Braskem beats estimates on PE spreads, PP volumes

Recurring EBITDA came to $224 million, up 121% sequentially from $102 million, and the recurring EBITDA margin came to 7%, up from 3% in the fourth quarter.

“The higher polyethylene and chemical spreads on the international market, as a result of the lower supply of resins in the American market, and the volatility in feedstock cost, a reflection of the geopolitical uncertainties, had a positive impact on EBITDA,” said Rosana Avolio, investor relations manager, during the company’s earnings call on May 12. “The increased volume of sales, in Brazil in exports of main chemicals, and [in] the United States and Europe [of] PP, contributed to the result.”

Looking forward to second-quarter results, Avolio said international spreads “will continue to be challenging due to prolonged shutdown in international markets and possible impacts of the new tariff scenario.” The company expects sales of PE and polyvinyl chloride (PVC) in Brazil to increase sequentially on demand into hygiene and cleaning for PE and pipes and construction for PVC. PP sales volume in Europe is forecast to increase owing to lower pricing and to remain strong in the US.

Segment results

The Brazil/South America segment turned in recurring EBITDA of $199 million, up 76% sequentially, on sales of $2.4 billion, down 2%. The recurring EBITDA margin came to 8%, up from 4%. Resin sales volume in Brazil was flat at 807,000 metric tons, with PE up 2%, PP up 3% and PVC down 16%, Braskem reported. Export sales declined 17% as domestic demand left less PP available for sale abroad. Domestic sales of main chemicals declined 8%, to 190,000 metric tons, mainly owing to higher internal consumption of ethylene and propylene for resin production. Exports of main chemicals increased 24%, to 64,000 metric tons, as lower domestic demand for butadiene, para-xylene and toluene left more available for overseas markets.

The US and Europe segment turned in recurring EBITDA of $20 million, up from a loss of $10 million in the fourth quarter, on sales of $818 million, up 8%. The recurring EBITDA margin came to 2%, up from negative 1%. PP sales volume increased 11% sequentially, to 496,000 metric tons, on greater availability of product for sale and a slight increase in US demand.

The Mexico segment turned in recurring EBITDA of $37 million, up 6% sequentially, on revenue of $207 million, down 2%. The recurring EBITDA margin came to 18%, up from 16%. PE sales volume declined 5%, to 186,000 metric tons, owing to inventory management in advance of a second-quarter maintenance shutdown.