Braskem SA to boost provision by $1.3 billion for safety

Braskem SA (NYSE:BAK), a Brazil-based petrochemical company with a market capitalization of $1.88 billion and annual revenue exceeding $13.7 billion, announced today that it will increase its provision for safety measures by approximately R$1.3 billion ($250 million). This decision follows the engagement of a specialized technical consultancy to study geological events in Alagoas.

The additional funds are earmarked for the backfilling of salt cavities with solid material, a process aimed at ensuring public safety. According to InvestingPro data, the company operates with a significant debt burden of $11.87 billion, making financial management crucial for such major safety investments.

The provision includes approximately R$1.2 billion for backfilling pressurized cavities, which may commence in 2027 and could extend over several years or decades. This precautionary measure is part of the company’s ongoing efforts to manage the impact of the geological event and prioritize the safety of the affected communities.

Chief Financial Officer Felipe Montoro Jens emphasized Braskem’s commitment to safety and informed that the company will continue to update the market on relevant developments in accordance with applicable regulations.

Braskem’s shares are traded on the B3 in Brazil, as well as on the New York Stock Exchange and LATIBEX. The company is known for its production of industrial organic chemicals and is listed under the SIC code 2860.

Recent InvestingPro analysis indicates the stock is currently undervalued based on their proprietary Fair Value model, despite challenging financial metrics including negative earnings per share of -$1.67 and a gross profit margin of 7.82%.

For deeper insights into Braskem’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US-listed companies with detailed analysis and actionable intelligence.

In other recent news, Braskem has made several significant announcements. The company has decided to halt new investments in Oxygea, its digital transformation venture with startups, as part of a broader strategy to optimize capital allocation and cash generation. Despite this, Braskem continues to prioritize innovation within its business strategy.

Additionally, Braskem has announced a robust $614 million investment plan to expand production capacity in Brazil, with seven projects expected to increase output by approximately 139 thousand tons across various regions. The company has also made changes to its Statutory Compliance and Audit Committee, appointing Mr. Gustavo Raldi Tancini as an independent external member and financial specialist.

In terms of financial performance, Braskem reported a 130% year-over-year increase in recurring EBITDA for Q3, reaching $432 million, and a 35% increase from Q2. Sales volume in Brazil grew by 6%, demonstrating resilience in its operations.

In legal developments, a São Paulo court partially favored an appeal by Novonor, Braskem’s controlling shareholder, overturning a previous ruling that had awarded damages to Braskem.

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