Braskem (NYSE:BAK) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
Braskem SA reported a consolidated recurring EBITDA of $192 million for Q1 2026, a 76% increase from Q4 2025, driven by higher utilization rates and improved spreads.
The company highlighted strategic initiatives including the reorganization of its capital structure, implementation of a Resilience Plan to preserve financial liquidity, and a Transformation Plan focused on sustainability.
Operational challenges were noted in the Mexico segment with a significant decrease in utilization rates, impacting sales and resulting in a negative recurring EBITDA of $50 million.
Braskem SA’s cash position was $1.1 billion at the end of Q1 2026, with discussions ongoing regarding the restructuring of capital to address high leverage and liquidity needs.
The geopolitical conflict in the Middle East has created uncertainties; however, the company anticipates improved petrochemical spreads in the coming quarters, assuming a resolution to the conflict by May 2026.
Full Transcript
OPERATOR
Good morning and thank you for holding. Welcome to Braskem’s first quarter of 2026 results conference call. With us here today we have Mr. Roberto Ramos, Braskem’s CEO, Mr. Felipe Jenks, Braskem’s CFO, and Ms. Rosanna Avoglio, investor Relations, Strategic Planning and Corporate Market Intelligence Director. Please note that today’s event is being recorded. The presentation will be delivered in Portuguese with simultaneous interpreting into English in Zoom. Participants may select their preferred audio language and view using the Interpretation and View Options buttons respectively. Captions are also available using the Show Captions buttons. Following Braskem’s remarks, we will open the call for questions. Questions should be submitted through the Q and A button. I will now repeat these same instructions. The presentation will be held in Portuguese and simultaneously interpreted into English. You may select your preferred audio Language and presentation view using the Interpretation and View Options buttons. You may also switch between languages using a button in the same menu. Following the remarks, we will open the call for questions. Please submit them using the Q and A button. Please remember that you may send questions to Brascam to be answered after the call as well. Before we proceed, I’d like to note that any forward looking statements made during this conference call regarding Braskem’s business outlook, projections and operating or financial targets are based on the beliefs and assumptions of the company’s management as well as on information currently available to Brascam. Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they relate to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that general economic conditions, industry conditions and other operating factors may affect Brass cam’s future results and could cause actual results to differ materially from those expressed or implied in these forward looking statements. I’ll now turn the call over to Ms. Rosanna Avoglio, Director of Investor Relations, Strategic Planning and corporate market intelligence. Ms. Avolio, please go ahead.
Rosanna Avoglio (Investor Relations, Strategic Planning and Corporate Market Intelligence Director)
Good morning, ladies and gentlemen. Thank you for joining Braskem’s earnings conference call for the first quarter of 2026. Following the agenda on slide number 3, we will start with the company’s main highlights for the period beginning on slide number four. In the first quarter of 2026, operations at Braskem’s petrochemical complexes in Brazil delivered a utilization rate 10% percentage points higher than in the last quarter of 2025. In relation to the United States and Europe segments, the utilization rate was higher by 8 percentage points. And in the Mexico segment, the utilization rate was lower by 30 percentage points, impacted by the feedstock supply and Brascombe’s ideas liquidity needs Regarding safety a non negotiable value for the company. The average global frequency rate of accidents in the period was 0.18 events per 1 million hours worked, the best rate in the first quarter result in the last 10 years in the quarter, the company reported consolidated recurring EBITDA of US$192 million, up by 76% compared to the fourth quarter of 2025. Regarding cash flow, operating cash flow, the company presented an operating cash consumption of approximately 603 million US doll period. Regarding indebtedness, the average maturity was approximately seven years with 61% of the corporate debt maturing as of 2030. Braskem’s cash position ended the first quarter of 2026 at US$1.1 billion considering the standby facility maturing in December 2026. Finally, it’s worth highlighting my presscam’s return to ISE B3 the Corporate Sustainability Index integrating the 2026 portfolio the return to the ISE is a recognition of the company’s efforts and initiatives on the sustainability topics. Now moving on to the next slide, the performance of each segment of the company will be presented below starting with Brazil on slide number six, the petrochemical plants in the Brazil segment had a higher average utilization rate when compared to the fourth quarter of 2025 by 10 percentage points, mainly explained by the normalization of operations at the petrochemical plant in Bahia after the scheduled maintenance shutdown started in the fourth quarter of 2025 and concluded in January 2026. In addition, results were impacted by inventory buildup ahead of the scheduled maintenance shutdown at the Rio Grande do Sul petrochemical plant, which started in March and ended in April 2026. In addition, the higher feedstock supply to the São Paulo petrochemical complex during the period also contributed to the increase in the utilization rate in