Braskem Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2025

Key Takeaways

  • Negative Sentiment: The company reported consolidated recurring EBITDA of $74 million, down 67% YoY, with Q2 operating cash consumption of $31 million (up $129 million QoQ) despite ending the quarter with $1.7 billion in cash and $2.8 billion total liquidity.
  • Negative Sentiment: In Brazil, petrochemical plants ran at similar rates to Q1 while resin sales rose, but segment recurring EBITDA fell 24% QoQ to $152 million, hurt by stock effects, a stronger real and higher fixed costs.
  • Positive Sentiment: The green polyethylene business saw Q2 plant utilization at 71%, with higher volumes driving an 18% revenue increase QoQ as Braskem advances its renewables pillar through SUSTENEA and BraskemCM partnerships.
  • Negative Sentiment: Internationally, US & Europe assets ran at 74% utilization and saw PP sales up 7 kt but logged an $8 million recurring EBITDA loss, while Mexico’s operations dropped to 44% utilization amid a maintenance shutdown and ethane shortages, resulting in a $9 million loss.
  • Positive Sentiment: Under its transformation program, Braskem is pursuing the TransformaRio project (230 kt ethylene expansion, ~$700 million capex pending ethane supply), shifting assets to gas feedstocks and evaluating hibernation of low-competitiveness lines.
AI Generated. May Contain Errors.
Earnings Conference Call
Braskem Q2 2025
00:00 / 00:00

Transcript Sections

Skip to Participants
Moderator

Good afternoon, everyone, and thank you for waiting. Welcome to Braskem's Second Quarter of twenty twenty five Results Conference Call. With us here today, we have Mr. Roberto Ramos, CEO Mr. Felipe Gens, Braskem's CFO and Ms. Rosanna Avalho, Investor Relations, Strategic Planning and Corporate Market Intelligence Director. We inform you that this event is being recorded. The presentation will be held in Portuguese with simultaneous translation into English. All participants can choose which language to listen to and see the presentation in using the show captions and view options buttons as well as the interpretation button. After Braskem's remarks, first, we will announce in English.

Moderator

The event will be held in Portuguese with simultaneous translation into English. All participants can choose which language to listen to and see the presentation in using the interpretation and view options buttons respectively. After Braskem's remarks, there will be a Q and A session. At that time, further instructions will be given. After Braskem's remarks, there will be a question and answer session.

Moderator

At that time, further instructions will be given. This event's audio will be available on the Investor Relations website after it concludes. We remind you that participants may choose what language may submit questions to Braskem's Board, which will be answered by the Investor Relations department. Before proceeding, we'd like to clarify that any statements that may be made during this call regarding Braskem's business prospects, projections, operational and financial goals constitute beliefs and assumptions of the company's management as well as information currently available to Braskem. Future considerations are not a guarantee of performance and involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur.

Moderator

Investors and analysts should understand that general conditions, industry conditions and other operational factors may affect Braskem's future results and may lead to results that differ materially from those expressed in such future conditions. Now I'll turn the conference over to Ms. Rosanna Avoglio, Investor Relations, Strategic Planning and Corporate Market Intelligence Director. Ms. Zavoglio, you may begin your presentation.

Moderator

Good morning, ladies and gentlemen. We appreciate everyone for participating in Braskem's earnings call for the 2025. According to the agenda on Slide three, we will start with the main company's highlights in the period, which can be found from Slide four. In the 2025, the performance of the industry continued to be affected by the continuation of the downturn in the petrochemical industry in addition to the global tariff uncertainties. In this scenario, the utilization rates of petrochemical plants remained stable in relation to the previous quarter, especially in Brazil and the assets in The United States and Europe, both with 74% of utilization, while Mexico, impacted by the general maintenance shutdown, showed a drop of 35 percentage points in its utilization rate when compared to the previous quarter.

Moderator

In addition, Bresken recorded an average global accident frequency rate of 1.11 events per million hours worked, well below the global industry average, which reinforces the nonnegotiable commitment to the safety of the company's operations. Regarding its results, the company reported a consolidated recurring EBITDA of $74,000,000 67% lower when compared to the 2025 in face of a challenging conjectural scenario. In addition, despite the lower working capital consumption when compared to the previous quarter, the company presented operating cash consumption of $31,000,000 an increase of $129,000,000 compared to the previous quarter. Regarding its debt profile, the company ended the quarter with an average debt maturity of about nine years and with more than 68% of the maturity as of 02/1930. Braskem's cash position at the end of the second quarter was approximately $1,700,000,000 sufficient to cover debt maturity in the next thirty months.

Moderator

Not considering the international revolving credit line available in the full amount of $1,000,000,000 and maturing in December 2026. The company's total liquidity, including this line, ended at approximately $2,800,000,000 in the quarter. Now let's move on to the next slide. The performance of each segment of the company will be presented below, starting with Brazil on Slide six. The petrochemical plants in the Brazil segment presented an average utilization rate in line with the first quarter of twenty twenty five, with emphasis on the gas based plant in Rio De Janeiro, which operated at 95%.

Moderator

Regarding sales, the volume of resins sold in the Brazilian market and in the international market were higher compared to the previous quarter, impacted by the anticipation of purchases in the transformation chain due to the lower prices in the international market in the quarter due to tariff uncertainties and the market's expectation of price increases throughout the 2025. As for the international spreads that impacted the segment, although the average resin spreads increased in the quarter due to the 17% increase in the PE spread, The lower PE spread at 4% had an influence on the result of the business. Recurring EBITDA for the segment was $152,000,000 24% lower than the previous quarter, mainly impacted by the stock effect of FEEDS, stock acquired in the previous period, the appreciation of the average real against the average dollar in the period and the increase in fixed costs and other expenses resulting from the reclassification of expenses from the corporate unit to the business due to changes in the company's organizational structure. Now let's move on to the next slide, please. In the 2025, the utilization rate of the green ethylene plant was 71%, 16 percentage points lower than in the previous quarter, impacted by the inventory optimization carried out in the period.

Moderator

On the other hand, sales of green polyethylene were higher due to the increase in demand from new and existing customers with emphasis on the higher volume sold in Brazil compared to the previous quarter. In this context, the green polyethylene business was 18 higher in revenue in conjunction with the company's ETBE business. The positive quarterly results benefits the company's transformation journey, focusing on its migration to renewables pillar with the objective of strengthening the resilience and longevity of the business. Currently, the presence of its own innovative ecosystem focused on developing renewable solutions and the strategic partnerships established through SUSTENEA and BraskemCM support the advancement of this journey. Now let's move on to the next slide, please.

Moderator

In The United States and Europe segment, the plant utilization rate remained in line with the 2025 compared to the previous quarter at 74% of utilization. On the other hand, the volume of PP sales in the segment was higher than in the previous quarter by 7,000 tons. Despite the higher volumes sales volumes, the segment's recurring EBITDA was negative by $8,000,000 mainly impacted by the following inventory effect due to the average cost of goods sold, referring to the feedstocks acquired in the previous periods, which partially offset the improvement in spreads in the segment and the higher SG and A explained by the reclassification of expenses from the corporate unit to the business due to changes in the company's organizational structure. Now moving on to the next slide, we will discuss the segment Mexico. In June, the general maintenance shutdown of Braskem Ideza plant began, which significantly impacted the segment operation in the period that operated at a utilization rate of 44 in the 2025. The volume of polyethylene sales in the period was also lower compared to the first quarter of the year, impacted by the lower availability of product due to the scheduled shutdown and also the lower supply of ethane by Pemex, impacting the inventory formation process prior to the general maintenance shutdown. In this scenario, this segment's recurring EBITDA in the period was negative by $9,000,000 also impacted by the lower spread of ethane based polyethylene in the period at about $95 per ton, but the higher expenses of the storage and ethane tankage due to the scheduled shutdown, which was partially offset by the positive impact on other revenues. Now next slide. In the 2025, the Mexico segment performance was impacted by a combination of significant factors. The reduced domestic ethane supply in recent months below the volume contracted with Pemex has posed an additional operational challenge, especially in a context of a downturn in the global petrochemical cycle, where international spreads are expected to remain challenged in the short and in the medium terms.

