Company announces ordinary dividends of R$14.2bn, posts net earnings of R$124.6bn for 2023
03/08/2024
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Jean Paul Prates — Foto: Leo Pinheiro/Valor
State-owned company Petrobras confirmed on Thursday night (7) what investors have been fearing and said it will not pay extraordinary dividends for the fourth quarter of 2023. The company announced the distribution of ordinary dividends of R$14.2 billion, following the calculation of 45% of free cash flow. The dividends correspond to R$1.09894844 per preferred and common share and will be paid in two installments, in May and June. If the proposal is approved at the shareholders’ meeting scheduled for April 25, the total dividends to be paid by the company for the year 2023 will be R$72.4 billion, considering the advances made over the past year.
The market’s reaction to the oil giant’s decision not to pay extraordinary dividends should be a point of attention on Friday (8). On Thursday (7), the news that there would be no additional dividends made the company’s shares fall by around 10% in post-market trading at the New York Stock Exchange.
Last week, the company’s shares fell following statements by CEO Jean Paul Prates indicating that investments in energy transition would require the company to be conservative in paying dividends.
Valor found that Petrobras’s management board proposed the payment of extraordinary dividends, half of which would be allocated to capital reserve and the other half to shareholders. However, the proposal was not approved by the board of directors in a meeting that lasted into the night. The reason, according to people familiar with the matter, was concerns that the company would run short on cash to execute the 2024-2028+ strategic plan, which focuses on projects related to energy transition.
“The approval of the dividend is compatible with the company’s financial sustainability and is in line with its commitment to generating value for society and shareholders, as well as the best practices of the global oil and natural gas industry,” Petrobras informed in a note.
The meeting’s agenda also included the approval of the company’s results, with net earnings of R$124.60 billion in 2023, 33.8% less than in 2022. Net revenue fell 20.2% last year compared to 2022, to R$511.99 billion, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 23% in annual comparison, to R$262.23 billion.
In the fourth quarter, net earnings were R$31.04 billion, below the average of six firms surveyed by Valor, which pointed to a R$34.1 billion bottom line for the period. Net revenue in the three months ended in December fell 15.3%, compared to the same period last year, to R$134.26 billion, above the average estimated by analysts, of R$128 billion. Adjusted EBITDA was R$66.85 billion, 8.5% down year-on-year and below analysts’ estimates of R$70.2 billion.
The meeting revealed the split in the board and the isolation of the CEO, who also has a seat on the board. Of the 11 board members, the five directors linked to Mines and Energy Minister Alexandre Silveira plus Rosângela Buzanelli, representing employees, voted against the payment of extraordinary dividends. Mr. Prates abstained and the four minority members voted in favor of the additional payment.
The capital reserve was approved in October to ensure funds for the payment of dividends, interest on equity (and their respective advances), buybacks, absorption of losses, and incorporation into the shareholder’s capital. The company’s executive board and the government have been defending lower dividends to back renewable energy projects.
“We recognize that energy transition will occur gradually and, therefore, we will continue to invest in oil and gas exploration and production, the segment generating the highest returns … We will also generate value with a fair and responsible transition, diversifying our operations into profitable low-carbon businesses and always prioritizing partnerships,” Mr. Prates said in a message attached to the financial report.
*Por Fábio Couto, Kariny Leal, Rafael Rosas — Rio de Janeiro
Source: Valor International