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Braskem, the largest petrochemical company in the Americas and the world's leading biopolymer producer, operated its petrochemical units at an average utilization rate of 93% in the second quarter of 2015, an increase of 4 percentage points compared to the capacity utilization in the previous quarter. This expansion, which reflects the operating efficiency driven by streamlined processes and investments made in recent years, had a positive impact on the average performance of Braskem's units. Excluding the gas-powered Rio de Janeiro unit, which is facing insufficient feedstock supply, Braskem's utilization rate in the second quarter was 97%.

The increasingly worsening state of the Brazilian economy was reflected in low demand for thermoplastic resins (polyethylene, polypropylene and PVC) in the domestic market, which totaled 1.2 million tons in the quarter. This volume is a 15% decline from the first quarter, which had been positively affected by inventory rebuilding and by anticipation of orders due to the prospects of a recovery in international resin prices. 

Braskem's resin sales followed the downward trend in domestic demand, decreasing 17% to 792 kton. This decline was partially offset by the increase in exports, which reached 373 kton, up 53% from the year-ago period. Basic petrochemical exports totaled 353 kton, increasing 23% from the first quarter of 2015.

The average capacity utilization rate of polypropylene plants in the USA and Europe exceeded nominal capacity, reaching 101% and resulting in a record production of 506 kton. This solid performance attests to the better operational reliability of Braskem's assets, which enabled it to increase production at the acquired plants. Polypropylene sales grew 7%, particularly in the United States, especially translating the healthy performance of the consumer goods, automotive and rigid packaging sectors in the country.

FINANCIAL RESULTS

Braskem's net revenue reached R$11.6 billion in the second quarter, up 14% from the previous quarter, driven by a combination of external and domestic factors. Average Brazilian real depreciation of 7%, recovery in petrochemical prices in the international market and higher sales volume explain this growth. These factors enabled Braskem to post EBITDA of R$2.6 billion, an increase of 76% from the first quarter, and EBITDA margin of 22.5%. In this context, Braskem posted net income of R$1.1 billion.

Braskem's operating result enabled it to reduce its financial leverage, which reached its lowest level in eight years based on the 16% growth in EBITDA in the last 12 months. Consequently, the Company's ratio of net debt to EBITDA in U.S. dollar ended the quarter at 2.27 times, down 11% from the first quarter of 2015 and 17% on the year-ago period. 

"Braskem's strong operating performance this quarter in a more favorable international scenario should not divert our focus from the challenges faced by the domestic industry of staying competitive, particularly in the chemical and petrochemical industry," said Carlos Fadigas, CEO of Braskem. "The strengthening of our production chain necessarily depends on long-term access to feedstock under competitive terms, which will allow us to face competition from U.S. shale gas and to have predictability so that fresh investments can be made in the chemical and petrochemical chain," he added.

Petrobras is the only naphtha producer in Brazil and ever since the birth of this industry in the country, back in the 1960s and 70s, has always supplied naphtha from its refineries to the chemical and petrochemical industry. That was how this industry grew and consolidated itself in recent decades to now become the sixth largest chemical industry in the world. Hence, it is very important that locally produced naphtha is not allocated to the fuel sector but continues to supply to an industrial sector that is fundamental for the Brazilian economy.

INVESTMENTS IN MEXICO

The investment project in Mexico is entering the final stage. Braskem invested around R$282 million in the first half of the year. The first steam generation boiler started operating in June, after fuel gas was made available. Construction on the project, which is a joint venture with Mexican group Idesa, reached 95% physical completion and operational startup is expected at the end of this year.
 
For further information, please contact:
CDN Comunicação 
Ana Beatriz Paschoal: 55 (11) 3643-2737 - anabeatriz.paschoal@cdn.com.br 
Priscila Ventura: 55 (11) 3643-2744 - priscila.ventura@cdn.com.br
Thaís Corrêa: 55 (11) 3643-2914 - thais.correa@cdn.com.br