Moderator

These factors have exerted additional pressure on Braskem IDEA's results, which operates with a significant debt structure, imposing constraints that require continued attention to cash preservation and financial discipline in this segment. Now next slide. Moving on to the next chapter, I will discuss the consolidated results of the company, starting with the updates regarding the work fronts in Alagoa. By the June 2025, all work fronts in Masayo continued to advance according to plan. The relocation and compensation front continued to show evolution in its indicators and ended the semester with 99.9% of execution of the residence relocation program.

Moderator

The same percentage also applies to the number of proposals submitted for the financial compensation and relocation support program, of which about 99.5% were accepted and 99.4% were paid. In parallel, the execution of the closure and the monitoring of the salt cavities still being implemented after the provision of all actions, if necessary, that ensure that the 35 cavities reach a maintenance free stage in the long term. We highlight in this quarter the approval by the ANM of the confirmation of the ceiling of Cavity 18. With this, there are already six naturally filled cavities. Regarding the financial provision, the total provision for the Alagoas event was about BRL 17,500,000,000.0, of which about BRL 13,100,000,000.0 have already been disbursed, and approximately BRL $439,000,000 have been recorded in other obligations payable.

Moderator

Therefore, the total balance provisioned at the end of the 2025 was 4,700,000,000.0, 8% lower than the balance at the end of the 2025. Now let's move on to the next slide. In the 2025, despite the greater working capital management when compared to the previous quarter due to the resilience measures implemented, the company presented a cash consumption of million given the results presented in the quarter. The lower recurring cash consumption when compared to the previous quarter of approximately BRL1 billion was mainly influenced by lower semiannual interest payments on the debt securities issued in the international market by the company, which are concentrated in the first and third quarters of the year. Considering the disbursements from Alagoas, the company presented a cash consumption of BRL 1,500,000,000.0.

Moderator

Now let's move on to the next slide. Braskem ended the second quarter of the year maintaining an extended profile of its corporate debt with an average maturity of nine years and 68% of the debt concentrated as of 02/1930. Considering the company's liquidity level, the available cash of $1,800,000,000 is sufficient to cover its obligations for the next thirty months without considering the available international credit line in the amount of $1,000,000,000 Finally, the corporate leverage stood at 10.59 times at the end of the 2025 due to the lowest EBITDA in the last twelve months. Following our agenda, we will move on to the next slide. Thus, we conclude the overview of the 2025, and I will now comment on the company's resilience and transformation program.

Moderator

The outlook for the international petrochemical industry remains challenged in the coming years, where by 02/1930, China will continue making significant investments in the expansion of ethylene and propylene chains using various feedstocks. This represents a significant increase in installed capacity with more than 40 new crackers planned, increasing ethylene capacity by about 100,000,000 tons and propylene by around 70,000,000 tons, which reinforces the expectation of oversupply and increased idleness in the sector. The average idle rate of ethylene production, without considering a rationalization of the industry, already shows an upward trend, and the data projects a growing gap between supply and demand by the end of the decade, which will put pressure on the margins of the entire industry. Next slide. In a challenging chemical and petrochemical scenario, it's important to highlight the importance of the chemical industry for Brazil.

Moderator

The national chemical industry is home to the fourth largest chemical industry in the world, responsible for 11% of the industrial GDP and occupying the third position among the largest industrial sectors in the country. The chain generates 2,000,000 direct and indirect jobs and is present in practically all segments of the economy, from fertilizers to pharmaceuticals, from personal hygiene to pesticides. In addition, it's an important competitive advantage. The production of chemical inputs in Brazil is now the cleanest in the world with carbon emissions up to 51% lower than those of the main international industries. However, despite its relevance and potential, the Brazilian chemical industry faces important structural challenges.

Moderator

Today, the industry operates with the highest level of autonomous in history, reflecting the growing pressure from imports and an uncompetitive cost structure. In the case of the Brazilian petrochemical company, the production based on NAFTA will continue to present a growing gap in competitiveness in relation to ethane, challenging the margins for the producers who use naphtha as a feedstock. Now let's move on to the next slide. In this context, Braskem remains committed to the execution of the initiatives set out in its resilience and transformation program with a focus on overcoming the structural challenges of the global petrochemical industry and the national chemical sector. In this scenario, the company has been implementing initiatives aimed at sustainable value generation with an emphasis on maximizing EBITDA and generating greater cash.

Moderator

Now moving on to the next slide. Regarding initiatives related to the defense of the Brazilian chemical industry, Braskem, together with Abiquin and other companies operating in the sector, reinforces the importance of implementing mechanisms to protect the national industry in order to ensure greater competitive balance. As an example, Bill eight ninety twotwenty five stands out, which establishes the special sustainability program for the chemical industry. PRASIC aimed at promoting the sustainability and competitiveness of the sector through fiscal incentives. BRASKIN reaffirmed its support for the approval of the project, recognizing it as an essential measure to strengthen the entire production chain.

Moderator

Additionally, with the proximity of the end of the special regime for the chemical industry, RAIC, scheduled for the 2026, it's urgent to adopt measures to ensure the competitiveness of the Brazilian chemical industry in the face of the structural and conjectural challenges of the sector. For Braskem, the resumption of the tax credit on the purchase of feedstock to the level of 8.25%, a rate originally approved in the implementation of break in 2013, represents an opportunity for competitive equality, creating value for the entire chain and for the country. Additionally, with the end of RAIC, the proposal would be the institution of a new financial regime between 2025 and 2029 with incentives for purchase of feedstocks and for the expansion of the production capacity. At the same time, the approval of antidumping measures is essential to correct market distortions and protect the domestic market, especially in the face of the growing pressure caused by the increase in imports made with unfair pricing practices. Several countries such as The United States, Europe and China and South Korea have already implemented robust policies to encourage the chemical industry with trillions of dollars in subsidies, support for innovation and trade defense mechanisms.

Moderator

Although each adopts specific strategies, they all share the same goal, to strengthen the chemical industry, an essential basis for several other production chains in addition to generating significant multiplier effects for their economies. Now let's move on to the next slide. Within the transformation pillar, the optimization of naphtha based assets is one of the company's objectives, aiming firstly to maximize the utilization rate of the most competitive production lines, such as the one in Rio De Janeiro, which operated at 95% in the last quarter. Another advance was the approval of resources via RAIC, Investimentos, of initiatives that enabled the expansion of the capacity of PVC assets in Alagoas. Meanwhile, the company is also evaluating the hibernation of the least competitive production lines globally, which considers the criteria such as plant age, technology used, production cost, scale and operational synergies, aiming at a greater efficiency and profitability.

