Transcript: Braskem Q2 2026 Earnings Conference Call

Braskem (NYSE: BAK ) released second-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

043 billion, driven by higher international spreads of resins and chemicals due to the Middle East conflict. The company's Brazil segment saw a 261% increase in recurring EBITDA, supported by increased spread prices and PIS/COFINS credits. In Mexico, polyethylene plant utilization fell, but recurring EBITDA improved due to higher polyethylene spreads. Braskem's operational highlights include increased green polyethylene sales and renewed commercial partnerships, like with New Balance.

The company is focused on financial restructuring to rebalance its capital structure and maintain operational continuity. Future outlook remains cautious due to expected normalization of spreads and persistent structural challenges in the petrochemical industry. Management emphasized the importance of long-term strategic planning, operational excellence, and capital discipline. Full Transcript OPERATOR Good morning everyone, and thank you for waiting.

Welcome to Braskem's second quarter of 2026 results conference call. With us here today we have Mr. Helcio Tokeshi, CEO; Mr. Carlos Brendel, CFO; and Mrs.

Rossonia Pollio, Investor Relations, Strategic Planning and Global 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 using the Show Captions and View Options buttons, respectively.

After Braskem's remarks, there will be a Q&A session. Please be advised that questions must be sent through the Q&A button. I will now repeat the same instructions in Portuguese. 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 using the Show Captions and View Options buttons, respectively. After Braskem's remarks there will be a question and answer session. Please note that questions should be submitted in writing through the Q&A button. The audio of this event will be available on the Investor Relations website after it ends.

We remind you that the participants will be able to submit questions to Braskem which will be answered after the end of this conference by the IR Department. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding Braskem's business prospects, projections, operational and financial goals are 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.

Investors and analysts should understand that general industry conditions, as well as other operational factors, may affect Braskem's future results and may lead to results that differ materially from those expressed in such future considerations. Now I'll turn the conference over to Mrs. Rossonia Pollio, Investor Relations, Strategic Planning and Global Market Intelligence Director. Mrs.

Pollio, you may begin your presentation. Rossonia Pollio, Investor Relations, Strategic Planning and Global Market Intelligence Director Good morning, ladies and gentlemen. Thank you for participating in the Braskem earnings release conference call for the second quarter of 2026. Today we will present the main operational and financial highlights for the period, discuss the market environment that affected our business, detail the performance of each segment, and share our market outlook for the coming quarters, as well as the Company's priorities for the second half of 2026.

Following the agenda on slide number 3, we will begin by presenting the context observed in the second quarter of 2026. Starting with slide number 4. In the second quarter of 2026, the global macroeconomic environment remained volatile due to the conflict in the Middle East, which restricted the global supply of feedstock, particularly to Asia, and raised international market prices of oil and naphtha, the Company's main feedstock. Given the above context, production costs among marginal producers in Asia were higher, which positively impacted the prices of resins and chemicals.

On the international market, prices were higher when compared to the first quarter of 2026. As you can see, this trend is evident in the main PE and PP spreads, which were significantly higher than the average from 2016 to 2025. In the US PE market, for example, the spread was almost 40% higher, driven mainly by the temporary widening of arbitrage between the US and Asia. This move opened up an export opportunity to the US PE market with more attractive netbacks and higher margins, behavior similar to that observed in the US PP market, which also saw significant increases.

Given that the price of ethane in the US market did not follow the price increases of other petrochemical feedstocks, it's worth noting that this improvement in international spreads results mainly from an on-off supply shock and not from a structural change in the dynamics of the global petrochemical cycle. Moving on to the next slide, the performance of each segment of the Company will be presented below, starting with Brazil. On slide number 6, the petrochemical plants in the Brazil segment presented an average utilization rate in line with the previous quarter, higher by 1 percentage point.

This result is mainly attributable to the strategy of maintaining production levels in response to the high volatility of feedstock prices in international markets resulting from the conflict in the Middle East. In relation to sales, the volume of resins in the Brazilian market was 2% lower compared to the previous quarter. This result is mainly attributable to a 6% decrease in polyethylene sales volume and a 1% decrease in PVC sales volumes due to higher volumes of imported products during the period. This effect was partially offset by the 3% increase in polypropylene sales in line with the growth in demand in the Brazilian market.

