Braskem Posts Net Revenue of BRL 12 Billion
OREANDA-NEWS. Braskem's sales of thermoplastic resins (polyethylene, polypropylene and PVC) grew 5% in the third quarter of 2014 compared to same period last year to reach 939 kton, reflecting third-quarter seasonality and the stronger performance of industries related to durable goods. This performance accompanied the growth in the Brazilian market. Compared to the second quarter, when the Brazilian economy decelerated, impacted, among other things, by the fewer business days due to the World Cup, Braskem's sales advanced 7%. The Company posted net revenue of BRL 12 billion in the quarter, or 8% higher sequentially, which is explained by the higher sales volume and average depreciation of 2% in the Brazilian real against the U.S. dollar in the period.
Braskem's petrochemical complexes operated at capacity utilization rates of 90%, increasing 6 percentage points on the prior quarter. The resumption of operations on one of the lines at the Triunfo Petrochemical Complex in Rio Grande do Sul following a scheduled maintenance shutdown and the higher capacity utilization rate at the Duque de Caxias Complex in Rio de Janeiro offset the scheduled shutdown at the ABC Complex in Sao Paulo that began in September and was concluded in October.
Braskem recorded EBITDA of BRL 1.5 billion, which benefitted from the higher spreads of petrochemical products in the international market and sales volume growth. Braskem's leverage, as measured by the ratio of net debt to EBITDA, declined slightly to 2.71 times. In October, Fitch revised its rating outlook for Braskem from "negative" to "stable," reflecting the reduction in its leverage levels; the progress made on the strategy to diversify its feedstock profile; the continuous improvement in operating results; and the better performance of petrochemical spreads at the global level. The Company posted net income of BRL 230 million, down 42% from the third quarter of 2013.
Despite the stronger demand in the quarter, the scenario remains challenging due to the weak performance of the Brazilian economy. In this context, Braskem considers it important that the Brazilian government continue to work on measures to stimulate growth in the country's manufacturing industry, focusing on costs and the availability of feedstock and electricity. "Specifically in the chemical industry, the challenge is even greater given the competition from U.S. petrochemical producers, which use competitive ethane derived from shale gas as feedstock," said Braskem CEO Carlos Fadigas. "Negotiating a more competitive contract for petrochemical naphtha is of critical importance to our industry."
EXPANSION AND SUSTAINABILITY PROJECTS
Braskem invested nearly BRL 2 billion in the first nine months of 2014. Of this total, around 60% (BRL 1.2 billion) was allocated to its industrial operations, which included the expenditures on the scheduled maintenance shutdowns at the Triunfo and ABC Paulista complexes. Another portion, of 30%, was allocated to the expansion strategy in the Americas, which seeks to take advantage of competitive feedstock in Mexico. Braskem, in partnership with chemical producer IDESA, has made progress on the construction of the integrated petrochemical complex for the production of polyethylene in the Coatzacoalcos region in the Mexican state of Veracruz. By the end of September, the project's construction had reached 82% completion. Work has already begun on the process of hiring and training the Team Members who will run the future industrial operation, which should be inaugurated in the fourth quarter of 2015.
In the United States, progress continued to be made on Ascent, the integrated project to produce polyethylene currently being evaluated by Braskem together with investors. Ineos Technologies, LyondellBasell and Technip were chosen as the suppliers of the technologies to be used in the project. These companies are also partners in the Mexico project, which should ensure commercial and operational synergies. The Ascent project seeks to capture the opportunities provided by the significant cost advantage of using feedstock derived from shale gas.
During the quarter, Braskem received important recognition for its management of sustainable development. For the third consecutive year, the company was included in the Dow Jones Sustainability Index Emerging Markets of the New York Stock Exchange (NYSE), which is a benchmark for investors seeking investment portfolios formed by companies that have adopted best practices in sustainability.
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