May 15, 2017 / 4:45 PM / 3 months ago

UPDATE 2-Brazil's Braskem gives mixed forecast after strong first quarter

(Recasts with outlook from conference call, updates share move, adds background on Mexican operations, bribery probe)

By Alberto Alerigi

SAO PAULO, May 15 (Reuters) - Braskem SA, Latin America's largest petrochemical company, on Monday gave a mixed 2017 forecast after its first-quarter profit more than doubled on a growing Mexican operation and stronger demand from Brazilian builders and carmakers.

Braskem executives said on a call they expected operating profit in Brazil to drop over the next nine months due to weaker prices, while rising slightly in the United States and Europe.

Braskem shares erased gains following the executives' comments after rising as much as 3.8 percent earlier in the day.

Still, Chief Executive Officer Fernando Musa said there was room for new projects and dividend payments while keeping a lid on debt ratios. Heavily indebted Odebrecht SA, one of Braskem's main shareholders, has agreed to give creditors all dividends it receives from the company, sources told Reuters.

Profit in the first quarter rose to a net 1.905 billion reais ($610 million) from 771 million reais a year earlier, according to unaudited results in a securities filing.

Braskem executives said they expected the audit would be finished soon and it would not change Monday's results.

Earnings before interest, taxes, depreciation, amortization and non-recurring items, a gauge of operating profit known as adjusted EBITDA, rose 16 percent to 3.598 billion reais. Analysts expected net income of 1.383 billion reais and EBITDA of 3.501 billion reais, according to a Thomson Reuters I/B/E/S consensus.

Global spreads between the petrochemical prices and the cost of Braskem's raw materials were returning to normal after an "absolutely exceptional" first quarter, the company said.

Braskem's Mexican operations also lifted earnings from a year ago, when its plant there was ramping up production. Industrial demand in Brazil also showed signs of picking up, according to Musa.

"We can already see some more optimistic sectors, which is translating into a concrete increase in volumes, especially in the auto industry," he told journalists on a separate call.

Braskem shares are nearly flat in 2017 despite hopes of stronger operating profits, as traders have eyed corruption investigations circling the petrochemical firm.

Braskem agreed to fines in Brazil and the United States to settle charges that it schemed with Odebrecht to bribe politicians and executives in Brazil.

Mexico's state oil company Pemex said in April that prosecutors asked to see contracts between Pemex, Odebrecht and Braskem as part of a bribery probe.

Musa said an internal investigation found no signs of wrongdoing outside Brazil.

$1 = 3.12 reais Reporting by Alberto Alerigi Jr.; Additional reporting by Bruno Federowski and Gabriela Mello; Writing by Brad Haynes and Bruno Federowski; Editing by Christian Plumb, Paul Simao and Chizu Nomiyama

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