Braskem SA ADR

Good morning, and thank you for holding. Welcome to GRASCAM's first quarter of 2026 results conference call. With us here today, we have Mr. Roberto Ramos, GRASCAM's CEO, Mr. Felipe Genz, GRASCAM's CFO, and Ms. Rosana Avoglio, Investor Relations, Strategic Planning, and Corporate Market Intelligence Director. Please note that today's event is being recorded. The presentation will be delivered in Portuguese simultaneous interpreting into English. In Zoom, participants may select their preferred audio language and view using the Interpretation and View Options buttons, respectively. Captions are also available using the Show Captions buttons. Following Brascam's remarks, we will open the call for questions. Questions should be submitted through the Q&A button. I will now repeat these same instructions. The presentation will be held in Portuguese and simultaneously interpreted into English. You may select your preferred audio language and presentation view using the Interpretation and View Options buttons. You may also switch between languages using a button in the same menu. Following the remarks, we will open the call for questions.

Please submit them using the Q&A button.

Please remember that you may send questions to Brascam to be answered after the call as well. Before we proceed, I'd like to note that any forward-looking statements made during this conference call regarding Brascam's business outlook, projections, and operating or financial targets are based on the beliefs and assumptions of the company's management, as well as on information currently available to Brascamp. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions. as they relate to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that general economic conditions, industry conditions and other operating factors may affect Brastham's future results and could cause actual results to differ materially from those expressed or implied in these forward-looking statements. I'll now turn the call over to Ms. Rosana Avoglio, Director of Investor Relations, Strategic Planning, and Corporate Market Intelligence. Ms.

Avalio, please go ahead.

