Petrobras Cuts Dividends by Almost 40% and Launches Share Buyback

The Brazilian oil giant approved dividends of R$15 billion, 39% less than the R$24.7 billion in Q123 and the lowest payout since early 2022

Petrobras Cuts Dividends and Launches Share Buyback
By Mariana Durão
August 04, 2023 | 08:37 AM

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Bloomberg — Petroleo Brasileiro SA slashed politically contentious dividends after profits declined and the Brazilian oil major set a more conservative policy for shareholder payouts.

The Rio de Janeiro-based producer’s board approved dividends of 15 billion reais ($3 billion), according to a filing on Thursday. It is down from 24.7 billion reais in the first quarter and the lowest dividend since Petrobras started making payments on a quarterly basis at the start of 2022. It will also buy back up to 157.8 million preferred shares over the next 12 months, which are worth 4.9 billion reais at current prices.

It brings Petrobras’s payouts in line with those made by other major oil producers. In 2022 Petrobras paid more dividends than any oil company apart from Saudi Arabian Oil Co.

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President Luiz Inacio Lula da Silva has attacked Petrobras’s dividends as overly generous for investors and said profits should be invested in oil refining and the energy transition.

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Meanwhile, oil majors in Europe and the US continue to prioritize investor payouts even after profits tumbled from record highs seen last year. Shell Plc, TotalEnergies SE, ExxonMobil Corp., BP Plc and Chevron Corp. have all kept cash flowing back to shareholders through dividends and share buybacks.

Net income tumbled 47% to 28.8 billion reais in the second quarter on lower oil prices, rising operational costs, and a sharp drop in international crack spread for diesel.

Petrobras has reduced dividends to 45% of free cash flow, an announcement that came as a relief to many investors who were expecting even lower payouts under new management. The company remains committed to paying at least $4 billion a year, unless total debt rises above limits set in its business plan. Analysts have said the new dividend guidelines align Petrobras with its international peers.

Read more at Bloomberg.com