Petrobras, the Brazilian state oil corporation, reported a disappointing fourth quarter with a net loss of 17 billion reais ($2.8 billion), compared to a profit of 31 billion reais the previous year.
Reuters reported that the current down cycle is primarily due to one-time occurrences, volatility in the Brent oil price, and a more volatile diesel market in the future.
Despite poor financial results, Petrobras expects to pay 9.1 billion reais in ordinary dividends from cash reserves.
Petrobras reported net revenue of 121.3 billion reais ($24.04 billion) for the quarter, reflecting a 10% decline and falling short of analysts’ expectations of 127.8 billion reais.
What impacted Petrobras’ bottom line
Petrobras reported a net loss for the quarter, a sharp contrast to the 31 billion reais net profit recorded a year earlier.
The company attributed this decline primarily to exchange rate variations affecting debts between the state-run oil firm and its international subsidiaries.
Despite the reported loss, Petrobras stated that these financial transactions did not impact its cash flow.
Excluding these effects, the company would have posted a net profit of 17.7 billion reais, though this still represents a 53% decline compared to the same period last year.
While these transactions weighed on net profit, they had a direct positive impact on the company’s equity, Chief Financial Officer Fernando Melgarejo noted in a statement.
Petrobras’ dividend dropped by about half from the previous quarter, disappointing investors.
Despite political pressure on its dividend policy at the start of President Luiz Inacio Lula da Silva’s term, the company has remained a strong cash generator.
XP Inc. analyst Regis Cardoso highlighted free cash flow and dividends as the biggest disappointments, citing higher-than-expected capital expenditures.
“It will take a few better quarters of solid cash flow generation to remedy the disappointment,” he wrote in a note to clients, adding that the issue is likely to spark further debate.
Other metrics
Petrobras spent $16.6 billion in 2024, marking a 31% increase from the previous year and exceeding its own guidance.
The company attributed the higher spending to accelerated payments to contractors at the massive Búzios offshore field, aimed at mitigating supply-chain risks.
Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at 41 billion reais, falling short of the 61.9 billion reais expected by analysts.
The company achieved an adjusted EBITDA margin of 34%, while its net debt-to-adjusted EBITDA ratio was 1.29 times, higher than the projected 1.17 times.
Free cash flow for the quarter stood at 21.70 billion reais, and net debt reached 52.24 billion reais, exceeding the forecast of 47.98 billion reais.
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