Good morning, ladies and gentlemen. Thank you for joining Braskem's earnings conference call for the first quarter of 2026. Following the agenda on slide number 3, we will start with the company's main highlights for the period. beginning on slide number four. In the first quarter of 2026, operations at Braskem's petrochemical complexes in Brazil delivered a utilization rate 10 percentage points higher than in the last quarter of 2025. In relation to the United States and Europe segment, the utilization rate was higher by 8 percentage points, and in the Mexico segment, The utilization rate was lower by 30 percentage points, impacted by the seed stock supply and Brevkin's edizus liquidity need. Regarding safety, a non-negotiable value for the company, the average global frequency rate of expense in the period was 0.18 events per 1 million hours worked, the best rate in the first quarter result in the last 10 years. In the quarter, the company reported consolidated recurring EBITDA of US$192 million, up by 76% compared to the fourth quarter of 2025. Regarding operating cash flow, the company presented an operating cash consumption of approximately US$603 million in the period. Regarding indebtedness, the average maturity was approximately 7 years, with 61% of the corporate debt maturing as of 2030. Braskem's cash position ended the first quarter of 2026 at US$1.1 billion, considering the standby facility maturing in December 2026. Finally, it's worth highlighting Braskem's return to ISEB3, the Corporate Sustainability Index, integrating the 2026 portfolio. The return to the ISE is a recognition of the company's efforts and initiatives on the sustainability topics. Now, moving on to the next slide. The performance of each segment of the company will be presented below, starting with Brazil on slide number 6. The petrochemical plants in the British segment had a higher average utilization rate when compared to the fourth quarter of 2025 by 10 percentage points, mainly explained by the normalization of operations at the petrochemical plant in Bahia after the scheduled maintenance shutdown started in the fourth quarter of 2025 and concluded in January 2026. In addition, Results were impacted by inventory build-up ahead of the scheduled maintenance shutdown at the Rio Grande do Sul petrochemical plant, which started in March and ended in April 2026. In addition, the higher feedstock supply to the São Paulo petrochemical complex during the period also contributed to the increase in the utilization rate in the quarter. Regarding sales, the volume of sales of resins in the Brazilian market was 5% higher compared to the previous quarter, impacted by higher sales of polyethylene and PVC, reflecting the beginning of the conflict in the Middle East. Chemical sales volume also increased by 5%, mainly due to higher product availability, with highlights including higher sales of gasoline, toluene, and benzene. Regarding results, the segment Recurring EBITDA was US$241 million, an increase of 69% versus the previous quarter. This was mainly driven by the segment's higher contribution margin, explained by the PIS credit on feedstock purchases, totally US$32 million, which had a positive impact on the segment's COGS. On the other hand, the appreciation of the average real against the average dollar by 3% in the period negatively impacted the recurring EBITDA by about $10 million. Moving on to the next slide. In the first quarter of 2026, the green ethylene utilization rate was 3 percentage points lower when compared to the last quarter of 2025. During the period, sales of green polyethylene were impacted by the lower demands due to the Chinese New Year. I would like to highlight that in early April, Brest can announce that it will be the first chemical company to receive the Celeverde Brazil certification. The Celeverde is a program of the Ministry of Development, Industry, Trade and Services designed to recognize products and services aligned with rigorous sustainability criteria. based on a specific standard for renewable polymers, in line with the Brazilian Association of Technical Standards. With this advancement, products in the Braskem's I'm Green biobased portfolio are positioned to become the first to receive the Silvers Brazil certification, which is expected to be concluded in the second half of this year. Now let's move on to the next slide. In the quarter, the utilization rate of the United States and Europe segment was 8 percentage points higher when compared to the fourth quarter of 2025, mainly due to the normalization of the plants after maintenance shutdowns in Europe and in the increase in production in the United States. In this context, sales volume in the quarter was 3% higher, mainly explained by the higher sales volume in the United States due to the geopolitical environment. The segment reported recurring EBITDA of US$21 million, driven by the increase in the polypropylene spread in the United States and Europe, and by the allocation of part of the chemical expenses previously recorded in the US and Europe segment to the Brazil segment to better reflect the commercial efforts in each region. Now let's move on to the next slide. In Mexico, the polyethylene plant utilization rate was 65%, 30 percentage points lower than in the previous quarter, explained by the lower average import ethane through the terminal of 15.8 thousand barrels per day compared to the 29.4 thousand barrels per day in the fourth quarter of 2025, in line with Braskem increases need for liquidity. Also contributing to the lower utilization rate was the lower supply of ethane by Panex in the quarter of 14.8 thousand barrels per day compared to 15.9 thousand barrels per day in the fourth quarter of 2025. The polyethylene sales were lower by 37% impacted by the lower availability of products for sale due to the lower utilization rate. The segment reported negative recurring EBITDA of $15 million, mainly impacted by lower sales volume due to lower product availability for sale associated with a lower utilization rate in the period and by the decrease in other revenues. partially offset by a positive impact in SG&A due to the at-train resale operation recorded in the fourth quarter of 2025. Moving on to the next slide. In the next section, I will present the company's consolidated performance. The consolidated recurring EBITDA in the first quarter of 2026 was 192 million U.S. dollars, 76% higher when compared to the previous quarter. This increase in relation to the last quarter is mainly explained by the increase of 16% in the average international spread of resins in Brazil segment, by the positive impact of $32 million U.S. dollars related to the rate increase in the acquisition of raw materials in the Brazil segment, and by the 6% increase in the international spread of polypropylene-based polypropylene in the United States and Europe segment, and by the increase in polypropylene sales volume in the United States and Europe segment. Additionally, the reduction of approximately $30 million in other recurring expenses