the quarter. Regarding sales, the volume of sales of resins in the Brazilian market was 5% higher compared to the previous quarter, impacted by higher sales of polyethylene and pvc, reflecting the beginning of the conflict in the Middle East. Chemical sales volume also increased by 5% mainly due to higher product availability with with highlights including higher sales of gasoline, toluene and benzene. Regarding results, the segment’s recurring EBITDA was US$241 million, an increase of 69% versus the previous quarter. This was mainly driven by the segment’s higher contribution margin explained by the PIs cofings credit on Feedstocks purchases totally $32 million, which had a positive impact on the segment’s COGS. On the other hand, the appreciation of the average real against the average dollar by 3% in the period negatively impacted recurring EBITDA by about $10 million. Moving on to the next slide in the first quarter of 2026, the green ethylene utilization rate was 3 percentage points lower when compared to the last point quarter of 2025. During the period, sales of green polyethylene were impacted by the lower demand due to the Chinese New Year. I would like to highlight that in early April Brasschem announced that it will be the first chemical company to receive the Cello Verdi Brazil certification. The Selo Verde is a program of the Ministry of the Development Industry, Trade and Services designed to recognize products and services aligned with rigorous sustainability criteria based on a specific standard for renewable polymers in line with the Brazilian association of Technical Standards. With this advancement, products in the Braskem’s IAM Green Bio based portfolio are positioned to become the first to receive the Silver Brazil certification which is expected to be concluded in the second half of this year. Now let’s move on to the next slide in the quarter. The utilization rate of the United States and Europe segment was 8 percentage points higher when compared to the fourth quarter of 2025, mainly due to the normalization of the plants after maintenance shutdowns in Europe and in the increase in production in the United States. In this context, sales volume in the quarter was 3% higher, mainly explained by the higher sales volume in the United States due to the geopolitical environment. The segment reported recurring EBITDA of US$21 million driven by the increase in the polypropylene spread in the United States and Europe and by the allocation of part of the chemical expenses previously recorded in the US and Europe segments to the Brazil segment to better reflect the commercial efforts in each region. Now let’s move on to the next slide. In Mexico, the polyethylene plant utilization rate was 55%, 30 percentage points lower than in the previous quarter, explained by the lower average import ethane through the terminal of 17.8 thousand barrels per day compared to the 29.4 thousand barrels per day in the fourth quarter of 2025, in line with Braskem indices needs for liquidity. Also contributing to the lower utilization rate was the lower supply of ethane by PEMEX in the quarter of 14.8 thousand barrels per day compared to 15.9 thousand barrels per day in the fourth quarter of 2025. The polyethylene sales were lower by 37%, impacted by the lower availability for sale due to the lower utilization rate. The segment reported negative recurring EBITDA of $50 million, mainly impacted by lower sales volume due to lower product availability for sale associated with the lower utilization rate in the period and by the decrease in other revenues partially offset by a positive impact in SGA due to the ethane resale operation recorded in the fourth quarter of 2025. Moving on to the next slide in the next section I will present the Company’s consolidated performance. The consolidated recurring EBITDA in the first quarter of 2026 was 192 million US dollars, 76% higher when compared to the previous quarter. This increase in relation to the last quarter is mainly explained by the 16% in the average international spreads of resins in Brazil segment, by the positive impact of $32 million US dollars related to the rake increase in the acquisition of raw materials in the Brazil segment and by the 6% increase in the international spread of polypropylene based polypropylene in the United States and Europe segments and by the increase in polypropylene sales volume in the United States and Europe segment. Additionally, the reduction of approximately $30 million or 180 million Brazilian reais and other recurring expenses related to environmental provisions, fines, terminations, indemnities and plant maintenance expenses recorded in the Brazil and South America segments in the fourth quarter of 2024 had a positive impact on on the consolidated recurring EBITDA in the period. These effects were partially offset by higher idle costs and scheduled shutdown impacts across all reportable segments of approximately US$41 million and by the 3% appreciation of the average Brazilian real against the average US dollar during the period. Now let’s move on to the next slide. By the end of March 2026, work streams in Maseyo continue to progress as planned. The relocation and compensation front ended the quarter with 99.9% of execution of the Resident Relocation Program. The same percentage applies to the number of proposals submitted under the Financial Compensation and Relocation Support program, with approximately 99.6% of the proposals being accepted and 99.6% being paid in parallel. The execution of the closure and monitoring of the SALT cavities remains under implementation on this front. All actions are provisioned if necessary to ensure that the 35 cavities reach a maintenance free state in the long term. At the end of the first quarter of 2026, six caverns were naturally