Latest update from scandal shaken Petrobras SA (ADR) (NYSE:PBR), the largest state owned oil-producing outfit in Brazil, has let it be known that the company will miss not only its production target for 2014 but also its earnings report. Details pertaining to this update were discussed by Michelle Caruso-Cabrera on CNBC wherein she said that missing out on the two key milestones was an outcome of the scandal that has recently shaken the company to its core.
It was also revealed that in the aftermath of several raids conducted by the police on Petrobras SA (ADR) (NYSE:PBR)’s offices, several of its employees as also executives of construction companies in Brazil had been arrested on charges of corruption and money laundering. In response to the recent developments, President Graca Foster offered the following insight –
“We are going through a very difficult moment in the company, but we are convinced that we will have better management after we structure and implement all of these managerial processes.”
She went on to say that creation of a compliance division at Petrobras SA (ADR) (NYSE:PBR) was in progress wherein new standards at work would be set. A conference had also been held on Monday, 17th November, 2014, wherein it was decided that while the unaudited financial results of the company would be released next month, the short-fall in production was attributed to delay in procuring licenses as also in platform deliveries.
Impact of all this on the stock has been devastating and it is evident from the plunging numbers in terms of share value which closed at $9.33 by the end of trading day on NYSE on Monday. Situation is likely to improve once the company posts its earnings report but the status quo is likely to continue till December.
Besides Brazilian authorities, Petrobras SA (ADR) (NYSE:PBR) is being investigated by US authorities too owing to the fact that its shares are traded on NYSE, an American exchange.
This article has been written by Vinita Basu.