In a challenging petrochemical scenario, Braskem reports net cash generation of R$3 billion in 2019

SÃO PAULO, April 3, 2020 /PRNewswire/ -- BRASKEM S.A. (B3: BRKM3) (B3: BRKM5) (B3: BRKM6) (NYSE: BAK) (LATIBEX: XBRK) announces today its results for 4Q19 and 2019.

HIGHLIGHTS:

Braskem - Consolidated:

    --  In 2019, recurring EBITDA came to US$1,514 million, down 50% from 2018,
        mainly explained by the narrower spreads in the international market,
        given the slower growth of the world economy and the new capacities
        coming online for PE in the United States and for PP and refineries in
        Asia, with these factors partially offset by the higher sales volume of
        PP in the United States and PE in Mexico. In Brazilian real, recurring
        EBITDA came to R$5,936 million, decreasing 46% from 2018.


    --  In the year, the Company recorded a net loss of R$2,798 million(1),
        which is explained by the accrual of a provision in the amount of
        R$3,383 million for implementing the Financial Compensation and Support
        for Relocation Program in Alagoas, by the actions to close certain salt
        wells of the Company and by the Program to Support the Recovery of
        Businesses and Educational Activities, as well as the adverse effect
        from the depreciation in the Brazilian real depreciation against the
        U.S. dollar on the Company's net exposure not designated for hedge
        accounting.


    --  In 2019, the Company made investments in its operations (US$470 million)
        and strategic projects (US$229 million) in the amount of US$700 million,
        which was US$187 million (21%) lower than the amount estimated at the
        start of the year and surpassed the reduction target of US$100 million
        set at the end of 1H19, demonstrating the Company's commitment to
        financial solidity.


    --  Free cash generation in 2019 was R$3,108 million, down 56% from 2018,
        due to the lower EBITDA and the payment of interest related to the
        full/partial prepayment of certain bonds (breakfund costs), with these
        factors partially offset by: (i) the decrease in accounts receivable,
        due to the lower sales volume and lower sales prices of products; (ii)
        the lower volume and costs of feedstock and finished goods inventories;
        (iii) the higher volume of naphtha imports with longer payment terms;
        (iv) the monetization of R$281 million of the PIS/COFINS balance
        (exclusion from the ICMS tax base); (v) the receipt of advances from
        clients related to future sale of chemicals in the Brazilian market and
        to future exports of PE and PP; and (vi) the lower payment of income tax
        and social contribution (IR/CSLL) in Brazil and the United States.


    --  Financial leverage measured by the ratio of net debt to EBITDA(2) in
        U.S. dollar ended the quarter at 4.71x.
    --  The recordable and lost-time injury frequency rate (CAF + SAF),
        considering both team members and partners per million hours worked,
        stood at 1.31 in 2019, 58% below the industry average.

Brazil:

    --  Demand for resins (PE+PP+PVC) was 5.3 million tons, growing 2% from
        2018, driven by the cuts in Brazil's policy interest rate and the
        improvement in business and consumer confidence, which leveraged
        primarily the agribusiness and food industries and the start of a
        recovery in construction industry.


    --  The capacity utilization rate of petrochemical complexes stood at 85%,
        down 6 p.p. from 2018, due to: the lower supply of feedstock at the
        crackers in Bahia due to the shutdown of the chlor-alkali and
        dichloroethane (EDC) plants in Alagoas state; (ii) the scheduled
        shutdown of one of the production lines of the cracker in Bahia in 4Q19;
        (iii) the logistics problems involving inbound feedstock at the cracker
        in Rio Grande do Sul; and (iv) the lower utilization rate at the
        crackers due to lower marginal profitability of exported resins.


    --  In 2019, the Company recognized R$2,049 million related to PIS and
        COFINS tax credits overpaid in prior fiscal years and monetized R$281
        million of the balance for said credits through the payment of other
        lower federal taxes. As a result, the recoverable balance of these
        credits at year-end was R$2,351 million, of which R$783 million should
        be monetized by the Company during 2020, as registered in its current
        assets.
    --  EBITDA from Brazil was US$821 million (R$3,205 million), down 57% from
        2018, and accounting for 55% of the Company's consolidated EBITDA.

United States and Europe:

    --  PP demand in the U.S. market was 3.1% lower than in 2018, reflecting the
        slowdown in the manufacturing and automotive industries. In the European
        market, PP consumption grew 0.7% compared to 2018, due to the stronger
        demand for consumer goods and services, which offset the contraction in
        the region's automotive industry. In the year, the volume of PP imports
        in the United States was 622 kton.


    --  The capacity utilization rate of the PP plants stood 88%, up 1 p.p. from
        2018, mainly due to the better operational performance of the United
        States plants, which counterbalanced the lower production of the
        European plants, explained by the logistics constraints on inbound
        propylene caused by operational problems at suppliers and the low level
        of rivers in the region. In this scenario, PP sales amounted to 1.9
        million tons, in line with the previous year.


    --  Construction of the new PP plant in the United States reached 89.7%
        completion at year-end, with total investment to date of US$555 million.
        In 2019, Braskem America imported 130 kton of PP from Braskem in Brazil
        to conduct pre-marketing activities for the new plant.
    --  The United States and Europe units posted EBITDA of US$316 million
        (R$1,247 million), down 48% from 2018 and accounting for 21% of the
        Company's consolidated EBITDA.

Mexico:

    --  Mexico's demand for PE was 2.2 million tons, 4.5% lower than 2018, due
        to the slowdown of the Mexican economy, mainly in the industrial sector.


    --  The PE plants operated at a capacity utilization rate of 76%, down 1
        p.p. from 2018, reflecting the low supply of ethane.


    --  PE sales amounted to 813 kton, up 2% from 2018, due to the higher resale
        volume of PE produced in Brazil. As part of the commercial strategy for
        allocating PE to more profitable regions, exports to the United States
        and Europe grew by 51% and 29% in 2019 compared to 2018, respectively.


    --  In January 2020, Braskem Idesa imported the first shipment of ethane to
        increase the capacity utilization rate of its petrochemical complex.
        With investment of approximately US$4 million, this solution to
        complement its feedstock supply enables imports of up to 12,800 barrels
        of ethane per day, equivalent to 19% of the Company's its needs for PE
        production.
    --  The Mexico unit posted EBITDA of US$361 million (R$1,427 million), down
        41% from 2018, and accounting for 24% of the Company's consolidated
        EBITDA.

The full earnings release is available on the Company's IR website: http://www.braskem-ri.com.br/home-en

Braskem will host conference calls to discuss its Results WEDNESDAY, April 8 at 2:00 p.m. US ET.

Additional information may be obtained from the Investor Relations Department at +55 11 3576-9531 or braskem-ri@braskem.com.br

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SOURCE Braskem S.A.