Braskem Q4 Earnings Call Highlights

Key Points

• Prolonged downcycle hit results: Recurring EBITDA fell to $109 million in Q4 and $557 million for FY2025 (a 49% decline vs. 2024), with operating cash consumption of about $246 million for the year, corporate cash of ~$2.1 billion and adjusted net debt of $7.5 billion (leverage ~14.7x).
• Alagoas provisions and remediation progress: Braskem has provisioned around BRL 18 billion for the Alagoas event (BRL 13.9 billion disbursed, BRL 3.5 billion remaining) and reports ~99% completion on relocation/compensation steps and ongoing cavity-sealing work.
• Resilience and strategic shift: Management implemented >70 action plans that contributed about $500 million in EBITDA and $600 million in cash in 2025, and is prioritizing cost control, capital-structure changes and feedstock diversification — targeting a reduction of naphtha use from ~80% to 60% by 2030 while expanding green products.

Braskem NYSE: BAK executives used the company’s fourth-quarter and full-year 2025 results call to emphasize the impact of a prolonged global petrochemical downturn on profitability and cash flow, while outlining steps taken to preserve liquidity, defend the Brazilian market, and advance a longer-term feedstock and transformation strategy.

Downcycle pressures operating rates and spreads

Investor Relations, Strategic Planning, and Market Intelligence Director Rosana Avolio said the petrochemical industry remained in a “prolonged down cycle” during 2025, with international petrochemical spreads below historical averages amid a persistent imbalance between global supply and demand. She said the dynamic weighed on profitability and liquidity across the industry and at Braskem.

In Brazil, utilization rates for petrochemical complexes were 4 percentage points lower than the prior year, which Avolio attributed mainly to production adjustments aligned with demand and a focus on higher-value sales while keeping the domestic market supplied. Utilization in the U.S. and Europe was in line with 2024, while Mexico ran lower year-over-year due to the first general maintenance shutdown at the country’s petrochemical complex since it began operations, completed at the end of July 2025.

Management also pointed to a volatile macro environment, including trade tensions, geopolitical fragmentation, and slowing major economies. Avolio said global uncertainties affected production decisions and inventory replenishment and contributed to lower resin spreads versus 2024. In Brazil, she said domestic resin demand fell about 2% in 2025 after a 60% growth year in 2024, as downstream converters optimized inventories.

Quarter and full-year results, cash flow, and leverage

Braskem reported recurring consolidated EBITDA of $109 million in the fourth quarter and $557 million for full-year 2025, which Avolio said represented a 49% decline versus 2024. She attributed the decrease primarily to pressure on petrochemical spreads and lower contribution margins, with lower sales volumes in Brazil (resins and chemicals) and lower polyethylene sales in Mexico. The company cited partial offsets from higher revenues tied to tax credit recoveries and the depreciation of the Brazilian real.

Operating cash generation was approximately $13 million in the quarter, while the company posted operating cash consumption of $246 million for the year, reflecting lower EBITDA. Avolio said corporate cash at the end of the fourth quarter totaled about $2.1 billion, including a $1 billion standby facility maturing in December 2026, and corporate leverage was approximately 14.74x.

On a local-currency basis, the company said operating cash consumption in 2025 totaled BRL 1.4 billion, driven mainly by lower EBITDA. Avolio added that working capital consumption increased due to reduced availability of certain payment arrangements with financial institutions and suppliers, while recurring cash consumption was impacted by higher interest payments stemming from higher gross debt. Including disbursements related to the Alagoas event, total cash consumption reached about BRL 7.3 billion.

At year-end 2025, Braskem reported adjusted net debt of $7.5 billion excluding Braskem Idesa, with a weighted average cost of currency variation plus 6.2% per year.

Segment performance: Brazil, U.S./Europe, and Mexico

In Brazil, Avolio said fourth-quarter utilization was 6 percentage points lower than the third quarter, driven by a scheduled maintenance shutdown at the Bahia complex (completed in January 2026) and continued production adjustments for lower seasonal demand. Domestic sales volumes fell 6% in the quarter due to seasonality, and chemical sales were pressured by reduced product availability tied to lower utilization, particularly at Bahia.

For 2025, recurring EBITDA in the Brazil segment was $698 million, down 22% from 2024. Management cited lower resin and chemical volumes and lower average spreads, partially offset by the weaker real and cost-reduction initiatives.