Sales volume of chemicals, however, was down 4%, mainly due to the lower availability of gasoline and benzene for sale and lower demand for ethylene and quinine in the Brazilian market. Regarding the quarter's results, the segment recurring EBITDA was $869 million, an increase of 261% compared to the previous quarter. This result was mainly driven by the segment's higher contribution margin due to approximately 50% increase in the spreads for resins and major chemicals in the international market, as mentioned previously, in addition to the positive impact of $115 million from PIS/COFINS credits on the purchase of feedstocks under the inputs program.

In addition, the recovery of nearly $27 million in credits related to vessel damage and the reversal of accounting provisions had a positive impact on the segment's results. These effects were partially offset by the 4% appreciation of the average Brazilian real against the average dollar for the period and by the lower sales volume of resin and major chemicals in the Brazilian market. Next slide, please. In the second quarter of 2026, the green ethylene utilization rate was higher by 2 percentage points compared to the first quarter of 2026, mainly due to the adjustment of production levels in response to higher demand.

During the period, sales of green polyethylene increased by 49%, mainly due to greater commercial opportunities in Europe and the normalization of demand following the seasonal recess of the Chinese New Year in the previous quarter. Highlights for the quarter include the renewal of our commercial partnership with New Balance to use I’m green bio-based EVA in the soles of running shoes, strengthening our existing commercial partnerships. Next slide. The United States and Europe segment registered a utilization rate of 76% in the quarter.

The reduction of 3 percentage points in relation to the previous quarter is explained by the scheduled maintenance shutdowns in plants in the US and in Germany lasting 35 and 30 days, respectively. It's worth noting that the higher sales volumes in the United States were offset by the lower sales volume in Europe due to the inventory management and the processing chain in the region, which meant that the sales volume in the quarter was in line when compared to the first quarter of 2026. In the quarter, the recurring EBITDA of the United States and Europe segment was $147 million.

The increase in relation to the previous quarter is mainly explained by the positive impact of the higher polypropylene spreads in the international market arising from the conflict in the Middle East. Moving on to the next slide, in Mexico, the capacity utilization rate for polyethylene plants was 43%, down 12 percentage points from the previous quarter, mainly due to the liquidity preservation measures adopted by Braskem Idesa. 7 thousand barrels per day, a decrease of approximately 3,000 barrels per day compared to the first quarter of 2026. 8 thousand barrels per day, a reduction of about 3,000 barrels per day when compared with the first quarter of 2026.

Polyethylene sales were lower by 11%, impacted by the lower availability of product for sale due to the lower utilization rate. In this context, the recurring EBITDA of the Mexico segment was $57 million in 2Q26. The improvement in relation to the previous quarter is mainly explained by the increase in the polyethylene spread in the United States by 73%, impacted by the uncertainties related to the conflict in the Middle East. Next slide, please.

In this next chapter I will present the Company's consolidated financial results. Consolidated recurring EBITDA in 2Q26 was $1,043,000,000, with an EBITDA margin of 24%, representing an increase compared to the previous quarter. This increase compared to the previous quarter is mainly due to the increase of 82% and 98% in the average international spreads of resins and main chemicals in the Brazil and South America segment, a 28% increase in the average polypropylene spread in the United States and Europe market segments, and a 73% increase in the international polyethylene spread in the Mexico market segment.

Additionally, results were positively impacted by $115 million, or R$578 million, resulting from PIS/COFINS credits for the purchase of feedstocks under the inputs program in Brazil. Such effects were partially offset by the average appreciation of the Brazilian real against the dollar of 4% during the period. Also, sales of resins and main chemicals decreased in the Brazilian market by 2% and 4%, respectively. Additionally, there was an 11% decrease in PE sales in Mexico.

Next slide, please. The Company presented an operating cash generation of $385 million, which mainly reflected an increase in chemical and petrochemical spreads in the international market driven by the conflict in the Middle East. Negative variation in working capital was mainly due to the high volatility of feedstock prices in international markets and an increase in inventory volumes due to prioritization of sales with higher added value. Recurring cash generation totaled approximately $210 million.

