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Lower sales volumes for ethylene & propylene at Braskem
07
Aug '08
BRASKEM S.A. the leading company in the thermoplastic resins industry in Latin America and third-largest resin producer in the Americas, announced its results for the second quarter of 2008 (2Q08).

The following financial and operating information, unless otherwise indicated, was prepared and presented in accordance to Brazilian GAAP (BR GAAP) and in Brazilian Reais (R$). Additionally, financial statements and operating information consolidate the numbers for Braskem and its subsidiaries.

A more detailed review of second quarter results has been filed with the Brazilian Comissao de Valores Mobiliarios ("CVM") and at U.S. Securities and Exchange Commission and can be viewed at Braskem's website.

"The approval of the acquisition of the petrochemical assets of the Ipiranga Group and the consolidation of the outstanding minority interest of a number of important assets previously owned by PETROBRAS allowed Braskem to reinforce its leadership position in the Brazilian petrochemical industry," commented Bernardo Gradin, Chief Executive Officer of Braskem.

"Domestic demand, fueled by construction and consumer-driven industries, remained strong. However, oil and naphtha price increases in the quarter put pressure on operational margins, leading Braskem to promptly realign its prices and leverage its position in the domestic market.

Despite the scheduled maintenance stoppages at the Basic Petrochemicals unit, we delivered results above our internal expectations.

As well, we still have teams actively working to capture additional gains related to integration synergies as well as initiatives to control costs in an ongoing effort to improve operational results."

Net revenue in the second quarter was R$ 4.4 billion, declining 11% on a year-over-year basis and flat sequentially with the first quarter of 2008.

The decline in net revenue was due to a drop in aromatics sales as well as lower sales volumes for ethylene and propylene due to scheduled maintenance stoppages at the Company's crackers in the Northeastern and Southern petrochemical complexes. The decline was partially offset by an increase in domestic sales volume and improvement in pricing.

Braskem recorded EBITDA of R$ 519 million in 2Q08 and EBITDA margin of 11.8%. Despite the strong sales volume of resins in the domestic market, which grew by 18%, high naphtha costs combined with a decline in sales volume of basic petrochemicals negatively impacted EBITDA.

It is expected that Braskem will benefit in the second half of the year from both the realignment of domestic prices with international reference prices and increased sales volumes of basic petrochemicals following the completion of scheduled maintenance stoppages.

As part of Braskem's commitment to improve its competitiveness, in 4Q07 the Company launched a program to reduce fixed costs and expenses, the results of which are being captured in2008.


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