In the U.S. and Europe segment, utilization was 8 percentage points lower sequentially in the fourth quarter due to scheduled shutdowns at European plants completed in the quarter and inventory optimization in both regions, with seasonal impacts also weighing on volumes. For the full year, utilization and sales volumes were described as broadly stable. Recurring EBITDA for 2025 was negative $52 million, which the company attributed to lower polypropylene and polyethylene spreads in Europe, inventory effects on U.S. cost of goods sold, and the reclassification of expenses into the segment following an organizational change.

Mexico’s polyethylene utilization reached 85% in the fourth quarter, up 38 percentage points versus the third quarter, reflecting ramp-up after the July maintenance shutdown and higher imported ethane supply through the import terminal. Full-year utilization was 64%, down 14 percentage points year-over-year due to the shutdown. The Mexico segment delivered recurring EBITDA of $2 million in 2025; management cited lower product availability and lower international polyethylene-ethane spreads.

Alagoas update and provisions

Braskem said work fronts in Maceió continued to advance as planned. Avolio reported that the relocation and compensation program ended the quarter with 99.9% of relocation execution completed; proposals submitted were also 99.9% complete, with 99.6% accepted and 99.5% already paid.

Sealing and monitoring of salt cavities also continued, and the company said all necessary actions to ensure 35 cavities reach a long-term maintenance-free condition have been provisioned. By the end of 2025, Braskem said six cavities were naturally filled, six were completed, four reached their technical filling limit, and six remained in the filling process.

The company’s total provision for the Alagoas event was about BRL 18 billion, of which roughly BRL 13.9 billion had been disbursed, with about BRL 1.4 billion classified to other payables. The remaining provision at the end of the fourth quarter was BRL 3.5 billion. CEO Roberto Ramos also said the company signed an agreement with the state valued at BRL 1.2 billion, with “the vast majority” already paid.

Strategy, geopolitical risks, and 2026 priorities

Management described an internal resilience effort designed to mitigate the downturn and protect liquidity. Avolio said the company implemented more than 70 action plans comprising over 700 initiatives across fronts including supplier negotiations, commercial initiatives, asset monetization, optimization of employed capital, and operational efficiency. Ramos later said operational improvements included feedstock and gas optimization, prioritizing higher-value resins for domestic demand, reducing downtime during grade transitions, lowering logistics costs, improving raw material acquisition, and adopting “tax grids.” He said initiatives contributed $500 million in EBITDA and $600 million in cash generation in 2025.

Executives also spent significant time on geopolitical developments, including heightened Middle East tensions and the potential implications for oil, naphtha, freight, and petrochemical supply chains. Avolio characterized the analysis as hypothetical and dependent on developments such as possible logistics restrictions involving the Strait of Hormuz. She said a restriction scenario could reduce global polyethylene supply by 6–19 million tons and polypropylene by 7–10 million tons, with differing impacts by region.

In Q&A, Ramos said Braskem imports naphtha—primarily from the U.S.—and also sources condensate from Algeria, with some shipments from the Middle East. He said Braskem does not buy naphtha from Russia due to sanctions and stated that the company’s supply “is not at risk,” though pricing can be impacted. He also outlined a longer-term goal to reduce reliance on naphtha from about 80% today to 60% by 2030, with the remaining 40% split between ethanol and gas, and noted efforts to use propane from Argentina and ethane imports from the U.S.

Asked about the potential EBITDA impact of the conflict, executives reiterated they do not provide formal guidance and said it was too early to define an outcome, noting they are evaluating different scenarios while emphasizing liquidity preservation.

On Brazil trade protections, management said it saw information indicating GECEX opted not to adopt a deeper technical study that recommended a $700-per-ton anti-dumping measure for polyethylene from the U.S., maintaining the existing provisional measure instead. Ramos said the company intends to appeal, calling the case strong.

Looking ahead, Avolio said the company’s 2026 priorities include reorganizing its capital structure to ensure continuity through petrochemical cycles, continuing the resilience plan with strict cost control and disciplined capital allocation, seeking financing alternatives for strategic projects, expanding the green product portfolio, maintaining compliance with Alagoas-related agreements, and keeping safety as a “non-negotiable” value. Braskem reported a global accident frequency rate of 0.80 events per million hours worked, described as the second-lowest since 2002.

About Braskem NYSE: BAK

Braskem NYSE: BAK is a leading integrated petrochemical company based in São Paulo, Brazil, and holds the distinction of being the largest thermoplastic resins producer in Latin America. The company operates across the entire value chain, from feedstock sourcing and polymer production to distribution and recycling. Braskem's comprehensive approach to petrochemical manufacturing enables it to serve a diverse set of end markets with a broad portfolio of products.

Braskem's core product lines include polypropylene, polyethylene and polyvinyl chloride (PVC), which are used in industries such as packaging, automotive, construction and electrical & electronics.

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