Petrobras is one of the largest oil producers in the world.
The Company will pay a final dividend of $1.1/ADR for fiscal year 2021.
Keep in mind this is higher than the "normal" quarterly dividend going forward.
That said, I remain very bullish on Petrobras' forecast to pay out at least $10/ADR in dividends over the 2022-2026 period.
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Sao Paulo, Brazil: Front view of Petrobras BR oil company and gas station. brand logo.
caio acquesta/iStock Editorial via Getty Images

I don't think Petrobras (PBR) (PBR.A) needs any introduction. As one of the largest oil producers in the world, it offers excellent exposure to rising oil prices despite the more difficult situation in domestic markets where politics play a major role. The stock price has been held back by political uncertainty as some presidential candidates seem to think Petrobras is making "too much" money, but I think incoming corporate taxes will allay those concerns. To put it into perspective, the more than $8 billion in corporate taxes due on 2021 earnings represent about 0.5% of Brazil's GDP. In the current oil context, the company is already a sort of golden goose for the government.

Petrobras stock
Data from YCharts
Fourth quarter results confirm that Petrobras is a cash monster
In the fourth quarter of 2021, Petrobras reported total revenue of just over $24 billion and gross profit of $10.6 billion. That's down slightly from Q3 2021, but luckily the company was able to cut some expenses elsewhere, resulting in underlying operating profit of $8.8 billion (due to sales of 'assets).

Petrobras Profit and Loss Account
Petrobras Investor Relations

As you can see in the image above, the company's interest expense is decreasing very rapidly as gross debt and net debt decrease, making the company a better consideration for lenders now that the balance sheet risk has disappeared. Net income was approximately $5.64 billion, or approximately $0.86 per ADR (considering that one ADR corresponds to two shares and a little over 13 billion shares and therefore 6.5 billion 'ADR in circulation).

Looking at the cash flow statement, Petrobras reported total operating cash flow of $9.2 billion. We still have to account for changes in working capital (a contribution of $900 million) and we also have to account for lease payments of $1.45 billion and the $360 million Deduct USD from payments interests. Finally, the company only paid $1.2 billion in taxes, even though about $2.27 billion is owed for fourth-quarter results. Then we have to add the nearly $500 million in dividends we received from the investees.

Petrobras Cash Flow Statement
Petrobras Investor Relations

This translates to adjusted cash flow from operations of $5.9 billion. Total investments amounted to $1.7 billion, which generated free cash flow of $4.2 billion. It's about $0.64/share.

This may sound disappointing, but let's not forget that the fourth quarter was a quarter rich in investments: while Petrobras recorded an impairment charge of 2.91 billion. In addition, the income statement was improved by the reversal (excluding cash) of previous impairments.

Petrobras production rate
Petrobras Investor Relations

The dividend is greater than $1/ADR
Although very high free cash flow is a given in the current oil price environment, most shareholders are eagerly awaiting dividend declarations. In December, Petrobras was very generous with a higher-than-expected dividend, as it surprisingly increased the December payout after reporting stronger-than-expected third quarter results, making the pre-announced payout quite low. . And it looks like Petrobras will continue to be a generous dividend payer.