RIO DE JANEIRO, BRAZIL – The five leading federal state-owned companies that rely on their own revenues – Petrobras, Eletrobras, Banco do Brasil (“Bank of Brazil”), Caixa Econômica Federal (“Federal Savings Bank”) and the National Bank for Economic and Social Development (BNDES) – earned R$85.2 billion (US$21 billion) from January to September this year. The amount is 70 percent higher than the R$50.2 billion in profit recorded in the same period of 2018.
The figure was released yesterday, December 20th, by the Ministry of Economy, which published the 12th edition of the Federal State Bulletin. The accumulated profit in the first nine months of the year exceeds the total profit of R$71.9 billion of these state-owned companies for all of last year. The five companies represent 96 percent of the federal government’s assets in state-owned companies.
According to the Ministry of Economy, the restructuring of state-owned companies – through voluntary dismissal programs, debt reduction, and spending cuts – contributed to the increase in profits of public companies.
However, the reduction in expenses affected investments (works and equipment purchases). According to the report, the five main state-owned companies invested R$31.9 billion through September. This represents completion of only 26.4 percent of the approved budget for this year of R$120.8 billion in investments by state-owned companies. In the first nine months of 2018, these companies had invested R$58.6 billion, representing 44.6 percent of the approved amount.
According to the Ministry of Economy, the drop in investments can be explained as a return to normalcy. According to the portfolio, public companies were used for many years to invest in dubious quality projects. With the restructuring of companies, the government is focusing on viable projects with guaranteed returns.
Debt
The report points out a reduction in the indebtedness of federal state-owned companies. In September this year, the debt of the five main public companies was R$325 billion, against R$544 billion at the end of 2015.
The higher profits of state-owned companies increased the payment of dividends and interest on equity (JCP) to the federal government. According to the report, the five main federal state-owned companies are expected to end the year having transferred R$20.8 billion to the National Treasury. This will be the highest amount paid in dividends and JCP since 2012 when dividend revenues reached R$27.8 billion.
Dividends are the portion of profits that corporations distribute to shareholders. In the case of federal state-owned companies, it is up to the National Treasury, as the main shareholder, to receive most of the dividends.
In August, the government changed the profit distribution policy of state-owned companies. Public banks began to collect dividends in the same year, based on profit in the first semester. According to the Treasury, the change does not represent an advance because the policy will become permanent.
Source: Agência Brasil