Shares of Brazilian state oil company Petrobras plunged more than 11% at the opening of trading in Sao Paulo on Friday, after the company's dividends frustrated investors and triggered analyst downgrades.
In releasing fourth-quarter results on Thursday night, Petrobras said it would pay 14.2 billion reais ($2.88 billion) in dividends to shareholders, but investors also expected an extraordinary dividend that did not materialize. .
Goldman Sachs analysts told clients that investors had expressed expectations for extraordinary dividends of $3 billion to $4 billion.
Petrobras has been a big moneymaker for its shareholders in recent years, particularly during the previous administration when the company paid much more than major Western oil peers.
“The message being delivered is very clear: investors should expect only minimal dividends for Petrobras,” JPMorgan analysts wrote, saying the fourth-quarter payout represents a meager 8.1% dividend yield in 2024, “substantially below that of peers that typically deliver returns in the mid-teens.”
The lower pay also prompted downgrades from analysts. Santander analysts downgraded Petrobras to “Neutral” from “Buy”, saying this sends “mixed signals regarding the short-term capital allocation strategy”.
Analysts at Bradesco BBI also downgraded the company, saying they believe that “flows could shift away from Petrobras towards Chinese oil companies, given the recent turnaround in capital discipline and strong buyback programs”, also mentioning Saudi Aramco.
Petrobras reported a 6.3% drop in recurring net profit for the fourth quarter, to 41 billion reais, exceeding expectations of 35.3 billion reais among analysts consulted by LSEG.
