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A Petrobras drilling platform under construction in Angra dos Reis, Brazil.

Ricardo Moraes/AP

Brazil's state-led oil company, Petroleo Brasileiro SA, said on Monday that fourth-quarter net profit rose 53 per cent from a year earlier after higher fuel prices, lower taxes and financial gains helped make up for rising operational costs.

Consolidated net income attributable to shareholders was 7.75 billion reais ($3.89-billion U.S.) in the three months ending Dec. 31, the company said in a filing with Brazil's CVM securities regulator.

The results beat investor expectations. The average fourth-quarter profit estimate of 12 analysts surveyed by Reuters was 6.21 billion reais.

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The increase, though, was not enough to prevent the company's worst annual result in eight years. Full-year 2012 profit of 21.2 billion reais was 36 per cent less than in 2011 owing to soaring costs and a second-quarter loss, the company's first in 13 years.

Net sales, or sales minus sales taxes, rose to 73.4 billion reais, a 12.5 per cent increase compared with the fourth quarter of 2011.

Costs, though, ate up much of the sales gain. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, fell 15 per cent from a year earlier to 11.94 billion reais. EBITDA is a measure of a company's ability to generate profit from operations.

Among the factors limiting EBITDA was a 43 per cent increase in exploration and extraction costs, which climbed to 2.15 billion reais. The cost of goods sold rose 19 per cent, while general and administrative expenses rose 8.3 per cent.

The impact of higher operational costs was eased by a nearly four-fold increase in financial earnings to 2.79 billion reais. The financial result was led by the sale of 2.64 billion reais of Brazilian Treasury bonds that Petrobras held in its portfolio, the company said.

Also bringing relief was a big drop in income and Social Security taxes, which fell by nearly two-thirds to 942 million reais in the fourth quarter from 2.76 billion reais a year earlier.

The average sales estimate in the Reuters survey of analysts was 73.8 billion reais. The average EBITDA estimate was 14.2 billion reais.

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