BAK

Business Context and Reporting Period

Company: Braskem S.A.
Filing Type: Form 6-K (Earnings Conference Call Presentation)
Reporting Period: Second Quarter 2026 (Ended June 30, 2026)
Context: The quarter was characterized by significant disruptions in global trade flows, particularly involving naphtha and petrochemicals moving from the Middle East to Asia. These disruptions reduced regional availability, driving up prices and spreads for chemicals and resins. While the petrochemical cycle remains structurally challenged by overcapacity, the 2Q26 environment provided a tactical value capture opportunity due to supply shocks.

Key Financial Metrics

Segment Performance (Recurring EBITDA):

• Brazil/South America: US$869 million (Driven by increased spreads and REIQ credits; offset by volume reduction and currency appreciation).
• USA & Europe: US$147 million (Driven by increased PP spreads; offset by scheduled maintenance).
• Mexico: US$57 million (Driven by PE spread expansion; offset by liquidity preservation measures and reduced ethane availability).

Material Changes vs. Prior Period

• EBITDA Growth: Consolidated Recurring EBITDA increased significantly from US$192 million in 1Q26 to US$1,043 million in 2Q26, primarily due to a US$1,043 million contribution margin increase driven by global spread expansion.
• Volume Trends:
  • Resins (PE+PP+PVC): Total sales decreased 2% to 763,000 tons compared to 1Q26. Brazilian market sales dropped due to increased imports and lower demand.
  • Chemicals: Sales decreased 4% to 598,000 tons.
  • Exports: Export share increased by 1 percentage point to 70%.
• Cash Flow: Despite high EBITDA, operating cash flow was constrained by a US$547 million consumption of working capital due to higher inventory levels and feedstock prices.
• Utilization Rates:
  • Brazil/South America: 66% (Up 2 p.p. from 1Q26).
  • USA & Europe: 76% (Down 3 p.p. from 1Q26 due to maintenance).
  • Mexico: 43% (Down 12 p.p. from 1Q26 due to liquidity measures).

Guidance, Outlook, and Risks

Outlook and Scenario:
Management views the 2Q26 performance as a tactical opportunity rather than a structural cycle change. The base scenario for 2H26 and 2027 anticipates a normalization of spreads as trade flows stabilize, though geopolitical risks may cause volatility. A reduction in the arbitrage between US and Asian PE is expected starting in 3Q26.

Strategic Priorities (2H26):

• Optimize capital structure, including Braskem Idesa, to ensure business stability.
• Maintain strict capital allocation discipline to optimize financial liquidity.
• Implement operational excellence and commercial capture initiatives.

Risks and Contingencies:

• Alagoas Geological Event: The company maintains a total provision of R$18.2 billion. As of June 2026, the net provision balance was approximately R$3.2 billion. Relocation of residents is 99.9% complete. The company notes that future costs may differ from estimates.
• Market Conditions: The global industry faces structural challenges including overcapacity (particularly in Asia) and moderate demand.
• Liquidity: Ongoing liquidity preservation measures in Mexico have impacted production volumes.

Investor Verification Checklist

• Working Capital Impact: Verify the sustainability of the US$547 million working capital outflow and its impact on future liquidity.
• Alagoas Provision Accuracy: Confirm the R$3.2 billion remaining provision balance against actual ongoing remediation and compensation costs.
• Spread Normalization: Assess the risk of EBITDA contraction in 3Q26 and 4Q26 as the "tactical" spread expansion normalizes.
• Mexico Segment Viability: Review the long-term impact of liquidity preservation measures on Braskem Idesa's production capacity and market share.
• Export Dependency: Evaluate the risk exposure to global trade disruptions given the 70% export sales mix.