filled, six were completed, four with their technical limit filled and six cavities being filled and two were in the preparation phase. Thus, in relation to the financial provision, the total provision for the Alagoa’s event at the end of March 2026 was about 18.1 billion reals, of which about 14.4 billion reals have already been disbursed and approximately 1.2 billion reals have been reclassified to other obligations to be paid. As a result, the total balance provisioned by the end of the first quarter of 2026 was 3.4 billion rials. Now let’s move on to the next slide. The company reported an operating cash consumption of 3.2 billion riyals mainly due to the negative change in working capital explained by the reduction in the availability of certain payment arrangements with financial institutions and suppliers and by the replenishment of inventories. Following the optimization carried out during the fourth quarter of 2025, the recurring cash consumption was impacted by interest payments on debt securities issued in the international market, which occur in the first and third quarters of any year. Finally, including Alago’s disbursements, the company reported a cash consumption of approximately 5.0 billion Brazilian real in the period. Now let’s move on to the next slide. By the end of the first quarter of 2026, Brescem’s adjusted net debt exclud Ruskin Edessa was US$8.5 billion. The weighted average cost of debt was foreign exchange variation plus 6.34% and the corporate leverage at the end of the first quarter was 16.81 times. Finally, the available cash of US$1.1 billion includes the withdrawal made in October of the standby line in the amount of US$1 billion. Moving on to the next slide. In the next slide I will comment on the petrochemical scenario. On slide 16 we provide an update on the global petrochemical scenario focusing on the risks associated with the geopolitical environment. Since our last call with investors, the geopolitical environment has remained uncertain. On February 28, the United States and Israel launched attacks against Iran and in retaliation Iran closed the Strait of Hormuz, impacting global energy and petrochemical markets. The closure of the Strait represents one of the biggest disruptions to global energy supply. Brent has accumulated so far, an increase of more than 50% since the beginning of the war at the end of February, with an estimated daily production deficit of 15 million barrels, only offset by oil exports via alternative routes and increased production in other regions. NAFTA has followed the volatility of oil pressure on the cost of the global petrochemical chain. The prices of chemical and petrochemical products in the international market have increased significantly due to the direct impact of the increase in the price of naphtha. The disruption in the international logistics brought changes in the global flows, partially reflecting on import parities and prices in the Brazilian market. I emphasize that although negotiations between the United States and Iran are ongoing, the outcome remains uncertain and the Company will continue to monitor these developments continuously. I also reinforce that the impacts presented on this slide represent hypotheses and may or may not materialize depending on the evolution of the geopolitical scenario and possible logistical constraints such as those in the Strait of Hormuz. Now let’s move on to the next slide regarding petrochemical spreads. According to external consultancies, a material improvement trajectory is expected throughout the second quarter of 2026 in the company’s three segments, driven by the global supply shock resulting from the conflict from the third quarter of 2026, spreads tend to follow a normalization path in line with expectations of lower feedstock costs and greater supply availability. This dynamic is also in line with expectations for the year 2026 as a whole, although relevant uncertainties remain regarding the duration and potential resolution of the conflict. It’s important to note that the projections above incorporate the hypothesis that the conflict will end during May. An eventual extension of the conflict beyond this horizon could further impact spreads in the short term as well as increased risks to global demand growth and feedstocks costs. Now let’s move on to the next slide. Finally, I will comment on the Company’s priorities for the year 2026 next slide. I would like to highlight the Company’s main priorities for 2026 aligned with Braskem’s strategic direction considering the global petrochemical industry scenario and the preservation of business sustainability. As a first priority, we will continue the reorganization of the Company’s capital structure with the objective of creating necessary conditions to ensure the business continuity across petrochemical cycles. We will also continue with implementation of the Resilience Plan with a focus on preserving the Company’s financial liquidity through strict control of costs and discipline in capital allocation. As a third priority, we have initiatives under the Transformation Plan to restructure strengthen the company’s competitiveness in the context of sustainability. The company will also continue exploring opportunities to expand its portfolio of products with sustainable attributes. Additionally, we will maintain our commitment to the full compliance with the agreements related to the geological event in Alagoas. Finally, safety, a perpetual and non negotiable value for the company continues to guide the operations so that they can be safe and reliable in line with the best practices of the global industry. Thus, we conclude the presentation of Brascam’s results for the first quarter of 2026. Thank you very much for your attention. We will now start the Q and A session.
