Braskem, the largest petrochemical company in the Americas and the world's leading biopolymer producer, reported EBITDA of R$2.77 billion in the first quarter of 2019, representing growth of 45% from the last quarter of 2018 and of 5% from the same quarter last year. In U.S. dollar, EBITDA was US$729 million, down 11% from the year-ago period.
The results include non-recurring effects, such as income from the overpayment of PIS/COFINS tax between January 2012 and February 2017 and reversals of provisions related to the Energy Development Account and the Special Regime for Chemical Industry (REIQ). Excluding these effects, EBITDA was US$336 million, down 16% and 60%, respectively, from the fourth and first quarters of 2018.
"The first quarter proved highly challenging due to the narrowing of petrochemicals spreads in the international market following the downward revision in the forecast for the world economy in 2019," said Braskem CEO Fernando Musa. "In this scenario, we will continue to focus on our business strategy to surmount the global challenges of the petrochemical cycle," added Musa, referring to the company's strategy to diversify geographically and to better balance its feedstock profile between naphtha and gas.
Braskem's net revenue came to R$13 billion in the first quarter of 2019, virtually in line with the prior-year period. Net income was R$1.03 billion, reversing the net loss of R$78 million in the prior quarter and in line with the first quarter last year.
In terms of operating performance, the crackers in Brazil operated at a capacity utilization rate of 88% in the first quarter, down 2 percentage points from the year-ago quarter, impacted by plant outages. Meanwhile, the plants in the USA and Europe operated at a capacity utilization rate of 90%, higher than in 4Q18, due to the normalization of logistics flows in Europe, but lower than in the year-ago period due to plant outages. In Mexico, the polyethylene plants operated at an average capacity utilization rate of 79%, up 6 percentage points from the fourth quarter of 2018, reflecting the higher ethane supply in the period.
Brazilian resin market
Demand in the Brazilian resin market was 1.4 million tons, increasing 7.8% and 4.2% from the fourth and first quarters of last year, respectively, influenced by the restocking trend in the period. Braskem's resin sales volume was 878 kton, representing growth on the fourth quarter of last year of 10%, above the industry average. Braskem's market share stood at 64% in the period.
In the first quarter of 2019, Braskem exported 356 kton of resins from Brazil, 16% higher than in the fourth quarter of 2018. Exports of the key chemicals produced in Brazil came to 194 kton, down 10% from the previous quarter, influenced by the lower sales volume of gasoline.
In the United States, polypropylene demand was weaker, due to high inventories throughout the chain and the weak performance of the textile fibers segment. In Europe, demand recovered in the quarter, with the market's growth driven primarily by sales in anticipation of a series of scheduled shutdowns slated for the second quarter of this year. In Mexico, polyethylene demand was 504 kton, down 8% from the same period last year, reflecting the contraction in public and private investment and the country's economic slowdown.
Investment and competitiveness
Braskem's expansion plans continue to advance. The company already has made 56.2% of the total investment planned for construction of a new polypropylene plant in the United States, which will be its sixth PP plant in the country. To date, US$426 million has been invested in the new unit, whose startup is slated for 2020.
During Feiplastic, Latin America's largest plastics trade fair, Braskem announced a new solution for the packaging market, the monomaterial stand-up pouch, which, because it contains only one raw material, facilitates the recycling process. The new product made from polyethylene, which was created in partnership with Antilhas Flexíveis, will target the cosmetics and food industries.
Braskem also launched a new solution that combines post-consumer resin from the reverse logistics of the company's pellet sacks with its I'm greenTM polyethylene. The new raw material features zero-carbon emissions, since the carbon dioxide emissions generated during the recycling process are offset by the sequestration of carbon during the green polyethylene production process.
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