Braskem Books Deep Loss on Currency Swing
Brazil's Braskem, the largest petrochemical company in the Americas, booked a steep third-quarter loss as Brazil's tumbling currency drove up the cost of its foreign debts.
Braskem posted a net loss of 1.046 billion reais ($588 million) compared to a 532-million-real profit a year ago.
The plunging local currency drove up the cost of Braskem's debts, 70% of which are denominated in dollars, adding to a financial loss of more than 2 billion reais.
Braskem said the currency swing had no short-term effect on cash flow, as the company's dollar debts have an average maturity of 17 years.
Earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, fell 9% to 940 million reais on the rising cost of raw materials and mounting competition in the Brazilian market.
Braskem's domestic polypropylene and polyethylene sales dropped 10% from a year before, hurt by imports that grew to nearly 30% of the market. A 14% jump in Braskem's foreign sales of the plastic resins partially offset the weaker domestic performance.
In July, Braskem announced plans to buy Dow Chemical's polypropylene business, making it the top producer of the plastic resin in the United States, which is the focus of its international expansion plans.
