Petróleo Brasileiro S.A. or Petrobras PBR recently lost a wage lawsuit when Brazil’s Labor Court voted in favor of the workers of Petrobras seeking higher wages. This is notably the biggest lawsuit that the company has faced in the Brazil’s Labor Court, which is expected to cost the company around 17 billion reals or 4.5 billion in U.S. dollars.
The case is mainly centered on the Minimum Remuneration Level Regime (RMNR) policy, adopted by Petrobras in 2007. The employees argue that the payments related to special working conditions such as night shifts and hazardous working environment should not be included in the base wage calculation, which will thus lead Petrobras to make additional payment to comply with RMNR. In contrast, the company is of the opinion that such payments should be included in the base wage calculations itself.
The ruling in favor of the workers is likely to result in wage increase of around 35% for 59,000 employees. Petrobras intends to appeal the decision in the Supreme Federal Court.
Of late, Petrobras has been going through a really tough time with the resignation of the company’s CEO, Pedro Parente. Petrobras has been thrown into disarray, with its shares falling sharply. The departure of Parente has raised speculations that the country may resort back to its old fuel pricing of subsidies that may again hamper the company’s growth and economy.
Early this month, the Brazilian Federal court suspended Petrobras’ $7-billion TAG sale deal with Engie SA, jeopardizing its 2017-2018 divestment goals of $21 billion. The latest lawsuit defeat comes as another huge blow to the company, which is grappling with high debt burden.
Zacks Rank and Key Picks
Currently, Petrobras has a Zacks Rank #3 (Hold).
Petroleo Brasileiro S.A.- Petrobras Price
Petroleo Brasileiro S.A.- Petrobras Price | Petroleo Brasileiro S.A.- Petrobras Quote
Some better-ranked stocks in the oil and energy sector are Cheniere Energy, Inc. LNG , Occidental Petroleum Corp. OXY and Royal Dutch Shell plc RDS.A, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cheniere Energy’s 2018 earnings are anticipated to grow 224.03% year over year.
Occidental’s earnings for 2018 are expected to grow 360.67% year over year.
Shell delivered positive earnings surprise in each of the trailing four quarters, with an average of 10.15%.
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