Petrobras the state-run oil firm in Brazil, reported third-quarter results on Thursday that blew away profit and margin expectations, less than two hours after President Jair Bolsonaro warned the corporation was too profitable and needed to give more to society as a whole.
While the company’s profits are increasing, its policy of pricing domestic fuel in line with foreign rates has sparked outrage in the Brazilian capital, Brasilia, as Brent crude prices continue to rise.
Many lawmakers appear to want the company to cut prices or at the very least stop raising them, a move that would affect the company’s profit line but would please voters in an election year.
Petrobras effectively regulates domestic diesel and gasoline pricing as Brazil’s largest importer and producer of the fuel. In order to keep gas prices artificially low, previous administrations compelled the corporation to endure large losses.
During a weekly live broadcast on social media, Bolsonaro remarked, “It should be a corporation that earns a profit that isn’t as high as it has been recently.” He also stated that he would try to change the company’s pricing philosophy.
The corporation announced a third-quarter profit of 31.14 billion reais ($5.34 billion) shortly after Bolsonaro’s speech, much exceeding the Refinitiv projection of 20 billion reais. EBITDA, or earnings before interest, taxes, depreciation, and amortization, was 60.74 billion reais.
Net income was boosted greatly by one-time items. The corporation reversed a decision taken at the start of the COVID-19 outbreak to lower its long-term Brent price estimates, boosting the value of its assets. Divestments and a win in a significant tax case aided the cause as well.
Petrobras reported that if non-recurring factors were excluded, quarterly net income would have been 17.37 billion reais.
Petrobras’ gross debt reduced to $59.59 billion, exceeding its aim of decreasing debt below $60 billion by 2022.
According to a filing on Thursday, Petrobras also approved a 31.8 billion reais special dividend payout. Although the company started yearly dividend payments in 2018, this is only the company’s second extraordinary payout since its bylaws were modified a year earlier to allow such payments.
Brazilian Senate leader Rodrigo Pacheco told reporters shortly after the results were released that he planned to meet with Petrobras’ executive board to discuss ways to keep fuel costs in check.
