February 5, 2013 2:03 am

Petrobras caps poor year with income surge

Petrobras, Brazil’s state-controlled oil company, reported a 53 per cent rise in fourth-quarter income following tax and financial gains, rounding off what was still its least profitable year since 2004.

The Rio de Janeiro-based company said late on Monday that net profit in the last three months of 2012 rose more than expected to R$7.75bn ($3.89bn) from R$5.05bn in the same quarter of the previous year.

Analysts surveyed by Reuters had on average expected income for the quarter to reach only R$6.21bn.

However, Petrobras’s annual net profit of R$21.2bn in 2012 was down 36 per cent from the previous year and ranked as the company’s lowest annual income in eight years.

In 2007 the company became the envy of the global oil industry after discovering vast so-called “pre-salt” offshore reserves, thought to contain more than 50bn barrels of oil.

However, government fuel price controls in Brazil to curb inflation have forced Petrobras to import oil at a loss to meet growing domestic demand in the meantime, weighing on profits.

The government has since allowed several moderate price gains, reducing but not eliminating Brazilians’ fuel subsidy.

Petrobras said net revenue, or revenue minus sales taxes, rose 12.5 per cent to R$73.41bn in the fourth quarter from R$65.26bn in the last three months of 2011. However, adjusted earnings before interest, taxes, depreciation and amortisation, or ebitda, dropped 15 per cent to R$11.94bn from R$14.05bn in the previous year.

The company also blamed the depreciation of the real against the dollar and higher operational costs for falling profits over the past year.

The rise in fourth-quarter net income, it said, was largely due to higher financial gains and lower taxes.

Petrobras’s sale of Brazilian Treasury bonds caused the company’s financial gains to soar almost 600 per cent to R$2.79bn during the fourth quarter from R$400m the previous year.

The company also said its profits were boosted by a R$2.1bn income tax benefit that it chose to redeem during the period.

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