Finally, when disbursements for Alagoas and payments related to lease-purchase agreements are considered, the Company presented a cash consumption of approximately $15 million in the period. Next slide, please. As of the end of June 2026, work fronts in Maceió continue to move forward as planned. 9% completion rate through the Residence Relocation Program.

7% of the proposals were accepted and also paid out. In parallel, we continue to move forward with the closing and monitoring of salt cavities. Every effort has been made along this work front to ensure, if necessary, that these 35 cavities require zero maintenance over the long term. Six cavities were filled naturally during the second quarter of 2026, a further eight cavities were completed and the technical fill limit was reached in six cavities.

Finally, three cavities are in the filling process and one cavity in the planning phase. 2 billion was reclassified under other payables. 2 billion. Next slide, please.

The next few slides represent the chemical and petrochemical scenario perspectives. Slide 15 presents the expected scenario for the second half of 2026 and 2027. The base scenarios prepared by consulting firms for these periods point to moderate spreads and potential occasional upsides. The gradual normalization of trade flows will tend to reduce the premium observed in 2Q26.

However, geopolitical, logistical and operational risks may continue to sustain volatility and value capture opportunities. These trends can be observed in the main spreads. With regards to Brazilian PE naphtha, external consulting firms expect a 59% decrease between the second and third quarters of 2026, given that a reduction in arbitrage between the United States and Asia is expected starting in the third quarter. Similar results are expected for Brazilian PP naphtha and Mexican PE ethane, which also saw a decrease.

Consultants are predicting a base scenario marked by the normalization of spreads driven by the redirection of flows, moderate demand and excess global supply. However, potential upsides remain possible if disruptions persist or intensify. I would therefore like to reiterate that we remain attentive to these potential trajectories and we are ready to capture opportunities whenever the environment allows. Slide 16 presents an outlook for the global petrochemical industry from specialized external consultants.

Despite improvements observed during 2Q26, the petrochemical cycle is expected to remain structurally challenging over the coming periods. The increase in spreads in the second quarter of 2026 resulted from a supply shock. Medium-term fundamentals, meanwhile, remain under pressure due to overcapacity and moderate demand. Global operating rates remain under pressure in both the PE and PP sectors, a reflection of global overcapacity, particularly in Asia, and continued moderate demand.

Structural challenges such as excess supply, a need for rationalization of capacity, and greater operational discipline existed before the conflict and will tend to persist even after trade flows are normalized. It is therefore important to emphasize that the scenario for 2Q26 should be interpreted as a tactical capture of value and not as a structural change in the cycle. Let's move on to the next slide. I will end off by commenting on the Company's priorities for the second half of 2026.

Braskem reviewed targets and priorities for 2H26 in response to recent changes in the Company's environment and business activities. These changes are due to external and internal factors within the global scenario in the petrochemical industry and Braskem's new shareholding structure. I'd like to highlight our new priorities for the second half of the year. Given the above context, in relation to our pillars of action, we will move forward along two complementary work fronts under the restructuring pillars.

These efforts will focus on optimizing Braskem Idesa's structure, guaranteeing business continuity and activities. Additionally, given the ongoing challenges faced in global industry, the Company remains committed to discipline in capital allocation focused on preserving and optimizing financial liquidity. We are expanding our ambition to strengthen our business structure competitiveness under our operational and commercial pillar through the implementation of an Operation Excellence Program, synergies, and the strengthening of commercial value capture levers.

Furthermore, we remain committed to reinforcing our institutional performance and promoting a more competitive business environment for the Brazilian chemical and petrochemical industries. Additionally, we will remain focused on completing the mapping of further value creation opportunities and beginning to capture these benefits through the Transformation Plan.

Finally, we are moving forward with our commitment to fulfilling agreements related to the geological event in Alagoas and, with regards to safety—which remains a non-negotiable value at the Company—we remain dedicated to guaranteeing reliable and safe operations, protecting people, and safeguarding the integrity of our processes across all regions where we operate. We've reached the end of our presentation of Braskem results for the second quarter of 2026. I'd like to thank you all for your attention, and we will now begin our Q&A session. Ladies and gentlemen, we will now begin the Q&A session.

Please be advised that questions must be sent through the Q&A button. Our first—so the Company may proceed. Please.