By Paul Kiernan And Luciana Magalhães
RIO DE JANEIRO--Shares of Brazilian state-controlled oil firm
Petróleo Brasileiro SA plunged at the opening bell Thursday after
the company wrote off a staggering 50.8 billion Brazilian reais
($16.8 billion) in 2014 due to losses from alleged graft and
overvalued assets.
Petrobras' preferred shares recently traded 5% lower at BRL12.47
on São Paulo's stock exchange.
The write-offs caused Petrobras' first year in the red since
1991, and the third-largest net loss of any publicly traded
Brazilian firm since 1986, according to local research firm
Economatica. The oil company reported Wednesday evening a loss of
BRL21.6 billion for 2014.
Chief Executive Aldemir Bendine told journalists Wednesday night
that Petrobras won't pay dividends for only the second time since
1986.
Investors had expected the impairments to be smaller: between
BRL15 billion and BRL30 billion, according to political risk
consultancy Eurasia Group.
There is a potential silver lining to such a large number,
analysts say. Independent auditor PricewaterhouseCoopers, which had
refused to sign off on Petrobras' financial statements for months
because of uncertainty surrounding a corruption investigation,
approved the 2014 earnings report "without any reservations," Mr.
Bendine said Wednesday.
But one large investor in Brazilian stocks, who didn't want to
be identified, said he didn't see much upside to Petrobras
shares.
"The relief from the earnings release is already priced in
today," the investor said Wednesday night, after Petrobras released
its report.
Bruno Gonçalves, an equity analyst at São Paulo-based Alpes
brokerage, said investors are now focusing on "excessive leverage,"
lower-than-expected production guidance and weak oil prices that
threaten the company's investments and planned asset sales
alike.
"Petrobras managed to get a BRL50 billion problem out of its
way," Mr. Gonçalves said. "Now the market is looking at the
fundamentals."
Write to Paul Kiernan at paul.kiernan@wsj.com
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