Brazil’s Petrobras smashes all-time profit record amid Brent bonanza

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Tanker truck leaves the Alberto Pasqualini Refinery of state-run oil company Petrobras in Canoas

By Gram Slattery and Marta Nogueira

RIO DE JANEIRO -Brazilian state-run oil company Petrobras smashed its all-time record for annual profits and dividend payouts in 2021, as sky-high Brent prices and a laser focus on the firm’s exploration and production business continued to bear fruit.

In a Wednesday evening securities filing, the firm, formally Petroleo Brasileiro SA, posted a yearly net income of 106.7 billion reais ($21.3 billion). That was more than double Petrobras’ previous record, set in 2019, when the firm posted a profit of 40.1 billion reais, which was about $9.2 billion at the contemporaneous exchange rate.

It was also well above the Refinitiv consensus estimate of 74.3 billion reais, thanks in part to significant one-off boosts, including asset divestments, impairment reversions and a victory in a major tax dispute. “Recurring” annual profit came in at 83.3 billion reais.

Shortly before releasing its results, Petrobras also announced that it was proposing a supplementary dividend of 2.861 reais per share at the next shareholders’ meeting in April. If approved as expected, dividends relative to the company’s 2021 performance will come to 7.773 reais per share, or 101.4 billion reais in total, a figure the company described as an all-time record.

The dividends in particular are likely to please the market. Analysts and investors have begun to pay close attention to the firm’s dividend payouts, which were paused for years as the company worked to whittle down its debt load.

Yet there are clouds ahead, and Petrobras’ results may speed the arrival of the storm.

Brazil is gearing up for a contentious presidential election in October. Current President Jair Bolsonaro has occasionally complained of high domestic fuel prices and expressed displeasure at dividend payouts. But over the last year, tangible political interference at the firm has been more subdued than many market observers had anticipated.

His main rival, leftist Luiz Inacio Lula da Silva, has promised a shake-up if elected, saying it is Brazilians, rather than international investors, who should be benefiting from Petrobras’ performance.

(Reporting by Gram Slattery and Marta Nogueira; additional reporting by Roberto Samora in Sao PauloEditing by Shri Navaratnam and Sam Holmes)