Braskem Q1’09 earnings to benefit from lower naphtha prices

06 March 2009 02:25  [Source: ICIS news]

SAO PAULO (ICIS news)--Brazil’s Braskem expects its first quarter earnings for the year to be positively affected by lower naphtha prices, a company executive said on Thursday.

"In the first quarter, we will not have the [negative] impact reported in the fourth quarter of 2008 from naphtha stocks purchased at higher prices last year,” Carlos Fadigas, Braskem vice-president of finances and investor relations said at the sidelines of a press conference on Thursday.  

The executive explained that when two ethylene production units were halted in the end of 2008, Braskem operated with naphtha previously purchased at higher prices.  

With production being resumed and naphtha stocks used, in the first quarter of 2009 Braskem started to produce petrochemicals from naphtha purchased at lower prices, explained Fadigas.

According to Braskem, average naphtha prices fell from around $960/tonne (€758/tonne) in the third quarter to approximately $365/tonne in the fourth quarter of 2008.

Higher naphtha prices paid for purchases in 2008 had a negative impact of Brazilian Reais (R) 170m ($71.4m) on the company’s fourth quarter earnings, according to Braskem.

In the fourth quarter, costs with naphtha corresponded to 78% of the cost of products sold by the company in the period, Braskem said.

($1 = R2.38/ $1 = €0.79)

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By: Hellen Berger
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