Petrobras Posts Profit Gain of 1.7% on Gasoline Price Controls
Petroleo Brasileiro SA, the state- controlled Brazilian oil company, reported the smallest profit gain of the world’s largest oil producers as government price controls on gasoline eroded gains from higher oil prices.
Net income rose to 8.3 billion reais ($4.7 billion), or 1.7 percent, to 95 centavos a share, from 8.16 billion reais, or 93 centavos a year earlier, Rio de Janeiro-based Petrobras said in a statement late yesterday. Per-share profit topped the 89 centavo average estimate of four analysts in a Bloomberg survey.
Petrobras posted the smallest profit increase of any of the top 10 major oil companies with the exception of BP Plc, whose earnings were pared by the Gulf of Mexico spill. Government caps on fuel prices ate into refining profits as Petrobras was unable to pass on rising oil prices to consumers like competitors Exxon Mobil Corp. and Royal Dutch Shell Plc. Refining costs also rose 28 percent to $3.93 a barrel in the quarter, the company said.
“Because the prices of gasoline and diesel are fixed, you don’t get much money with the increase of oil — you don’t pass that on to consumers,” Andres Kikuchi, an analyst at brokerage Link Investimentos, who rates the stock “outperform,” said by telephone from Sao Paulo before the results were released.
The company cut gasoline prices by 4.5 percent and diesel 15 percent in June 2009 and hasn’t increased them since. Oil and gas production rose to 2.59 million barrels a day in the second quarter, from 2.52 million barrels a year earlier.
“We sold more volumes, compensating for a lower price” of gasoline, Chief Financial Officer Almir Barbassa said at a press conference in Rio de Janeiro.
Crude Falls
Crude oil for September delivery fell 35 cents, or 0.5 percent, to settle at $75.39 a barrel on the New York Mercantile Exchange, the lowest price since July 12. Futures fell 6.6 percent this week, the most since the period ended July 2.
Exxon, the world’s largest publicly traded oil company, reported a 91 percent rise in second-quarter profit. U.S. producers Chevron Corp. and ConocoPhillips said profit more than tripled, while Shell and Total SA reported increases of 15 percent and 72 percent, respectively.
BP posted a $17.15 billion second-quarter loss from a $32.2 billion pretax charge to cover spill-related cleanup costs and potential fines.
Worldwide demand for crude in the second quarter rose an estimated 3.2 percent from a year earlier, according to the International Energy Agency in Paris.
Share Sale
Petrobras plans to sell shares in September to help finance as much as $224 billion of investments through 2014, including plans to tap oil fields such as Tupi, the largest find in the Americas since Mexico’s Cantarell in 1976. UBS AG analyst Lilyanna Yang downgraded the stock on Aug. 11 on concern the stock sale will dilute earnings per share.
Petrobras rose 13 centavos, or 0.5 percent, to 27.66 reais in Sao Paulo trading yesterday. The results were released after the end of regular trading.
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