Moderator

Now let's move on to the next slide. In relation to this front, we will seek to enable the expansion of our gas based assets with a focus on greater competitiveness and the resilience of the business by expanding the use of more competitive feedstock. This includes projects to expand gas based capacity, the expansion of the flexibility of petrochemical plants in Brazil and initiatives that ensure the operational stability of our crackers, such as the recent expansion of our own fleet dedicated to transport ethane between The United States, Brazil and Mexico. As an example of an initiative to expand gas based assets is Transformajillo, a project to increase the capacity of the petrochemical complex in Rio De Janeiro by two and thirty thousand tons with equivalent expansions of P. So far, million have been approved for the contracting of conceptual based engineering studies.

Moderator

The final investment decision of the project is conditioned to the signing of a long term ethane supply contract and the use of resources within the scope of rate investments. In addition to promoting a greater competitiveness for the company, the project has potential to unlock important socioeconomic benefits for the region, such as increased revenue and national collection in addition to the need for around 7,500 jobs during its execution. Now let's move on to the final slide. To conclude, I would like to reinforce our priorities that guide our actions in 2025. We will continue to advance in the transformation of our assets with a focus on competitiveness, efficiency and sustainability.

Moderator

This journey is essential to ensure the resilience of our business in the face of the challenge of the sector. At the same time, implementing contingency initiatives for the petrochemical cycle with special attention to the financial preservation and cash flow management, ensuring solidity and responsibility in our decisions. We will also continue our work in the competitiveness agenda of the Brazilian chemical industry, seeking measures to promote competitive equality and strengthen the sector as a whole. And finally, we will maintain our commitment to the agreement signed in Masayo, fulfilling each stage with transparency and responsibility. All this without giving up safe actions in our operations.

Moderator

Safety is and will continue to be a nonnegotiable value in our strategy, guiding Braskem's every action and decision. Thus, we conclude the presentation of Braskem's results for the 2025. Thank you very much for everyone's attention. We will now start the Q and A session. Ladies and gentlemen, we will now start the Q and A session.

Moderator

Send your question using the Q and A window. And our first question comes from Gabriel Baja, Citi. Gabriel, you may proceed.

Moderator

Hi, everyone. Thanks for taking my questions. I have two of them. We discussed a lot about measures to improve the company's results and how to improve resiliency. And when we look at micro numbers and spreads, as you mentioned, there is a longer delay in recovery for the spreads than we had expected.

Moderator

This is, in fact, taking longer than we imagined, And the company's leveraging peaked at almost 3x this quarter. I know there's matters related to costs, but this is rather high leveraging in our perspective. And this does make us a little concerned about the leverage rate and the company's bottom line. And also on the topic of the recent interview that the company gave talking about sales of assets and bringing in a potential partner for green production. I'd like to see if Roberto or Felipe perhaps can tell us a little bit about how you can work in a more difficult and compressed spread scenario and bring the company to a healthier portfolio.

Moderator

You mentioned a lot about green, but could you also talk about other assets that may be discussed or perhaps about rationalizing capacity? And what is the route to improve the company's leverage over the coming years? The second question, I think, is inevitable, but we must discuss the company's control. I know it's complicated for you, but we must comment also about the recent press conference you gave with regard to Petrobras. Could you give us an update about how these discussions are going with Tanudis and the different investment plans and perspectives and so on?

Moderator

I think you've also looked at other players as well and their proposals. Could you give us an update, a broader update about how these discussions are going? It would help us to understand more about the future of the company and this contest of the divestment of Novo Nord over the past few years. Thank you. Hi.

Moderator

Can you hear me? All right. Thank you. Thank you, Gabriel. Good afternoon once again.

Moderator

With regard to the company's financial status, in fact, as you aptly put it, it's a double digit leverage rate, largely not due to debts, but due to nonfulfillment of EBITDA. As we've discussed over the half of the year and recently in the conference call, there are a number of measures that we can bring in to bring these levels to lower numbers. And they are things we look at in our strategy, and they largely involve growing our EBITDA. We have a transformation plan called fly up to green and switch to gas, which is going to significantly improve our productivity and as a result, generate EBITDA for the company and consequently give us more comfortable levels when it comes to leverage. But part of that strategy also involves, as you mentioned, liquidity initiatives for the company that touch on not just the measures that we've just presented with regard to competitive standing, competitive equality with regard to the Brazilian petrochemical industry so that we can remain on the growth agenda and impact positively on the EBITDA.

Moderator

But also, as you mentioned, Gabriel, the company is not focused on selling assets to generate cash as long as there's something more important, which is the transformation plan. So assets, and we've always said this, Roberto has said this, all of our conversations over this time, assets that are not necessarily directly linked to the company's future, which is our transformation plan. They may potentially be monetized in part or in whole and thereby generate some cash for the company. Of course, this in times when our liquidity is tighter, this becomes more important. But this is not a sale that is solely focused on that.

Moderator

It's actually part of a much greater and more structured plan, which is our transformation plan. And so these are parts of the transformation plan that remain tightly connected to everything we've been discussing about with you when it comes to a potential reduction in shareholder stake in any one of these assets? Roberto? Yes, I'll take the second question. Just to remind you, Gabriel, in classic situations like this one, what we aim to do is to manage working capital as well as we can.

Moderator

So we work with our suppliers to lengthen payment plans and work with clients to tighten our receivables plans. So we have a number of different initiatives. They are all being pursued very diligently. And it's relevant to mention that at the price level for resins today, levels that are imposed by the growing imports of products that arrive here at levels lower than they're practiced in their respective countries where they're produced, well, this is an imbalance that must be corrected. And and so it depends on us to show the severity of this to the Brazilian government and for them to make the necessary measures.

Moderator

With regard to the sales of Novo Nord and with regard to Braskem, it's important to remind everyone that when you have a company interested in purchasing the other, the purchasing company researches the company they're interested in purchasing. That's the due diligence process. Now as part of the due diligence process, it's inevitable that you will have a management presentation or the management five. In other words, a presentation to the future purchasing company's management, presenting your plans and how things are going. And this is what we have done, and it's what we always do whenever such a situation arises.

Moderator

There's nothing special. Now I always repeat this, and unfortunately, I cannot make my message be correctly received, but we are not part of those negotiations. We are not party to these meetings and discussions because we cannot control the Braskem shares that are owned by other shareholders. That's up to the individual shareholders, the banks or the other companies. I can speculate, but I mean everyone can speculate.

Moderator

It's I know that there is a level of exclusivity that was granted, which I believe expires on August. And we are waiting to see whether or not this operation or this trade will be completed. And, you know, our our schedule, our our day to day is significantly occupied by our business. So we really can't waste a lot of our time mulling over this topic. I always say this, whatever shareholder comes to control Braskem, the challenges that they will encounter are the same ones we have today.

Moderator

And resolving those challenges involves our management, our capacity to implement the necessary solutions. Therefore, wasting our internal time and energy trying to become involved in a negotiation that does not truly pertain to the company, but instead to its shareholders does not really add value. It actually consumes a lot of our energy. Answer. Thank you, Roberto and Felipe.

Moderator

Our next question comes from Tasovas Gonzalez with UBS. You may proceed, sir.

Moderator

Hi, everyone. Good afternoon. Thank you for taking my questions. Roberto, on the topic of your last comment and also with the interview you gave earlier, you mentioned that a new controlling shareholder could potentially revise some of the company's plans. So where do you see greater room for these changes?

