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Petchem financial results set to improve in 2007

Bnamericas Published: Thursday, December 14, 2006
Rising prices of naphtha feedstock and resins produced by the Brazilian petchem industry are expected to help boost the financial figures in the sector both this year and next, according to a report from brokerage Ágora Corretora. In relation to Brazil's GDP, the sector is estimated to grow 3% in 2006 and 3.5% per year beginning in 2007. In the international market, the spread of polypropylene and naphtha prices was projected at US$680/ton in 2006 and 2007. Because of expected improvements in the spread, the brokerage predicts improved operational figures, especially for Braskem and Suzano Petroquímica next year. Suzano Petroquímica is expected to see the strongest growth, with optimal cash generation and a reduction in its debt/Ebitda ratio, the report stated. In 2006, Suzano's net losses are forecast to reach 16.0mn reais (US$7.4mn), while in 2007 the results are predicted to improve to a net profit of 8.3mn reais. The firm's Ebitda is estimated to reach 176mn reais in 2006 and to rise to 315mn reais in 2007. Braskem's net profits for this year will reach 13.6mn reais, but will climb to 86.6mn reais in 2007, thanks to at least four new projects underway - one in Paulínia in São Paulo state, one in Bahia and two in Venezuela - according to the report. The company's Ebitda for 2006 is forecast to total 1.48bn reais and will increase to 1.80bn reais in 2007, the brokerage said. The broker also analyzed petchem company Copesul. Because the company does not produce resins, its cash flow is not as volatile as the other two companies. Net profits are estimated at 546mn reais in 2006 and 589mn reais in 2007.

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