Production Costs Bring Brazil’s Petrobras Profits Down by 36%

Brazilian state-controlled oil company Petrobras informed that fourth-quarter profit fell 36%, hit by higher production costs that its chief executive said were worrisome.

Petróleo Brasileiro SA said net consolidated profit totaled 5.2 billion reais (US$ 2.46 billion), down from 8.1 billion reais a year earlier. The result was below market expectations.

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell to 10.6 billion reais from 12.5 billion reais.

Analysts, on average, had expected Brazil's industrial flagship to post net consolidated profit of about 6.2 billion reais and EBITDA " a key measure of cash flow " of 12.6 billion reais.

Net revenue in the fourth quarter was 41.04 billion reais, compared with 38.6 billion in the same quarter a year earlier.

Petrobras said refining costs rose 28% per barrel in the fourth quarter from the same quarter a year earlier and that extraction costs, excluding government participation, rose 13%. Planned stoppages at some refineries also contributed to costs as Petrobras imported more oil derivatives.

"One of the worries of management is costs, as both operating costs and investments have systematically been affected by generally higher prices in the oil sector," Petrobras Chief Executive José Sergio Gabrielli said at a media conference.

"For sure the price of oil and the returns it generates for companies compensate for this increase in costs; however, management is always monitoring them," he said.

Petrobras shares were 0.4% higher at 44.4 reais in afternoon trading, as international oil prices rose slightly, but the stock lagged behind the broader market's 1.6% rise.

"(The result) was worse than expected. Costs have been disappointing for some time already … this is reflected in the stock price," said Luiz Otávio Broad, an analyst with brokerage Agora Senior.

Despite the higher costs, for all of 2006 consolidated profit was a record 25.9 billion reais, helped by a near 6% rise in domestic oil output to an average of 1.78 million barrels per day.

In the previous year, Petrobras earned 23.7 billion reais.
It wants to boost output to 1.9 million bpd by the end of this year after the launch of several new rigs.

Mercopress

Tags:

Ads

You May Also Like

FIFA Doesn’t Like Brazil’s Pace in Preparation to Stage the 2014 World Cup

FIFA’s president Sepp Blatter is not hiding his displeasure at the way Brazilian are ...

How Brazil Benefits from Being World’s Most Pentecostal Country

In several Latin American social movements a new reading is emerging of the role ...

Brasil Telecom Expanding Wireless Network

Harris Corporation a provider of wireless equipment and services, today announced that Brasil Telecom ...

Brazil’s Experimental Theater Group Invited to Play in Cairo Festival

Forte Casa Teatro, a group of actors from São Paulo, in southeastern Brazil, was ...

Brazil Wants to Create a South American Interpol

The Brazilian government is sponsoring the creation of a Mercosur police force similar to ...

Brazil’s Fingerprinting: Good to Catch Sex Tourists

Many U.S. citizens visit foreign lands to engage in illegal activity that would be ...

Brazil Collects US$ 119 Billion in 2004. A Record.

Brazil’s Federal Revenue agency collected a record amount of taxes and contributions in 2004, ...

Brazil’s Proposal of Mercosur Fund for Business Ready for Launching

The Fund for Small and Medium Companies of the Mercosur, proposed by Brazil, should ...

Roberto Marinho – The Most Powerful Man in Brazil

Roberto Marinho commanded a media empire and some say that he was more powerful ...

Brazilian Tropfruit Makes Juice for Foreign Tastes

The company Tropfruit Nordeste, manufacturer of orange, passion fruit and pineapple juice concentrates, based ...