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Earnings at Braskem up 7% in Q2 of 2012

15
Aug '12
BRASKEM announces its results for the second quarter of 2012.

Highlights:

Focus on competitiveness

  • The crackers operated at an average utilization rate of 88% in 2Q12.
  • Market share expanded 3 p.p. in 2Q12, with sales volume of 796 kton, or 71% of the total market. Compared to 2Q11, Braskem’s sales grew by 4%.
  • EBITDA in 2Q12 was R$845 million, up 7% on the prior quarter, benefitting from the U.S. dollar appreciation in the period. Excluding the nonrecurring impacts of R$108 million, EBITDA was R$737 million. In U.S. dollar, total EBITDA was US$430 million.

Expansion and diversification of feedstock

  • The new PVC and butadiene plants have already been commissioned and should reach normalized production operations already in 3Q12, contributing to the Company’s results as of July.
  • Ethylene XXI Project (Mexico): earth moving works have entered the final phase and work has already begun on construction and purchasing equipment with longer delivery lead times, with the complex’s start-up in 2015 on schedule.
  • In line with its strategy to become more competitive and diversify its raw material sourcing, Braskem has implemented the following actions to strengthen its position in the U.S. market:

-           Acquisition of the propylene splitter assets at the Marcus Hook refinery. With this transaction, the Company not only ensures the operational continuity of the PP plant, but also diversifies its supplier base and improves its production cost structure due to the acquisition of refinerygrade propylene.

-           Strengthened its long term commercial arrangement with Enterprise Products for the supply of propylene through various contracts with terms in excess of 15 years. One of these agreements involves the construction by Enterprise of a propane dehydrogenation (PDH) unit.

Commitment to financial health

  • Braskem returned to capital markets once again in July 2012 to raise US$250 million with a yield of 6.98% p.a. through the reopening of its 2041 bond issue. The objective is to take advantage of the opportunity in the market and prepay its short-and medium-term debt.

Executive Summary:

The average price of naphtha, the main raw material used by the petrochemical industry, fell 13% in 2Q12, following the sharp drop in oil prices in the period. As a result, spreads for resins1 and basic petrochemicals2 in international markets widened by 21% and 41%, respectively. However, demand for petrochemicals remained depressed, driven by the continued downturn in the world economy, which continues to be influenced by uncertainties concerning Europe’s financial crisis and the lower growth of China’s economy.


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