Petrobras Posts Largest Profit in Two Years--Update

By Paul Kiernan Features Dow Jones Newswires

SÃO PAULO -- Brazilian state-controlled oil company Petróleo Brasileiro SA reported Thursday its largest quarterly earnings in two years as the government continued allowing it to sell fuel at a profit in the domestic market.

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Petrobras, as the company is known, posted a 4.5 billion reais net profit in the January to March period, reversing a 1.25 billion reais loss in the first quarter of 2016.

The company's adjusted earnings before interest, taxes, depreciation and amortization, or Ebtida, rose 19% to 25.25 billion reais, while revenue fell 2.8% to 68.37 billion reais.

Petrobras, the world's most indebted oil company, continued chipping away at its mountain of outstanding loans. The company's total debt finished the first quarter at $115.12 billion, down from $118.37 billion at the end of 2016.

Write to Paul Kiernan at paul.kiernan@wsj.com

SÃO PAULO -- Brazilian state-controlled oil company Petróleo Brasileiro SA reported its largest quarterly earnings in two years Thursday as crude prices rose and the government allowed it to sell fuel at a profit in the domestic market.

Continue Reading Below

Petrobras, as the company is known, posted a 4.5 billion reais net profit in the January to March period, reversing a 1.25 billion reais loss in the first three months of 2016.

The world's most indebted oil company, Petrobras has benefited in recent quarters from a hands-off approach by the Brazilian government regarding fuel prices, which it has been forced to subsidize at times.

A 59% rise in Brent crude prices, to an average of $53.78 a barrel, enabled Petrobras' upstream division to turn a profit in the first quarter after it lost money a year earlier.

As a result, the company continued chipping away at its mountain of outstanding loans. Petrobras' total debt finished the first quarter at $115.12 billion, down from $118.37 billion at the end of 2016.

With such a large debt load, the company spent about half as much on interest in the first quarter as it did on capital investments.

To reduce that burden, Petrobras executives aim to raise about $21 billion via asset sales and partnerships this year and next. But Brazil's nationalistic unions have managed to slow that process down in the courts, and the company didn't secure any new transactions in the first quarter.

Petrobras' adjusted earnings before interest, taxes, depreciation and amortization, or Ebtida, rose 19% in the first quarter from a year earlier to 25.25 billion reais, while revenue fell 2.8% to 68.37 billion reais.

Write to Paul Kiernan at paul.kiernan@wsj.com

(END) Dow Jones Newswires

May 11, 2017 18:57 ET (22:57 GMT)