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Braskem SA (BAK)
NYSE:BAK

Braskem SA (BAK) AI Stock Analysis

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Braskem SA

(NYSE:BAK)

42Neutral
Braskem's overall stock score reflects financial instability, evidenced by negative equity and cash flow challenges. Technical indicators point to bearish momentum, and valuation metrics reveal unattractiveness due to recent losses. Despite strong EBITDA growth and strategic initiatives highlighted in the earnings call, operational and market challenges continue to weigh on the outlook.
Positive Factors
Financial performance
Braskem's 3Q24 EBITDA exceeded expectations, largely driven by stronger results in the US, Europe, and Mexican operations.
Operational improvements
Brazil's operations saw significant improvement with a 45% sequential rise in EBITDA, attributed to an increase in sales volumes and exports.
Negative Factors
Cash flow challenges
Despite stronger-than-expected results, Braskem's recurring free cash flow was negative, largely due to working capital consumption and the Alagoas event.
Geological risks
Braskem announced an increase in the provision related to the Alagoas geological event.
Market conditions
The outlook for petrochemical spreads will remain challenging given the weak current demand scenario and the strong capacity addition expected to come online in China.

Braskem SA (BAK) vs. S&P 500 (SPY)

Braskem SA Business Overview & Revenue Model

Company DescriptionBraskem SA (BAK) is a leading petrochemical company headquartered in Brazil, primarily engaged in the production and commercialization of thermoplastic resins. As one of the largest producers of polyethylene, polypropylene, and polyvinyl chloride in the Americas, Braskem operates in sectors that include chemicals, petrochemicals, and thermoplastics. The company focuses on providing innovative and sustainable solutions through its diverse portfolio of chemical products, serving industries such as automotive, construction, and packaging.
How the Company Makes MoneyBraskem SA generates revenue through the production and sale of petrochemical products, including thermoplastic resins like polyethylene, polypropylene, and PVC. These products are essential raw materials used in a wide range of industries, including packaging, automotive, and construction. The company's revenue model is primarily based on the volume of chemical and resin sales, with pricing influenced by global oil prices and market demand. Braskem also benefits from strategic partnerships and joint ventures, which help expand its market reach and distribution capabilities. Additionally, the company invests in research and development to innovate and improve its product offerings, catering to the demand for more sustainable and efficient materials.

Braskem SA Financial Statement Overview

Summary
Braskem SA is experiencing financial distress with declining revenues, persistent losses, and high leverage. The negative equity raises solvency concerns, and cash flow generation challenges impact overall liquidity.
Income Statement
32
Negative
Braskem SA has faced declining revenues and profitability. The TTM shows a negative net income and EBITDA, with a significant drop in gross profit margin from previous years. The revenue growth rate is negative, indicating a contraction in the company's business activities.
Balance Sheet
25
Negative
The balance sheet shows high leverage with a negative stockholders' equity, indicating financial instability. The debt-to-equity ratio is not calculable due to negative equity, posing a risk to financial health. The company has struggled to maintain positive equity over recent years.
Cash Flow
40
Negative
Cash flow statements reveal a negative free cash flow, reflecting challenges in generating cash from operations. The operating cash flow to net income ratio highlights operational inefficiencies, though there's been some improvement in operating cash flow in the latest TTM.
Breakdown
TTMDec 2023Dec 2022Dec 2021Dec 2020Dec 2019
Income StatementTotal Revenue
74.95B70.57B96.52B105.63B58.54B52.32B
Gross Profit
5.86B3.02B11.36B32.06B11.21B6.44B
EBIT
481.32M-1.83B4.27B26.04B-228.36M-733.89M
EBITDA
-926.40M3.80B8.84B27.28B-1.65B2.18B
Net Income Common Stockholders
-7.25B-4.58B-820.00M13.98B-7.02B-2.64B
Balance SheetCash, Cash Equivalents and Short-Term Investments
7.93B19.14B14.76B11.34B16.17B8.49B
Total Assets
59.19B91.74B88.05B92.56B86.08B68.13B
Total Debt
37.97B59.91B52.78B53.53B59.56B43.70B
Net Debt
32.42B45.72B40.32B44.85B45.70B36.89B
Total Liabilities
53.28B88.46B81.94B86.36B89.95B64.18B
Stockholders Equity
6.79B3.99B7.32B7.87B-2.20B4.89B
Cash FlowFree Cash Flow
-1.32B-6.80B4.10B11.37B3.53B-417.25M
Operating Cash Flow
2.64B-2.27B8.95B14.79B6.29B2.27B
Investing Cash Flow
-3.91B-4.53B-4.95B-3.38B-2.72B-2.67B
Financing Cash Flow
-1.06B8.87B225.00M-16.97B2.17B1.64B

Braskem SA Technical Analysis

Technical Analysis Sentiment
Negative
Last Price3.48
Price Trends
50DMA
4.21
Negative
100DMA
4.75
Negative
200DMA
5.72
Negative
Market Momentum
MACD
-0.25
Positive
RSI
31.04
Neutral
STOCH
21.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BAK, the sentiment is Negative. The current price of 3.48 is below the 20-day moving average (MA) of 4.03, below the 50-day MA of 4.21, and below the 200-day MA of 5.72, indicating a bearish trend. The MACD of -0.25 indicates Positive momentum. The RSI at 31.04 is Neutral, neither overbought nor oversold. The STOCH value of 21.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BAK.

