Petrobras (PBR) stock prices were up by 0.67% as of the market closing on October 28th, 2021. This brought the price per share up to USD$10.56. Subsequent afterhours fluctuations saw the stock rise by 0.57%, bringing it up to USD$10.62.
Stellar Financial Reports
October 28th 2021 saw PBR stock disclose financial reports for the third quarter of fiscal 2021, having far exceeded profit and margin estimates. The news came shortly after President Bolsonaro heralded the company as being too profitable, stating that it would have to contribute more to society. As the company’s profits continue to grow, it is garnering ire in the Brazilian capital on account of its policy of pricing domestic fuel in accordance with international rates. Politicians are pushing for the company to lower prices or, at the very least, prevent further price increases. This move would adversely impact the company’s bottom line but could be useful for the politicians as the country heads into election year.
Government Intervention
PBR stock is the country’s main importer and producer of fuel, effectively controlling domestic prices for both diesel and gasoline. Historically, governments have forced the company into artificially low fuel prices, resulting in the company having to take on massive losses. President Bolsonaro stated his intention to alter the company’s pricing policy.
PBR Stock’s Net Income
Net income was substantially bolstered by one-off items. PBR stock reversed a decision taken at the onset of the global coronavirus pandemic to revise down its long-term projections for Brent prices, thereby boosting the value of its assets. The net income was also buoyed by various divestments and a major tax dispute that swung in favor of the company.
PBR Stock’s Extraordinary Dividend
PBR stock recently approved a sizable extraordinary dividend payment. Annual dividend payments were resumed in 2018, but this most recent dividend will be the second extraordinary dividend since the company changed its bylaws a year ago to facilitate the allowance of such a payment. Shortly after the disclosure of the financial report, the leader of the Brazilian Senate stated his intention to meet with the company’s executive board to discuss the containing of fuel prices.
Future Outlook for PBR Stock
The company reported a promising quarter, as evidenced by the strength of its financial reports for the third quarter of fiscal 2021. PBR stock is keen to maintain the momentum it has generated through to the end of the fiscal year and into the next. Current and potential investors are hopeful that management will be able to effectively leverage the resources at their disposal. This is hoped to facilitate significant and sustained increases in shareholder value over the long term.
