Petrobras wants to adjust dividends to levels practiced by competitors, says director – 05/12/2023 – Market

The studies for the preparation of a new dividend policy for Petrobras will consider that the company must have remuneration compatible with other major global oil companies, said this Friday (12) the company’s CFO, Sergio Caetano Leite.

In 2022, the state-owned company was the second largest dividend payer in the world, according to resource manager Janus Henderson, and even became a target of then-president Jair Bolsonaro (PL) for the high remuneration in times of record fuel prices. .

The Luiz Inácio Lula da Silva (PT) government took over with the promise of changing this scenario, which reflects a policy of remuneration to shareholders implemented in the management of Roberto Castello Branco, the first president of Petrobras under Bolsonaro.

With the promise of returning to shareholders part of the company’s cash generation that was not intended for investments, the policy led the state-owned company to have one of the best levels of profitability on the sector’s share.

A survey carried out by Einar Rivero, from TradeMap, shows that the indicator that measures the return in dividends on the share price (known as ‘dividend yield’) of Petrobras is much higher than that of other companies in the segment, second only to the British BP .

Since 2018, Petrobras preferred shares have had an average dividend yield of 12.77%. Ordinary shares, 10.78%. In the case of the American giant Exxon, for example, the indicator was 5.01%. For the Norwegian Equinor and the American Chevron and Conoco Philips, it was below 5%.

The leader BP has an average dividend yield of 14.36% in the period. In 2022, Petrobras’ 12-month dividend yield was greater than 50% for both share classes, according to TradeMap data.

In an interview to detail the balance sheet for the first quarter, Leite said that the new dividend policy is still being studied, but “it is natural” that the company pays levels similar to those paid by its competitors in the oil sector.

According to the executive, the new shareholder compensation policy will be presented by the end of July for consideration by the state-owned company’s board of directors. In a conference call with market analysts, he said this Friday that the studies are still in their initial phase.

The government defends that part of the company’s cash generation be allocated to more investments and the company has already committed to returning to segments abandoned by previous administrations, such as fertilizers and renewable energies.

But the current management also proposes to use part of the resources in a share buyback program, as other large global oil companies have done, taking advantage of the excess cash generated by the rise in oil prices to improve its market value.

“Buybacks occur in companies as a way of distributing value to shareholders, but above all it reflects Petrobras’ view that the company has more value than the market demonstrates,” said Leite.

While it does not change its dividend policy, Petrobras continues to announce high values ​​to shareholders. For the profit of BRL 38.1 billion in the first quarter of 2023, it will distribute BRL 24.7 billion in dividends.

As the new policy should only be ready after the end of the second quarter, the tendency is for there to be a new distribution by the result between April and June.

At the same time that they are the target of criticism from the government, however, Petrobras’ dividends help the Treasury, since the Union is the largest shareholder in the state-owned company. With 28.67% of the shares, the Union will have R$ 7.1 billion referring to the result of the first quarter.

The BNDES (National Bank for Economic and Social Development), which holds 7.94% of the company’s capital, will be entitled to an additional R$ 1.9 billion.