Investors To Keenly Watch Petrobras’ 2Q’18 Results For Any Change In Outlook By The New CEO
Petroleo Brasileiro Petrobras (NYSE:PBR), the Brazilian integrated energy company, is slated to post its June quarter financial results before the market opens on 3rd August 2018((Petrobras To Announce June Quarter 2018 Results, 30th July 2018, www.petrobras.com)). Similar to the last quarter, the company is likely to deliver a notable improvement in its revenue as well as earnings due to higher volumes and better price realizations. However, the company’s CEO Pedro Parente resigned due to the rising pressure amid the truck strike in the country. As a result, Ivan Monteiro, who has been Petrobras’ Chief Financial and Investor Relations Officer since February 2015, was appointed as the new CEO of the company. We will keenly watch for the outlook that the new CEO will outline for the company in the latest earnings release.
We have a price estimate of $15 per share for the company, which is higher than its current market price. View our interactive dashboard for Petrobras’ 2Q’18 Results and modify the key drivers to visualize their impact on its valuation.
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Key Trends To Watch Out For In 2Q’18 Results
- Petrobras’ domestic oil and gas production is expected to be slightly lower compared to the previous quarter due to the maintenance stoppage of FPSO Cidade de Paraty, located in the field of Lula in the Santos Basin pre-salt. However, the production is likely to be higher on a year-on-year basis. This, coupled with the improved price realizations, is expected to boost its revenue for the quarter.
- During the quarter, Petrobras approved the second phase of the Temporary Diesel Subsidy offered by the Federal Government. The objective of the subsidy is to encourage the reduction of diesel oil prices and to stabilize them during a pre-determined period. Those opting for the program will receive a reimbursement for the discount offered, limited to R$0.30 per liter, upon verification.
- Further, the company had to suspend the sale of its shares of the subsidiary Transportadora Associada de Gas (TAG), following an order of the Federal Court. However, the company maintains that it has adhered to all the regulatory guidelines and is willing to sell its interests in the asset after appropriate approvals.
- Petrobras pre-paid $500 million worth of debt due in 2022 during the quarter. Further, it refinanced various trances of long term debt to extend the maturity of its debt as well as lower its interest obligations. While this will defer the repayment obligations, it may not help the company to meet its net debt to EBITDA target of 2.5 x by the end of the year.
- Similar to the last quarter, we expect Petrobras to pay out quarterly dividends to both classes of shares under its Shareholders Remuneration policy, or dividend payout policy.
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