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Investors punished Petrobras and downgraded its prospects after the state-controlled oil company expanded output at a slower-than-expected pace and results declined in the third-quarter as net income rose to 8.57 billion reais ($5 billion).
“If the government and the unions continue to see this as the goose that lays the golden egg, western investors will become wary of watching returns marginalize,” said fund manager Ted Harper.
President Lula da Silva has “disappointed” investors by failing to improve efficiency, cut costs and trim staff at the company, said fund manager Mirela Rappaport.
Analyst Paula Kovarsky said Petrobras’s “skyrocketing” refining costs and higher oil production costs are a “source of concern.” Unions are likely to win wage increases and drive costs higher, she said.