OPERATOR
Ladies and gentlemen, we will now begin the Q and A session. Please note that questions must be submitted in writing using the Q and A button on Zoom. I will now turn the floor over to the company for their remarks.
Philippe
Good morning. Good morning everyone. Thanks again for joining us for this earnings conference. This question is of course strongly linked to the two ratings that compose leverage, net debt and ebitda. As you know, this company’s EBITDA has been updated constantly due to the events occurring in the Middle east, which has raised spreads. And this is not marginal when it comes to the positive economic impacts when it comes to improving the company’s ebitda. That being said, what the company always holds is that in low cycles, that means when the EBITDA is lower than the company’s generation ability, we the company aims or accepts a indebtedness or leverage ratio that is roughly around 4.5%. And in high cycles, this leverage can be reduced to 3 or 2.5 times. So we’re looking not just at the gross indebtedness level, but also the cash generation ability and ebitda, which makes that sustainable in the medium and long term, resulting in the leverage levels that I’ve just mentioned. Thank you.
Felipe
Excellent. Thanks once again for the question. I’ll answer in two parts. First is liquidity. As you’ve been seeing in our presentations and relevant facts, the company has been employing significant efforts to improve and maintain its working capital over the past few quarters, which has been kept at a level that allows the company to keep its operating abilities and functions while also keeping our cash and working capital at good levels. As I’ve said, this scenario starts really inflecting starting in March. So Q1, as we’ve confirmed now in April and May, All of this has, of course, economic impacts on the company. Now, in a broader sense, when we talk about restructuring Braskam’s capital structure, I need to make it very clear that at the present moment, there’s nothing that is off the table, nor is there anything that has been defined with governance bodies and entities. Everything pertains to discussions that occur. These are ongoing discussions and we have kept all of you apprised. Since the second half of last year, the company has been updating all of our stakeholders. It’s important to note that, yes, some very important marks, very important points have occurred with regard to shifts in the company’s controlling stakeholders, as pertains to Petrobras and an MoU and other documents signed with Novonor and IG4. This has also been announced to the market vis a vis a new shareholder agreement, a potential new shareholder agreement. Now, no shares have been transferred yet, but this is under discussion. And this has also already produced important changes to the company’s boards. There are members in Petrobras that now occupy positions in Braskem’s board, starting with the president Magda, who is now the president of Braskem’s administrative board, and also discussions with members of IG4 who participate and interact with the company already in the sense of better understanding the company’s dynamics and also respecting the fact that they have not at the present time assumed any responsibilities because they are not at the moment shareholders of the company. So they are firmly aware that this capital restructuring is an ongoing project, as we’ve been discussing. Of course, they also do make they contribute to discussions, of course, and that pertains both to creditors in the capital markets and our financial creditors who are the object of these discussions and the potential restructuring of the company’s finance and keeping its financial creditors and operating vendors and suppliers and strategic vendors also intact.
Roberto
Good morning everyone. I’d just like to add that it’s hard to make a firm assessment, but we are working on that to see what exactly is the extent of the damage caused to the cracker at polyethylene and polypropylene plants in the conflict region, but also to the gas generation fields. Because the major change that occurs in the industry to progressively abandon naphtha and move toward ethane as an, as a feedstock has been possible because there were major ethane producers in the region. That means Qatar. Qatar and Iran share the largest gas field in the planet, which is 1, sorry, 1,000 trillion cubic feet of gas in Qatar. This is called the North Field or the north dome. Qatar produces 77 billion tons of year of LNG and ethane as well. They are major supplier of ethane, including for China. This field has been attacked by Iran. As you know, Iran and Qatar share this geological structure. And Iran attacked Qatar, but that’s what happens in a war. So we now need to reassess these fields because the situation may have changed. I don’t know if you’ve been following, but since Trump applied the US gas export tariffs, China stopped buying it from the US and started buying ethane exclusively from Qatar and Russia. Now with this recent visit that Trump made to Beijing, conversations have resumed between the US and China working toward attempting to reduce those tariffs, aiming for China to once again buy ethane from the US to me, this seems like an indication that part of Qatar’s export capacity is out of order and therefore may have suffered a damage that could take a while to be repaired if they need to replace a compressor that takes two years to produce a compressor, for one example. So what I think will happen is that we will see greater stress when it comes to obtaining feedstocks and many companies are going to end up short on feedstocks. This in turn will translate into higher prices because if you have a permanent increase in feedstocks, then you need to raise your prices. So in my view, it could be that spreads may not evolve, but the nominal spreads will need to remain at a high level because the increase in feedstocks, whether that’s naphtha or