Braskem reports second-quarter EBITDA of R$3.2 billion

The strong result, which is 20% higher than in the prior quarter, demonstrates the company's resilience in a quarter affected by a truck drivers' strike in Brazil and plant outages in the U.S. and Mexico

Braskem (B3: BRKM3, BRKM5 e BRKM6; NYSE: BAK; LATIBEX: XBRK) reported EBITDA of R$3.2 billion (US$877 million) in the second quarter of 2018, or 20% more than in the first quarter of the year and 5% more than in the same quarter last year. Parent company net income, which was affected by local-currency depreciation, was a robust R$547 million. Free cash flow was R$3.6 billion, compared to R$1.8 billion in the prior quarter and R$1 billion in the second quarter of last year. 

"These results demonstrate Braskem's resilience when faced with unexpected events, such as the truck drivers' strike in Brazil, as well as scheduled events, such as the plant outages in the U.S. and Mexico," said Braskem CEO Fernando Musa. "We continued to execute our successful strategy based on diversifying geographically, balancing our feedstock profile and continuing to capture operating efficiency gains."

In the second quarter of 2018, the crackers in Brazil operated at an average capacity utilization rate of 90%, in line with the first quarter of 2018, despite the logistics constraints caused by the truck drivers' strike. In the United States, the utilization rate was 84%, down 8 p.p. from the first quarter, due to a scheduled outage at the Oyster Creek Unit in Texas and an unscheduled outage at the Marcus Hook Unit in Pennsylvania. At the Petrochemical Complex in Mexico, a scheduled shutdown to carry out operational adjustments led to a capacity utilization rate of 72%. 

Financial leverage measured by the ratio of net debt to EBITDA in U.S. dollar stood at 1.90x. In a sign of the confidence it enjoys in international markets, the company contracted a revolving credit facility of US$1 billion for five years from a syndicate of global banks. Braskem maintained investment grade ratings above Brazil's sovereign risk at Standard & Poor's (BBB-) and Fitch Ratings (BBB-) and a stable ratings outlook at the three main agencies.

New U.S. plant and green resin
By the end of the second quarter, Braskem already had invested US$281 million of the US$675 million planned for the construction of a new polypropylene (PP) plant in the United States with production capacity of 450 kta. Located in La Porte, Texas, the industrial plant, which will be Braskem's sixth PP plant and seventh unit in the country, reached 28% completion in the period. Construction is expected be completed in early 2020.

Braskem also expanded its portfolio of renewable products under the I'm greenTM brand with the launch of Green EVA (ethylene-vinyl acetate) made from sugarcane ethanol. Developed in partnership with San Francisco-based Allbirds, the new resin has applications in the footwear, automotive, transportation and other industries and will expand the I'm greenTM portfolio. Featuring superior flexibility, lightness and resistance, the Green EVA helps to reduce greenhouse gases in the air by capturing and storing CO2 during its production process.

On June 15, 2018, Braskem was informed by Odebrecht S.A., its controlling shareholder, about the beginning of discussions with LyondellBasell, a listed company headquartered in Rotterdam, for a potential transaction involving the transfer to LyondellBasell of the entire interest held by Odebrecht S.A. in Braskem. Accordingly, Braskem's management has been adopting all applicable measures to support the due diligence process.

People management 
In a survey of 70,000 college students conducted by the consulting firm Cia. de Talentos, which specializes in people management, Braskem was elected one of the Dream Companies for Young Professionals in Brazil. The ranking identifies companies that, according to respondents, offer the most opportunities for the professional development of young professionals just starting their careers. 

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