Braskem (NYSE: BAK) reported recurring EBITDA of $1.043 billion for the second quarter of 2026, a significant increase driven by wider international spreads for resins and chemicals amid the Middle East conflict.

The company’s Brazil segment saw recurring EBITDA rise 261% quarter-on-quarter to $869 million, supported by higher contribution margins and PIS/COFINS credits. Meanwhile, the Mexico segment recorded recurring EBITDA of $57 million despite a drop in polyethylene plant utilization.

Segment Performance

The Brazil segment benefited from approximately a 50% increase in spreads for resins and major chemicals in the international market. This was bolstered by a positive impact of $115 million from PIS/COFINS credits on feedstock purchases under the inputs program. Additionally, the recovery of nearly $27 million in credits related to vessel damage and the reversal of accounting provisions contributed to the segment's results.

In Mexico, capacity utilization for polyethylene plants fell to 43%, down 12 percentage points from the previous quarter, due to liquidity preservation measures by Braskem Idesa. Average ethane imports through the terminal decreased to 14.7 thousand barrels per day. Despite an 11% decline in polyethylene sales, recurring EBITDA improved due to a 73% increase in the US polyethylene spread.

Financial Highlights

Consolidated recurring EBITDA margin stood at 24%. Operating cash generation reached $385 million, reflecting higher chemical and petrochemical spreads. However, negative working capital variation resulted from feedstock price volatility and increased inventory volumes. When considering disbursements for Alagoas and lease-purchase agreements, the company reported a cash consumption of approximately $15 million.

What the Numbers Show

The surge in consolidated EBITDA is heavily dependent on non-operational tax benefits and geopolitical anomalies rather than pure operational volume growth. The $115 million impact from PIS/COFINS credits constitutes roughly 11% of the total recurring EBITDA, indicating that fiscal policy adjustments are currently as critical to profitability as market spreads. Furthermore, while international spreads widened significantly, domestic resin sales volumes in Brazil contracted by 2%, suggesting that local demand has not yet absorbed the supply shock-driven price increases.

Outlook and Strategy

Management expects a normalization of spreads in the second half of 2026, with external consultants predicting a 59% decrease in Brazilian PE naphtha spreads between Q2 and Q3 2026. The company is prioritizing financial restructuring to rebalance its capital structure through dialogue with creditors. Operational focus remains on preserving liquidity, particularly at Braskem Idesa, and executing an Operation Excellence Program to strengthen competitiveness amidst structural industry challenges such as global overcapacity.

Braskem Idesa, S.A.P.I. announced on Aug. 18, 2026 that it has secured a comprehensive consensual restructuring agreement with all major stakeholders, significantly de-leveraging its balance sheet. The Mexican petrochemical company, a joint venture between Brazil’s Braskem S.A. and Mexico’s Grupo Idesa S.A. de C.V., will reduce its total senior debt from approximately US$2.5 billion to US$1.6 billion, a reduction of more than US$920 million.

To expedite the process, Braskem Idesa and certain subsidiaries filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas. The company targets emerging from these proceedings within approximately 60 to 90 days through a "prepackaged" in-court restructuring.

Capital Injection and Ownership Structure

As part of the financial solution, Braskem, the majority shareholder, will contribute a total of US$476 million, inclusive of amounts funded prior to the bankruptcy filing. This capital infusion underscores Braskem’s commitment to the joint venture’s future growth. Upon emergence, Braskem will continue to hold a majority stake in the reorganized equity, while Idesa and its affiliates will remain the largest minority shareholder.

Operational Continuity

Day-to-day operations at the Nanchital, Veracruz complex, which produces 1,050,000 tons of ethylene and polyethylene annually, will continue without interruption. The company filed customary "first day" motions with the court to support business-as-usual operations, including the continuation of employee wages and benefits. Unsecured creditors and trade vendors will be paid pursuant to first-day motions and the plan of reorganization.

What the Numbers Show

The restructuring represents a significant deleveraging event for Braskem Idesa. By reducing senior debt by more than one-third (from US$2.5 billion to US$1.6 billion) while securing a US$476 million capital contribution from its majority shareholder, the company is positioning itself to improve its net debt profile immediately upon emergence. The consensual nature of the agreement with a substantial majority of noteholders suggests reduced litigation risk compared to contested restructurings, potentially allowing for a smoother transition back to normal operations within the targeted 60-to-90-day window.