Petrobras reports second-quarter profit
BY JEFF FICK
RIO DE JANEIRO -- Higher fuel prices and an accounting change helped Brazilian state-run oil company Petroleo Brasileiro SA, or Petrobras, swing to a profit in the second quarter.
Petrobras reported a second-quarter net profit of 6.2 billion Brazilian reais ($2.73 million), up from a net loss of BRL1.35 billion in the year-ago quarter. That topped the BRL5.3 billion profit expected by analysts, but was down nearly 20% from the first quarter this year.
The adoption of hedge accounting for Petrobras's export business in May helped the company avoid a steep foreign-exchange loss in the second quarter, Chief Executive Officer Maria das Gracas Foster said in a statement. The change allows Petrobras to account for the impact of foreign-exchange volatility on its dollar-denominated debt when exports are made.
Brazil's real joined the long list of emerging-market currencies that lost ground against the U.S. dollar in recent months on expectations that the Federal Reserve would soon end its asset-buying program known as quantitative easing. The real weakened 10% versus the dollar in the second quarter, a move that would have cost Petrobras about BRL7.98 billion. Even with the accounting change, the weaker real still resulted in a BRL3.56 billion loss, the company said.
Petrobras also continued to get relief from price increases to domestic gasoline and diesel made earlier this year. Gasoline prices were 2.3% higher in the second quarter from the first quarter, while diesel prices were 5.6% higher in the same period, according to Sao Paulo-based brokerage Agora.
Petrobras reported that net revenue rose to BRL73.6 billion from BRL68 billion in the second quarter of 2012. Earnings before interest, taxes, depreciation and amortization, or Ebitda, came in at BRL18.1 billion versus BRL10.6 billion in the year-ago period.
The company also opted to import more crude oil for processing in Brazil's refineries rather than pricier imports of gasoline and diesel, with refineries operating at 99% capacity, Petrobras said. The shift helped Petrobras cut second-quarter losses in the refining division by nearly half from the first quarter of 2013.
Petrobras's domestic crude oil production should recover later this year, with production growing "more strongly" in the fourth quarter, Ms. Foster said. Heavy maintenance shutdowns at aging offshore platforms have undercut output over the past two years, including a 2% year-on-year decline to 1.93 million barrels a day in the second quarter. Four recently installed platforms are ramping up output, while four more are expected to be installed later this year, Ms. Foster noted.
Cost pressures continued to rise in the second quarter, with lifting costs advancing more than 10% year-on-year in the second quarter on new platform startups and higher personnel costs related to changes in pension and health benefits, Petrobras said. Record refining capacity also led to higher costs in that division, as well, the company added.
Petrobras also continued its ambitious investments in the second quarter, with spending up 18% from the year-ago period to BRL24.3 billion. Petrobras expects to spend a total of BRL98 billion this year, part of the company's $237 billion spending plan for the 2013-2017 period.
Financial metrics at the company worsened slightly after the company raised $15.1 billion from capital markets during the quarter. Net debt ended the second quarter at BRL79.6 billion, rising to 2.57 times Ebitda in the quarter from 2.32 times Ebitda at the end of the first quarter, Petrobras said.
The company's locally traded shares closed 2.6% higher at BRL17.08 on the Sao Paulo Stock Exchange ahead of the release. In New York, the company's American depositary receipts ended 2.4% higher at $14.28.
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