Brazil Braskem's Q4 op profit falls 35% from 06

20 February 2008 18:04  [Source: ICIS news]

HOUSTON (ICIS news)--Brazilian chemical major Braskem reported on Wednesday a fourth-quarter operating profit of Brazilian reais (R) R233m ($135m), down 35% from R357m reported for the same time in 2006.

Braskem attributed the drop to falling prices for aromatics and rising costs for naphtha and energy.

For two years, in fact, Braskem has had trouble guaranteeing natural-gas supplies to Camacari. As a result, it has relied on more expensive fuel oil.

Overall, cost of goods sold reached R4.0bn for the fourth quarter, up from R3.2bn reported for the fourth quarter of 2006, Braskem said. Fourth-quarter net revenue reached R4.8bn, up from R4.2bn reported for the same time in 2006.

The company reported fourth-quarter earnings of R648m before interest, taxes, depreciation and amortisation (EBITDA). The figure was down from R938m reported for the same time in 2006.

For all of 2007, Braskem reported an operating profit of R1.8bn, roughly the same as 2006. Net revenue reached R18.8bn, up from R17bn for the 2006.

The company reported a 2007 EBITDA of R3.2bn, up from R3bn reported for 2006.

For 2008, Braskem said it expects the world's economy to grow steadily. While the US economy remains uncertain, petrochemical demand should continue increasing in China and India, the company said.

Brazil's GDP should grow by 4.5% in 2008 due to internal demand, rising incomes and more accessible credit, Braskem said.

Brazilian demand for thermoplastics should rise by 8-10% in 2008, due to demand from construction, automobiles, manufacturing and agribusiness, the company said. Capacity utilisation rates for ethylene production should remain high, resulting in acceptable profit margins for resins.

In other news, Braskem's Copesul site should undergo scheduled maintenance in April, the company said. Its Camacari site will undergo maintenance in May.

In regards to corporate strategy, Braskem will continue to widen its source of raw materials while pursuing consolidation of Brazili's petrochemical industry. As such, Braskem should close this quarter on the acquisition of Ipiranga Group's petrochemical assets. 

Braskem expects to start operations at its R704m Petroquimica Paulinia plant in March 2008. The plant will have a polypropylene (PP) capacity of 300,000 tonnes/year.

The company also considering an expansion of its PP and polyethylene (PE) capacity at its Southern Petrochemical Complex. It is studying the viability of a new PP plant in Camacari, which could start operations in 2012.

($1 = R1.73)

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By: Al Greenwood
+1 713 525 2645



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