PBR:Petrobras Net Profit Falls 20% -- Update 6:57:00 PM
6:57p ET August 8, 2014 (Dow Jones)
Petrobras Net Profit Falls 20% -- Update
By Paul Kiernan and William Connors
RIO DE JANEIRO--Brazilian state-controlled oil company, Petroleo Brasileiro SA said Friday its profit fell for a fourth consecutive quarter as it continues to grapple with the high cost of subsidizing fuel imports for the domestic market.
Second-quarter net profit declined 20% from a year earlier to 4.96 billion Brazilian reais ($2.17 billion), the company known as Petrobras said Friday.
Weighing on the company's bottom line was its refining division, which imports gasoline and diesel fuels and then sells them at below cost to help the Brazilian government battle inflation, a program the government started in 2011 and which has cost Petrobras billions of dollars.
Petrobras' imports of oil and derivatives surged 33% in the second quarter from a year earlier to 941,000 barrels a day. The refining division's quarterly loss ballooned to 3.88 billion reais, up 54% from the second quarter of 2013.
The fuel subsidy, combined with a massive investment budget, has turned Petrobras into the world's most indebted oil major. Net debt as of June 30 stood at $109.58 billion, up 16% from the end of 2013.
Petrobras said higher interest expenses and a weaker Brazilian real further ate away at its profits in the second quarter.
Earnings before interest, taxes, depreciation and amortization, or Ebitda, fell 10% on the year to 16.26 billion reais.
Revenues, on the other hand, rose 12% to 82.3 billion reais, Petrobras said, bolstered by rising production of crude oil. Second-quarter oil output reached 2.05 million barrels a day in July, up 6.4% from March.
Brazil aims to be among the world's top five global oil producers by 2020, when it expects to be producing four million barrels of oil a day. Petrobras reiterated its target of increasing oil production by 7.5%, plus or minus one percentage point, in 2014.
Petrobras Chief Executive Maria das Grac Less