ethane, I believe it’s going to be permanent for a number of years until there is a complete replenishment of these products and feedstocks and everything that has been impacted by the attacks, including nafta. Hi Rodrigo. I’d just like to add that if you want to imagine a proxy between reduced oil demand and reduced naphtha and consequently resin demand, the International Energy Agency yesterday revised their oil demand by 400,000 barrels and reduced the same forecast by 200,000 barrels at something between 0.2 and 0.4% of the daily use of oil. I believe it’s still a moderate Impact. They’re obviously doing the math for me. In my opinion, that’s based on assuming that a conflict will begin resolving starting at the end of May. Now, that’s the question everyone is asking and no one has the answer to, which is, how much longer is that region going to remain in a state of war? The fact that there is no bombing currently occurring, but the Strait of Hormuz is still closed makes the risk rate to remain very high. And as a result, you don’t have any guaranteed feedstock provisions coming out from there. It’s not just the case of NAFTA and gas, which is our working area we work with, but Iran also is a major producer of sulfur, benzene, ethylene. These are all products that are produced at those refineries which today are embargoed. So, yes, there’s going to be lower demand. It’s very difficult to estimate because it’s difficult to estimate not when the conflict will end, because the conflict is in theory suspended. But I mean, when will the conflict be resolved and what are the conditions that will allow this conflict to be resolved? Definitely. The extent of which, if you want to set up a proxy with oil, something between 0.2 and 0.4%, but we’ll see what happens.
Felipe
Thank you, Rosanna. The broader explanation has has been given. Hosanna mentioned the economic and stocks and sales aspects, but looking at the more micro and operational aspects, we have been engaging in operations focusing on through sales for our receivables to anticipate future receivables through programs done with financial institutions. We are also in negotiation and have completed some negotiations already with some important suppliers of the company that will allow working capital to build up and as a result improve our spreads. As we mentioned recently, this will allow us to capitalize on the company’s economic condition. And we’ve also been discussing maintenance of a program that has been in practice since last year to monetize what we call non-liquid assets, so contingent and future assets of the companies that do have some economic value, sometimes very large, but difficult to establish exactly. So we keep an economic gain that we call an earn out for Braskem, but in a way that also allows us to use these assets so to give us immediate liquidity in the cash. Some of these have already been completed and others are in the final implementation phase.
Hau
Thank you, Philippe. Moving on, I have a question by Hau with 911. This is his question. If the company has had a higher liquidity, the utilization rate of the petrochemical activities and assets in general would be higher as well.
Roberto
Undoubtedly, the answer is an outright yes. The challenge we have today is how can we raise funds that will allow us to increase utilization percentage. They’re currently at 70%, but we could work at 90 plus percent because the market demands resins and part of the resin production capacity is currently reduced, whether it’s because of the conflict zone or because of the lack of feedstocks. This is our challenge. Our process of trying to handle this is trying to convince all stakeholders, and I do mean all stakeholders, that includes shareholders and resource donators, that if we have greater access to working capital, we will have more EBITDA and in turn more cash. So it’s immediate payback during the calendar year itself. I understand that the market perceives risk. I understand the risk perception. But having access to feedstocks, essentially we consume NAFTA from the US or African markets. In other words, from outside the epicenter of the war. Of course we have access to feedstocks, but it could be higher. And the demand level for resins, both in the Brazilian market and internationally is significant. This is also very much true for our operations in Mexico. We are working with a very low load in Mexico. We could triple our current utilization there. Our challenge is how can we gain access to these resources that will allow us to purchase feedstocks and sustain this working capital delta for that number of days. So do some math, see how much Breast Cam gets in sales per month and find out what a 15 day investment in our cash flow will be. That’s our challenge, to increase our operational capacity.
Felipe
Thank you. Yes, this is a relevant liability for the company in 26, as we have published in our statements and our conference call. And without any doubt, this renegotiation of the standby is part of the entire context of the capital restructuring. It doesn’t have a specific, it’s not specifically being discussed in any particular place because since the last year we’ve received a proposal to restructure the company’s capital in a very broad way in order to stabilize the company and its finances. In other words, we don’t want to attack or reorganize any one specific financial covenant or agreement. What we’re talking about is a major, a broad restructuring that we’re interested in and something that will please all of our stakeholders, financial stakeholders and everyone. So this is a very relevant discussion and it’s at the crux of every discussion we have with all of our stakeholders and all of our financial stakeholders and shareholders as well. And we’re going to do that without any chance of breakage here at the company.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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