Petrobras' financial performance expected to improve in coming quarters

Brazil’s Petrobras reported a 23.7bn-real (US$4.6bn) net profit in the first quarter of 2024, down 38% year-on-year.

Local analysts were not surprised by the result and believe the state-run firm will report better financial figures in the coming quarters. 

According to Petrobras, the drop in profit reflected the impact of currency depreciation at the end of the period and the lower volume of sales of oil and oil products, a common occurrence in the first quarter of the year, when there is less demand for diesel, as well as the reduction in the price of oil and the diesel margin. 

Mahatma dos Santos, technical director of the national institute for strategic oil studies (Ineep), the state-owned company showed operational resilience, with an increase in production levels of oil and gas and derivatives. 

"Petrobras once again achieved a positive result, which allowed the company to distribute around 13.5bn reais in dividends, while maintaining growth in its investments in the quarter," he told BNamericas. 

Capex in the period was approximately US$3bn, of which US$2.5bn was for exploration and production (E&P); US$360mn for refining, transportation and marketing; and US$100mn for gas and energy.   

Sidney Lima, an analyst at Ouro Preto Investimentos, said that Petrobras' results had been expected to decline due to the price of oil and fuel, as well as higher operating expenses. 

As for the outlook for the coming quarters, the analyst considers it crucial to monitor how the company manages its costs and implements strategic investments. 

He believes that if Petrobras manages to successfully increase production and diversify its operations, it could offer attractive returns in the long term. 

"However, global economic challenges and fluctuations in oil prices will continue to be critical factors to watch," Lima told BNamericas. 

João Abdouni, an analyst at Levante Inside Corp., predicts that Petrobras will present better figures from the next quarter on, after scheduled maintenance stoppages. 

"In general, the figures were mixed, a little down on the income statement for the year, however the cash flow data came in higher than expected," he said in a report. 

In 1Q24, Petrobras recorded operating cash flow of 46.5bn reais and adjusted Ebitda of 60bn reais. 

The company's financial debt in the quarter fell by US$1.1bn to US$ 27.7bn, the lowest level seen since 2010, while gross debt remained under control at US$61.8bn, including leases.

In BB Investimentos' view, even though they were lower than expected, the items that affected Petrobras' results are specific and reflect market conditions. 

"They do not signal a change in direction; therefore, they do not change our understanding of the company, which remains robust operationally, with structural conditions of low lifting cost (effect of dilution of fixed costs in the pre-salt) and with prospects of continuing to deliver good operating cash generation and dividends," the bank said in a report. 

RUSSIAN DIESEL

Petrobras' executive director for logistics, commercialization and markets, Claudio Schlosser, assured that the company did not limit fuel prices in the quarter, strictly following its commercial strategy. 

 "We have effectively managed to cope with imports of products, including those of Russian origin, while remaining competitive," he said during a press conference on Tuesday.

Schlosser pointed out that, although there is no legal impediment, Petrobras has decided not to import Russian diesel. 

When importing Russian diesel "important requirements must be met, such as not having any type of person or company sanctioned during the acquisition process. So that brings risk to Petrobras," explained the executive.