Braskem SA Risk Analysis

Braskem SA disclosed 74 risk factors in its most recent earnings report. Braskem SA reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Braskem SA Peers Comparison

Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
EMEMN
75
Outperform
$10.89B12.6416.11%3.36%1.91%2.94%
LYLYB
61
Neutral
$23.92B18.4310.69%6.88%-1.46%-36.00%
WLWLK
59
Neutral
$13.93B23.805.76%1.86%-3.24%24.29%
DODOW
58
Neutral
$25.81B23.896.14%7.63%-3.72%91.57%
HUHUN
50
Neutral
$3.01B-5.22%5.79%-1.23%-277.52%
47
Neutral
$2.64B-3.85-29.39%3.32%2.72%-29.67%
BABAK
42
Neutral
$1.47B-8638.28%0.84%-50.11%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
BAK
Braskem SA
3.48
-4.81
-58.02%
EMN
Eastman Chemical
92.41
2.43
2.70%
HUN
Huntsman
16.52
-8.14
-33.01%
LYB
LyondellBasell
72.19
-23.51
-24.57%
WLK
Westlake Chemical
106.96
-34.98
-24.64%
DOW
Dow Inc
35.75
-18.87
-34.55%

Braskem SA Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: -14.71% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Neutral
Braskem showed strong financial performance with significant increases in EBITDA and cash generation, and successful operations in Mexico. However, the decrease in international spreads and operational challenges in the US and Europe segments, along with increased provisions for the Alagoas event, present ongoing challenges.
Highlights
Increased EBITDA and Operating Cash Generation
Braskem reported a consolidated recurring EBITDA of US$1.1 billion for 2024, which is a 46% increase compared to 2023. Operating cash generation also amounted to approximately US$788 million for the year.
Cash Position and Debt Management
Braskem ended 2024 with a cash position of US$2.4 billion, sufficient to cover debt maturities over the next 47 months. The company's leverage decreased to 7.42 times, down from the previous quarter.
Record Sales of Green Polyethylene
The annual sales of resins from renewable sources increased by 23%, reaching an all-time high with 191,000 tons sold in 2024.
Successful Operations in Mexico
Mexico segment recorded a 5% increase in sales volume for 2024, and the recurring EBITDA for the year was US$280 million, 166% higher than in 2023.
Lowlights
Reduction in International Market Spreads
The main spreads in the international market fell in the fourth quarter, especially impacting the spreads for PE and main chemicals, leading to lower quarterly results.
Operational Challenges in the United States and Europe
The utilization rate in the US and Europe segments was 9 percentage points lower in Q4 2024 due to scheduled shutdowns, leading to a 34% decrease in recurring EBITDA compared to 2023.
Increased Provisions for Alagoas Event
Braskem increased its provision by US$1.3 billion for measures related to the Alagoas event, with a total provision balance of R$5.6 billion at the end of 2024.
Company Guidance
In the recent Braskem conference call, the company provided comprehensive guidance on its financial performance and strategic direction for 2024 and beyond. The company reported a consolidated recurring EBITDA of $1.1 billion for 2024, marking a 46% increase from the previous year, primarily driven by higher polyethylene sales and improved spreads in Brazil and Mexico. The operating cash generation was approximately $788 million, while the cash position ended at $2.4 billion, covering debt maturities for the next 47 months. The company maintained a leverage ratio of 7.42 times, reflecting a reduction of 0.7 times from the previous quarter. In terms of operational efficiency, Braskem's average global accident frequency rate improved by 16% to 0.91 events per million hours worked. Strategically, the company is focusing on optimizing its asset portfolio, including increasing the use of gas as a feedstock and expanding green ethylene production capacities. The company also highlighted its plans for capital expenditure, with a budget of $484 million for 2025, emphasizing the importance of maintaining operational safety while optimizing costs. Additionally, Braskem is committed to maintaining financial resilience, indicated by its issuance of $850 million in debt securities and partial repurchase of its hybrid bond. Looking ahead, Braskem plans to capitalize on its competitive advantages in the green business sector and continue its strategic transformation to ensure long-term sustainability and profitability.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.