Brazil's Petrobras posts 2.7b reais loss despite record exports to China

[RIO DE JANEIRO] Brazilian state-run oil firm Petroleo Brasileiro on Thursday posted a loss of 2.7 billion reais (S$718.1 million) in the second quarter, hurt by tumbling oil prices despite record export volumes to China.

The result, down from a record quarterly profit of 18.9 billion reais a year ago, came as the company pursued an aggressive volume-over-cents strategy to drive sales as crude prices slumped, hitting multi-decade lows in April.

In a securities filing, Petrobras, as the firm is known, said its cash generation, or Ebitda, was 24.99 billion reais in the April to June quarter.

This was ahead of a Refinitiv consensus estimate of 20.9 billion reais, but the figure was boosted by major non-recurring items, namely a court victory in a major tax dispute, the company said. Without one-off items, Ebitda would have come in at 17.7 billion reais, it said.

The swing to a loss illustrates how record exports by Petrobras and fairly steady production levels were not enough to insulate the Rio de Janeiro-based company from the far-reaching effects of the novel coronavirus on the oil industry.

"Brent prices of US$65 per barrel in February tumbled to US$19 per barrel in April 2020 due to a 25 per cent contraction in global demand, threatening a sudden halt to cash flow," Petrobras chief executive officer Roberto Castello Branco said in a letter to investors.

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Crude inventories built in the first quarter of the year were sold at a discount in the second quarter, contributing to 1.1 billion reais in losses, the company said.

Exports hit a record in terms of volume in April, with more than 1 million barrels a day sold. China was the destination of 87 per cent of the oil.

As demand for fuel plummeted, Petrobras strived to place its products in a bid to avoid costly production halts amid a ramp-up plan at highly productive deep-water fields, but revenue figures show it exported at thin margins.

Petrobras sales revenue fell more 44 per cent compared to the second quarter of 2019, to 27.7 billion reais.

REUTERS