Braskem remains confident of long term prospects

26-Oct-05

Braskem, Latin America's leader in the thermoplastic resins segment and one of the three largest Brazilian privately owned industrial companies has had a good year, marked with ups and downs. Thermoplastic resins sales volume during Q3-2005 increased by 16% compared to Q2-2005 and 11% as against Q3-2004. Domestic sales that rose by 21% as against the previous quarter, were primarily responsible for this recovery. Q3-2005 witnessed a decline in international prices for thermoplastic resins when converted into reais. In line with the Company's policy of keeping its domestic prices aligned with international prices, Braskem adjusted prices downwards by 9% in Q3-2005 to reflect the current market scenario. This adjustment has led to an R$80 million reduction in EBITDA during Q3-2005. An 18% increase in average naphtha and feedstock costs reduced EBITDA in Q3 by R$100 million. In a bid to ensure the best operating levels and productivity of its plants, Braskem has maintained high capacity utilization rates and production volumes during Q3-2005, consistent with capacity utilization rates and production volumes during Q2-2005. The company remains confident of its medium- and long-term prospects. Domestic prices and volumes have started recovering by the end of the quarter, and the process of gradual reduction in interest rates in Brazil is expected to result in even higher domestic demand for thermoplastic resins, possibly leading to higher operating margins in the near future.