Braskem Reports Recurring EBITDA of US$920 million in 1Q22

Rhea-AI Summary

Braskem S.A. (NYSE: BAK) reported a Recurring EBITDA of US$920 million for 1Q22, a 19% decline from 4Q21 and a 27% drop year-over-year. This decrease resulted from lower sales volumes in Brazil, normalization of international spreads, and the appreciation of the Brazilian real. The net income was R$3.9 billion with a 15% net margin. Additionally, Braskem distributed R$1.35 billion in dividends, leading to a total of R$7.35 billion for FY2021. The company maintains a cash position of US$1.8 billion.

Positive

• Distributed total dividends of R$7.35 billion for FY2021, indicating strong capital return to shareholders.
• Maintains a solid cash position of US$1.8 billion, ensuring liquidity for upcoming debt maturities.
• Achieved a return on cash flow of 28% in 1Q22.

Negative

• Recurring EBITDA decreased by 19% from 4Q21 and 27% from 1Q21 due to lower sales volumes.
• Corporate leverage stood at 1.00x adjusted net debt to Recurring EBITDA, indicating potential financial strain.

In May, Braskem distributed R$1.35 billion in additional dividends for fiscal year 2021

SÃO PAULO, May 12, 2022 /PRNewswire/ -- BRASKEM S.A. (B3: BRKM3, BRKM5 and BRKM6; NYSE: BAK; LATIBEX: XBRK) announces today its results for 1Q22.

1Q22 HIGHLIGHTS

CONSOLIDATED

• In 1Q22, the Company's Recurring EBITDA was US$920 million, 19% lower than 4Q21, mainly due to: (i) the normalization of international spreads for main chemicals and resins in Brazil, for PP in the USA & Europe and for PE in Mexico; (ii) lower sales volume of main chemicals and resins in the Brazil segment; and (iii) the appreciation of the Brazilian real against the U.S. dollar of 6.3%. Compared to 1Q21, the Company's Recurring EBITDA in U.S. dollar contracted 27%, due to: (i) the normalization of international spreads for main chemicals, PE and PP in Brazil, for PP in the USA and for PE in Mexico; (ii) the lower sales volume of resins in Brazil and PP in Europe; and (iii) the appreciation in the Brazilian real against the U.S. dollar of 4.4%. In Brazilian real, Recurring EBITDA was R$4.8 billion, lower 23% and 30% than 4Q21 and 1Q21, respectively, due to the appreciation of the Brazilian real against the U.S. dollar.
• In the quarter, the Company recorded net income^[1] of R$3.9 billion, representing R$4.88 per common share and class "A" preferred share^[2]. Additionally, the Company's net margin in the period was 15%.
• In May, the Company paid additional dividends of R$1.35 billion, based on the results for fiscal year 2021, which, added to the R$6.0 billion prepaid in December 2021, brings the total to R$7.35 billion, corresponding to 77.5% of the adjusted net income for 2021.
• The Company's recurring cash flow was of R$467 million and return[3] on cash flow was of 28% in 1Q22. Adding payments related to the Alagoas geological event, the Company presented in 1Q22 a cash consumption of R$176 million and return³ on cash flow was of 21%.
• Corporate leverage, measured by the ratio of adjusted net debt to Recurring EBITDA^[4] in U.S. dollar, ended the quarter at 1.00x.
• The cash position was US$1.8 billion, a level that guarantees coverage of debt maturities for the next 69 months. This position does not consider the international revolving credit line (stand by) available in the amount of US$1.0 billion, with maturity until 2026, which increases the company's liquidity.
• In January, the Company disbursed the funds related to the first CRA - Agribusiness Receivables Certificates structured by the Company for the purchase of ethanol, which is used as feedstock to produce Green PE (I'm green^TM bio-based) and ETBE. This operation, in the amount of R$721 million in two series of 7 years and 10 years, highlights Braskem's entry into the Brazilian fixed income market.

ESG

Recognition

• CDP Supplier Engagement Rating: Braskem has invited its critical suppliers to take part in the CDP Supply Chain assessment based on sustainability criteria, since 2016. Suppliers' participation in the Climate and Water themes achieved 87% and 79%, respectively, placing Braskem as a leader in the CDP Supplier Engagement Rating.