Moderator

Some kind of geography change or in the company's business model or the product mix? Or I don't know, are there other locations where this type of change can more drastic ones can occur? And also along those lines, what impact might those changes have to the process, whether that is in use or burn of our cash or in improvements to operations in the very short term? And the second question, which is I think for Felipe, the company burned cash in the order of $700,000,000 in the first half of this year. So what is your perspective or is your forecast for the second half of the year?

Moderator

Is the company perhaps going to be more cash neutral closer to the end of the year? Or are we still going to work under a scenario where the company continues to have a little bit of cash burn? And is there a significant improvement to spreads without the, government's intervention such as rate, proceed and antidumping for 2026? Those are my questions. Thank you.

Moderator

Tao. So I mentioned that in theory, because any future controlling shareholder that comes to have control over the company will have the right to analyze and, criticize the company's actions. I'm convinced that our strategy is the best strategy applied to our reality because it focuses on neutralizing our weaknesses and maximizing our strengths. So minimizing or neutralizing our weaknesses means ceasing consumption of naphtha as feedstock and starting to consume a more profitable feedstock. And in terms of emphasizing our strengths, I have a SWOT analysis in my head.

Moderator

We have to minimize weaknesses and threats and maximize strengths and opportunities. So in terms of maximizing strengths, that's about our migration to green. That means increasingly ramp up produce production of green products, polyethylene but not just polyethylene, and adjusting production of fossil based products to our success in converting the naphtha to gas basis. I'm talking about theories here, but in my mind, in my perspective, that's the best strategy that Braskem can pursue. This does not necessarily mean I am utterly correct.

Moderator

It could be that some potential new shareholder could wish to emphasize one area or another. I was talking about theories. I was not talking specifically about one particular point that could be highlighted or, or down regulated. Now with regard to financial health and banks, investors and analysts, our strategy, given the industry's status now I should mention that the industry constantly consumes cash for two years now. That's not just Braskem.

Moderator

Our major international competitors, I won't name them, all have significant cash consumption year after year and an increase of, other metrics. They ran into some problems, and we ran into problems that they didn't occur, which pertains to the salt mine. And this includes the Chinese competitors. They're building 32 tons of ethylene, and yet they're running their plants at under 70% utilization rates because they overbuilt plants and the market hasn't absorbed that much material. So we remain with our strategy with awareness that it is the correct strategy.

Moderator

And if such a time comes when a new shareholder, controlling shareholder changes our strategy and calls upon us to change our pack, so we will do. This doesn't mean that any of these strategies are more correct than ours. What we need to do is to spend less, to improve the performance of our plants and to seek out products that give us better EBITDA, and that is exactly what we're doing. Perfect. And on the topic of what Roberto said, which is exactly the answer to your second question, Taz.

Moderator

Yes, we should still consume some cash in the second half of the year, less so than in the first half, largely based on all of these measures we've been discussing, announcing and really hammering on about with regards to improving productivity, improving initiatives to improve our feedstocks and energy inputs at these plants. And as we've mentioned, performing other potential improvement measures, whether they are creating our green business, improving creation of our green businesses, making sure that it has the necessary resources to expand and to ensure that all of them will create cash, if not by the end of this year, at the longest in the very short or medium term so that we can deleverage, improve our EBITDA and reduce our consumption of cash in the more immediate term. This is a major focus of ours. We are involved in all of these measures, whether that's through a VPL or economic value or liquidity or different financial measures that allow the company to reduce the cash consumption within 2025 because both spreads and volume forecasts are not going to be very different for the second half of the year than they were in the first half of the year.

Moderator

As a result, our ability to generate operating cash within the company is something we are going to focus on through all of these initiatives. Excellent. Thank you. That's very clear.

Moderator

Our next question comes from Vincente Fallen with Bradesco BBI. You may proceed, sir.

Moderator

Thank you, Roberto, Felipe and Rosanna. Thanks for the call. I have two questions. I'd like to understand the main takeaway that the company has sent to bondholders. The bonds are trading under 70 at face value.

Moderator

I know that there's many bonds coming to term, but most are in 2028. For my second question, I'd like to understand whether today you see the assets that Braskem purchased in The U. S, such as Dow, among others, as strategic. Back in 2010 and 2012, the company really wished to increase its participation in The U. S, for instance, through the cracker project in Philadelphia, and for a number of reasons that didn't occur.

Moderator

So I'd like to understand how strategic these assets are within the company's strengths portfolio. Thank you. With regard to our U. S. Plants, they are an integral part of our strategy.

Moderator

Maintaining these plants in The U. S. Is of essential importance for us because that is where two of our three main laboratories are located. The Pittsburgh laboratory, which is focused on technology products and catalysts for polypropylene especially, but also polyethylene and the Lexington laboratory, which is focused on our line of green product. Along these lines, one of our projects is to produce green polypropylene in The US based on corn ethanol.

Moderator

And therefore, the plants there are essential for us to process propylene or propene, the green propylene that we would then create. So we have no, no doubt that these plants are essential for us. And I'm personally not a fan of thinking about selling assets to amortize debt. Now with regard to the bonds, as you mentioned as you asked, Braskem has a conversion plan for gas and for green that involves investments, very large investments. For instance, just one of them involves a $700,000,000 investment.

Moderator

So to finance that, you will finance that through a bank financing during construction. But after construction, you necessarily must migrate to long term financing to match the assets and funding in terms of terms. You can't mismatch short, long term funding or financing. So whether use bank financing or own financing, we need to migrate to capitals. So any type of migration that would be done with Braskem's debt.

Moderator

Now this would be considering that Braskem would need to reprofile its debt. And this would prevent us from gaining access to this capitals market. And this would impede us from our transformation plan and the investments we must perform. So in terms of financial, technical discussions, it makes no sense to reprofile Braskem's debt. Furthermore, I believe that this is a mistaken diagnosis.

Moderator

Braskem's problem is not the size of its debt, but its current EBITDA. It is resolved by increasing our EBITDA, and we increase EBITDA through all of these resiliency measures and tariff and commercial protections that we aim to obtain from the government. This will increase Braskem's EBITDA to the levels that we had five or six years ago. And as a result, our net EBITDA ratio will stop being relevant. In 2028, Braskem's EBITDA level will be much higher than it is today.

Moderator

So for me, in my opinion, this is a very superficial view of Braskem. And it's about bringing in a medication for a wrong diagnosis. And if you know finance, this is not the right diagnosis. Thank you, Roberto. That was very clear.

Moderator

Our next question comes from Bruno Montanari with Morgan Stanley. You may proceed, sir.

Moderator

Good afternoon, everyone. Thanks for taking my questions. I'd like to follow-up on some of the topics that were discussed. I think Vicente's last question is due to a headline that was published recently that said you may be thinking of selling The US assets. But based on your response, I can see that that is not the case.

Moderator

So I'd just like to double check whether it is totally out of the question. And another topic along those lines, on the topic of restructuring the portfolio and reassessing strategies, this is something we've seen discussions for some time now, quite some time now. Currently, no real structural changes have occurred. So my question is about timing. What do you see in terms of execution for performing that transformation given that the leverage rate has reached numbers that are kind of critical in the double digit rate?

