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UPDATE 2-Brazil's Braskem cutting 2012 capex after losses
March 14, 2012 / 1:52 PM / 6 years ago

UPDATE 2-Brazil's Braskem cutting 2012 capex after losses

* Sees 2012 investment down 18 pct from 2011 to $951 mln

* Lower capex underlines weak industrial investment

* Petrochemical company posts Q4 net loss of $112 mln

* Q4 results add to full-year 2011 loss

SAO PAULO, March 14 (Reuters) - Brazil’s Braskem , Latin America’s largest petrochemical company, is cutting back on investments in 2012 after posting a steep loss for 2011 due to rising competition from imports and weak global demand for its plastic products.

Braskem expects capital expenditures to total 1.712 billion reais ($951 million) this year, down 18 percent from 2011, according to a Wednesday securities filing.

The cutback reinforces concerns about waning industrial investment in Latin America’s largest economy as companies struggle with a strong currency and a global slowdown.

Braskem, which is controlled by the Odebrecht construction conglomerate, on Wednesday posted a net loss of 201 million reais ($112 million) for the fourth quarter, compared with a profit of 356 million reais a year earlier. The company’s loss for all of 2011 was 517 million reais.

Earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, was 718 million reais in the fourth quarter, down 33 percent from a year earlier. Weak sales volumes and slipping profit margins led to an 8 percent drop in full-year EBITDA to 3.74 billion reais.

Braskem sells plastic resins used in food packaging and consumer goods, sectors that have seen weaker demand growth in markets such as the United States and Europe. And the company relies on increasingly costly feedstock, such as crude oil-derived naphtha.

In the Brazilian market, Braskem has suffered the fate of many industrial peers, facing down a flood of imports made cheaper by a stronger local currency.

Braskem said it reaped 400 million reais in cost savings last year from the 2010 takeover of rival Quattor, 6 percent above initial estimates. This year, the company hopes to boost annual cost savings from the deal to 495 million reais.

Shares of Braskem were little changed in Sao Paulo trading on Wednesday, slipping 0.06 percent to 15.43 reais.

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