August 8, 2019 / 1:44 AM / 16 days ago

Brazil's Braskem reports 76% drop in Q2 profit

SAO PAULO, Aug 7 (Reuters) - Braskem suffered a sharp fall in second-quarter net income due to slower demand in Europe and Mexico, and the freezing of funds to pay for environmental damages in Alagoas state.

Latin America’s biggest petrochemical company on Wednesday reported net income of 129 million reais ($32.5 million), down 76% from a year ago despite good results in Brazil and the United States.

Earnings before interest, taxes, depreciation and amortization, a gauge of cash generation known as EBITDA, declined 49% to 1.61 billion reais ($405.7 million).

The company said in a securities filing that its U.S. petrochemical plants performed better and it enjoyed higher sales of chemicals in the Brazilian market, while spreads for chemicals remained high internationally.

Braskem is jointly owned by Brazilian engineering and construction conglomerate Odebrecht and state-run oil company Petroleo Brasileiro SA, better known as Petrobras.

Braskem had about 3.8 billion reais frozen by a Brazilian court to cover potential compensation for damages to the environment and buildings caused by its mining activities near Maceió, the capital of Alagoas, where it produces raw material for making PVC.

Braskem said the New York Stock Exchange (NYSE) has scheduled for Oct. 17 a hearing related to the company’s appeal against the decision to suspend trading and start delisting its American depositary receipts, a way foreign companies can list on U.S. exchanges, after failing to file an annual form with the U.S. Securities and Exchange Commission.

Braskem said it has not been affected yet by the filing for bankruptcy protection by its controlling shareholder Odebrecht.

$1 = 3.9684 reais Reporting by Aluisio Alves; Editing by Lisa Shumaker

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