In 2Q02, PEP was known as Perez Companc; Brazil's federal energy company Petrobras bought the company at the end of 2002. The improvement was mainly due to a 29% appreciation of the peso against the US dollar, which had a positive impact on dollar-denominated debt, part offset by the negative impact of the exchange rate difference on the company's operating income.
Net sales fell 16.5% to 1.14bn pesos and gross profit fell 37.4% to 426mn pesos in the second quarter due to the combined effect of lower prices, volumes and margins on the company's oil & gas and petrochemicals businesses. Oil & gas exploration and production gross profits fell 23.9% to 280mn pesos, due to a decline in oil and gas sales volumes, reflecting reduced investments in 2002 and, to a lesser extent, the effects of the national oil workers strike in Venezuela in the first quarter.
Lower prices internationally contributed to a 47.4% fall in petrochemicals profits to 60mn pesos. However, the reductions were part compensated by a 47mn peso increase in gross profit for the refining segment as a result of a 24% rise in sales volumes and higher margins that resulted from a recovery in prices. Operating income fell 21.7% to 299mn pesos due to the lower sales, part compensated by lower administration and marketing expenses.
As expected, the company saw sales volumes and prices for its main products, excluding refined products, fall in the second quarter. Oil sales fell to 113,000 barrels a day (b/d), from 122,000b/d in 2Q02. Oil sales averaged 54.7 pesos a barrel compared to 60.3 pesos/b in the second quarter of 2002. Gas sales fell to 287 million cubic feet a day (mcf/d), from 365mcf/d a year ago, while average prices dropped to 2.15 pesos a cubic foot from 2.87 pesos a year ago. Petrochemicals manufactured in Brazil fell to 34,000 tons, from 49,000t a year ago, while the price fell to 2,708 pesos a ton, from 3,065 pesos/t a year ago.
However, petrochemical sales in Argentina rose to 150,000t, from 121,000t a year ago. The price dropped to 1,125 pesos/t, from 1,456 pesos/t in the year earlier period. Output of refined products increased 24% from 2Q02 due mainly to higher volumes of gas oil, gasoline and asphalt. Non-operating losses decreased 70.4% to 79mn pesos in the second quarter, mainly due to exchange rate differences and lower debt payments. The exchange rate differences accounted for a 43mn peso gain in the second quarter compared to a 2.64bn peso loss in the same period of 2002.
As a result of the impact of the stronger peso, net debt excluding debt attributable to affiliates under joint control as of June 30, 2003 was US$1.89bn, accounting for a 10.1% drop compared to the US$2.1bn net debt as of June 30, 2002.
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