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 minister Smriti Irani at a press conference with minister of state for textiles, Ajay Tamta, the principal director general (M&C), PIB, AP Frank Noronha and other dignitaries. Courtesy: PIB

Apparel/Garments | On 23rd May 2017

Special package for knitwear coming soon: Irani

Union textiles minister Smriti Irani said that the government of...

Apparel/Garments | On 23rd May 2017

Apparel, footwear use may rise by 63% in 2030: Report

The apparel and footwear consumption is projected to rise by 63 per...

Apparel/Garments | On 23rd May 2017

Gap Inc earns $3.4 bn in net sales in Q1 FY17

Gap Inc's net sales for the first quarter of fiscal year 2017 were...

Interviews View All

Darshan Mehta
Infinium Polychem

We are spending double digit figures on R&D

Milind Khandwe
Hindoostan Innovation Centre

‘Modern technical textile is an indispensable tool for science and...

Sonia Agarwal
Whitenife

‘The terms eco-friendly and organic are common but everyone perceives them ...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Giorgio Mantovani
Corman S.p.A

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

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

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

news category


Related Categories:
May 2017

May 2017

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

SUBSCRIBE


Browse Our Archives

GO


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search