Braskem (BRKM5) Q3 2024 earnings summary

Executive summary

• Recurring EBITDA reached $432 million (US$432 million/R$2.4 billion) in Q3 2024, up 35% sequentially and 130% year-over-year, the highest since Q2 2022, driven by improved spreads and operational recovery, especially in Brazil and Green PE segments.

• Operational improvements included higher sales volumes and utilization rates, notably in Brazil and Green PE, with utilization rate rebounding to 95%.

• Cash position at quarter-end was $2.4 billion, covering debt maturities for the next 52 months.

• CEO Roberto Bischoff announced his departure as part of a structured succession plan.

• Strategic advances included the launch of a leased ethane ship, progress on the Mexico ethane terminal, and the opening of a new Renewable Innovation Center in the US.

Financial highlights

• Operating cash generation was $75 million (R$416 million), with recurring cash consumption of $199 million due to higher interest payments, partially offset by proceeds from the Cetrel sale.

• Recurring EBITDA margin improved to 11% from 9% in Q2 2024.

• Leverage ratio improved to 5.76x, down 1.03x from the previous quarter.

• Sale of Cetrel control concluded, with R$208.5 million received in Q3.

• Net loss was R$593 million, a significant reduction from R$3.7 billion in Q2 2024, mainly due to negative exchange rate effects.

Outlook and guidance

• Q4 2024 expected to see lower utilization rates in Brazil due to scheduled maintenance and seasonality, with lower sales volumes.

• U.S. and Europe segment utilization rates to remain stable, with sales volumes in line with Q3; Europe to increase output post-turnarounds.

• Mexico segment expects increased production as ethane supply stabilizes and maintenance ends, with sales volumes steady.

• International spreads for PE and PP projected to decline in Q4 due to seasonality and increased supply, with recovery expected in Q1 2025.

• Ethane import terminal in Mexico reached 87% completion, with operations expected to start in Q1 2025.