Braskem Q3 net income falls 14% to R554m on currency effects

11 November 2010 14:13  [Source: ICIS news]

Braskem earnings fall 14%TORONTO (ICIS)--Braskem’s third-quarter net income fell 14% to reais (R) R554m ($320m) from R645m in the 2009 third quarter, largely due to a 9% year-over-year depreciation of the US dollar versus the Brazilian reais, the Brazilian petrochemicals and plastics major said on Thursday.

Since Braskem holds net exposure to the US dollar, any change in the exchange rate impacted its financial results, the company said.

Overall third-quarter net revenues rose to R7.28bn, up 26% from R5.79bn in the 2009 third quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 7% to R1.03bn, largely because of a “compression in resin-feedstock margins in the international market” and the appreciation in the reais, the company said.

Third-quarter EBITDA margin was 14.2%, down 5 percentage points from 19.2% in the 2009 third quarter.

Third-quarter operating rates were over 90%, Braskem said.

During the quarter, Braskem started up a “green ethylene plant” at its Trifuno petrochemical complex, it added.

Going forward, Braskem said it expected to see relatively slower global growth in the current fourth quarter.

However, slower global growth would not affect Braskem’s domestic market in Brazil, were full-year GDP was forecast to grow by over 7% this year, it said.

Brazil remains one of the best-positioned countries in the current economic scenario, given its growth perspective and its financial solidity,” it added.

“In Brazil, [petrochemical] demand should remain strong through November, and begin to seasonally wane in December, a month when companies usually reduce their purchase volumes in anticipation of the year-end holiday season, to drawdown inventories and for tax purposes,” the company said.

($1 = R1.70)

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By: Stefan Baumgarten
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