First quarter profit surges - BRASKEM S.A.
BRASKEM S.A., the leading resin producer in the Americas, announces its 1Q11 results.
Braskem's consolidated EBITDA in 1Q11 was R$919 million, down 14% from the prior quarter. The high prices of resins and basic petrochemicals in Brazilian real partially offset the lower sales volume, higher raw material prices and local-currency appreciation. In U.S. dollar, EBITDA in 1Q11 was US$551 million, down 13% from 4Q10. 1Q11 EBITDA margin excluding naphtha/condensate/oil resales was 14.1%, down 2.3 p.p. from 4Q10, reflecting the narrowing of the resin-naphtha spread.
This lower sales volume is explained mainly by the power blackout that affected production at the industrial assets located in the states of Bahia and Alagoas. It's important to note that this is not an event derived from a structural problem in the power supply but rather from a unique power failure which happened in February, the only one of its kind since the complex is operating.
Production suffered the impact from a drop in ethylene production of approximately 90 ktons, which also affected second-generation production. The Company estimates that the physical losses and impacts from the blackout reduced the results for the first quarter of this year by approximately R$230 million. Braskem is considering to ask the insurance company for loss of profit deriving from this event.
Polyolefins (PE and PP) sales to the domestic market contracted by 12% from 4Q10, following the 11% drop in Brazilian5 demand for these products in in the period. In the case of PP, despite the seasonally lower demand, Braskem managed to maintain the good performance of PP sales, especially to the automotive and agricultural sectors.
Exports totaled 295 ktons in 1Q11, down 8% from the previous quarter, explained by the lower availability of PE and PP.
Polyolefins production in the first quarter of the year amounted to 977 ktons, down 9% from 4Q10, reflecting the operational problems mentioned above and the scheduled shutdown at the PP plants in the Southeast.
Polyolefins sales to the domestic market decreased by 4% in relation to 1Q10. In the export market, the 16% growth in sales was driven by the higher supply of PP, which had been impacted by the scheduled and unscheduled shutdowns in the previous year.
The Company's total ethylene and propylene sales in 1Q11 reached 208 ktons, virtually in line with the sales of these products in 4Q10. Both periods were affected by scheduled and unscheduled shutdowns at the cracker in the state of Bahia, which limited the supply of products, as explained above. In addition to the shutdown, the power blackout led to operational damages in the Camaçari cracker, whose investments were covered by the plant insurance. On the other hand, the average prices of ethylene and propylene followed the upward trend in the international market to rise by 17% and 19% in relation to the prior quarter, respectively.