14 August 2012 19:48 [Source: ICIS news]
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HOUSTON (ICIS)--Braskem's second-quarter sales volumes fell because of slower growth in Brazil, whose economy is now expected to expand by just 2.5% this year, the company said on Tuesday
In 2010, Brazil's economy grew by 7.5% before slowing down to 2.7% in 2011, according to the International Monetary Fund (IMF).
Domestic demand for polyolefins reached 870,000 tonnes in the second quarter, down by 9% from the first quarter and 5% from the same time last year, Braskem said.
Second-quarter production reached 1.017m tonnes, down 7% from the first quarter but 4% higher year on year.
Domestic polyvinyl chloride (PVC) demand reached 260,000 tonnes, down 7% from the first quarter and down 5% year on year.
PVC production reached 111,000 tonnes, down 4% from the first quarter but up slightly year on year.
Brazil is contending with both the slowdown in China and the eurozone financial crisis.
So far, the Brazilian government has attempted to counteract these trends through several stimulus measures, Braskem said.
It provided incentives to encourage sales of durable goods, the company said. It also cut the basic interest rate several times.
However, the stimulus did little to help the Brazilian economy, and a recovery may not start until the third quarter.
In all, Braskem reported a second-quarter net loss of reais (R) 1.03bn ($510m, €413m), because sales did not keep up with costs and because its domestic currency weakened against the dollar.
During the same time last year, Braskem reported a second-quarter net income of R420m, the company said.
Much of the loss was caused by what Braskem calls its net financial result, which takes into account changes in the real versus the dollar.
During the second quarter, Braskem's net financial result recorded an expense of R2.11bn, compared with an expense of R79m for the same time last year.
Braskem attributed the larger expense to the dollar appreciating 11% against the real during the second quarter.
However, even without the weaker real, the second quarter was difficult for Braskem.
Second-quarter gross profit was R860m, down 30.1% from R1.23bn reported for the same time last year. Gross profit fell because costs outpaced sales.
Net revenue reached R9.14bn, up 9.2% from R8.37bn reported for the same time last year, Braskem said.
The company attributed the increase to higher prices for resins and basic petrochemicals, which helped offset lower sales volumes.
Second-quarter cost of goods sold reached R8.28bn, up 16.0% from R7.14bn for the same time last year. Braskem attributed the increase to higher costs for feedstock naphtha, the weaker real and the integration of Braskem's recently acquired polypropylene (PP) assets.
($1 = R2.02)
($1 = €0.81)
Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
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