MercoPress. South Atlantic News Agency

Petrobras' 2024 profits below those attained the year before

The exchange rate variation impacted negatively on the company's performance

Brazil's State-owned oil company Petrobras activities yielded R$36.6 billion (US$7.5 billion) in profits last year, according to a report released Wednesday in Brasilia. However, these figures are below 2023's performance, when the company recorded a net profit of R$124.6 billion (US$24.9 billion), the exchange rate variation in debts between Petrobras and its subsidiaries abroad playing a key role in these results.

In the 4th quarter of 2024, the company had a loss of R$17 billion (US$2.8 billion). Petrobras says that if one-off events are excluded, net profit for the 4th quarter would be R$17.7 billion (US$3.1 billion).

Company President Magda Chambriard highlighted what she considers to be the main positive points of the 2024 balance sheet.

“The excellent operating and financial result for 2024 demonstrates, once again, our company's ability to generate values that are reverted to society and to our investors. I would highlight the operating generation of US$ 38 billion and the financial debt of US$ 23 billion, the lowest level since 2008,” Chambriard explained.

Petrobras' Financial Director Fernando Melgarej said that although the so-called “exclusive events” (tax transactions, exchange rate variations, among others) had an impact on net profit, they did not affect the company's cash. Without these effects, net profit would be R$ 103 billion (US$ 19.4 billion) for the year.

“Petrobras' result in 2024 was impacted mainly by an item of an accounting nature: the exchange rate variation on debts between Petrobras and its subsidiaries abroad. These are financial transactions between companies in the same group, which generate opposite effects that in the end balance out economically. This is because the exchange rate variation in these transactions is included in the net result of the holding company in Brazil and had a negative impact on the profit for 2024. At the same time, there was a direct positive impact on equity,” Melgarej pointed out.

The four main factors reducing profit were therefore: exchange rate variation (- US$ 10.9 billion); devaluation of Brent and diesel crackspread (- US$ 6.5 billion); federal tax transition (- US$ 2.7 billion); and oil production volume (- US$ 0.8 billion).

Petrobras adhered to the tax litigation notice in June 2024. According to the company, the decision made it possible to end significant legal disputes involving the chartering of vessels or platforms and the respective service contracts.

There was also a variation in the price of Brent and a 40% reduction in the diesel crackspread (the difference between the average price of diesel on the world market and that of oil) from 2023.

Petrobras said the instability in the whole market was due to large global refiners impacted by lower international diesel margins and a reduction in EBITDA in the refining and marketing segment. (EBITDA is an acronym that stands for “earnings before interest, taxes, depreciation, and amortization”. It is a useful metric for understanding a business's ability to generate cash flow for its owners and for judging a company's operating performance).

Petrobras also invested R$ 91 billion (US$16.6 billion) in other projects during 2024. According to the company, the realization above the projection (guidance) does not represent an additional cost but an anticipation, since the gap between the physical and financial evolution of the platforms in Búzios was reduced.

The company paid out R$ 102.6 billion (US$ 18.72 billion) in dividends last year plus R$ 270 billion (US$ 49.25 billion) in taxes.

Of the total amount of dividends paid in 2024, R$ 37.9 billion corresponds to the Brazilian government's share (Federal Government + BNDES). In addition, R$1 billion was earmarked for voluntary and mandatory socio-environmental investments, sponsorships, and donations.

In 2024, total oil and natural gas production was 2.7 million barrels of oil equivalent per day (boed). New annual records for total owned and operated production were achieved in the pre-salt, with 2.2 million boed and 3.2 million boed, respectively.

The company achieved a reserves replacement ratio (IRR) of 154% and a production reserves ratio (R/P) of 13.2 years. Two new production systems came on stream (FPSO Maria Quitéria and FPSO Marechal Duque de Caxias) and the Sepetiba platform ship reached peak production.

The total utilization factor (FUT) in 2024 was 93%, the highest utilization of the refining park in the last ten years considering Petrobras' current refineries.

Production records were set for gasoline (420,000 bpd) and S-10 diesel (452,000 bpd). The diesel produced by Petrobras in 2024 is enough to supply almost 1.5 million trucks.

Also in 2024, commercial operations began at the Boaventura Energy Complex's UPGN and RNEST's SNOx unit. In refining, the best value in history was achieved for the Greenhouse Gas Emissions Indicator - IGEE-Refining (36.2 kgCO2e/CWT).

(Source: Agencia Brasil)