Braskem Q2 Earnings Call Highlights

Key Points Recurring EBITDA reached $1.043 billion in Q2 2026, with a 24% margin, helped by wider petrochemical spreads and $150 million in Brazilian PIS/COFINS tax credits.

Operating cash flow was $385 million, though post-disbursement cash consumption was approximately $15 million.

Braskem cautioned that the improved spreads were driven by a temporary Middle East-related supply shock, not a structural recovery; consultants expect spreads to normalize in the second half amid global oversupply and moderate demand.

Management is pursuing a consensual financial restructuring with major creditors while focusing on cost discipline, operational efficiency and cash generation.

Mexican operations were reduced to preserve liquidity, while full-year capital expenditures excluding IDESA are expected at $485 million.

Braskem NYSE: BAK reported recurring EBITDA of $1.043 billion for the second quarter of 2026, supported by wider international petrochemical spreads following supply disruptions linked to the Middle East conflict.

The company said the improvement was tactical rather than evidence of a structural recovery in the global petrochemical cycle, which it expects to remain pressured by overcapacity and moderate demand.

Recurring EBITDA margin reached 24% in the quarter.

Braskem said results benefited from higher average spreads for resins and chemicals across its operating regions, as well as $150 million, or BRL 578 million, in PIS/COFINS tax credits related to feedstock purchases under Brazil’s REIQ inputs program.

The company generated $385 million in operating cash flow and approximately $210 million in recurring cash generation during the quarter.

After Alagoas-related disbursements and lease-purchase agreement payments, Braskem reported cash consumption of roughly $15 million.

Rosana Avolio, Braskem’s investor relations, strategic planning and global market intelligence director, said the Middle East conflict restricted global feedstock supply, particularly to Asia, lifting oil and naphtha prices.

Higher costs for marginal Asian producers helped raise international resin and chemical prices compared with the first quarter.

In the U.S. polyethylene market, the spread was nearly 40% above the 2016-2025 average, aided by a temporary widening in the arbitrage between the U.S. and Asia.

Braskem said U.S. ethane-based producers also benefited because ethane prices did not rise in line with other petrochemical feedstocks.

However, Avolio cautioned that the stronger spreads reflected an “on-off supply shock” rather than a structural shift in industry fundamentals.

External consultants expect spreads to normalize in the second half as trade flows adjust, while global oversupply—particularly in Asia—and moderate demand continue to weigh on operating rates.

Consultants expect Brazilian PE-naphtha spreads to decline 59% between the second and third quarters as U.S.-Asia arbitrage narrows.

Brazilian PP-naphtha and Mexican PE-ethane spreads are also expected to decline.

Braskem said geopolitical, logistics and operational disruptions could still create intermittent upside opportunities.

The Brazil segment posted recurring EBITDA of $869 million, up 261% from the prior quarter.

The company attributed the increase primarily to an approximately 50% rise in international spreads for resins and major chemicals, along with $115 million in PIS/COFINS credits and nearly $27 million from recovered vessel-demurrage credits and reversed accounting provisions.

Those gains were partially offset by a 4% appreciation in the average Brazilian real aga...