Brazil's Petrobras Posts Loss Following Settlement Charges -- 3rd Update
March 15 2018 - 4:29PM
Dow Jones News
By Jeffrey T. Lewis and Luciana Magalhaes
SÃO PAULO -- Brazil's Petróleo Brasileiro SA, or Petrobras, said
Thursday it lost money last year as the state-controlled oil
company continues to suffer from the side effects of the Car Wash
corruption scandal.
Rio de Janeiro-based Petrobras reported a net loss of 446
million reais ($136 million) for the full year, after a loss of
14.8 billion reais in 2016. Petrobras said it would have had a net
profit of 7.1 billion reais in 2017 if not for some extraordinary
items, including one for $3.4 billion to settle a class-action suit
in the U.S. Petrobras reported a loss of 5.5 billion reais in the
fourth quarter.
Petrobras is recovering from the damage done by the corruption
scheme known as Car Wash, in which suppliers overcharged it and
funneled part of the money to politicians and their parties.
Petrobras in 2015 wrote off 6.2 billion reais due to the graft and
another 44.6 billion reais for overvalued assets, including
refineries, because of the scam.
The stock market reacted negatively to Thursday's numbers, with
the company's preferred shares down 4.2% in late afternoon trading.
Petrobras's operating results have improved, but the impact of the
settlement and another extraordinary item of 10.4 billion reais
related to a tax payment were a problem, according to Pedro Paulo
Silveira, chief economist at the Nova Futura brokerage in São
Paulo.
"There was good news in the report, but not enough to outweigh
the hit from the extraordinaries," he said.
The company announced at the start of this year an agreement to
settle the class-action suit filed by disgruntled shareholders, who
calculated the corruption scheme helped erase about $271 billion,
or almost 90%, from Petrobras's market value between 2009 and
2015.
The earnings figures show that "Petrobras is turning the page on
problems related to Car Wash," said Shin Lai, an investment
strategist at São Paulo-based research company Upside Investor.
"The change is happening and it's consistent."
Petrobras has been working to cut costs throughout its
operations, and its efforts are starting to show results. General
and administrative expenses fell 19% in 2017 to 9.3 billion reais,
mostly because of lower personnel costs, after Petrobras cut staff
through employee buyouts.
The company cut its net debt to $84.9 billion at the end of
2017, the lowest level for the figure since 2012, lengthened the
average life of the debt to 8.6 years from 7.5 years and reduced
the average interest rate to 5.9% from 6.2%. Those changes helped
cut full-year debt payments to 22.3 billion reais, from 25.6
billion reais in 2016, Petrobras said.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com and Luciana
Magalhaes at Luciana.Magalhaes@wsj.com
(END) Dow Jones Newswires
March 15, 2018 16:14 ET (20:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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