(Adds comment from analyst and Petrobras comment, background on
By Jeb Blount
RIO DE JANEIRO May 9 Profit at Brazil's
state-run oil company Petroleo Brasileiro SA fell 30 percent in
the first quarter, the company said on Friday, meeting analysts'
expectations as refining and fuels losses rose and output fell.
Petrobras, as the company is known, reported net
income of 5.39 billion reais ($2.43 billion) in the quarter,
compared with 7.69 billion reais a year earlier. The result was
in line with the 5.24-billion-reais average estimate of 11
analysts surveyed by Reuters News.
Profit fell 14 percent from the fourth quarter.
Petrobras is struggling to implement a $221 billion
five-year investment plan as government fuel-price controls and
soaring costs starve the company of cash. Rio de Janeiro-based
Petrobras has the highest debt levels and lowest profitability
of any major oil company.
Petrobras' annual profit could soar if the company is more
efficiently managed and freed by the government to raise
domestic gasoline and diesel prices in line with world prices,
Paula Kovarsky, an oil company analyst at Banco Itau BBA in Sao
Paulo, wrote on Thursday in a note to investors. She said profit
under those conditions could rise by more than half in 2014 from
2013 to 36.2 billion reais.
Profit in the first quarter fell despite a jump in revenue.
Net sales, or sales minus sales taxes, rose 12 percent to
81.5 billion reais, compared with 72.5 billion reais a year
earlier. The figure, boosted by fuel-price increases last year,
was also in line with the survey estimate.
Several factors eroded the higher revenue.
The refining and supply unit lost 4.81 billion reais in the
quarter, 13 percent more than a year earlier as fuel imports
continued to drag on results.
Petrobras' average oil and natural gas output in the first
quarter was the lowest in five years, the result of falling
flows from older fields and delays in bringing massive new
offshore areas on line.
Chief Executive Officer Maria das Gracas Foster said in the
earnings statement that the company will meet its target of
boosting output by 7.5 percent in 2014.
Petrobras also wrote off a net 1.6 billion reais in the
quarter for a voluntary retirement plan that will cut its
workforce by about 8,300 people. The move aims to save 13
billion reais by the end of 2018.
Brazil's currency was 15 percent weaker in the quarter than
a year earlier. This meant the company must use more local
currency to import each dollar-denominated barrel of fuel
imports, wiping out part of November's fuel-price increase.
Brazilian domestic fuel prices have been held below world
prices as part of a government effort to control inflation.
Earnings before interest, taxes, depreciation and
amortization, or EBITDA, a measure of the company's ability to
generate cash from operations, fell 12 percent to 14.3 billion
reais. The EBITDA result was 9.14 percent below expectations.
($1 = 2.2150 Brazilian reais)
(Reporting by Jeb Blount; Editing by Chris Reese and Jan