Shares of Brazil's state-run oil company Petrobras plunged more than 11% in opening trading in Sao Paulo on Friday, after the firm's dividend frustrated investors and triggered analyst downgrades.
In a fourth-quarter earningsrelease late on Thursday, Petrobras said it would pay out 14.2 billion reais ($2.88 billion) in dividends to shareholders, but investors had also expected an extraordinary dividend that did not materialize.
Goldman Sachs analysts told clients that investors had expressed expectations of a $3-4 billion extraordinary dividend.
Petrobras has been a major cash cow for its shareholders in the last few years, mainly during the previous management when the firm paid out far more than Western oil major peers.
"The message that was passed is very clear: investors should expect only minimum dividends for Petrobras," analysts at JPMorgan wrote, saying the fourth-quarter payout represents a meager dividend yield of 8.1% in 2024, "substantially below that of peers that typically deliver returns in the low teens."
The lower payout also triggered downgrades from analysts. Santander analysts downgraded Petrobras to "Neutral" from "Buy", saying it sends "mixed signals regarding short-term capital allocation strategy."
Analysts at Bradesco BBI also downgraded the firm saying they believe "flows could move away from Petrobras to 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 its fourth-quarter net recurring profit to 41 billion reais, beating expectations of 35.3 billion reais among analysts polled by LSEG.
(Reuters - Reporting by Peter Frontini; Editing by Gabriel Araujo and Brad Haynes)