EBITDA in USD grows 10% over the same period in 2010

Uncertainties regarding the intensity and scope of the global economic slowdown impacted the commodity market in the third quarter. During the period, the petrochemical industry was marked by feedstock price volatility, coupled with speculation in the oil market and lower resin and basic petrochemical prices, among other factors.

Nevertheless, Braskem recorded year-to-date EBITDA of R$3 billion, or US$1.9 billion, 1% and 10% up on 9M10, respectively. Consolidated third-quarter EBITDA totaled R$940 million, 9% down on 2Q11.

"Despite the immediate uncertainties in relation to the international economy, we believe in the strength and resilience of the domestic market, the consistency of the Company's business strategy and the excellent midterm prospects for the global petrochemical market. As a result, we will be continuing with our projects to expand production capacity," declared Carlos Fadigas, Braskem's CEO. "The new PVC plant in Alagoas and the butadiene plant in Rio Grande do Sul are in the final stages of construction,  we are concluding the engineering project for an integrated polyethylene complex in Mexico and we have made considerable progress in regard to defining the Comperj project with Petrobras," he added.

Despite the impact of the global economic slowdown, Brazil's economy continued to perform well. Third-quarter seasonality fueled Braskem's local thermoplastic resin sales, which totaled 857 ktons, 12% up on 3Q10.

Polyolefins (polyethylene and polypropylene) and PVC accounted for 29% and 35% of domestic import volume, respectively, in line with the second quarter, reflecting the appreciation of the real against the dollar (which was reversed in September), the growing market for PVC in Brazil and the continuing opportunistic entry of materials through ports that grant ICMS tax credits to importers, among other factors.

Net revenue totaled R$8.7 billion in the third quarter, 15% up on 3Q10 and 4% higher than in 2Q11, while net revenue in USD climbed by 23% and 1% respectively. Export revenue moved up by 51% to US$1.9 billion in 3Q11 and by 59% year-on-year in 9M11, reaching US$4.9 billion.

Given that virtually 100% of Braskem's revenue and approximately 80% of its costs are directly or indirectly pegged to the dollar, the Company considers it appropriate to maintain a significant portion of its debt in the same currency. The impact of the 18.8% third-quarter appreciation of the dollar against the real on this portion of the debt, which currently accounts for 70% of the total, was the main reason for the Company's period accounting loss - with no immediate cash impact - of  R$1,046 million. In the first nine months, the Company reported a net loss of R$316 million.

Braskem closed September with net debt of R$10.8 billion. Due to its dollar exposure, the impact of the period exchange variation pushed up the Company's financial leverage (measured the by net debt/EBITDA ratio) from 2.30x to 2.62x in the third quarter. In USD, financial leverage declined by 6% to 2.32x, in line with the Company's commitment to maintaining its investment-grade rating.

In July, Braskem issued US$500 million in 30-year bonds, extending its average debt term to 12 years in BRL or 17 years in USD. At the close of September, the Company announced the conclusion of its acquisition of Dow Chemical's polypropylene business, which was disclosed to the market in July. As a result, Braskem became the largest polypropylene producer in the United States.

At the beginning of October, the credit rating agency Fitch increased Braskem's rating to BBB-, effectively granting it investment grade status, with a stable outlook. The agency highlighted as positive points the Company's strategic position in the global petrochemical industry, as well as the management of its financial profile and its strong shareholding structure. Braskem is now considered as investment grade by all three global ratings agencies.

"Braskem is maintaining its commitment to sustainable growth and development and will continue to pursue the best possible opportunities, seeking to improve competitiveness throughout the entire supply chain, creating value for shareholders without losing its focus on financial discipline," concluded Fadigas.