Braskem(US:BAK)2024-08-14 22:22Financial Data and Key Metrics Changes - In Q2 2024, Braskem's recurring EBITDA was $320 million, a 39% increase from the previous quarter and a 128% increase year-over-year [8][18] - Operating cash generation increased by 9% compared to the last quarter, reaching $214 million, while recurring cash generation was positive at $69 million [8] - The company maintained a liquidity position of $2.8 billion at the end of the quarter, with a leverage ratio of 6.8 times, down from the previous quarter [9][20] Business Line Data and Key Metrics Changes - In Brazil, the recurring EBITDA was $231 million, a 10% increase from the previous quarter, positively impacted by better spreads and cost reductions [14] - The United States and Europe segment saw a recurring EBITDA of $46 million, a 33% decrease from the first quarter, due to lower production and sales [16] - In Mexico, the recurring EBITDA was $56 million, a 53% increase from the first quarter, driven by higher sales volume and improved spreads [17] Market Data and Key Metrics Changes - The petrochemical spreads improved in the international market due to better supply-demand balance and increased maritime freight rates [7][18] - The utilization rate in Brazil decreased by 3 percentage points due to extreme weather, while the U.S. and Europe segment's utilization rate increased by 2 percentage points [11][16] - The Mexican segment's utilization rate was 78%, down 5 percentage points from the last quarter, impacted by lower ethane supply [17] Company Strategy and Development Direction - Braskem is advancing its corporate strategy towards 2030, with significant progress in the construction of an ethane import terminal in Mexico, expected to be operational by Q1 2025 [11][30] - The company is focusing on decarbonization initiatives, including partnerships for energy efficiency and the development of renewable energy projects [12][28] - A strategic partnership with Solvà and GRI aims to create a national platform for environmental solutions, resulting in a positive impact of R$284 million for Braskem [12][30] Management's Comments on Operating Environment and Future Outlook - Management expects improved usage rates in Brazil and increased sales volume in Q3 2024, driven by better product availability and demand [25] - The company anticipates a gradual balance in global petrochemical spreads, influenced by ongoing logistical restrictions [27] - Management highlighted the importance of government support for long-term restructuring and competitiveness in the Brazilian petrochemical industry [67] Other Important Information - Braskem's debt profile remains long-term, with 64% of debt maturing after 2030, and the company is committed to maintaining liquidity and reducing leverage [9][20] - The company reported a total provision of R$15.9 billion related to the Alagoas event, with significant disbursements already made [25] Q&A Session Summary Question: Demand outlook for Brazil in Q3 - Management forecasts a polymer demand growth of 13% in Brazil, with sales recovering at a slower rate of 2% to 3% [35] Question: Impact of container prices and butadiene prices - Increased freight rates due to conflicts in the Red Sea have affected resin prices, while butadiene prices have risen nearly 50% due to lower global supply [42][44] Question: Working capital and CapEx dynamics - CapEx is expected to be around $400 million for the year, with no significant changes in working capital anticipated [48][49] Question: Global supply and demand dynamics - New capacity is expected in polyethylene, while polypropylene capacity is increasing, particularly in China [55] Question: Cash generation outlook - The company anticipates neutral cash generation for 2024, excluding the Alagoas event, with a positive outlook for 2025 [68]