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Petrobras Quarterly Profit Misses Estimates on Fuel Import Costs

Petroleo Brasileiro SA, Brazil’s state-controlled oil producer, said third-quarter profit slid 40 percent, missing analysts’ estimates, on higher fuel imports and refining losses.

Net income dropped to 3.39 billion reais ($1.55 billion), or 26 centavos a share, from 5.66 billion reais a year earlier, or 43 centavos, the Rio de Janeiro-based company said today in a regulatory statement. Per-share profit excluding some items trailed the 44-centavo mean of 12 analysts’ estimates compiled by Bloomberg.

Fuel imports are curbing profit as imported gasoline and diesel prices exceeded those in Brazil even after four price increases since June 2012. Imported gasoline cost 20 percent more than domestic fuel in the quarter because the government, which control’s Petrobras’s board, prohibits fuel sales at market prices to control inflation, Itau Unibanco Holding SA said in a note to clients.

“Petrobras’s profitability in the third quarter was reduced by the fuel price gaps,” Auro Rozenbaum, an analyst at Bradesco SA who rates the stock a hold and doesn’t own any, said by telephone from Sao Paulo ahead of the report. “By the end of August the gap reached a record level.”

Refining Losses

The company’s refining unit posted an operating loss of 8.59 billion reais in the quarter. Fuel imports climbed to 493,000 barrels a day in the period, an increase of 89 percent from the previous quarter, Petrobras said in the report.

Petrobras has increased prices for gasoline 15 percent and diesel 22 percent since June 2012 to reduce the discount with international prices. The gap narrowed to about 10 percent in the fourth quarter after Brazil’s currency rebounded and international crude prices fell, making imported gasoline cheaper, Rozenbaum said.

The real has appreciated more than all currencies tracked by Bloomberg since Aug. 22 when the central bank announced a $60 billion program of currency swaps and credit line auctions. The real reached 2.1523 per dollar on Oct. 17, the highest level since June 14.

Brent crude averaged $109.65 a barrel in the third quarter, little changed from $109.42 a year earlier. Brent oil for December settlement dropped 0.3 percent to close at $106.66 a barrel on the London-based ICE Futures Europe exchange today.

Petrobras is investing $237 billion over five years to build refineries, develop deepwater fields and ramp up output at Lula, the second-largest discovery in Brazil’s history after Libra. Petrobras took a 40 percent stake in the Libra field in a government auction on Oct. 21.

Petrobras expects domestic crude production to double to 4.2 million barrels a day in 2020 as it adds more than 30 production units to fields in deep waters of the Atlantic. It plans to increase refinery output 50 percent during the period to allow it to phase out fuel imports.

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