Shares of Brazil's Petrobras fall after earnings release

SAO PAULO Tue Feb 5, 2013 9:19am EST

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SAO PAULO (Reuters) - Preferred shares of Petroleo Brasileiro SA (PETR4.SA) fell on Tuesday after its fourth-quarter earnings fanned concerns over management's ability to turn around the Brazilian state-controlled oil company known as Petrobras.

Net profit rose 53 percent from a year earlier, the company said in a securities filing on Monday, but operational income rose less than expected, and debt surpassed its target. This heightened concerns about the sustainability of Petrobras' aggressive investment program.

"Although the bottom line was positive, operational results were weak and very heavily pressured by an increase in costs," said analyst Luiz Otávio Broad of Agora Corretora in Rio de Janeiro. "Considering the strong level of investment that is planned, this will be yet another year of heavy leveraging for the company, and that continues to be a worry."

Petrobras' common shares (PETR3.SA) took their biggest plunge in more than seven months following the earnings release, after the company said it changed the way it distributes dividends.

While holders of both preferred and common stock have received equal dividend payments per share in recent years, Petrobras said it would now pay 0.47 reais in dividends per common share and 0.96 reais per preferred share.

The decision caught investors by surprise and showed that the company lacks the ability to deliver results and distribute dividends, said analysts at XP Investimentos in Rio de Janeiro.

Petrobras' preferred shares were down 2.39 percent at 17.57 reais in morning trading, while common shares were down 6.24 percent at 16.97 reais.

(Reporting by Asher Levine and Danielle Assalve; Editing by Gerald E. McCormick and Lisa Von Ahn)

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