There were high expectations for new Petrobras (
) CEO Maria das Graças Foster. Five months later the market is
still questioning if she can actually run the company. Is Foster
really the Latin American 'iron lady'?
[caption id="attachment_62739" align="alignright" width="300"
caption="Petrobras CEO Maria das Gracas Silva Foster"]
The fact is that from mid-February when Graças Foster took
office until late June, PBR's stock has declined almost 30%.
However, experts -- and the market -- have no doubt her management
is better than predecessor José Sergio Gabrielli.
According to Itaú analysts, market criticism about Foster
is not about her, but what she can actually do. "While Petrobras
managed by Foster and her team is definitely a better company",
they say, "two factors remain: we cannot fight the numbers,
and the controlling shareholders remain the same."
Experts are also worried about political interference in
Petrobras' operations, since it is a mixed economy company.
However, in the past couple of weeks, a new precedent was set for
PBR in Brazil. Against all odds, it was able to raise the wholesale
price of gasoline by 7.83% and diesel by 3.94%. This increase
represents a big victory for Foster. Moreover, this favors
analysts' view that she will improve its management by reducing
political manipulation in its operations.
The market reacted timidly to the move since it was considered a
small adjustment, but there was more to come. After the raise on
Monday June 25, last Thursday PBR announced a second increase in
fuel prices, this time sending the stock up.
Without these price rises the company would be unable to pay for
its five-year investment plan of $237 billion, Foster
The move has solidified the belief that Foster can offset
political influence and is able to handle the board. She went
against Brazil's Finance Minister Guido Mantega -- also chairman of
Petrobras' board of directors -- who led the call for no increase
in fuel prices.
Neverthless, experts are aware it will take a while for PBR's
new administration to prove that it is able to execute the
company's largest investment plan ever without major hiccups.