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PBR » Topics » Currency fluctuations could have a material adverse effect on our financial condition and results of operations, because most of our revenues are in Reais and a large portion of our liabilities are in foreign currencies.This excerpt taken from the PBR 20-F filed May 22, 2009. Currency
fluctuations could have a material adverse effect on our
financial condition and results of operations, because most of
our revenues are in reais and a large portion of our liabilities
are in foreign currencies.
The impacts of fluctuations in exchange rates, especially the
real/U.S. dollar rate, on our operations are varied
and may be material. The principal market for our products is
Brazil, as over the last three fiscal years over 73% of our
revenues have been denominated in reais, while some of
our operating expenses and capital expenditures and a
substantial portion of our indebtedness are, and are expected to
continue to be, denominated in or indexed to U.S. dollars
and other foreign currencies. In addition, during 2008 we
imported U.S.$22.2 billion of crude oil and oil products,
the prices of which were all denominated and paid in
U.S. dollars. Conversely, a substantial share of our liquid
assets are held in U.S. dollar denominated assets, or
indexed to the U.S. dollar, but we do not use forwards,
swaps and futures contracts to mitigate the impact of changes in
currency values
on our operations and financial statements because of their
limited liquidity and cost.
Our recent financial statements reflect the appreciation of the
real by 11.8%, 8.7% and 17.2% against the
U.S. dollar in 2005, 2006 and 2007, respectively, and the
depreciation of the real by 31.9% against the
U.S. dollar in 2008. The weakness of the U.S. dollar
against other currencies in general has also affected our
results. As of May 20, 2009, the exchange rate of the
real to the U.S. dollar was R$2.020 per U.S.$1.00,
representing an appreciation of approximately 13.6% in 2009,
year-to-date.
This excerpt taken from the PBR 20-F filed Jun 30, 2005. Currency fluctuations could have a material adverse effect on our financial condition and results of operations, because most of our revenues are in Reais and a large portion of our liabilities are in foreign currencies.
The principal market for our products is Brazil, and over the last three fiscal years over 80% of our revenues have been denominated in Reais. A substantial portion of our indebtedness and some of our operating expenses and capital expenditures are, and are expected to continue to be, denominated in or indexed to U.S. dollars and other foreign currencies. In addition, during 2004 we imported U.S.$6.9 billion of crude oil and oil products, the prices of which were all denominated in U.S. dollars.
The Real depreciated 52.3% in 2002 against the U.S. dollar before appreciating 18.2% and 8.1% against the U.S. dollar in 2003 and 2004, respectively. As of June 23, 2005, the exchange rate of the Real to the U.S. dollar was R$2.3932 per U.S.$1.00, representing an appreciation of approximately 9.8% in 2005 year-to-date. The value of the Real in relation to the U.S. dollar may continue to fluctuate and may include a significant depreciation of the Real against the U.S. dollar as occurred in 2002. Any future substantial devaluation of the Real may adversely affect our operating cash flows and our ability to meet our foreign currency-denominated obligations.
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