Moderator

And my second question, when we think about the government's support for the industry as a whole, which makes sense, and you mentioned that various other regions have these types of incentives. However, your results in those regions where the incentives exist were worse than here in Brazil. So what types of additional measures would be needed in The US, Europe or Mexico for the company's results to improve? And if I may ask a third question. I understand that you are not party to the Novo Nord negotiations, but the company's management is involved in assessing Braskem's articles.

Moderator

I'd like to ask you about tag along, the tag along clause. And what, in the company's opinion, would be a trigger for that to count as change of control? Would would it be only the total, divestment of Novo Nord? Or would it be Novo Nord losing effective controlling status and becoming a minor shareholder. Roberto, before I start, on the topic of the assets, I want us to be very coherent about everything we do and everything we discuss.

Moderator

Again, everything comes down to our transformation plan that we have announced and have approved and have discussed exhaustively now by Roberto and that we have, discussed at length and have received strong feedback that this is the route that many, many of the company's shareholders believe is the most correct way to address the challenges imposed by the fact that the global petrochemical industry, is in. Given all of that, the existing assets, whether they are, more aligned with the plan or less aligned with the plan, they may always, and that's not just to state, stop being part of the company's portfolio in whole or in part. As Roberto mentioned, the question of The U. S.-based laboratories, these laboratories are extremely important for the company's transformation plan. And so they are absolutely in line with our future and all the measures we've put in line.

Moderator

The asset itself is without a doubt an important and relevant asset. It has generated cash and EBITDA more strongly in the past, and it is likely to grow again in the future. We're always going to assess them as long as that doesn't deviate us from our transformation plan, as Roberto also mentioned, in the company's growth so that we can address our leveraging, which was also questioned by Gabriel's first question. So it's important for us to be clear about this topic that everything results from our transformation plan. And things that are within or outside of the plan may be, more or less susceptible to potential monetizations, be they partial or total, depending on the assets we are discussing specifically.

Moderator

With regard to the transformation, actually, many, many steps are being taken. We're not just, discussing them. For instance, in Rio De Janeiro, we have Transforma Rio. It's one of the largest investments that has ever been announced in the Brazilian petrochemical industry. It is extremely relevant, and it's one of the key components of our transformation plan.

Moderator

It is in full, full steam. The BRL $233,000,000 plan, it's a 4,000,000,000 real investment. There's a team with dozens upon dozens of people involved along with Petrobras working specifically on this topic to make sure that all the expenses are accounted for, including rake expenses every month. So this is a project that is in full motion as well as our green project, as we've mentioned. It's currently at a reasonably advanced phase.

Moderator

We are looking at potential interested parties, parties who may be interested in a share of our green company, which will be here in Hiragonda Do Sul and Bahia as well as Thailand. This is a process that, as you well know, generally takes several months or more than a year to be completed. We began in late twenty twenty four at full steam on the first half of the year. These players are engaging in their due diligence for these assets. So it's they are dedicated and the project is moving along very, very significantly.

Moderator

There is also the topic of Alagoas as we've discussed here. This agenda has been exhaustively discussed and worked on with various different stakeholders, whether they're public, private, class associations, all aiming to improve productivity of our PVC plant and as a result, optimize our feedstocks, which provide the necessary material for that plant to produce. There's also an BRL 88,000,000 investment in that plant to improve its productivity. There are actually two major projects that were approved, both for new technologies and for producing PVC itself, 15,000 tons. We have over 30,000 tons of PVC coming in.

Moderator

And all of that makes the set of these plants, which had been suffering because of their technology and age as well the age of some of their components, especially the provision of feedstocks, which now make that plant, this is actually very recent news, have a completely different profile than what occurred during the first half of the year. Actually, would say that this has concluded. These measures are now complete within our transformation plan. And lastly, before I pass the floor back to Roberto, the question you asked about whether or not there is a tag along, this is a highly legal question. As you mentioned, there is a clear definition in the company's articles, which is open for anyone who wants to read and interpret what is written there with regard to what does or does not trigger a tag along clause.

Moderator

And as Roberto also mentioned, we are not currently spending our time to analyze that because if and when that occurs and moves forward and those proposals are officially submitted, the banks that hold them, Novo Nord as well, with regard to any proposals that may come to be made with regard to the Novo Nord shares, then at that time, if and when that occurs, we will discuss that. But again, this is a highly legal discussion, which of course will at some point need to be defined. But on our part, this is not something we are provoking or defining. Roberto? I will answer the other questions on the topic of the results from The U.

Moderator

S, Germany and Mexico. Mexico has our best results by far. Their EBITDA is much higher than the EBITDA at our other plants because it's a much more modern site. Its thermal and energy profile is much more efficient. They suffer from lack of feedstock because our feedstock supplier consistently fails to provide us the necessary levels of feedstock.

Moderator

So we had to invest in a terminal to import ethylene from The US. With the end, as I mentioned last week, with the end of the halt and the beginning of investment in the plants, we are now going to start operating at a level, a capacity level that really owns up to that complex. And you will see that the EBITDA margin is many times higher than what we have in Brazil. With regard to Brazil, our polypropylene plants in The U. S.

Moderator

And Germany are not integrated. That means we buy propylene from suppliers. The price of propylene has fluctuated because we can purchase polymer grade or refinery grade propylene. In the past, there was a spread between these two types of propylene. We capitalized on that spread to buy the cheapest, one for us, and this arbitrage was somewhat reduced.

Moderator

But what we saw in The US in the first semester was atypical. These plants have given us $1,000,000,000 per year in cash flow. So the news from this journalist who is very well informed when it comes to Braskem, I don't know what his sources are, dollars 1,000,000,000 from The U. S. Plants, that's something we had every year.

Moderator

So we're talking about a whole other level of value. And in Germany, our two plants in Germany suffer from the same problems that all of European petrochemical industry suffered. The cost of energy in Germany tripled when it it comes to, the end of using Russian gas and moving to US gas, the value tripled per BTU. So the cost of energy, reflects that. As a result, we are aligning our supply contracts for those plants so that we can gain access to less expensive propylene.

Moderator

But there's a crisis in the petrochemical industry in germ in Europe as a whole and in in Germany, in particular. The billiard table has all the billiard balls in motion. So we're working to recover everything that we can.

Moderator

Our next question comes from Nicolas Fabiaseko. Question comes from Leonardo Marconjes with Bank of America. Line is open, sir. Hello? Hi. Hello. Can you hear me? Okay.

Moderator

Good afternoon, everyone. Roberto, Felipe, Rosanna. Thanks for taking my questions. I have two questions as well. First, I'd like to ask how you see the capacity closure dynamic in the short, medium, and long term, let's say, '25 and '26.

Moderator

And within that context, I'd also like to understand if you have any forecasts with regard to the time evolution topic that has arisen in China and how that could impact capacity closures in the short term? My second question pertains to the value leveraging and whether that could help the petrochemical industry in Brazil. I'd like to get your opinion about the timing for these measures. Do you think that antidumping is something that might be discussed in the next, GSX meeting any other meetings, including urgent ones with regard to timing? How do you see the timing for these measures?

Moderator

Felipe, let me answer the first part of your question, then you and Rosanna can answer the others. Unfortunately, this is the last question I will need, I will be able to field because I, sadly, I have a commitment I'm already late to. Leonardo, something that's very clear for us at Braskem is that all of our production plants, we have 40 different plants around the world. All of them must generate positive cash flow. If they fail to generate positive cash flow, then those sites will be submitted to some kind of intervention, whether that means replacing feedstocks from naphtha to gas or a naphtha gas blend or some other kind of feedstock such as non ethane, which is the case with plant two in Rio Grande do Sul, which we plan to run with propane.

