CONSOLIDATED RESULT

In order to permit comparability, the comments analyzing the results below were prepared based on Law 6.404/76 before the adjustments of Law 11.638/07 and complemented with reconciliation with the new criteria.

Petrobras and its subsidiaries presented a consolidated net profit of R$ 33.915 million in the year ended December 31, 2008, after eliminating intercompany transactions and deducting the minority interest, which is a 53% increase in relation to the previous year (R$ 21.512 million).

The following factors contributed towards this performance:

  • > Increase in gross profit of R$ 8.504 million, due to:
  • >> The growth in the average realization prices of oil and oil products on the domestic market and exports (R$ 26.289 million), particularly for naphtha, aviation kerosene and fuel oils, reflecting the behavior of international quotations, and for diesel and gasoline, related to the readjustments of 15% and 10%, respectively, applied as from May, in addition to the quarterly readjustments of imported natural gas, which contributed to correct the contracts for supply of gas, and to the higher prices of electric power traded, due to the emergency operation of the thermoelectric power stations at the beginning of the year;
  • >> Surpassing the greater expenditures with importing oil, oil products and gas (R$ 12.301 million), government interests (R$ 6.011 million), maritime transport and transport via pipelines (R$ 553 million) and non-oil products, basically biodiesel (R$ 728 million), offset by the lower expenditures with materials, services and depreciation (R$ 124 million).
  • > Increase in operating expenses (R$ 2.927 million), highlighting:
  • >> Sales (R$ 1.579 million), as a result of the volume of sales on the domestic and foreign markets, reflecting the increase in the afreightment of ships, as well as in the quotation of freights on the international market (R$ 1.157 million), including the effect of the appreciation of the US dollar during the year (32%) and higher recording of allowances for doubtful accounts (R$ 103 million);
  • >> Administrative and general (R$ 1.066 million), resulting from the increase in expenditures with personnel, due to the increase in the workforce and collective bargaining agreements in Brazil (R$ 233 million) and abroad (R$ 479 million), including the effect of the appreciation of the US dollar in the year, in addition to third party services, on consulting, auditing and data-processing, in Brazil (R$ 164 million);
  • >> Exploration costs (R$ 1.084 million), related to the write-off of dry wells or wells that were not economically viable in Brazil (R$ 971 million) due to the continual increase in the wells drilled in recent years, a reflection of the intensification of the Company’s investment program and the rise in unit costs for drilling wells caused by the pressure of the industry’s pickup on inputs;
  • >> Loss on the recovery of Exploration and Production assets (R$ 479 million), reflecting the low in the quotation for petroleum;
  • >> Other Operating Expenses (R$ 148 million), due to losses with devaluation of inventories (R$ 1.381 million), due to the fall in prices of commodities, offset by the extraordinary expenditure with the Petros Plan (R$ 1.050 million) in 2007 and other decreases in expenses, such as: Safety, Environment and Health (SMS) and charges and contractual fines (R$ 106 million).

Surpassing the decrease occurring in expenses related to:

  • >> Pension and Healthcare Plans (R$ 1.068 million), due to the commitments assumed with the Reciprocal Obligations Agreement (R$ 697 million) in 2007, in addition to the decrease, in 2008, of the actuarial expenditure due to the good results of the Plan’s assets in 2007 (R$ 185 million) and the implementation of the pharmacy benefit in 2007 (R$ 97 million);
  • >>Tax (R$ 355 million), due to the extinguishment of CPMF (Provisional Contribution on Financial Activities), offset by the increase in the rate for IOF (Tax on Financial Operations) as from January 2008 and by the increase in taxes abroad, especially those levied on dividends and loans.

Higher financial income (R$ 8.043 million), due to the gains with exchange variations on net assets in US dollars, as described below:

Consolidated result
  (R$ million)
JAN-DEC/2008 JAN-DEC/2007 Change
FX Effect on Net Debt (1.315) (688) (627)
Monetary Variation in Financing (321) (110) (211)
Net Financial Expenses (2.566) (1.805) (761)
Financial Result on Net Debt (4.202) (2.603) (1.599)
FX Variation - International Subsidiaries 6.418 (2.254) 8.672
Hedge for comercial and financial operations      
Comercial 665 (410) 1.075
Financial (22) (19) (3)
Total Hedge 642 (429) 1.071
Marketable Securities 248 417 (169)
Other Net Financial Income (Expenses) 584 941 (357)
Other Net FX and Monetary Variation 330 (95) 425
Net Financial Results - law 6.404/76 4.020 (4.023) 8.043

Greater gain in the results from investments in significant corporate interests (R$ 66 million), effect of the exchange variation on the translation of the financial statements of the subsidiaries abroad (R$ 1.315 million), a reflection of the appreciation of the US dollar in the year (32%) and gain through the change in stakeholding, due to the corporate restructuring of Quattor Participações (R$ 409 million), offset by the performance of the stakeholdings in the petrochemical sector (R$ 878 million) and amortization of goodwill (R$ 273 million).