Braskem S.A. (BAK)
Q4 2012 Earnings Call
February 7, 2013 11:30 am ET
Guilherme Mélega – IRO and Corporate Controlling.
Carlos Jose Fadigas de Souza Filho – Chief Executive Officer
Marcela Aparecida Drehmer Andrade – Vice President Executive Officer and Chief Financial Officer
Frank McGann – Bank of America Merrill Lynch
Good morning ladies and gentlemen. At this time we would like to welcome everyone to Braskem’s Fourth Quarter 2012 Earning Conference Call. Today with us we have Carlos Fadigas, CEO; Marcela Drehmer, CFO; and Guilherme Mélega, IRO and Corporate Controlling. We would like to inform that this event is being recorded and all participants will be in listen-only mode during the company’s presentation.
After Braskem remarks are completed, there will be a question-and-answer section. At that time further instructions will be given. (Operator Instructions) We have simultaneous webcast that may be accessed through Braskem’s IR website at www.braskem.com.br/ir.
The slide presentation may be downloaded from the website. Please feel free to flip through these slides during the conference call. There will be a replay facility for this call on the website. We remind you that the questions which will be answered during the Q&A session will be posted in advance on the website.
Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Braskem management and on information currently available to the Company. They involve risks, uncertainties and assumptions because they relate to the future events and therefore, depend on circumstances that may or may not occur in the future.
Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Braskem and could cause results to differ materially from those expressed in such forward-looking statements.
Now, I’ll turn the conference over to Guilherme Mélega, IRO and Corporate Controlling Officer. Mr. Mélega, you may begin your conference.
Good morning, ladies and gentleman. Thank you for participating in our Braskem earnings conference call. Today, we will be commenting on our results for the fourth quarter of 2012. First, we would like to remind you that pursuant to Federal Law 11638 from 2007, the results presented in today’s presentation reflect the adoption of International Financial Reporting Standards, or IFRS. Note also that as of the second quarter, the company began to recognize investments in jointly controlled companies using the equity method instead of the previous method delivered on proportionate consolidation.
In addition, unless stated otherwise, for the periods presented, Braskem’s consolidated results reflect: the proportional consolidation of Refinaria de Petróleo Rio-Grandense, or RPR, until the first quarter of 2012; as of the fourth quarter of 2011, the polypropylene business acquired from Dow Chemical. At Braskem that in the last quarter of 2012, the company divested its interest in the capital offset (inaudible) and is currently negotiating that as (inaudible). Therefore the result of this company for the quarter is (inaudible) 2011 and 2012 are recognizing as profit or loss from this discontinued corporations.
In addition to this presentation was reviewed by an external auditor. Let’s go to the next slide, where we’ll begin our comments. In Slide 2, we presented the highlights of the fourth quarter of 2012. In line with the seasonality of the fourth quarter, Braskem incorporated its crackers at an average utilization rate of 82%, dye, from the previous quarter which also reflects the operational problem resulting from the volatility power supply. (Inaudible) market compared to about 8% in the fourth quarter to 1.2 million tons; lastly, comparing the weaker demand with sales volume of 867,000 tons, leading its market share in the quarter to remain stable at 70%.
Net revenue was R$9.3 billion, in line with the third quarter and 8% higher average price for resins and Basic Petrochemicals. In the last quarter, full year EBITDA was R$1.4 billion, or $677 million. These amount includes the recognition of a gain of R$409 million from divestment of interesting total of the half of the water treatment units and R$107 million related to the sale for oil cost at Braskem America. Excluding these effects, it designed a fourth quarter with R$883 million.
As part of the strategy to diversify its feedstock metrics Braskem continues to make progress and its greenfield project in Mexico to ensure the units start off by mid-2015. Earthmoving works have been concluded in the project civil construction, which is 20% completion in line with the timetable. Note that the company’s interest in the project was included some 65% to 75% and that the project finance structure, the amount of $2.3 billion was concluded, in line with its commitment to sit its financial help, Braskem contracted another standby credit line in the amount of R$450 million and also contracted a new line from Nexi, the amount of $200 million that will be reversed in the first quarter of 2013.
Let’s move on to Slide 4. This slide presents the performance in fiscal year 2012. Braskem’s crackers operated at an average duration rate of 89%, including six percentage points compared anyway till 2011. And yet the factor was scheduled and unscheduled maintaining shutdowns.
The higher level of operating efficiency allowed the company to deliver on its strategy also recovering share in Brazil’s thermoplastic resin market, which extended by five points to stand up 70% in the year end. EBITDA reached R$4 billion, or $ 2 billion excluding nonrecurring items such as while receipt of compensation under one of the operating supply conflicts in the United States and their divestment of non-strategic assets in the fourth quarter, EBITDA was R$2.1 billion. As part of its strategy (inaudible) existing trends, growing, diversifying and expanding to national Braskem (inaudible) productions at or exceeded PVC plant and the capacity expansion project at its Butadiene plant.
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