Home / Knowledge / News / Textiles / Petrochemical margins remain low at Braskem in Q1
Petrochemical margins remain low at Braskem in Q1
11
May '12
Margins in the petrochemical industry remained depressed in the quarter, due to the combination of limited demand, which reflected the weak economic growth, especially in developed countries, and higher prices for raw materials, mainly naphtha.

Domestic demand for thermoplastic resins showed signs of recovery in 1Q12, particularly in March. Braskem's resins sales volume grew 9% compared to the previous quarter, while the industry grew 3% on average, with the difference due to the Company's higher share in total sales, while the share of imports in the market decreased.

On the operational front, the Company's production posted a solid performance, setting a new monthly record in March for the production of the main petrochemical raw material, ethylene, as well as for polypropylene. The capacity utilization rates of these two products, as well as for polyethylene, increased by more than 10 percentage points compared to 4Q11. The higher capacity utilization rates for Braskem's main products reflect the normalization of production at the Company's plants following the scheduled and unscheduled maintenance shutdowns during 2011.

"Although initial measures taken by the Brazilian government, such as supporting the currency and lowering interest rates, are a move in the right direction, it is very important to advance the creation of an industrial policy for the country that can restore the competitiveness of local industry in a scenario marked by so many uncertainties," said Carlos Fadigas, the CEO of Braskem.

Braskem's consolidated net revenue was R$8.2 billion the first quarter, down 5% from the prior quarter. The higher sales and increase in average sale prices in U.S. dollar were offset by the reduction in naphtha resales. Compared to 1Q11, net revenue grew 11%, driven by the 6% average appreciation in the U.S. dollar in the period.

Consolidated EBITDA in 1Q12 was R$787 million, up 10% on the prior quarter. The amount reflects the nonrecurring effect from the recognition of compensation from a feedstock supply agreement, with a positive impact of R$236 million. The higher sales volume was insufficient to offset the lower contribution margin, which followed international spreads in thermoplastic resins and key basic petrochemicals, which decreased by around 11% and 6%, respectively.

Compared to 1Q11, EBITDA decreased 14% in Brazilian real and 20% in U.S. dollar. The higher sales volume and 6% appreciation in the U.S. dollar in the period were insufficient to offset the lowers spreads in thermoplastic resins and basic petrochemicals, which decreased 31% and 22%, respectively, between the periods.

Braskem recorded net income of R$152 million. This result was mainly driven by the reduction in financial expenses due to the depreciation in the U.S. dollar in the period and by the nonrecurring impact from the compensation received under the supply contract, as mentioned above.

The Company's consolidated net debt in U.S. dollar decreased by 4% in the quarter, to US$6.1 billion at March 31. When measured in Brazilian real, Braskem's consolidated net debt decreased by 7%, influenced by the U.S. dollar depreciation of 3% in the period. The average debt term increased from 12 to 15 years, due to the reopening of two bonds issues, one involving 10-year bonds and the other perpetual bonds, with each issue worth US$250 million and placed at very competitive conditions, and the proceeds used to pay higher-cost and shorter-term debt.

Must ReadView All

Textiles | On 19th Jan 2017

Pakistan imposes duty on Indian fine cotton yarn

A provisional countervailing duty ranging from Rs 26.89 to Rs 55.8 a...

Textiles | On 19th Jan 2017

Union Budget: Textile sector expects excise duty revisions

Excise duty on man-made fibres should be reduced to bring it on par...

Union textiles minister Smriti Irani at the inauguration of IIGF in New Delhi with textiles secretary Rashmi Verma and other dignitaries. Courtesy: PIB

Apparel/Garments | On 19th Jan 2017

Ministry to reimburse apparel exporters for state levies

The textile ministry has received a sum of Rs 500 crore from the...

Interviews View All

Sachin Sharma
Gem Enviro Management Pvt Ltd

There are no significant differences between virgin yarn and PET recycled...

Karan Toshniwal
Orange O Tec

Contemporary industry is paying more and more attention to the...

Rajiv Sirohi
Shara

‘Portugal is taking away a major share of the mill made sector.’

Steve Cole
Xerium Technologies

Steve Cole of Xerium Technologies discusses the industry. Xerium is the...

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer Prathyusha Garimella is known for blending...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search