Moderator

And the plants that fail to adjust to all of these interventions we can make to improve productivity, well, they have no reason to exist. And so we will hibernate or shut down plants that generate negative EBITDA after all of the corrective measures we can undertake. Of course, this needs to be done in an orderly manner. And with regard to the previous question, you don't shut down a plant overnight. You have business commitments you need to uphold.

Moderator

You have employees you need to reassign. You have commitments you have signed to the different, contracts you need to comply with. You don't implement a decision like this overnight. We are constantly analyzing all of our assets. And I assure you that those assets that cannot return to generating positive cash will be shut down in time.

Moderator

Thank you. That's clear. But my question was more on the topic of what you see in the industry because there's low capacity to close, not Braskem, but the industry as a whole. And I'm wondering if you've seen anything different or if you have any different expectations with regard to the more mainstream consulting services that people generally follow. And in that sense, if you have any kind of perspective about the time evolution matter in China, which was really a hot topic over the past couple of weeks.

Moderator

With regard to China, I'm sure you saw that the Chinese government opened a process to define what petrochemical plants will be removed from operation. The Chinese model is about building a, electric fence, as they call, which determines the need for a given product in the petrochemical industry, polyethylene and polypropylene. And then they allow the various actors, whether they are private or public, federal municipalities, to build their plants. They provide credits and tax subsidies. Those plants are built.

Moderator

The production capacity comes online all at the same time, and then they engage in an internal destruction process. It's it's a destructive type of capitalism that is applied in China. And after the after after everything is on the table, then the government decides what remains. This was done on, the lead up to the Beijing Olympics. This process is occurring more slowly than we imagined.

Moderator

One of the things we expected, we hoped for better prices this year is we expected this process, especially in Europe, would occur more quickly. It did not occur more quickly because the governments at each of those countries or regions tried to prevent plants from being shut down. So they start granting subsidies here and there and different easements along that process. And as a result, they change the different price signals. They changed the optimal allocation of capital.

Moderator

And so plants that shouldn't continue to run remain online. That's I'm sorry. I do need to apologize again. Thank you all for being here, but I leave you in the very capable hands of Felipe and Rosanna. Thank you.

Moderator

Roberto, Leo, I'm just going to add something. Leo, you're right. We have been following this movement. People mention capacities that used to be there. On the other hand, there is a willingness of China to meet the demands of its internal requirements so that they are less dependent on the rest of the world.

Moderator

And when we look at the capacities that are going to be included in China, this was also in the presentation we made in relation to the capacities. We see there's a large capacity of PE and PP. Maybe the foundation of PP may be more positive for the years to come when compared to PE because the self sufficient movement by China started before. So if we look into the future, we see that China is likely to reduce its new capacity of PP for the next years. At the other hand, polyethylene, which stands at 70% of self sufficiency, we understand that this is going to affect the capacity.

Moderator

And you asked about the consulting firms. We have contact with specific consultants from the sector. And what we do is what to have a potential rationalization of the world. It's an exercise when we consider the base case. And we assume which would be the decision of another entity to close down a unit, but we have considered other aspects such as contracts they have with the suppliers.

Moderator

So it's difficult to understand what the other is going to be. So we have been following up what the rationalizations are going to be, especially major competitors. But as you said, they do not move at the speed that we expected. If we compare, for example, with the financial crisis for different reasons, but in a way, they also impact the supply and demand rationale. When we look at the environment, when it was better in relation to the impacts of the financial crisis, we saw that 27 of the industry closed.

Moderator

So it takes a while. So we have been monitoring what China has been doing. We have the rationalization model that we adopt, and we understand that those who are likely shut down are those whose technology was owed, which is not our case. But China has been putting in the market a lot of capacity, as I mentioned. The rest of the world that, for them, we do not see a lot of changes.

Moderator

Even we do not see that they're we do not see the announcements of new capacities. So I believe that when China reaches this substitution level, we are likely to have a better balance of the spreads. But year over year, we have been observing some change, some improvement. It's difficult to understand what the rationalization is going to be, and we believe that this is going to take about two or three years. And there's also the point of antidumping.

Moderator

Yes, antidumping and rake. Let me tell you a story of antidumping process. In fact, first, providing a context. Today, we have a context, which is the most competitive feedstock at the global level. Without any doubt, it's ethane in relation to the price of the molecule and also its conversion from ethane to ethylene and also the cash cost based on Europe.

Moderator

So it's competitive and cost is very large, especially when we consider all the agendas that we have in relation to the industry protection. So this is what we observe. See, let's get a reference, an average price. So the international reference of the product that is produced in The United States and sold in The United States, it's from $300 or $500 higher than the price of exports. And this is where we see the damage.

Moderator

We are talking about exports of imports of $900 of $1,000 So from the technical viewpoint, the company really believes that the legal arguments for the undumping to be approved is are underway. And there are two important moments to consider. This investigation process started in November 2024. And following the legal right, it will end up to May year. And considering all the points that I shared beforehand, as we see the preliminary report, unfortunately, we do not have any expectation of when this is gonna become public.

Moderator

So we are going to look for this anticipated approval. Unfortunately, we do not have a specific deadline, but it's important to mention that antidumping is a very technical agenda, and we really believe that this is going to be approved. I don't know if it's going to be anticipated, but it has enough technical arguments. And we're also talking about the production chain as a whole, which does not involve only Braskem but all the chemical industry, which is an industry that has been hurt and hit by many actions, actions coming from China, also affecting the profitability of the industry. So the industry as a whole has been working hard to move forward together with Abiquin and other players of the Brazilian industry. And unfortunately, there is no deadline for this to be approved. But what it can ensure is that Baskin, Abiquin and the industry at large have been focusing so that this can be approved as soon as possible.

Moderator

This is one of the main focus of the company and of the industry as a whole. Our next question comes from Rodrigo Almeida with Santander. Rodrigo, you may proceed.

Moderator

Good afternoon, everyone. I have just a few follow-up questions. First, with regard to GreenCo. Let I want to ask about sources and uses. In the GreenCo, what do we expect will be involved?

Moderator

We mentioned that Thailand and Brazil. This is a large, there's a large, biomedicine project in The U. S. I've it's not clear for me whether that would be included in GreenCo. And if there are any other additional investments maybe in Bahia, any green ethylene plans to include that in GreenCo.

Moderator

My aim is to understand essentially the size of the GreenCo so that we could see how much that equity would be valued at that you're that you aim to raise. And the second part of my question pertains to the investments you intend to make in Brazil, particularly the logistics investments in Bahia. Is there reasonable volume, a 100 and a $180,000,000? I think it's something around that level. And if you are making similar investments in Brazil as you made in Mexico or logistics investments in Brazil, could you give us some context about investments about importing propane for Rio Grande do Sul?

Moderator

And just to conclude, this may be difficult to answer now, but it's worth a try. At Braskemiteza, are there any plans or studies to expand the plant given that you have now completed the terminal? Since it's isolated, do you have any plans at the moment? Thank you. All right.

Moderator

Thank you, Rodrigo, for your questions. With regard to Grico, you have a great map you've outlined. Those are the main assets that are currently presented as potential assets to be part of GreenCo, including the Bahia project, which you mentioned. So yes. And remember, again, we are currently in a time of discussions.

