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This excerpt taken from the PBR 20-F filed May 22, 2009. Results
of Operations—2008 compared to 2007
Net
(Loss) Income
PifCo had a loss of U.S.$772 million in 2008 compared to
net income of U.S.$29 million in 2007.
Sales
of Crude Oil and Oil Products and Services
PifCo’s sales of crude oil and oil products and services
increased 58.8% to U.S.$42,443 million in 2008 compared to
U.S.$26,732 million in 2007. This increase was primarily
due to:
Cost
of Sales
Cost of sales increased 60.5% to U.S.$42,231 million in
2008 compared to
Table of Contents
U.S.$26,311 million in 2007. This increase was
proportionally higher than the increase in sales of crude oil
and oil products and services primarily due to the same reasons
and also as a result of higher average inventory price formation
in the last quarter of 2008, since oil and oil products were
largely acquired prior to the decline in international oil
prices.
Selling,
General and Administrative Expenses
PifCo’s selling, general and administrative expenses
consist primarily of shipping costs and fees for services,
including accounting, legal and rating services. These expenses
increased 90.8% to U.S.$562 million in 2008 compared to
U.S.$294 million in 2007. This increase resulted primarily
from increases in offshore sales and average freight rates in
2008, as a result of changes in international market trends and
shipping routes in the amount of U.S.$452 million.
Other
Operating Expenses
PifCo recognized a loss of US$577 million due to inventory
impairment for the year ended December 31, 2008, as a
result of the recent decline in the international oil prices.
Financial
Income
PifCo’s financial income consists of the financing of sales
to us, inter-company loans to us, investments in marketable
securities and other financial instruments. PifCo’s
financial income increased 12.3% to U.S.$2,325 million in
2008 compared to U.S.$2,070 million in 2007. This increase
was primarily due to:
This increase was partially offset by a decrease in financial
income from loans to related
parties, due to the transfer of U.S.$8,231 million in
notes receivable to Braspetro Oil Services Company (Brasoil) as
a consequence of the assumption by Brasoil of PifCo’s
obligations under the notes payable to Petrobras in the same
amount. See Note 5(v) to PifCo’s audited consolidated
financial statements.
Financial
Expense
PifCo’s financial expense consists of interest paid and
accrued on PifCo’s outstanding indebtedness, other fees
associated with PifCo’s issuance of debt and other
financial instruments. PifCo’s financial expense remained
substantially stable, at U.S.$2,170 million in 2008
compared to U.S.$2,168 million in 2007.
There was an increase in derivative expenses related to exchange
traded contracts as a result of increases in offshore sales and
the average price of crude oil and oil products in the
international market and an increase in interest expenses
relating to recent issuances of notes, including the issuance of
U.S.$1.0 billion in Global Notes in November 2007, and a
reopening of those Global Notes in the amount of
U.S.$750 million in January 2008.
These increases were offset by a decrease in interest expenses
due to the assumption by Brasoil of PifCo’s obligations
under notes payable to Petrobras in the amount of
U.S.$8,231 million, as a consequence of the transfer of
notes receivable to Brasoil in the same amount.
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