related to environmental provisions, fines, terminations, indemnities, and length maintenance expenses recorded in the Brazil and South America segment in the fourth quarter of 2024, had a positive impact on the consolidated recurring EBITDA in the period. These effects were partially offset by higher idle costs and the scheduled shutdown impacts across all reportable segments, of approximately US$41 million and by the 3% appreciation of the average Brazilian real against the average US dollar during the period. Now let's move on to the next slide. By the end of March 2026, work streams in Mateo continued to progress as planned. The relocation and compensation front ended the quarter with 99.9% of execution of the resident relocation program. The same percentage applies to the number of proposals submitted under the Financial Compensation and Relocation Support Program, with approximately 99.6% of the proposals being accepted and 99.6% being paid. In parallel, the execution of the closure and monitoring of the sold cavities remains under implementation. On this front, all actions are provisioned. if necessary, to ensure that the 35 cavities reach a maintenance-free state in the long term. At the end of the first quarter of 2026, six caverns were naturally filled, six were completed, four with their technical limit filled, and six cavities being filled, and two were in the preparation phase. Thus, in relation to the financial provision, the total provision for the Alagoas event at the end of March 2026 was about R18.1 billion, of which about R14.4 billion have already been disbursed and approximately R1.2 billion have been reclassified to other obligations to be paid. As a result, the total balance provisioned by the end of the first quarter of 2026 was 3.4 billion rials. Now let's move on to the next slide. The company reported an operating cash consumption of 3.2 billion rials, mainly due to the negative change in working capital explained by the reduction in the availability of certain payment arrangements with financial institutions and suppliers, and by the replenishment of inventories following the optimization carried out during the fourth quarter of 2025. The recurring cash consumption was impacted by interest payments on debt securities issued in the international market, which occur in the first and third quarters of any year. Finally, including Alagoas disbursements, the company reported a cash consumption of approximately 5.0 billion Brazilian Reais in the period. Now let's move on to the next slide. By the end of the first quarter of 2026, Breskin's adjusted net debt, excluding Breskin Edesa, was $8.5 billion. The weighted average cost of debt was foreign exchange variation plus 6.34%, and the corporate leverage at the end of the first quarter was 16.81 times. Finally, The available cash of US$1.1 billion includes the withdrawal made in October of the standby line in the amount of US$1 billion. Moving on to the next slide. In the next slide, I will comment on the petrochemical scenario. On slide 16, we'll provide an update on the global petrochemical scenario, focusing on the risks associated with a geopolitical environment. This is our last call with investors. the geopolitical environment has remained uncertain. On February 28, the United States and Israel launched attacks against Iran, and in retaliation, Iran closed the Strait of Hormuz, impacting global energy and petrochemical markets. The closure of the Strait represents one of the biggest disruptions to global energy supply. Brent has accumulated so far an increase of more than 50%, since the beginning of the war at the end of February, with an estimated daily production deficit of 15 million barrels, only offset by oil exports via alternative routes and increased production in other regions. NAFTA has followed the volatility of the pressure on the cost of the global petrochemical chain, The prices of chemical and petrochemical products in the international market have increased significantly due to the direct impact of the increase in the price of NASDAQ. The disruption in the international logistics brought changes in the global flows, partially reflecting on import disparities and prices in the Brazilian market. I emphasize that although negotiations between the United States and Iran are ongoing, the outcome remains uncertain. and the company will continue to monitor these developments continuously. I also reinforce that the impacts presented on the slides represent hypotheses and may or may not materialize, depending on the evolution of the geopolitical scenario and possible logistical constraints, such as those in the Strait of Hormuz. Now let's move on to the next slide. Regarding petrochemical spreads, according to external consultancies, Improvement trajectory is expected throughout the second quarter of 2026 in the company's three segments, driven by the global supply shock resulting from the conflict. From the third quarter of 2026, spreads tend to follow a normalization path in line with expectations of lower feedstock costs and greater supply availability. This dynamic is also in line with expectations for the year 2026 as a whole, although relevant uncertainties remain regarding the duration and potential resolution of the conflict. It's important to note that the projections above incorporate the hypothesis that the conflict will end during May. An eventual extension of the conflict beyond this horizon could further impact spread in the short term. as well as increased risks to global demand growth and big stocks' costs. Now let's move on to the next slide. Finally, I will comment on the company's priorities for the year 2026. Next slide. I would like to highlight the company's main priorities for 2026. aligned with Breskin's strategic direction, considering the global petrochemical industry scenario and the preservation of business sustainability. As a first priority, we will continue the reorganization of the company's capital structure, with the objective of creating necessary conditions to ensure the business continuity across petrochemical cycles. We will also continue with implementation of the resilience plan with a focus on preserving the company's financial liquidity through strict control of costs and discipline in capital allocation. As a third priority, we have initiatives under the transformation plan to strengthen the company's competitiveness. In the context of sustainability, the company will also continue exploring opportunities to expand its portfolio of products with sustainable attributes. Additionally, we will maintain our commitment to the full compliance with the agreements related to the geological event in Alagoas. Finally, safety, a perpetual and non-negotiable value for the company, continues to guide the operations so that they can be safe and reliable in line with the best practices of the global industry. Thus, we conclude the presentation of Brastem's results for the first quarter of 2026. Thank you very much for your attention. We will now start the Q&A session.

