(Bloomberg) — Petrobras announced another blockbuster dividend payment, rewarding shareholders at a moment of growing concern that the bonanza may come to a halt following Luiz Inacio Lula da Silva’s return to power.
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The state-run oil company’s board approved dividends of 3.3489 reais per share, totaling 43.7 billion reais ($8.5 billion), according to a regulatory filing Thursday.
While the number represents a slowdown from the colossal $17 billion payout in the previous quarter, it means the total for 2022 stands at around 180 billion reais, well above last year’s record dividends of 101.4 billion reais. Politicians from Washington to London have been lashing out at oil companies for funneling windfall profits to investors while consumers suffer from higher energy prices.
“It’s almost impossible for Petrobras to sustain payouts to holders at these levels,” said Leonardo Rufino, a portfolio manager at Mantaro Capital in Rio de Janeiro. “Now the focus will shift to Lula’s nominations and, if a reasonable name is chosen, we could start ruling out the worst case.”
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Brazil’s main oil union, known as FUP, and an association of oil workers who are also shareholders, Anapetro, pledged to contest the massive dividends in court even before it was announced. They argue that dividends are much bigger than investments by the state-controlled company, and that the dividends undermine its long-term plans.
The dividends are compatible with the company’s financial sustainability in the short, medium and long terms and in line with the commitment to create value for society and shareholders, Petrobras said in a statement.
Preferred shares in Petrobras were up 0.5% at 5:00 p.m. in Sao Paulo, trimming gains after rising as much as 1.8% earlier.
Petroleo Brasileiro SA, as it is formally known, was at the center of Brazil’s presidential elections this year. Its robust profits and payouts were slammed by both Lula and President Jair Bolsonaro during the campaign.
“The dividend bonanza could be starting to peak if we assume the new administration will focus on building new refining capacity,” said Fernando Valle, an analyst at Bloomberg Intelligence, adding that the next government could take steps to curb fuel inflation.
JPMorgan Chase & Co., which downgraded Petrobras shares to neutral from overweight following Bolsonaro’s defeat, says the change in power brings uncertainties, including what will happen with the existing dividend policy.
The new administration “has openly criticized how Petrobras has been run and has also discussed likely changes at the company,” analysts including Rodolfo Angele wrote in a report dated Oct. 30. “The main ones should be on capital allocation and pricing policy for fuels sold domestically.”
(Updates with analysts and company comments)
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Source: finance.yahoo.com