April 26, 2013 / 11:15 PM / in 5 years

UPDATE 1-Petrobras profit down 17 pct, output drops, imports soar

* Net income in the quarter was 7.69 bln reais

* Revenue rose 9.68 pct to 72.5 billion reais

* Net crude, fuel imports rose to 454,000 barrels/day

By Jeb Blount

RIO DE JANEIRO, April 26 (Reuters) - State-controlled oil company Petroleo Brasileiro SA said on Friday that first-quarter profit fell 17 percent as oil-output fell, imports soared and fuel subsidies ate up cash needed for investment.

While the result beat analyst expectations, the Brazilian company failed again to fulfill a promise to reign in operating costs, which jumped in almost every major category.

Net income in the three months ending March 31 fell to 7.69 billion reais ($3.85 billion), compared with 9.21 billion reais in the first quarter of 2012. The average profit estimate of five analysts surveyed by Reuters was 6.7 billion reais.

The result was little changed, falling 1 percent, from the fourth quarter.

Production at Petrobras, as the company is known, fell for nine consecutive months through February, compared with each of those same months a year earlier. The reduction, the result of a platform-maintenance program in the Campos Basin, forced an increase in oil imports, while reducing exports.

As a result, Petrobras’ net import of oil and refined products, or the difference between exports and imports of crude oil and fuels, rose more than nine-fold in the quarter to an average 454,000 barrels a day.

The government, seeking to limit inflation, has also prevented domestic fuel prices from rising at the same pace as international oil prices, forcing Rio de Janeiro-based Petrobras to sell fuel in Brazil at a loss.

That has squeezed profitability and forced debt to rise beyond levels stipulated by Petrobras’ own rules. Meanwhile, the government, its controlling shareholder, is pushing Petrobras to move ahead with a $237 billion five-year expansion plan, the world’s largest corporate spending program.

Net sales, or total sales minus sales taxes, rose 9.68 percent to 72.5 billion reais from 66.1 billion reais a year earlier. The figure was in line with the average analyst estimate of 73.4 billion reais.

Earnings before interest, taxes, amortization and depreciation (EBITDA), a measure of a company’s ability to generate cash from operations, fell 1.76 percent to 16.2 billion reais, compared with 16.5 billion reais a year earlier. That beat the average analyst estimate of 14.5 billion reais.

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