OREANDA-NEWS. The partial correction in the exchange rate with the depreciation in the Brazilian real, the reduction in the rate of PIS and COFINS taxes levied on petrochemical raw material purchases and the improvement in international margins were the main factors driving the improvement in Braskem's results in the third quarter.

In this context, consolidated net revenue reached BRL 10.7 billion, increasing 12% from the prior quarter and 16% from same quarter last year, driven by the variables mentioned above. In U.S. dollar, net revenue amounted to USD 4.7 billion, increasing 2% from 2Q13 and 3% from 3Q12. In the first nine months of 2013, net revenue amounted to BRL 29.5 billion or USD 13.9 billion, which represents growth on the prior-year period of 12% and 2%, respectively.

“The improvement in the global economy and the tax relief for our raw materials in response to industry demands made positive contributions to Braskem's performance and were also fundamental in supporting a partial recovery in the competitiveness of Brazil's petrochemical chain,” said Carlos Fadigas, Braskem's CEO. “This has allowed us to strengthen our capacity to invest sustainably through projects like Comperj in order to accompany the growth in the Brazilian market,” he added.

In response to the stimulus measures for the industry recently implemented by the federal government, Braskem, working together with the plastics manufacturing industry, developed the Plan to Promote Competitiveness in the Plastics Chain (PIC), which came into effect in the third quarter. The plan's initiatives include special conditions for resin sales to manufacturers with the aim of doubling exports of manufactured plastic goods within two years, promoting innovation to support the market's expansion, improving the qualifications of professionals and management at companies and promoting the advantages offered by plastics.

Braskem also announced investments to expand one of its polyethylene production lines in the state of Bahia to produce metallocene-based LLDPE. The Company also signed a memorandum of understanding with Styrolution to evaluate the possibility of producing the resin acrylonitrile butadiene styrene (ABS) and styrene-acrylonitrile (SAN) at the Camacari Complex in Bahia.

Despite the better scenario, Brazil's domestic demand for thermoplastic resins contracted by 8% in the third quarter compared to 2Q13, which is explained by the consumption of inventories built up in the prior quarter and the slowdown in industrial production. In the first nine months of the year, resin demand amounted to 4.0 million tons, or 9% more than in the same period of 2012, fueled by the strong performance of sectors such as agriculture, automotive, food and infrastructure.

Braskem's crackers continued to operate at high capacity utilization rates in the quarter, which averaged 92%, though 2 percentage points down from the second quarter, due to the unscheduled shutdown caused by the power outage that impacted Brazil's Northeast in August. The outage also adversely affected operations at the PVC plants located in Bahia and Alagoas, which, combined with the anticipation of the scheduled maintenance shutdown, led to a 12% decline in PVC production in the quarter compared to the prior quarter.

Accompanying the weaker domestic demand in the quarter, Braskem's domestic PVC sales decreased 9% from 2Q13, while polyethylene and polypropylene sales volumes decreased 4%. Despite these results, considering all three resins, the Company's market share expanded by 2 p.p. to 68% by recovering ground from imported products. In the year to date, domestic resin sales reached 2.8 million tons, increasing 7% from the prior-year period.

Braskem's EBITDA (earnings before interest, tax, depreciation and amortization) amounted to BRL 1.65 billion, increasing 57% from the prior quarter, driven by the recovery in international spreads and the depreciation in the Brazilian real against the U.S. dollar. In the year to date, consolidated EBITDA was BRL 3.6 billion, up 42% on the prior-year period, due to the same reasons described above as well as to the higher sales volume in the domestic market.

Braskem recorded net income of BRL 394 million in 3Q13 and BRL 492 million in the year to date.

The EBITDA growth in the last 12 months, combined with the 6% reduction in net debt (USD 6.6 billion), led to a reduction from 3.01x to 2.73x in the Company's financial leverage measured by the ratio of net debt to EBITDA in U.S. dollar. In Brazilian real, the financial leverage ratio stood at 2.87x.

To sustain its programs aimed at stimulating growth and improving productivity and operational reliability, Braskem invested BRL 1.7 billion in the first nine months of 2013.

Braskem's commitment to sustainable development was the target of important recognitions in the quarter, with its stock included in the Dow Jones Sustainability Index for Emerging Countries and the Carbon Disclosure Project selecting it as Brazil's best company in carbon management. Braskem was also a highlight in the area of sustainability in the annual awards sponsored by the magazines Exame and Epoca.