MOSCOW (MRC) - Brazil's state-run oil company, Petroleo Brasileiro SA, will likely report a one-third drop in first-quarter profit from a year earlier, on slack output, rising costs and a weakening Brazilian currency that erased gains from a fuel-price increase, said Reuters.
Net income in the period likely fell 32 percent to 5.24 billion reais (USD2.41 billion), according to the average forecast of 11 analysts surveyed by Reuters. Net income in the first quarter likely fell 17% from the fourth quarter. Petrobras plans to report first-quarter results after markets close on Friday.
The company is struggling to implement a USD221 billion, five-year investment plan as government fuel-price controls and soaring costs starve the company of cash. Rio de Janeiro-based Petrobras has the highest debt levels and lowest profitability of any major oil company.
Despite giant new offshore oil and gas discoveries, investors have been shunning its shares. Six years ago it was one of the world's 10 biggest companies by market value. Today's market cap of USD102 billion is only about one-third of its 2008 peak.
Petrobras' annual profit could rise by more than half in 2014 from 2013 to 36.2 billion reais if the company is more skillfully managed and freed by the government to raise domestic gasoline and diesel prices in line with world prices, Paula Kovarsky, oil company analyst at Banco Itau BBA in Sao Paulo, wrote on Thursday in a note to investors.
The company, though, faces a series of difficulties dragging on revenue, cash flow and profit. Petrobras' average oil and natural gas output in the first quarter was the lowest in five years, the result of slipping flows from older fields and regular delays in bringing giant, new offshore areas on line. As MRC wrote before, Petrobras, was in talks to sell off its Argentine unit as part of a USD9.9 billion divestment plan.
Petroleo Brasileiro S.A. or Petrobras is a semi-public Brazilian multinational energy corporation headquartered in Rio de Janeiro, Brazil. It is the largest company in the Southern Hemisphere by market capitalization and the largest in Latin America measured by 2011 revenues.
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