursday a sharp decline in second-quarter
earnings as it again wrote off part of a major refinery project and
revenue fell.
Petrobras said its net profit fell 30% in the second quarter
from a year earlier to 370 million Brazilian reais ($117.8
million). Contributing to the decline was a 1.12 billion-real
impairment charge from its vastly overpriced Comperj refinery
project, which is under review.
Revenue declined 11% from the second quarter of 2015 to 71.32
billion reais, hit by weak fuel demand in recession-stricken Brazil
and lower oil prices in the international market.
Earnings before interest, taxes, depreciation and amortization,
a measure of cash flow known as Ebitda, rose 2.8% on the year to
20.32 billion reais after adjusting for nonrecurring impacts.
Solange Guedes, Petrobras's director of exploration and
production, said Thursday that results in the third and fourth
quarters of this year will be "much better" now that the Comperj
write-off is behind it, and once several pieces of its oil rig
fleet come on stream.
It isn't the company's first Comperj-related write down. Earlier
this year Petrobras wrote off BRL5.28 billion on Comperj, a hulking
refinery complex on the outskirts of Rio de Janeiro that Petrobras
poured roughly $13.5 billion into in recent years only to halt work
because it ran out of money. The company has for months been
looking for a partner to help finish the refinery, and its newly
installedexecutives said Thursday that it was still looking.
Petrobras and its newly installed chief executive, Pedro
Parente, are working to shake off the lingering effects of a
sprawling corruption scandal and to sell off more than $15 billion
worth of assets as part of a vast cost-cutting program.
The corruption scandal is still roiling Petrobras, along with
Brazil's biggest companies and politicians, and a class-action
lawsuit brought by shareholders in New York remains unresolved.
But in recent months, the company's divestment program has
gained some steam.
In July, Petrobras sold a controlling stake in an offshore oil
field for $2.5 billion to Norway's Statoil ASA, Also last month,
Petrobras said it entered into exclusive talks with Mexican
petrochemicals company Alpek to sell its petrochemical units
Petroquimica Suape and Citepe.
And in May, Petrobras sold stakes in its Argentina and Chile
subsidiaries, and the company is in exclusive talks with Canada's
Brookfield Asset Management Inc. over the sale of its natural gas
pipeline unit, Nova Transportadora do Sudeste SA.
Though it remains saddled by a mountain of debt, that burden got
slightly lighter in the second quarter. Total debt ended June at
$123.92 billion, down 2% from the end of 2015. Net debt was
equivalent to 4.49 times adjusted Ebitda, down from 5.31 times at
the end of last year.
Write to Will Connors at william.connors@wsj.com and Paul
Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
August 11, 2016 19:25 ET (23:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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