Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Braskem SA (BAK, Financial) reported a significant increase in recurring EBITDA, reaching $432 million, which is 35% higher than the previous quarter and 130% higher than the same period last year.
- The company's cash position was strong at $2.4 billion, sufficient to cover debt maturities for the next 52 months.
- Braskem SA (BAK) successfully implemented financial preservation initiatives, resulting in a positive impact of about $212 million in EBITDA and $279 million in cash generation.
- The utilization rate of Brazilian petrochemical plants increased, leading to a 6% rise in sales volume in the Brazil market.
- Braskem SA (BAK) made significant progress in its long-term corporate strategy, including the launch of its first leasing ship and the construction of an ethane port terminal in Mexico reaching 85% completion.
Negative Points
- The company experienced a consumption of $199 million in recurring cash generation due to higher interest payments on debt securities.
- Braskem SA (BAK) faced a reduction in utilization rates in the Mexico segment due to the shutdown of an international ethane supplier and maintenance of a polyethylene plant.
- The company anticipates lower spreads in the international petrochemical market in the next quarter due to seasonal demand and increased supply.
- Braskem SA (BAK) continues to face challenges related to the Alagoas event, with significant provisions and cash disbursements impacting financials.
- The company is navigating a downward cycle in the petrochemical industry, requiring ongoing efforts to maintain resilience and financial health.
Q & A Highlights
Q: Could you tell us whether the increase in working capital during the quarter is set to normalize in the next quarter? Also, will the scheduled downtime for 2025 make the CapEx higher than this year's guidance? Lastly, are you seeing any effects from the increase in import tariffs?
A: Working capital is expected to normalize, with a potential drop in Q4 due to lower spreads and scheduled downtime. Regarding CapEx, maintenance should align with this year's levels, with no significant changes expected. The increase in import tariffs is anticipated to contribute approximately $30 million to results in Q4, with further impacts expected in the following quarters. - Roberto Bischoff, CEO
Q: What is the expected impact of the lower foreign exchange rate for Q4 on your results?
A: A 1¢ change in the exchange rate impacts EBITDA by approximately $3 to $4 million annually. The current exchange rate could add $15 to $20 million to Q4 EBITDA. However, this is offset by seasonal reductions in volume and international spreads. - Roberto Bischoff, CEO
Q: What were the biggest challenges during your tenure as CEO, and what challenges will the next CEO face?
A: The major challenge was navigating a significant downward cycle while maintaining strategic initiatives in renewables and the circular economy. The next CEO will need to balance operational adaptation with strategic investments, particularly in renewables. - Roberto Bischoff, CEO
Q: How do you see the impact of the US elections and potential tariff changes on Braskem's operations?
A: Protectionist policies in the US could benefit our polypropylene operations, especially in the automotive sector. However, increased competition from countries like China could pressure the Brazilian market, emphasizing the need for local competitiveness measures. - Pedro van Langendonck Teixeira de Freitas, CFO
Q: With a stronger EBITDA expected next year, how do you foresee cash generation at Braskem?
A: We aim for neutral cash generation next year, with reduced cash consumption from Alagoas and continued cost optimization. We are targeting a 3-4% reduction in fixed costs compared to this year. - Pedro van Langendonck Teixeira de Freitas, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
