Petrobras Beats Forecasts With 49% Profit Jump, Approves $2 Billion Payout

Petrobras reported a first-quarter net profit of R$35.2 billion ($6.21 billion at R$5.67), surpassing analyst estimates by 12% and marking a 48.6% year-over-year surge, according to its Monday financial disclosure.

The Rio de Janeiro-based energy giant, which controls South America’s largest oil reserves, reversed a R$17.04 billion ($3.01 billion) loss from Q4 2024 despite a 2.2% annual revenue decline to R$123.14 billion ($21.72 billion).

A 7% appreciation of Brazil’s real against the dollar generated R$18.36 billion ($3.24 billion) in foreign exchange gains, accounting for 52% of net income.

Stripping out currency effects and one-time items, core profits fell 12.1% to R$23.6 billion ($4.16 billion), revealing operational strain.

Financial market bets turned positive, contributing R$10.6 billion ($1.87 billion) compared to consistent losses in previous quarters.

Production rose 5% from Q4 2024 to 2.77 million barrels of oil equivalent per day, though remaining 0.2% below Q1 2024 levels.

Eleven new wells began operations across Campos and Santos basins, including advanced work on the Búzios 7 floating platform (89% complete, 225,000 bbl/d capacity).

Petrobras Beats Forecasts With 49% Profit Jump, Approves $2 Billion Payout

Capital expenditures dropped 29% quarterly to $4.1 billion but jumped 34% annually, prioritizing pre-salt zone development.

Domestic fuel sales grew 3.2% as China-bound exports fell 10.4%, diverting 760,000 bbl/d to Southeast Asia.

Refining margins collapsed, prompting a 25% cut in downstream investments to $405 million. Lease liabilities for the FPSO Almirante Tamandaré surged $2.6 billion, expanding debt obligations.

The board approved R$11.72 billion ($2.07 billion) in dividends-R$0.91 per share-extending 2024’s R$72.4 billion ($12.77 billion) total shareholder returns.

Tax payments consumed R$65.7 billion ($11.59 billion), while operating cash flow reached $8.5 billion. Net debt edged up to $42.3 billion from $41.9 billion in December.

CEO Magda Chambriard cited “strategic portfolio management” for the production rebound, while CFO Fernando Melgarejo noted “efficiency gains” despite rising leverage.

Analysts highlighted reliance on non-operational factors, with EBITDA margins improving to 49.6% from 43.1% last quarter but missing the R$62.94 billion ($11.10 billion) consensus.

Petrobras reaffirmed its 2025 output target of 2.8 million boe/d (±4%), supported by the 39%-complete Mero 3 project in the Santos Basin.

Underlying EBITDA fell 14% year-over-year to R$62.2 billion ($10.97 billion), while refining returns on capital crashed to 1.8% from 9.4% in early 2024.

The results underscore Petrobras’ dual challenge: delivering Western-style shareholder returns while meeting Brazilian government demands for local job creation and fuel subsidies.

Despite Brent crude averaging $62/barrel-down 8% year-over-year-the firm’s export revenue per barrel rose 3% to $81 due to the real’s strength.

Domestic gasoline prices remained frozen since January 2024, creating a R$4.1 billion ($723 million) subsidy burden.

Pre-salt production now represents 78% of total output, up from 75% a year ago, with break-even costs at $35/barrel.

Workforce expenses grew 7% annually to R$3.2 billion ($564 million), reflecting union wage agreements.

As Petrobras navigates political pressures and global oil volatility, its 12-month dividend yield stands at 15.4%-triple ExxonMobil’s 5.2%-raising sustainability concerns.

The stock has gained 23% year-to-date in São Paulo trading, outperforming Brazil’s Ibovespa index by 11 percentage points.

With $14.2 billion in projected 2025 investments, analysts question whether current payout levels can coexist with growth ambitions in an era of uncertain energy prices.

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