Business context and reporting period
Braskem S.A. filed this Form 20-F on April 27, 2022, covering the fiscal year ended December 31, 2021. It is an annual report, not a standalone fourth-quarter filing; the provided text does not give a clear Q4-only set of financial results. Financial statements are prepared under IFRS as issued by the IASB, with amounts primarily in Brazilian reais (R$).
Braskem is a global petrochemical and plastics producer operating across Brazil, the United States, Europe and Mexico. Its reportable segments are Brazil, USA and Europe, and Mexico.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net revenue | R$105.6 billion | R$58.5 billion |
| Gross profit / gross margin | R$32.1 billion / 30.3% | R$11.2 billion / 19.2% |
| Operating profit before net financial expenses and taxes | R$26.0 billion | Loss of R$71.9 million |
| Net profit (loss) | R$14.0 billion | Loss of R$7.0 billion |
| Net cash from operating activities | R$14.8 billion | R$6.3 billion |
| Net cash used in investing activities | R$3.4 billion | R$2.7 billion |
| Net cash used in financing activities | R$17.0 billion | Cash provided: R$2.2 billion |
| Cash and cash equivalents at year-end | R$8.7 billion | R$13.9 billion |
| Financial investments at year-end | R$3.5 billion | R$3.6 billion |
| Consolidated indebtedness | R$47.4 billion | Not stated here on a directly comparable basis |
Net financial expenses were R$8.1 billion, including R$4.0 billion of net foreign-exchange losses. Total debt was 98.6% denominated in foreign currencies, principally U.S. dollars. Braskem reported R$1.5 billion of short-term indebtedness and R$45.9 billion of long-term indebtedness at year-end. It also had an unused US$1.0 billion revolving credit facility maturing in 2026.
Segment revenue in 2021 was R$69.5 billion for Brazil, R$32.4 billion for USA and Europe, and R$6.5 billion for Mexico. Capacity utilization was 81% for Brazil ethylene, 87% for USA and Europe polypropylene, and 66% for Mexico polyethylene.
Material changes versus the prior comparable period
- Revenue rose 80.4% year over year, while cost of products sold rose 55.4%. Management attributed the improvement primarily to higher international prices and spreads, recovery in demand, and supply and logistics constraints; increased sales volumes were a smaller contributor.
- Gross margin increased to 30.3% from 19.2%, and the company moved from a net loss to substantial net profit.
- Operating cash flow more than doubled, but cash and cash equivalents fell by R$5.2 billion during the year, reflecting financing outflows including debt repayments and R$6.0 billion of dividends.
- Net financial expenses improved from R$9.6 billion to R$8.1 billion, although financial expenses increased and foreign-exchange losses remained significant.
- Other expenses fell to R$2.7 billion from R$7.9 billion, mainly because geological-event expenses in Alagoas were lower than in 2020.
Outlook, risks, contingencies and unusual items
- Alagoas geological event: Braskem recorded a R$7.66 billion provision at year-end for relocation and compensation, mine closure and monitoring, and social, urban and environmental measures. The estimate may change as technical studies, regulatory review and remediation proceed. A separate CBTU claim was stated at an updated R$1.4 billion; the company said the matter was stayed through December 20, 2022 while negotiations continued.
- Mexico feedstock and operations: Braskem Idesa’s polyethylene utilization was constrained by interruptions to natural-gas transport and reduced Pemex ethane supply. The amended ethane agreement reduced the minimum contractual volume to 30,000 barrels per day until February 2025, subject to specified extensions. An ethane import terminal, estimated at approximately US$400 million, was targeted for completion in 2024; delays remain possible. Fast Track imports were being expanded.
- Mexico refinancing: Braskem Idesa refinanced its project debt in 2021 with US$1.2 billion of sustainability-linked notes due 2032 and a US$150 million term loan. The notes’ coupon can increase by 37.5 basis points if the subsidiary misses its 2028 target to reduce absolute GHG emissions by 15% from a 2017 baseline.
- Legal and compliance matters: R$1.1 billion remained payable under leniency agreements, in installments through January 2025. The company also disclosed R$17.2 billion of tax proceedings assessed as possible losses. A separate securities class action concerning the Alagoas event remained pending, with potential exposure not reliably estimable.
- Control transaction and governance: Novonor and Petrobras’ proposed share offering was suspended in January 2022 because of market volatility; they stated an interest in resuming it when conditions improve. A potential move to B3’s Novo Mercado remains subject to studies and approvals and could change Braskem’s share structure and governance.
- Internal controls: Management concluded disclosure controls and internal control over financial reporting were ineffective at December 31, 2021, due to a material weakness in hedge-accounting controls at Braskem Idesa. The related misstatement was corrected and was not material, but KPMG issued an adverse opinion on internal control effectiveness. KPMG issued an unqualified opinion on the IFRS consolidated financial statements.
- Commodity and macroeconomic risks: Naphtha, propylene and ethane costs rose sharply in 2021. The company does not generally hedge feedstock price exposure and may not be able to pass cost increases through promptly. The filing also highlights inflation, exchange-rate volatility, petrochemical cyclicality, trade and tariff changes, climate regulation, and the Russia–Ukraine conflict as risks.
- Management outlook and investment: Braskem planned R$5.55 billion of 2022 capital expenditure, including maintenance, safety, efficiency, recycling and biopolymer projects. Its stated long-term ambitions include 1 million tons of green PE capacity by 2030, 1 million tons of recycled-content resins and chemicals by 2030, and net-zero Scope 1 and 2 emissions by 2050.
Subsequent to year-end, shareholders approved an additional R$1.35 billion dividend in April 2022, on top of R$6.0 billion of interim dividends paid in December 2021. The 2021 filing does not provide a clear standalone fourth-quarter financial summary.
Most important facts for investors to verify
- Review audited statements and segment disclosures to confirm the extent to which 2021 earnings growth reflected durable demand and spreads versus temporary price, supply and logistics conditions.
- Track cash conversion, working-capital needs, liquidity available outside Braskem Idesa, foreign-currency debt exposure and upcoming maturities.
- Assess whether the R$7.66 billion Alagoas provision is sufficient as mine-closure, relocation, environmental and related legal matters develop.
- Monitor Pemex ethane deliveries, Fast Track import capacity, Cenagas service continuity, and construction, financing and timing of the Mexico ethane terminal.
- Verify remediation of the Braskem Idesa hedge-accounting control weakness and the status of external monitoring, which was expected to continue through 2022.
- Follow the proposed shareholder sale and Novo Mercado migration, including any effect on control, preferred-share rights and Braskem’s right of first refusal on petrochemical opportunities.