Brazil's scandal-hit Petrobras sees earnings slide

Scandal-plagued Brazilian oil giant Petrobras announced unaudited, incomplete and long-delayed third quarter 2014 results Wednesday showing profits down 9 percent on the previous year.
The news sent Petrobras shares plunging to end the day down 10.42 percent, dragging down the benchmark Bovespa index, which closed the session off 1.87 percent.
Petrobras has now lost more than half its market value since September.
"This is the way the market shows its rejection of Petrobras' lack of transparency. It is not so much the result as how the firm is acting," Alex Agostini, an economist with Austin Rating, told AFP.
The earnings report was the firm's second since a massive scandal broke in March exposing alleged kickbacks by contractors and payoffs to politicians estimated at up to four billion dollars.
In its twice delayed report, Petrobras said it earned 3.097 billion reais ($1.2 million) in the third quarter, a 38 percent drop from the second quarter of 2014.
From January through September the company said net profits came in at 13.4 billion reais, a 22 percent fall on the same period in 2013.
The oil giant gave no details on the loss in the value of assets resulting from the graft scandal, saying it could not quantify the depreciation.
Moreover, the results -- originally due last  November -- were not signed off by the company's external auditors PricewaterhouseCoopers.
Petrobras said it had a duty to shareholders to release the results, even if incomplete and not externally approved.
- Question over losses -
"The company understands it will be necessary to make adjustments to the accounts to make modifications to the value of fixed assets affected by fraudulent contracts," Petrobras said in a statement.
The firm added it considered it "impossible" to calculate "correctly, completely and definitively" the extent of asset depreciation resulting from the corruption scandal.
Market analysts estimate the depreciation at between $10 and $20 billion.
"The reaction on the market is understandable as we just don't know the value," Eduardo Velho, chief economist with Invx Global consultants, told AFP.
The uncertainty leaves Petrobras facing a possible credit downgrade from ratings agencies.
Last October, Moody's downgraded the firm to two levels above speculative debt and maintained a negative outlook.
Petrobras blamed the poor results on a drop in oil production, a fall in the value of the real against the dollar and the suspension of work on two refineries.
Brazil's biggest company has been beset for months by a widening probe into alleged kickbacks to politicians, mainly allies of the government of President Dilma Rousseff, a former Petrobras chair.
A total of 39 people -- former executives from the company itself and representatives of construction companies -- are under investigation.
A detained former Petrobras director, Paulo Roberto Costa, says dozens of politicians benefited from hundreds of millions of dollars of kickbacks from inflated Petrobras contracts over a decade.
Under the alleged corruption scheme, companies won contracts that were inflated to include illicit surcharges.
The cash was then allegedly passed on to intermediary companies that drew up bogus service and consultancy contracts, allowing the money to be laundered through these firms.
Police say the graft ring moved $4 billion over the past decade.
No one has been formally charged, but one suspect has implicated 28 politicians, some of them close to Rousseff herself, who denies all knowledge of the scam.
After a cabinet meeting Tuesday, Rousseff demanded an end to corruption as she seeks to revitalize an economy struggling for investment with its reputation dented by the Petrobras affair.
"We must punish but not destroy firms that are essential to Brazil. We must close the door on corruption," Rousseff said.
In the current circumstances, Petrobras, already facing a mammoth debt pile, hopes to limit as far as possible the need to seek external finance in the coming months.
Petrobras chair Graca Foster said recently the company would not be passing on the recent falls in crude prices when pricing fuel, "which in the current situation will very much favor the coffers."