Petrobras Reportedly Pulls Back On Dividends

On Monday, two Brazilian cabinet members said that a proposed extra dividend suddenly axed by state-run Petrobras Brasileiro (NYSE:PBR) will be kept in reserve for future disbursement.

On Thursday, Petrobras Chief Executive Jean-Paul Prates proposed to the company’s board that shareholders be paid 50% of a potential 44 billion reais ($8.8 billion) extraordinary dividend as per the company’s bylaws, but government-appointed board members voted to withhold the money, reported Reuters.

The move blindsided investors, who expected an extraordinary dividend of $3 billion or more in addition to a routine payout of 14.2 billion reais ($2.9 billion).

A day later, two energy ministry sources told Reuters that Brazilian President Luiz Inacio Lula da Silva’s government plans to revise the reserve’s rules so it could be used for reinvestment.

Haddad said that Petrobras’ board would reevaluate in the coming “weeks and months” how the extraordinary dividends might be distributed.

But before the meeting, Lula da Silva said in an interview with TV channel SBT that Petrobras should be a motor for economic growth and job creation over shareholder returns.

This month, Petrobras’ sales of $27.11 billion (-10.2% Y/Y) beat the consensus of $26.94 billion. Earnings per ADS of $0.96 missed the consensus of $1.11.

Petrobras Brasileiro Price Action: PBR shares are trading higher by 2.13% at $14.87 at the last check Tuesday.

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