Petrobras’ profit margin is up to 6 times higher than foreign companies

The rise in fuel prices makes President Jair Bolsonaro (PL) complain about Petrobras’ profits. He stated that the state company “is worried about being the world champion”. Survey carried out at the request of the UOL shows that in the first quarter of this year Petrobras actually had the highest profit margin compared to foreign oil companies, achieving a result almost six times higher than PetroChina in this indicator.

According to experts consulted by the UOL, Petrobras profits more and stops making investments to distribute this amount to shareholders. The company claims that it has profited from the rise in oil, like all companies in the world, and its gains benefit society. (read Petrobras’ full comment at the end of this text).

In the first quarter of this year, Petrobras profited BRL 44.5 billion, up 3,608% over the same period in 2021.

“Everyone has to be aware, tighten their belts, save Brazil as all the oil companies in the world did. Decreased your profit. Except for Petrobras Futebol Clube. This one is worried about being the world champion”, said Bolsonaro when commenting on the results of the state-owned company. “The Brazilian population pays the bill for this profit,” he said.

Petrobras profits more than competitors

According to data from financial information firm Economatica, Petrobras’ net margin was 31.6% in the first quarter of this year, while competitors had a maximum of 11.5% (see chart below). In relation to PetroChina, which had a net margin of 5.6%, Petrobras’ result is almost six times higher. Net margin is the result of dividing net income by net revenue.

Revenue rises more than costs

According to Eduardo Costa Pinto, professor of economics at UFRJ (Federal University of Rio de Janeiro) and researcher at Ineep (Instituto de Estudos Estratégicos de Petróleo, Gás Natural e Biocombustíveis), Petrobras’ profit grows beyond the others, given that revenue, from the sale of fuel, rises faster than the company’s costs in pre-salt extraction.

“For revenue, as Petrobras maintains the PPI (International Parity Price), it maximizes profit because it charges the maximum possible price [dos combustíveis]. And how does she do it? Keeping up with international levels, with shipping and tax, and selling at the monopoly price,” she said.

“On the other hand, there has been a reduction in costs over the last few years, especially in oil extraction. Today the cost is around US$ 30 a barrel. So, with oil on the rise [o barril estava cotado em cerca de US$ 123 na terça-feira, 14/6]profit goes up,” he said.

Higher profit margin and distribution to shareholders

In addition to the profit margin above its competitors, Petrobras still chooses to distribute more dividends to shareholders than the others. According to Costa Pinto, in the first quarter of this year the Brazilian state-owned company distributed US$ 10.2 billion, about four times the average for international oil companies, which was US$ 2.5 billion.

According to Vitor Polli, Oil & Gas analyst at Levante Corp, Petrobras’ dividends are higher because some companies still report losses in the balance sheet due to Russia’s departure after the start of the war with Ukraine. They also choose to invest the majority of the amount in the company itself, seeking alternatives to oil.

“Some companies had to carry out accounting maneuvers, mainly Shell, because of the exit from the Russian market, which has an effect on the result, and the profit is lower because of that”, he said.

“In addition, the resources of some of them are being used to invest in renewable energies, such as solar panels and wind energy. [vento], aiming at the energy transition. The big oil companies are already looking for this variation in the energy matrix because a reduction in the use of oil is expected in the long term”, said the analyst.

Company doesn’t think about the long term, says analyst

According to Costa Pinto, such a large distribution of dividends makes the company stop thinking about the long term, especially in relation to alternatives to oil.

“The problem is that the company has to be thought of in the short, medium and long term. They could think about energy transition to guarantee profits in the future. Today the pre-salt is a big dairy cow. But if I don’t invest now, I don’t have the ability to turn opportunities into cash cows,” she said.

Petrobras says gains return to society

Sought, Petrobras reported that “like other oil and gas companies, it presented positive results in the first quarter of 2022, reflecting the high price of oil in the global market”.

The state-owned company also reported that “the results achieved by Petrobras also return to society through the payment of taxes. In the first quarter of 2022, almost R$70 billion was paid in taxes, royalties and government participation. This amount is almost double the total collected in the same period last year”.

Source: Uol