Moderator

We don't yet have final decisions. This is going to start being better defined as we start closing the the the plant the window and receive more proposals from interested parties so that we can price them, qualify them, and really quantify everything and determine what is included and what is not. This is just a topic to be discussed, the matter of SAF, which used to be considered, well, it is green, but it's not part of GreenCo at the moment. It's a little different. But it is just, I'm mentioning it just to mention that there are still discussions to be had.

Moderator

We have not yet, hit the hammer on anything yet, much less put it to the Board for approval. With regard to logistics, yes, we are going to request some logistics investments in Brazil to implement the transformation plan that Roberto mentions for importing ethane and propane here in Brazil. And as we see that develop, at the moment, we don't yet have any definitions. Creating a terminal is a possibility as we did in Mexico, but it is not at Vallos is not a certainty at all at the moment. So we don't yet know whether it would justify creating a logistics company.

Moderator

But this is part of our list of initiatives. You are correct that it is part of our transformation plan. And you're correct that we are looking at the best way to make the best possible use of our structures to implement these assets. And lastly, today at Braskemidesa, our installed capacity there is 1,050,000. For the first time, it's going to be able to run when terminal enters.

Moderator

It is going to run at full operation for the first time. We are now moving to 1,200,000 tons. This is being discussed. At the moment, we are not yet certain about the right timing. But when the plant when we see how the plant operates, when it's at full swing and the matter of the global petrochemical industries and spreads and volumes and all of those external questions, external to Braskem and external to the petrochemical industry as well.

Moderator

We need to look at all of that in order to make these decisions. So I would say that your answer is we don't yet have a definitive answer.

Moderator

If I could add something related to the transformation point, there are some considerations I would like to make. Bahia is already flexible. It already has this flexibility. You're right. The investment was in the order of $100,000,000 So we can have this option of purchasing ethane, and we have been exercising this possibility and a little bit less in the past because the price of oil dropped and therefore, naphtha price.

Moderator

So we already have this flexibilization in place. So it's extends for about 15% or 20% of what we process in terms of ethane. So we can create value. We can attract value of something that we have implemented in 2017, and we are using this flexibility. In relation to the South, even though the plants we have in the Southern regions are very older, but we understand that they can run propane or so we understand the investment is going to be lower because different from the $100,000,000 that we invested in the past, we understand that Bahia can run propane.

Moderator

So the investment would be lower. So future all the shares are still underway. But if we wanted to convert into ethane, we would not need to make the calculations to see how much the investment would come to. But in fact, we can extract value related to the flexibility, something that was planned beforehand in the past. And as to the plant expansion, what's important for us to look at?

Moderator

We have never tested the plant 100%, but it's important to understand that we can optimize the plant so that it can run above 1,050,000 tonnes without any investments, any additional investments. So this is going to be our total focus. So the plant can produce how much? So the imports terminal already considers capacity of imports of 80,000 barrels per day, which is much higher than the capacity that we need. So any expansion would be something to be discussed in the future.

Moderator

That would also include the need for higher capital. As we mentioned in the call, we talked about Mexico and the stability when we work with Mexican products. So this is our total focus, how we can operate the plant without additional CapEx and improve the effectiveness. Our next question comes from Luis Carvalho with PTG.

Moderator

Given the current time, I will ask just one question. Felipe, to recap everything that was asked during this call and all your answers, I am currently rather more concerned about the timings and motions of everything that has been raised here. Because when we look at the spread dynamic that you yourselves publish or any consultants and the slow times in reducing capacity in other countries, the cash burn and the debt level, and we are discussing the transformation process, I become very concerned because at the end of the day, two years from now, we may be discussing, I will disagree with what Roberto said, we may be discussing reprofiling the debt two years from now. So I'm wondering, at what point in time do you believe that this button will or may need to be pressed in order for us to make more drastic decisions in order to keep the company sustainable. Because if we compare '25 and '26 with the current scenario, the company is going to reach '27 very close to the '28 term with a much worse debt leverage level.

Moderator

So at what time do you believe that, you know, given the rate for Zika and antidumping, do you perhaps consider accelerating the process? A new article was published from another journalist about the same topic about potentially selling the plants in The US. So at what point would that sense of urgency raise among the management in order to make more drastic changes about those questions? All right, Luis. In fact, your question involves a number of different variables, many of which we control and many others of which we do not control, such as the exact date when the antidumping will be published or the increase in rake or the size, those have important impacts on the company, and we manage all of that and draft scenarios about when, which scenarios may occur.

Moderator

So this is all, to give you an analogy, it's like playing billiards, but the balls never stop moving. So I don't have a precise tactical, answer I can give you right now. But we know that I can tell you this is something we do. We consider many different scenarios internally so that if one of those more severe liquidity scenarios comes up on the horizon, we will be able to make a decision ahead of time. As Roberto mentioned, this is not our current scenario.

Moderator

This is not what we predict will occur, but it may occur. Unexpected tariffs, countries invading other countries, and other events that fall completely outside of our control. So we need to be prepared for these scenarios. Many times, they do have an impact on the company. What I can tell you is that we are very alert to this agenda.

Moderator

This is not a secondary topic in our priorities. On the contrary, both among the management and among the board, we discuss possible strategies and possible measures to be implemented in order to address any potential situations that may arise, many of which we've discussed during this call. In order to effectively implement those strategies, And I just saw what you mentioned here on, on Global Hippo Act, who has just published about this. Again, this corroborates what we said earlier, namely and what I affirm to you right now. We are in fact looking at this agenda, making the necessary measures, but it's important to always take a step back, look at the macro concept.

Moderator

We have a compass, which is our transformation plan. I again say this was approved by the board, the administrative council, by everyone in attendance. It was tested by numerous stakeholders, many of whom are our bank financers such as you and other consultancies and other bondholders and stakeholders. And they have all confirmed, you have all confirmed that this is the route for us to follow. There's nothing to add or remove from the plan we are pursuing today, which is liquidity measures and economic valuation measures in the very, very short medium and long terms.

Moderator

So we are significantly focused on this agenda. And every time there is a potential for liquidity within this period, as you mentioned, 06/1928, which is when we start seeing substantial results because the results are occurring at this exact moment, results of the transformation agenda, reassigning some less efficient plants, changing our feedstocks. And this puts an end to the cash burn, which we had in the past to start being cash positive. This is occurring at this exact moment. We have these medium to long term measures as well starting to generate results.

Moderator

And while that occurs, we implement other measures as well at potential total and partial monetizations. But, it's important to make something clear and to strongly establish, Luis, that our plan remains. Nothing has changed. And increasingly, what we see is the sense of urgency that it must be implemented without deviating from the three pillars, which are resiliency, the equality of the petrochemical industry, switch to gas, fly up to green. And we are not deviating a single inch within that strategy using that sense of urgency so that we never need to come to that scenario that you mentioned now.

Moderator

And we will only discover what happens in the future if things occur or don't occur at the speed and intensity that we are scheduling. But we do expect things to occur at the speed and intensity that we forecast. But you're right. We may potentially need to accelerate some additional measures within the transformation plan in order to prevent deviations from it so that we can prevent any of those events that you predicted. Thank you.

Moderator

That's very clear. It's just that the closer it comes, then the more unfavorable the company becomes should a potential deviation occur. Thank you.

Moderator

Next question comes from Conjado with Safra. You may proceed.

