Brazil's Petroleo Brasileiro SA reported a 57 percent surge in quarterly profit on Tuesday, boosted by higher oil prices and asset sales, fanning hopes that the state-controlled oil company may be moving past a massive corruption scandal. Petrobras, as the firm is known, posted a net profit of 6.961 billion reais ($1.96 billion) in the first quarter, the biggest in five years, as it continued to cut debt. It also announced a dividend of 0.05 reais a share, its first in three years.
Adjusted earnings before interest, taxes, depreciation and amortization, a gauge of operational profit known as EBITDA, crept up just 2 percent to 25.669 billion reais in the first quarter. The results represented progress for a company striving under Chief Executive Pedro Parente to move past the fallout from a probe, begun in 2014, that showed construction firms bribed Petrobras officials and politicians to win inflated contracts.
The scandal sent Petrobras' share price tumbling, hammered its bottom line, drove up debt and led to a series of lawsuits. In a client note, JPMorgan described the latest results as a "solid quarter," adding that the "deleveraging story continues to be delivered."
Petrobras, which still holds the dubious title of the world's most indebted oil company, said it generated 3.223 billion reais from the sale of stakes in assets like the Lapa field, and the Iara area in the offshore Santos basin. It said net debt fell more than 3 percent to 270.71 billion reais ($76.23 billion) in the period on a sequential basis. Rising international oil prices, which increased from an average $54.04 per barrel in the fourth quarter to $60.18 per barrel in the first three months of the year, helped boost results, the company said.
TALKS WITH GOVERNMENT
Parente also said the company was making progress in talks with the Brazilian government over the so-called transfer-of-rights area and could reach a deal by May 17. Petrobras was granted rights to drill for 5 billion barrels of oil and gas in that area, located in Brazil's coveted offshore pre-salt layer, though the value of the contract has been disputed. Executives also said they saw the company further recovering market share in Brazil's gasoline and diesel markets.
The company said preliminary figures showed it had boosted its share of the gasoline market to 86 percent last month from 80 percent in March while its share of the diesel market rose to 79 percent from 77 percent in the same period.
Free cash flow was positive for the second quarter in a row but down 3 percent year-on-year as the result of the first payment to US investors who won a class action against the company in January tied to the graft scandal. Revenue from sales reached 74.461 billion reais ($20.97 billion) in the quarter, up 9 percent from the same period last year.
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