Braskem hits free cash flow generation record in 3Q21 and lowest leverage in history

Braskem recorded a recovery of 12 percent of resins market share in Brazil in the third quarter, in line with the Company’s strategy of prioritizing the Brazilian market. The free cash flow generation was a quarterly record and the corporate leverage reached the lowest level since the Braskem’s formation in 2002.

– The Brazilian resin market share in the quarter reached 64%, compared to 52% in the previous three months. The recovery was due to the return to operations of the ABC (industrial region in Greater São Paulo) petrochemical plant, in São Paulo, which underwent scheduled maintenance in the previous quarter;

– The free cash flow generation reached R$3.9 billion, an increase of 152% compared to 2Q21 and 424% compared to 3Q20;

– The consolidated recurring operational result in the third quarter was R$7.7 billion, 18% lower than the previous quarter, but 109% higher than the third quarter last year;

– Net income was R$3.5 billion, 52% lower than in the previous quarter;

– The net debt/recurring operating result ratio, in dollars, was 0.83x in the quarter, down 24% when compared to the previous quarter – 1.1x. The reduction from the same period last year was 83%.

“We have a good recovery of the market share in Brazil, which reflects our efforts to serve our customers and partners well,” said Roberto Simões, president of Braskem. “In addition, we have reinforced our commitment to financial health, which has already been recognized by rating agencies. We remain firm in our intention to return to investment grade in all agencies.

In September, S&P Global Rating raised the Company’s global scale risk level to BBB-, with a stable outlook. The agency highlighted that the rating upgrade to investment grade reflects considerable improvement in profitability indicators and cash generation, the Company’s commitment to leverage, and the agency’s expectation that Braskem will continue to benefit from high petrochemical spreads in the coming quarters.

Biopolymers

The world’s largest producer of biopolymers, Braskem has been establishing itself as an international partner for large companies seeking to follow the path of making products using renewable raw materials.

This week, Braskem announced the execution of a memorandum of understanding with the American company Lummus Technology to jointly license green ethylene technology in North America and Thailand.

In September, Braskem and SCG Chemicals, one of Thailand’s largest integrated petrochemicals and an industry leader in Asia, also executed a memorandum of understanding to conduct feasibility studies to jointly invest in a new ethanol dehydration plant in Thailand. This plant would aim to produce green ethylene and I’m green® bio-based polyethylene.

Recognitions

Braskem was recognized by the United Nations High Commissioner for Human Rights and by the UN Global Compact for practices related to the preservation of human rights within its business operations. Two cases of human rights actions were presented at the event celebrating ten years of the Guiding Principles on Business and Human Rights. The cases are part of the Company’s commitments to sustainable development for 2030.

In addition, the Company was recognized by “Forbes” as one of the best employers in the world, one of the three Brazilian companies among 750 companies spread over 28 countries. More than 150,000 people were interviewed, and among the criteria evaluated were the company’s concern with the environment impact, the search for the development of new talents, social responsibility, and actions in favor of diversity.

BloombergNEF also recognized Braskem for its achievements in circular economy. In the ranking that tracks the sustainability strategy of the world’s largest brand owners and plastics producers and assesses their ambitions compared to competitors, Braskem outperformed its global peers.

Mexico

In August, Braskem Idesa concluded the project to expand the fast track import capacity, which is currently 25 thousand barrels per day. As a result, during September it reached the historic import volume of 22.4 thousand barrels per day. In 3Q21, in order to complement Pemex’s ethane supply, Braskem Idesa imported an average of 18.6 thousand barrels per day of ethane from the United States, which represents about 74% of the current fast track capacity.

Additionally, the Company is working on an expansion of the fast track, which may allow Braskem Idesa to reach a maximum ethane import capacity of up to 35 thousand barrels per day, expected to be concluded during 2Q22.

In September, Braskem Idesa signed an addendum to the ethane supply contract with Pemex, with the settlement of previously existing contractual pending issues; and an agreement with Pemex and other governmental entities that establishes support measures for the building of an ethane import terminal, with the capacity to meet all of BI’s raw material needs.

In October, Braskem Idesa concluded its debt refinancing plan, by substituting the remaining balance of US$ 1.35 billion of project finance for new debt in corporate format, with an elongated profile. The highlight of these new debts is that they were in the form of substitutability-linked bonds (SLB). To issue the SLBs, Braskem Idesa has committed to reduce its gas emissions, in line with the Company’s long-term sustainable development strategy.

Alagoas

Since 2018, Braskem has been contributing with the public authorities in understanding the geological phenomenon in Maceió and minimizing its effects. The Company signed agreements with the Federal Prosecutor’s Office, the State Prosecutor’s Office, the Federal Defender’s Office, and the State Defender’s Office of the State of Alagoas to promote the safety and financial compensation of the residents of the neighborhoods affected by the phenomenon and for the social-environmental and urban reparation of the region.

As of October 22, 97% of the properties identified by the program created by the agreements have been vacated.  More than 10,000 proposals for financial compensation have been made, and the acceptance rate is 99.6%. The amount paid so far by Braskem exceeds R$ 1.6 billion.

The social-environmental actions advanced in the quarter with the public hearing relating to the environmental diagnosis work in progress, with the participation of the community and technical institutions. In addition, the social diagnosis in the adjacent areas has also advanced with interviews of the population and consultation with public entities. It should be completed in the next few months. These two dimensions are key parts of the social-environmental agreement being implemented this year.

The plan to close and monitor the region is progressing as planned and it included the installation of the last batch of seismographs in the monitoring region, as agreed with Maceió’s Civil Defense.

All these actions reinforce our commitment to caring for the region and people. Braskem hopes to continue advancing along this path.