Moderator

I'll try to be very to the point here because of time. My question is about the RealPaul expansion plans. What is Petrobras involvement in the discussions for those investments? Do you think it's coming up soon? You mentioned that it's a key component of a final decision, for providing feedstocks there.

Moderator

And Petrobras has numerous times mentioned they want to make investments in the old competitive region for petrochemicals. Do you see any interest for Braskem or Rake to get involved in producing chemicals that are not resins?

Moderator

Thank you very much for the question. In relation to the expansion of Hill Polymeru, let me provide you with a prospect. Today, Hill Poly, since it started up in 2016, it uses propane and ethane as feedstock. So the company is always going to try to use ethane more in order to make polyethylene. This would be the best source in addition to being more competitive.

Moderator

And Petrobras, in this expansion process of Rio Pao, it has it wears two hats, one at the Board. And this is what we communicated, and we made it a point to reinforce today. In relation to the approval of the investment, any investment higher than BRL100 million has to be approved by the Board. So we took information to the Board about the study phase. So we are talking about BRL230 million, which were approved by the Board.

Moderator

We do not have the final approval for the investment. We believe that this is a project that is going to create value to the company. It's the only full gas based plant that we have for the company. And at the right moment, we are going to take it for the approval of by the Board. And what's the proper moment?

Moderator

Any petrochemical project, without any doubt, it starts with an contract of feedstock. Feedstock is essential for any project to continue because this is the main input and the most important input. Yes, considering the other hat that Petrobras wears, we have been discussing a new contract so that we can use the Attain that Petrobras has informed me that it has more availability with the beginning of Route 3. All of those discussions are underway. We are confident.

Moderator

In the context of synergy, it makes a lot of sense because ethane has a limitation that it has considering the heat power that it has. It has a lot of synergy for both companies. So this is something that has been going on. And we are going to make it public in due time. And the current agreement that we have is with Petrobras.

Moderator

And this is a very important year because we are not only going to discuss this new contract, which is going to be so important for the implementation of the transformation strategy, but also to the renewal of the agreements that we have executed. So these are the two roles that Petrobras has. One at the Board with the decision and the other is related to the feedstock so that the project can become feasible. And the second point, which is very important today, of course, we are still making the detailed engineering and coming to the final CapEx. There's an estimate of about $700,000,000 which is an initial estimate.

Moderator

Of course, it's very important to mention that. When I mentioned about the Rake Investments and PRASIC, the industrial Brazilian industry wants to build the industry of the future using the green ethanol, etcetera. So the approval of PRASIC not only addresses PRASIC in relation to feedstock and when we talk about competitiveness, but we also have to touch upon investment. So what have been we have been searching, we and other sectors as well, we are seeking for the approval of So we support the full approval of Considering the competitiveness at present and also for the future.

Moderator

So we are going to use all the resources of Prezik investments in order to implement RAPE for the implementation of the expansion of Rio Palimero. The BRL230 million that have already been approved by the Board are being used together with break investments. And your last question about compares. Any decision of new investments is related to allocation of capital by the company, and it has to be compliant with the corporate strategy of the company, which is fully clear. It's clear where the company wants to go.

Moderator

So if we have this compliance, if we have this adherence, the company will evaluate at all times, and we understand what's the best allocation of the capital in terms of ROI. So this is the corporate decision we have to make should we have any chemical related projects. At Branske, we say that it's a petrochemical company, but it's a chemical and petrochemical company. If we talk about revenues, 20% of the revenue comes from the chemical products that we produce in Brazil. So this is where we would look at.

Moderator

So return of the capital employed and compliance with the strategy, which is so clear that we made clear in the beginning of the year. Thank you. That was very clear. Thank you, Josema.

Moderator

Our next question comes from Regis Cardoso with XP. You may proceed, sir.

Moderator

Hi. Good afternoon, everyone. Thanks for the very detailed discussion. I want to ask about the results of the SKE in particular. And with regard to the inventory turnover, would that effect be reverted in Q3 due to the NAFTA use?

Moderator

And with working cash, would you expect a greater use due to the drop in price? With regard to the composition of inventory, my question is mostly about whether Q3 and inventory and working cash is going to cause any changes? That's one question. The second is, why is the utilization rate for Green PE lower? I understand that we discussed prioritization of GreenCo in particular.

Moderator

So I believe that that part of the assets would have higher utilization. And if you allow me a quick third question for eliminating EBITDA in the consolidated, we had a very negative number in the quarter. Is there something that is important for us to understand there for the next quarters? Hi, Rajesh. Thank you.

Moderator

Good afternoon. With regard to inventory turnover, you may have seen that in Q1, the company had cash consumption because of scheduled shutdowns due to our strategy and price provisions. We had built up inventory so that inventory improved with the reduction in Q2, and that's the impact we see specifically in Q2 'twenty five, not as a strategy for Q3, but really as a result of Q1. And now for Q3, it's going to be more in line with normal operating numbers for the company. With regard to utilization rates for green products, you may have seen in Hosanna's presentation in the beginning of the call, there was composition of inventory in Rio Grande do Sul in Q1.

Moderator

As a result, utilization rate in the South was 82%, 87%. As a result, inventory was produced and so utilization rate dropped to 71%. And you'll see that sales volumes of PE in Q1 jumped from 38,000 to 48,000 tons in Q2, thereby consuming that inventory and as a result, reducing the utilization rate. With regard to the negative impact, the stock effect that you mentioned in relation to the first quarter to the second quarter and the contribution margin. In the current operational rate, 50% is imported. Bersken made this change of importing more naphtha, especially when there was a change of the output of Petrobras refineries. We needed to make that shift. And when we import the naphtha, from the moment we purchased naphtha, the moment it's in stock as finished product, it has the turnover in four months.

Moderator

So you observed there was a large drop of the oil price, especially between March and April and as a consequence of naphtha price. And the price was much lower, about $550 And NAFTA was more expensive at that time. So if we consider at the bridge between those periods, there's about 130,000,000 $150,000,000 of contribution margin. This is the difference. And this effect of the inventory effect is there.

Moderator

It happened especially in Brazil. And there was something in this regard that happened in The United States. So in if you observe the quarter, the second quarter, If you look at the expectation and if we also consider the opinion of consulting companies, we understand that the oil price is going to be at $70 per barrel. And this crack spread that is likely to be maintained at the regular levels that would come to $550,000,000 or $570,000,000 for NAFTA. And we are not likely to see this positive inventory effect according to your question.

Moderator

And lastly, in relation to elimination, without any doubt, we report the uptick from production because they are based and their values in different ways. And this is related to the change that we made in 2015 and 2016. So what is materialist important to mention is how we see production. And this is what we do. We have accounting movement of Subsea forty seven that happened, and this has not affected the client yet.

Moderator

And there was another factor that we tried to explain along the release related to the business. We had some changes in the organizational structure of the company. So all the fixed cost of the corporate unit is reported after I reported the segment EBITDAS. And because of this change in the organizational structure of the company, so that would amount to about $40,000,000 So this was a different way of making the calculation. From the historical viewpoint, we can see variation in those values.

Moderator

But if you consider modules, you can see that this is very aligned to what we have seen along the quarters. And this has to do with the new logics of production. And we want we did that because we do not want to make major adjustments in managerial aspects. Thank you, Regis. This concludes today's question and answer session.

Analysts
    • Moderator
Powered by Quartr