Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance
Find Stocks Now

Petrobras (PBR) Q2 Earnings Beat On High Gas Margins, Up Y/Y

Published 08/15/2019, 10:46 PM
Updated 07/09/2023, 06:31 AM
Petrobras (NYSE:PBR) announced second-quarter earnings per ADS of 74 cents, surpassing the Zacks Consensus Estimate of 34 cents. Solid contribution from its Gas & Energy segment and divestment gains from the TAG pipeline led to the outperformance. The bottom line also increased from the year-earlier earnings of 44 cents.
The Brazilian state-run energy giant reported revenues of $18,502 million, lagging the Zacks Consensus Estimate of $22,351 million and the year-earlier sales of $20,753 million.
Segmental Performance
Upstream: The Rio de Janeiro-headquartered company’s total oil and gas production during the second quarter came in at 2,633 thousand oil-equivalent barrels per day (MBOE/d), down from 2,659 MBOE/d in the corresponding period of 2018.Brazilian oil and natural gas production — constituting 97% of its overall output — decreased to 2,553 MBOE/d from 2,563 MBOE/d in the prior-year quarter.
In addition to the output decline, Petrobras bore the brunt of weak oil price realizations. During the quarter, oil price realizations came in at $68.82, down 7.4% from the year-earlier figure of $74.35 per barrel.
Resultantly, the segment’s revenues declined to $12,660 million in the quarter under review from $13,383 million in the year-ago period. However, the segment’s profits rose to $3,515 million from the year-ago figure of $3,215 million due to the decrease in pre-salt lifting costs.
Downstream: Revenues from the segment totaled $16,675 million, lower than the year-ago figure of $18,148 million. Petrobras' downstream earnings tankedto $286 million from the year-ago level of $1,457 million, owing to weaker oil products sales margins and a sharp increase in operating expenses amid high impairment costs.
Gas & Energy: While revenues from the segment declined 10.4% y/y to $2,575 million, improved margins for natural gas lifted earnings of the unit from $76 million to $3,890 million in the quarter under review. Better commercial conditions in the international LNG market drove its margins.
Costs
During the period, Petrobras’ selling, general and administrative expenses were $1,494 million, lower than the year-ago period’s $1,663 million. Selling expenses also fell 15.4% from a year ago to $935 million. However, gains from asset sales, particularly from the TAG pipeline, more than offset its total operating costs. As a result, total operating expenses declined by a whopping 157% year over year.
Financial Position
During the three months ended Jun 30, 2019, Petrobras’ capital investment and expenditure totaled around $2,587 million, 17.5% lower than $3,138 million incurred in the comparable year-ago period.
While the company generated positive free cash flow for the 17th consecutive quarter, the metric declined to $2,874 million from $4,305 million recorded in the year-ago period. Adjusted EBITDA also declined to $8,326 million from the year-ago figure of $8,340.
At the end of the quarter, the company had a net debt of $83,674 million, increasing from $73,662 million a year ago. Its net debt-to-capitalization ratio stands at 51%. Petrobras ended the second quarter with cash and cash equivalents of $16,714 million.
Zacks Rank and Key Picks
Petrobras currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked players in the energy space are NuStar Energy (NYSE:NS) , Delek Logistics Partners (NYSE:DKL) and BP (LON:BP) Midstream Partners (NYSE:BPMP) . While NuStar and Delek Logistics sport a Zacks Rank #1, BP Midstream holds a Zacks Rank #2 (Buy).
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.


Delek Logistics Partners, L.P. (DKL): Free Stock Analysis Report

Petroleo Brasileiro S.A.- Petrobras (PBR): Free Stock Analysis Report

NuStar Energy L.P. (NS): Free Stock Analysis Report

BP Midstream Partners LP (BPMP): Free Stock Analysis Report

Original post

Zacks Investment Research
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.