Environmental

• Mechanical Recycling (Brazil): in March, the first mechanical recycling line in Brazil was inaugurated in Indaiatuba, São Paulo. The project was made feasibly by the collaboration with Valoren, a company that specializes in the development of new technologies and the management of solid waste recycling. Annually, 250 million units of post-consumer packaging consisting of polyethylene and polypropylene are expected to be converted into 14,000 tons of high-quality resins for reuse as raw materials by the plastics converter industry.
• Advanced Recycling (USA): acquisition of non-controlling interest in Nexus Circular LLC in January 2022. Nexus is a company engaged in advanced recycling that converts plastics that would have been sent to landfills into circular feedstock used in the production of sustainable virgin plastics. The equity investment allows Braskem to participate in the growing chemical recycling market, supporting Braskem's strategy to drive plastic circularity.
• EDF Renewables: in April, Braskem announced that it entered into a second wind power purchase agreement with EDF Renewables Latin America, which will enable the construction of a new complex in southeastern Bahia. The new wind power complex, which is planned to come up in 2024, provide sustainable energy to operations for the next 20 years.
• Casa dos Ventos: Braskem acquired non-controlling equity interests in the special purpose companies, Ventos de Santa Amélia and Ventos de Santo Abelardo, both of which are managed by FIP Salus of the Casa dos Ventos group, essentially making the Company as a renewable energy self-producer.
• Partnership with Sojitz: in March, Braskem announced that it signed a cooperation agreement with Sojitz Corporation to form a joint venture for producing and selling monoethylene glycol (bio-MEG) and monopropylene glycol (bio-MPG), subject to approval from the relevant antitrust authorities. Furthermore, the business plan of the Joint Venture entails investments for the construction of three industrial plants in the first phase, conditioned on the conclusion of technological development, which will be aided by the Danish Company Haldor Topsoe.

Social

• Health and Safety: in the quarter, the consolidated reported and lost time injury-frequency rate was 1.18 event per million hours worked, an 55% increase over the same period of 2021. The TIER 1^[5] rate was 0.07 event per million hours worked, a 12% decrease from the first quarter of 2021, which positions Braskem on par with its peers in the global chemical industry considered references in safety. Meanwhile, the TIER 2^[6] rate was 0.44 event per million hours worked.

Governance

• Sustainable Development Advisory Board: the Company established an external sustainable development advisory board comprised of four independent professional chosen for their experience and diversity of backgrounds. The external board will support the Global Sustainable Development Committee, which is integrated by Company leaders, in guiding the plans for 2030 and 2050, based on unbiased perspectives of issues related to the environment, health and safety, social responsibility and other relevant ESG topics. Two meetings were held in 2022 in which themes involving Climate Change and the Circular Economy were discussed with members.

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

Braskem will host conference calls to discuss its Results THURSDAY, May 12 at 10:00 a.m. US ET.

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

^[1] Based on net profit (loss) attributable to the shareholders of the Company.
^[2] For the class "B" preferred shares, the amount is R$0.61 per share.
^[3] Corresponds to cash flow in U.S. dollar in the last 12 months divided by the Company's market capitalization in the quarter.
^[4] Excludes the Project Finance in Mexico and based on Recurring EBITDA.
^[5] Incident with loss of containment of products above the limits established in the American Petroleum Institute (API) 754 for TIER 1, based on the product released, or any release that causes: fatality or lost-time injury of an employee or third party, hospital damages or fatality of the external public, financial losses greater than US$100,000, or evacuation of the community.
^[6] Incident with loss of containment of products above the limits established in the American Petroleum Institute (API) 754 for TIER 2, based on the product released, or any release that causes: reportable injury of own employee or third party and financial loss greater than US$2,500.

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SOURCE Braskem S.A.

FAQ

What was Braskem's Recurring EBITDA for 1Q22?

Braskem reported a Recurring EBITDA of US$920 million for 1Q22.

How much did Braskem distribute in dividends for fiscal year 2021?

Braskem distributed a total of R$7.35 billion in dividends for fiscal year 2021.

What is the financial impact of the Brazilian real's appreciation on Braskem?

The appreciation of the Brazilian real negatively impacted Braskem's Recurring EBITDA, contributing to a 27% decline year-over-year.

What was Braskem's net income in 1Q22?

Braskem's net income for 1Q22 was R$3.9 billion.

What major operational challenges did Braskem face in 1Q22?

Braskem faced challenges including lower sales volumes and normalization of international spreads for chemicals and resins.