Braskem had a solid operational performance in the first quarter of 2007, together with an important evolution in its growth strategy with the creation of value and its consolidation in the petrochemical sector, where the acquisition of the Ipiranga Group’s petrochemical businesses in an alliance with Petrobras was the highlight. EBITDA reached R$ 432 million, an expressive 36% growth over the first quarter of 2006 when comparing the results of the periods without the effects of non-recurring revenue. Net profits for the first quarter of 2007 totaled R$ 107 million.

"The results achieved by Braskem during the last quarter demonstrate strong capacity for implementing its strategic vision and an important improvement in the company’s operational performance and profitability," says José Carlos Grubisich, Braskem president. "Furthermore, the evolution of the petrochemical market and growth of the Brazilian economy indicate a scenario with high sales volumes and profitability for the sector, contributing to our improved results," he adds. 

The domestic market for Braskem’s strategic thermoplastic resins - polyethylene, polypropylene and PVC - grew 4.3% in volume during the first quarter compared to the same period in 2006, confirming its elasticity in relation to variations in GDP. This reality, associated with strong demand in the international market, was reflected in Braskem´s high capacity occupation rates, which varied between 92% for polyethylene and PVC, to 100% for polypropylene.  The company’s sales volume in the domestic and export market grew 7%, totaling 524 thousand tons.

In the first quarter, Braskem’s net revenue reached R$ 2.9 billion, with a 5% growth in comparison to the same period in 2006. In dollars, the currency of reference for the petrochemical sector, this increase was 9%, reaching US$ 1.4 billion. Exports contributed with net revenue of US$ 329 million, which represented a 24% increase over the first quarter of last year, reflecting the beneficial effect of having opened a market development and business base in Europe and reinforcing operations in the United States and Argentina.

Even considering the effects of non-recurring revenue in the first quarter of 2006, Braskem’s R$ 432 million in EBITDA grew 3% this year. Cash generated by operating activities grew R$ 862 million in a comparison between the two periods, demonstrating the company’s capacity to finance its expansion projects and reduce its indebtedness. 

The company’s net debt on March 31 totaled R$ 4.2 billion, a reduction of R$ 308 million in comparison to the close of the previous quarter, with an average maturity of 16.6 years, more than sufficient for the company´s capacity to generate cash. When comparing these two dates, the net debt/EBITDA ratio decreased from 2.72 to 2.51 times.

Braskem obtained a bridge loan of up to US$ 1.2 billion at extremely competitive costs for a 2-year period to finance the acquisition of Ipiranga Petroquímica’s businesses. At the same time, it filed a request to register a public offering for the acquisition of shares and closing Copesul capital.

On April 25, Braskem celebrated an Operation Reversibility Preservation Agreement (APRO), through which the CADE - Administrative Council for Economic Defense revoked a previous writ of injunction that imposed limitations to the administration of assets acquired by Braskem in alliance with Petrobras. Based on this decision, Braskem hopes the cause will be ruled on and approved quickly, confirming prior manifestations by CADE that the international market is the relevant market for the petrochemical sector.

The incorporation of Politeno by Braskem, which also occurred in April, signaled the end of yet another successful phase in the Brazilian petrochemical company’s consolidation process.

Also in April, Braskem signed an agreement aimed at forming two joint ventures in Venezuela in partnership with state-owned Pequiven to implement the most competitive petrochemical project of the Americas in the Jose Industrial Complex with a global scale, cutting edge technology and access to raw materials in conditions resembling those in the Middle East. The agreement, formalized during the setting of the foundation stone for the project, involves the construction of a polypropylene plant with an annual capacity of 450 thousand tons and an integrated petrochemical complex with an annual production of 1.1 million tons of polyethylene and other petrochemicals, with investments of US$ 3 billion equally shared by the two companies and projected to begin operation by the end of 2009 and 2011, respectively.

"With the acquisition of Ipiranga Petroquímica and the new growth projects in Brazil and abroad, Braskem is taking major steps towards becoming one of the 10 leading petrochemical companies in the world," underscores Grubisich.