Braskem Sa ((BAK)) has held its Q4 earnings call. Read on for the main highlights of the call.
Braskem’s recent earnings call revealed a mixed sentiment, characterized by strong financial performance and operational successes, particularly in Mexico, alongside challenges in international markets and increased provisions for the Alagoas event. The company reported significant increases in EBITDA and cash generation, yet faced hurdles due to decreased international spreads and operational difficulties in the US and Europe.
Increased EBITDA and Operating Cash Generation
Braskem reported a consolidated recurring EBITDA of US$1.1 billion for 2024, marking a 46% increase compared to 2023. This impressive growth was accompanied by an operating cash generation of approximately US$788 million, underscoring the company’s robust financial health.
Cash Position and Debt Management
The company ended 2024 with a strong cash position of US$2.4 billion, sufficient to cover debt maturities over the next 47 months. Braskem’s leverage decreased to 7.42 times, reflecting improved debt management compared to the previous quarter.
Record Sales of Green Polyethylene
Braskem achieved record sales in its green polyethylene segment, with a 23% increase in annual sales of resins from renewable sources, totaling 191,000 tons sold in 2024. This milestone highlights the company’s commitment to sustainability and innovation.
Successful Operations in Mexico
The Mexico segment recorded a 5% increase in sales volume for 2024, with a recurring EBITDA of US$280 million, a remarkable 166% increase from 2023. This success underscores the strategic importance of the Mexican market for Braskem.
Reduction in International Market Spreads
The fourth quarter saw a decline in international market spreads, particularly impacting spreads for polyethylene and main chemicals. This reduction contributed to lower quarterly results, posing a challenge for Braskem’s international operations.
Operational Challenges in the United States and Europe
Operational challenges in the US and Europe were evident, with a 9 percentage point decrease in utilization rates due to scheduled shutdowns. This led to a 34% decrease in recurring EBITDA compared to 2023, highlighting the need for operational adjustments.
Increased Provisions for Alagoas Event
Braskem increased its provision by US$1.3 billion for the Alagoas event, bringing the total provision balance to R$5.6 billion by the end of 2024. This significant increase reflects the ongoing impact of the event on the company’s financials.
Forward-Looking Guidance
Looking ahead, Braskem provided comprehensive guidance, emphasizing its strategic focus on optimizing its asset portfolio and expanding green ethylene production capacities. The company plans a capital expenditure budget of $484 million for 2025, with a commitment to operational safety and cost optimization. Braskem aims to leverage its competitive advantages in the green business sector to ensure long-term sustainability and profitability.
In conclusion, Braskem’s earnings call highlighted a strong financial performance with notable achievements in EBITDA growth and cash generation, despite facing challenges in international markets and increased provisions. The company’s strategic focus on sustainability and operational efficiency positions it well for future growth and resilience.