Petrobras registers record profit of R $ 59.9 billion in the fourth quarter with reversal of write-offs By Reuters

By Marta Nogueira and Roberto Samora

RIO DE JANEIRO (Reuters) – Petrobras (SA 🙂 posted a record net profit of 59.9 billion reais in the fourth quarter of last year, compared to 8.15 billion reais in the same period of 2019, mainly due to a reversal of writing billions of dollars. discount related to prices, the company said Wednesday.

After a deterioration of more than 65 billion reais in the first quarter due to the crisis that brought down oil prices and the values ​​of the company’s assets, there was a reversal of almost half the value in the fourth quarter .

In addition, the gains in foreign exchange of 20 billion reais and the reversal of past expenses of the AMS health plan, at 13.1 billion reais, helped the results, due to the review of the future obligations of the business.

“Part of the impairments previously made, amounting to R $ 31 billion, was reversed as a result of the new price and change curves approved in the 2021-25 Strategic Plan, as well as the review of the project portfolio, mainly related to E&P ”, explained Petrobras.

Without taking into account non-recurring effects, the company would have registered a net profit of R $ 28.4 billion in the fourth quarter, and it would still be a record, surpassing the mark of the second quarter of 2019 (R $ 18.9 thousand millions).

Adjusted result before interest, taxes, amortization and depreciation (Ebitda) totaled R $ 47 billion between October and December, 28.8% more than in the same period of 2019.

Compared to the third quarter, Adjusted Ebitda increased 41%, mainly due to the gain derived from the reversal of past expenses of the AMS plan.

Higher Brent prices also contributed to the Ebitda for the months of October to December, the higher demand for thermoelectric energy, which positively impacted power generation, as well as the volumes of fuel oil and LNG.

“These were offset by lower export volumes, lower margins for diesel and gasoline, and provision for employee bonus payments,” the company said.

Net income for the fourth quarter totaled R $ 75 billion, 8.3% less than in the same period last year.

Compared to the third quarter, revenue grew 6%, with the rebound in Brent oil, among other factors. On the other hand, the volume of oil exports decreased due to lower production in the quarter.

Petrobras said that diesel revenues were slightly higher in the fourth quarter compared to the third quarter, unlike the usual seasonality of the product, due to a commercial effort to increase sales, mainly through auctions.

MINOR DEBT

In full 2020, the company had a net profit of 7.1 billion reais, a decrease of 82.3% compared to the previous year, due to the 35% fall in the price of Brent in dollars and greater “deterioration”, which it totaled 34.26 billion reais, despite the decline recorded in the fourth quarter.

In addition, lower earnings from divestments and a 31% devaluation of the real relative to the United States put pressure on annual earnings.

“On the other hand, initiatives that increased resilience and efficiency and continuity of work to reduce debt contributed to partially offset the impacts of the crisis,” said Petrobras in its financial report.

Adjusted Ebitda last year totaled R $ 143 billion, an increase of 10.6% compared to the previous year, despite an adverse scenario, caused by the pandemic, with a 35% devaluation of Brent prices.

This result, according to Petrobras, was possible thanks to initiatives such as increased exports, which offset the reduction in demand and margins for petroleum derivatives in Brazil.

The company has been carrying out an ambitious plan to cut costs and sell assets, seeking to reduce its debt, which fell 15.7 billion dollars in 2020 compared to 2019, to 63.2 billion dollars (net debt).

Gross debt totaled $ 75.5 billion, 13.3% less than the previous year, exceeding the company’s goal, which was to keep gross debt stable before 2019, at $ 87 billion.

Currently, the company still has more than 50 assets for sale at different stages of its divestment processes, with the potential to help reduce debt further. Among them are five refineries, Gaspetro and several mature oil fields that have reached the final stage of signing the purchase and sale contracts.

Net income in 2020 was 272 billion reais, a 10% drop compared to the previous year, due to the effect of oil prices and a drop in sales of petroleum products.

The drop came despite overall sales volume rising, driven by a 30% increase in exports over 2019, with demand from China.

(By Marta Nogueira and Roberto Samora)