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Petrobras’s 2Q16 Earnings Miss Estimates

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Petrobras’s 2Q16 estimated and actual performances

Petroleo Brasileiro (or Petrobras) (PBR) posted its 2Q16 results on August 11, 2016. Before we proceed with an earnings review, let’s look at PBR’s 2Q16 performance compared to estimates.

In 2Q16, Petrobras posted adjusted EPS (earnings per share) of $0.03 compared to analysts’ estimates of $0.12. With this, the company’s 1H16 EPS stood at -$0.02 compared to its estimated EPS of $0.13. This lower-than-expected EPS resulted from a steep fall in earnings in PBR’s Exploration and Production (or E&P) segment in 1H16 compared to 1H15.

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Petrobras’s earnings review

In 2Q16, Petrobras’s earnings attributable to its shareholders stood at $106 million compared to $171 million in 2Q15. This was on account of a fall in crude oil and natural gas prices, which impacted upstream earnings. Plus, crude oil and natural gas production volumes fell by 6.3% over 2Q15 to 2.1 billion barrels of oil equivalent per day in 2Q16.

Petrobras’s peer Suncor (SU) reported a loss in 2Q16. Chevron (CVX) and ExxonMobil’s (XOM) adjusted EPS fell by 42% and 59%, respectively, in 2Q16 compared to 2Q15. Total’s (TOT) earnings fell by 30% in 2Q16 over 2Q15. BP’s (BP) adjusted earnings fell to $730 million in 2Q16, compared to $1.3 billion in 2Q15. For global stock exposure, you could consider the Vanguard Total World Stock ETF (VT).

Coming back to Petrobras, the company’s second-quarter earnings reduced its 1H16 loss to $212 million. In 1H16, PBR posted a steep fall in its E&P, G&P (Gas and Power), and Distribution segments’ operating earnings compared to 1H15.

A loss in the company’s Biofuels segment in 1H16 further dented its operating earnings, but this was partly offset by a marginal rise in its Refining, Transportation, and Marketing segment’s earnings in 1H16 over 1H15.

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