Petrobras releases financial results, biofuel segment struggling

By Erin Voegele | August 08, 2012

Brazil-based Petrobras S.A. has released financial results for the first half of 2012, demonstrating its biofuels segment is currently operating at a loss.  

In its financial report, Petrobras noted that while biodiesel margins have improved in 2012, those improvements have been more than offset by losses in ethanol due to several factors, including lower volumes and prices. Higher feedstock costs due to lower sugarcane production are also cited by the company as a factor leading to losses, as are the effects of the decrease on biological assets’ value and the exchange variation effect. In addition, Petrobras also noted increased research and development costs associated with second-generation ethanol were also factor contributing to losses in the biofuel segment.

During the first half of 2012, Petrobras reported $18 million in capital expenditures and investments in biofuels. This is down from the $142 million reported for the same period in 2011.

Petrobras’ biofuel segment posted $212 million in sales revenue and a $13 million loss in gross profits for the first half of the year. During the same period of 2011, the company posted $148 million in sales revenue and a $29 million loss in gross profits.

The earnings before interest, taxes, depreciation and amortization (EBITDA) for the biofuels segment during the first half of 2012 was reported as a $66 million loss. The EBITDA for the same period of last year was a $72 million loss.

Petrobras reported $1.17 billion in total assets in the biofuel segment for the first half of this year, compare to $1.289 billion reported for the same period of last year.

In its report, Petrobras also noted that it operates joint ventures with many other companies both within Brazil and abroad. In fact, the company is a member of 141 partnerships abroad.

Blue Sugars Corp. is one U.S.-based cellulosic ethanol producer that Petrobras has partnered with. Earlier this year, Blue Sugars announced that it had successfully completed the first phase of the work program under a Joint Development Agreement with Petrobras, which had been signed in 2010.