Braskem Reports $940 Million Loss in Q4 Amid Falling Spreads and Rising Debt

Braskem, Latin America’s largest petrochemical company, closed 2024 with a staggering R$5.65 billion ($940 million) net loss in the fourth quarter.

This marked a 259% increase compared to the same period in 2023, as revealed in its financial report on February 27. For the full year, losses totaled R$11.32 billion ($1.89 billion), up 147% from 2023, reflecting significant challenges across global markets.

The company’s recurring EBITDA fell to R$557 million ($93 million) in Q4, down 47% year-over-year. Analysts expected stronger results, but weak petrochemical spreads and declining demand weighed heavily on performance.

Braskem’s net revenue grew 15% to R$19.15 billion ($3.19 billion), driven by higher sales prices in some segments, but this failed to offset operational pressures. Petrochemical spreads dropped sharply, with polyethylene-naphtha spreads in Brazil falling 23% and basic chemical spreads declining 24%.

In Mexico, polyethylene spreads fell 21%, driven by rising ethane costs and weaker pricing. Demand for resins in Brazil hit its lowest level of the year due to high interest rates and sluggish industrial activity.

U.S. and European markets also struggled with economic uncertainty, further pressuring sales volumes. Braskem faced additional challenges from higher environmental provisions and idle capacity costs.

Braskem Faces Increased Debt & Market Volatility

The company’s net debt rose by $338 million during the quarter to $6.1 billion, pushing its leverage ratio to 7.4 times net debt-to-EBITDA, up from 6.1 times in the prior quarter.

Market reactions reflected investor concerns, with Braskem shares (BRKM5) falling 2.15% to R$11.81 ($1.97) on February 27 after hitting an intraday low of R$11.14 ($1.86).

Analysts at XP Investimentos noted that recurring EBITDA was 68% below expectations, while Bradesco BBI highlighted a disappointing performance despite some improvement in free cash flow generation.

While Braskem implemented cost-cutting measures and maintained a robust $2.4 billion cash position, recovery depends on improved global demand and petrochemical spreads.

Bradesco BBI maintained an “outperform” rating for Braskem’s U.S.-listed shares with a price target of $8.50 but warned that market conditions must improve for sustained recovery.

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