Corrected: Brazil’s Braskem reports $112m loss in fourth quarter

14 March 2012 16:15  [Source: ICIS news]

Correction: In the ICIS story headlined "Corrected: Brazil’s Braskem reports $112m loss in fourth quarter" dated 14 March 2012, please read the headline as "…$112m loss…" instead of "…$111m loss…".

MEDELLIN, Colombia (ICIS)--Brazil's Braskem, Latin America's largest petrochemical company, reported a quarterly loss of reais (R) 201m ($112m,
€85m) for the fourth quarter amid higher raw-material costs, slowing demand and narrowing spreads in global markets, the company said during a conference call on Wednesday.

Earnings before interest, tax, depreciation and amortisation (EBITDA), a gauge of operating profit, was $396m during the quarter, down 33% year on year. In 2011, EBITDA reached $2.2bn, down 3% year on year.

Net revenue increased 25% to R8.7bn in the quarter, up from R7.0bn year on year, Braskem said.

Domestic sales volumes dropped 12% for thermoplastic polymers and 6% for polyvinyl chloride (PVC), owing to competition from increasing imports, Braskem said. Costs jumped 39% in the quarter to over R8bn.

The lack of strategy to contain Europe’s sovereign debt crisis and its effect on the global financial system lowered fourth quarter spreads for resins and basic petrochemicals in international markets, which decreased by 14% and 10% respectively from the previous quarter, Braskem said.

The average capacity utilisation rate of the company’s crackers was 80% amid two maintenance shutdowns - one scheduled for October at the Triunfo site in the state of Rio Grande do Sul, and the other at the Camacari site in the state of Bahia.

The Camacari maintenance was originally planned for early 2012, but was moved up to November in view of market conditions, according to the company.

Braskem’s new PVC and vinyl chloride monomer (VCM) plants in the state of Alagoas are expected to start in May 2012. The plant will have a capacity of 200,000 tonnes/year, increasing the total PVC capacity at Alagoas to 460,000 tonnes/year.

Currently, Braskem’s total PVC capacity exceeds 500,000 tonnes/year, produced mainly at its plants in Alagoas and Bahia, according to the company.

The company pushed back the start-up of a new butadiene (BD) plant one month, to July, at the Triunfo petrochemical complex in the southern state of Rio Grande do Sul, the company said. The capacity will be 100,000 tonnes/year.

The first phase of engineering for the Comperj project, the new petrochemical complex to be built in the state of Rio de Janeiro, was finished in 2011, the company said. Progress on the engineering studies and defining the project’s scope are expected during 2012.

Project financing for Braskem’s joint venture with Mexico-based Idesa for the Ethylene XXI project in Mexico is in the final phase of negotiations, Braskem said.

Braskem and Idesa expect to start up the 1.05m tonnes/year cracker project in mid-2015, Idesa CEO Jose Luis Uriegas said in November. The project, which comprises an integrated ethane cracker and polyethylene (PE) units, was originally scheduled to start up in early 2015.

Downstream production will comprise two high density polyethylene (HDPE) plants with capacities of 350,000 and 400,000 tonnes/year and one 300,000 tonne/year low density polyethylene (LDPE) plant, Uriegas said.

($1 = €0.76)
($1 = R1.80)

By: Leela Landress
+1 713 525 2653

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