Braskem Sees Resin Sales Growth Beating Brazil GDP This Year

Braskem SA (BRKM5), the second-best performer on Brazil’s benchmark stock index last year, expects sales for its petroleum-based resins to expand faster than Latin America’s largest economy in 2014.

The region’s biggest producer of materials used to make plastics for packaging and auto parts estimates sales will rise 3 to 4 percent by volume, while Brazil’s economy will probably grow about 2 percent, Chief Executive Officer Carlos Fadigas said today in an interview in Davos, Switzerland. How the volume increase will affect revenue at the Sao Paulo-based company will depend on the exchange rate for its exports, he said.

Brazil’s weakening currency is helping Braskem get more reais for dollars from exports, bolstering earnings. Braskem jumped 64 percent in Sao Paulo trading last year, the most among shares in the Ibovespa index after for-profit education company Kroton Educacional SA. The real slumped 13 percent.

The manufacturing industry would benefit from a further weakening of the real, Fadigas said on the sidelines of the World Economic Forum, declining to give any forecast for the currency.

Braskem’s third-quarter earnings before interest, taxes, depreciation and amortization jumped 68 percent from a year earlier to 1.6 billion reais ($670 million), boosted by the rising export revenue in local-currency terms and tax breaks.

Naphtha Talks

The company is negotiating the price it pays for naphtha to Petroleo Brasileiro SA (PETR4), the country’s only supplier of the refined oil product used to make petrochemicals, and should reach an accord by June, Fadigas said.

Concern that Petrobras, as the state-run crude producer is known, could raise its naphtha price led Braskem shares to lose part of last year’s gains, declining 10 percent this year.

Petrobras is also one of Braskem’s controlling shareholders, with 47 percent of voting shares. A unit of Odebrecht SA owns 51 percent of the voting shares.

Outside Brazil, Braskem has operations in several countries, including the U.S. and Mexico, and is seeking to expand in Argentina with the acquisition of Solvay SA (SOLB)’s assets in the country.

The petrochemicals maker is in talks with the Argentine securities regulator after the agency said this month that an offer made by Braskem to minority stakeholders in Solvay was insufficient, Fadigas said.

“We will surely reach an agreement with the regulator on what it considers a fair price,” Fadigas said. “There is a possibility” Braskem will have to pay more than the 1.35 Argentine pesos (17 cents) per share originally offered, he said.

To contact the reporters on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net; Juan Pablo Spinetto in Davos, Switzerland at jspinetto@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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