Petrobras, Brazil's state-controlled oil giant, reported stark financial results for the fourth quarter of 2024, marking a sharp reversal from previous gains. The company posted a net loss of R$ 17 billion, compared to a profit of R$ 31 billion during the same period of 2023. This downturn has raised eyebrows among analysts and investors alike, coming just after Petrobras recorded its second-best performance ever the prior year.
According to the company’s announcement made on Wednesday, February 26, 2025, the disappointing results were influenced by currency depreciation and higher provisions for operational expenses. Analysts had anticipated Petrobras would generate profits of about R$ 25 billion for Q4, so the reported figures fell significantly below expectations.
Petrobras’ sales revenue also declined sharply, totaling R$ 121.26 billion, down 9.7% year-over-year and down 6.4% from the preceding quarter. The alarming drop was echoed by the company's EBITDA, which plummeted to R$ 40.96 billion, down 38.7% annually and 35.7% quarter-over-quarter. This substantial decrease has raised concerns across the market, especially since the reported EBITDA came far below the Bloomberg consensus estimate of R$ 62 billion.
"This EBITDA result will be the one most notable to investors," remarked Gabriel Mota, equity trader at Manchester Investments. He noted signs of market trepidation, as Petrobras' American Depositary Receipts (ADRs) saw declines exceeding 5% on the New York Stock Exchange after the earnings report was released.
Over the entire year, Petrobras reported net income of R$ 36.6 billion, which was down by 70.6% from 2023, primarily due to exchange variations related to debts owed between Petrobras and its foreign subsidiaries. The fluctuation significantly impacted the financial outlook, leading the company to note, "The variations we reported are fundamentally due to accounting factors not affecting our cash flow."
Despite the grim figures, the company revealed it would propose R$ 9.1 billion for dividend payouts, to be ratified at the General Ordinary Assembly scheduled for April 16, 2025. If approved, this would bring total shareholder remuneration for 2024 to R$ 75.8 billion, including R$ 73.9 billion from dividends and interest on capital. The approved dividends would amount to R$ 0.70954522 per share, distributed over two payments due on May 20 and June 20, 2025.
Petrobras’ strategy to maintain dividend payouts has been outlined under its existing Remuneration Policy, which stipulates distributing 45% of its free cash flow as long as gross debt is within pre-defined limits. Nonetheless, this latest announcement of dividends has prompted mixed reactions from the market, especially considering it’s almost 36% lower than the R$ 14.2 billion dispensed during the fourth quarter of the prior year.
While facing these financial challenges, Petrobras aims for increased production and flexibility within its capital structure moving forward. "The expected results of the company showcase both the desktop and the expectations between cash flows and future profitability," said Petrobras President Magda Chambriard. "The outcome we experienced is not simply reflective of operational issues but tied heavily to broader economic environments affecting our outputs. "
Looking at market reactions from analysts following the announcement, the situation reflects the uncertainties surrounding the dynamic oil sector, particularly as Brent crude prices averaged US$ 74.69 per barrel for the last quarter of 2024, representing an 11.1% decrease from the year before and the third quarter.
Analysts indicate the full effects of these results may have yet to be seen and could lead to continued fluctuations within Petrobras' stock performance. Considering the historical volatility of the oil sector, reactions may depend heavily on both domestic and international market indications. The question remains as to how Petrobras can maneuver through this challenging period and return to profitability after such significant losses.
For 2025, some experts predict potential improvements, citing anticipated favorable market conditions and possible upward trends due to increased demand for diesel. The closure of previous disputes over R$ 45 billion might protect the company against risks of future volatility.
Despite the disappointing financial results for Q4, Petrobras is attempting to stabilize and position itself for growth, leaving stakeholders to monitor the company's responses to such financial strains.