RIO DE JANEIRO—Brazilian state-run oil firm Petroleo
Brasileiro SA reported Friday a 1.2% drop in first quarter 2015
profit but a surprising 50% jump in adjusted earnings, as new
management looks to cut costs and move beyond a corruption scandal
that has cost the company some $17 billion in writedowns.
Petrobras posted a first-quarter 2015 net profit of 5.33 billion
reais ($1.78 billion), down from 5.39 billion reais in the same
period of 2014. The company's revenue totaled 74.35 billion reais
in the quarter, down 9% from the same period in 2014. Earnings
before interest, taxes, depreciation and amortization, or Ebitda,
increased 50% year-over-year to 21.52 billion reais.
"We're very satisfied with the results we've presented but we
know there are a lot of challenges ahead," Chief Financial Officer
Ivan Monteiro said Friday. Mr. Monteiro said Petrobras hopes to
"gradually regain the market's confidence."
Petrobras shares were up nearly 4% in after-hours trading in New
York.
As the company works to dig itself out from the writeoff and the
lingering effects of the scandal, it is slashing its budget and
looking for ways to reduce its vast debt. The company cut capital
expenditures 13% in the first quarter, to17.8 billion reias, and
focused heavily on cutting costs in the downstream division, in
which capex fell 64%.
The downstream division, which lost roughly 60 billion reais due
to government-mandated fuel subsidies between 2011-14, posted a
6.18 billion profit in the first quarter as Petrobras kept domestic
prices for gasoline and diesel steady despite a drop in
international oil markets.
Last month the company wrote off some $17 billion due to losses
from graft and overvalued assets. Chief executive Aldemir Bendine,
who took the post in February after a management overhaul, said at
that time that Petrobras was looking to move beyond a "sad chapter"
in the company's history.
Petrobras, the world's most-indebted oil major, said in March
that it is looking to sell an estimated $13.7 billion of assets in
2015 and 2016. Petrobras's debt load is equivalent to about $133
billion, the company reported Friday. The company also previously
announced intentions to cut an ambitious $220 billion investment
plan by $16 billion.
It also must confront lower global oil prices and try to woo
foreign oil companies hesitant to partner with a company so closely
linked to corruption.
Brazilian federal prosecutors say that the company's suppliers
conspired to overcharge Petrobras for major projects, including
several multi-billion refineries, funneling some of the illicit
profit to former Petrobras executives and politicians in the form
of bribes and illegal political donations. Some of the accused have
denied wrongdoing, while others are cooperating with
authorities.
The scandal has reshaped the C-Suite at Petrobras and been a
source of embarrassment for president Dilma Rousseff, who was
chairwoman of the Petrobras board when much of the alleged
corruption took place. Ms. Rousseff hasn't been implicated in the
graft, and has denied any knowledge of it.
Four former Petrobras executives have been charged with crimes
including corruption and money laundering. One former executive,
Paulo Roberto Costa, was sentenced last month to six months under
house arrest after he made a deal with prosecutors in exchange for
telling what he knew of the alleged scheme.
Petrobras has portrayed itself as a victim of the graft and says
it has cooperated with authorities.
Write to Will Connors at william.connors@wsj.com and Paul
Kiernan at paul.kiernan@wsj.com
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