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Petrobras: Petrobras financial results show improvement in the third trimester of 2020
Petrobras: Petrobras financial results show improvement in the third trimester of 2020

Petrobras financial results show improvement in the third trimester of 2020

In a challenging year such as 2020, Petrobras acted swiftly to ensure liquidity during the first semester, the most critical moment of the crisis so far. In the third trimester, thanks to solid cash flow, supported mainly by the operational performance and increase in the price of Brent, the company managed to speed up its process of leverage and cash flow generation.


The cash flow measured by Ebitda presented a remarkable recovery in relation to the last trimester, partly due to the trimester's 47% increase in the Brent price. The company closed the period with recurring adjusted Ebitda of U$ 6,9 billion, more than the double of the second trimester. This is an important result, as it takes away the effect of interest, taxes, depreciation and liquid profit amortization, allowing for an easier comparison of results among companies, a fundamental information helping in decision making of potential investors, and thus a fundamental parameter for analyzing the operational result of a company throughout time.   


As a consequence, the liquid result has also shown improvement in the period, especially in the recurring items. Yet, the company registered liquid losses of US$ 236 million. If one takes away the non-recurring items, the result would be positively reverted and recurring liquid profit would be US$ 633 million. Among non-recurring items are the effects of adherence to fiscal amnesty programs and premiums in bound repurchases, due to the lower risk perception by the market. 


The resumption of pre-payments allowed Petrobras to reduce in US$ 11,6 billion its gross debt in the third trimester. "In the last 21 months we managed to reduce US$ 31,3 billion in debt - around US$ 1,5 billion per month - a key factor for our company, as it contributes to our balance's risk reducing, for the strengthening of our resilience to cash flow volatility and freeing resources for investment in our world-class assets", declared Petrobras president Roberto Castello Branco. And, even with the marked reduced in debt, the company held a solid cash flow position of US$ 13,4 billion. 


Expressive operational results


The total Petrobras production of oil and gas increased 5% in relation to the previous trimester, with special highlights to the increase of production in pre-salt. Due to that, the company aims to overcome the originally defined goal for the year, that was 2,7 million equivalent oil barrels (boed). The new goal is now 2,84 million boed, with a +/- 1,5% variation.


This expressive operational performance is due to an increase in production capabilities from Búzios and a high operational in pre-salt, as well as the postponing of part of the great programmed production stoppages. 


The sales volume of fuels increased 18% in the trimester, with a boost from economic recovery and market share resumption. The refinery utilization factor exceeded expectations and closed the trimester in 83%, after reaching 70% in the second trimester. Along with a progressive export increase, with a new oil exportation record registered in September (1,066 million barrels per day).


The company remained with a descendent TAR trajectory, the rate of registrable accidents per million man-hours, reaching 0,60 in the third, an important reference for the global oil industry.
The total cash flow entry of Petrobras with asset sales reached US$ 1 billion in the year's first nine months. There's furthermore ten operations to be closed until the end of the year and 39 other disinvestment underway.


Changes in the company's dividend policy 


The company has approved changes in its' divident policy, allowing for an option to distribute dividends even with accounting losses in a certain year, as long the net debt has diminished in the last twelve months, this distribution limited to the valor of this reduction. These changes are part of the company's approach to focus in cash flow generation instead focus in accounting measures, in line with global peers.


Check here the full report of financial results in the third quarter of 2020.