Ladies and gentlemen, we will now begin the Q&A session.

Please note that questions must be submitted in writing using the Q&A button on Zoom. I will now turn the floor over to the company for their remarks.

Thank you very much. Good morning everyone. As a guidance, I'm going to take the questions beginning from Vicente, speaking of Bradesco. He asked us about the gross indebtedness. He asked us, what's the gross indebtedness? With the indebtedness above $9 million, what would the company consider as sustainable? So, Felipe will answer this. Thank you, Vicente, for the question.

Good morning. Good morning, everyone. Thanks again for joining us for this earnings conference. This question is, of course, strongly linked to the two ratings that compose leverage, NetDebt and EBITDA.

As you know, this company's EBITDA has been

updated constantly due to the events occurring in the Middle East, which has raised the spreads. And this is not marginal when it comes to the positive economic impact when it comes to improving the companies that bid them. That being said, what the company always holds is that in low cycles, that means when the EBITDA is lower than the company's generation ability, the company aims or accepts an indebtedness or leverage that is roughly around 4.5%. And in high cycles, this leverage can be reduced to 3 or 2.5 times.

So, we're looking not just at the gross indebtedness,

but also the cash generation ability and EBITDA, which makes that sustainable in the medium and long term, resulting in the leverage levels that I've just mentioned. Thank you.

Thank you, Felipe. Now, moving on, there is a number of questions we received also about the indebtedness and potential alternatives that are being considered by the companies. Thank you for the support included in the question. So I'll turn over to Felipe for him to provide updates how this process goes in relation to the reorganization of the capital structure.

Over to you. Excellent.

Thanks once again for the question. I'll answer in two parts. First is liquidity. As you've been seeing in our presentations and relevant facts, the company has been employing significant efforts to improve and maintain its working capital over the past two quarters, which has been kept at a level that allows the company to keep its operating abilities and functions while also keeping our cash and working capital at good levels. As I said, this scenario starts really inflecting starting in March, so Q1 as we've confirmed now in April and May.

All of this has of course, economic impacts on the company.

Now, in a broader sense, when we talk about restructuring Braskem's capital structure, I need to make it very clear that at the present moment, there's nothing that is off the table, nor is there anything that has been defined with governance bodies and entities. Everything pertains to discussions that occur. These are ongoing discussions, and we have kept all of you apprised since the second half of last year. The company has been updating all of our stakeholders it's important to note that yes some very important marks very important points have occurred with regard to shifts in the companies controlling stakeholders as pertains to petrobras and an mou and other documents signed with novenor This has also been announced to the market. These have been a new shareholder agreement, a potential new shareholder agreement. Now, no shares have been transferred yet, but this is under discussion. And this has also already been announced. produce important changes to the company's boards. There are members in Petrobras that now occupy positions in Braskem's board, starting with the president, Magda, who is now the president of Braskem's administrative board, and also discussions with members of IG4, who are participate and interact with the company already, in the sense of better understanding the company dynamics, and also respecting the fact that they have not, at the present time, assumed any responsibilities because they are not, at the moment, shareholders of the company. So they are firmly aware that this capital restructuring is an ongoing project, as we've been discussing.

Of course, they also do make, they contribute to discussions, of course, and that pertains both to creditors and the capital market.

and our financial creditors who are the object of these discussions and the potential restructuring of the company's finance and keeping its financial creditors and operating vendors and suppliers and strategic vendors also intact.

Thank you, Felipe. I'm going to ask a question from Alejandra. Considering the cash position at the end of the first quarter of about $1 billion, how is the company managing its operations for the second quarter of 2026? or is the company working with operation rates lower than those that were posted for this first quarter? I'm going to start answering the question and then you can add. Thank you, Alejandra, for the question. First, speaking of the cash position of $1 billion, I'm going to explain why we have We posted that drop. If you observe any first quarter of the company, there is a natural movement of inventory formation of any year, so that the company can start serving especially the Brazilian market, which is our main priority when I talk about Brazil operations, supply Brazilian market, and we always see a beginning of demand recovery along the first quarter. So this is why it usually increases stock levels. And you saw the consumption of about 1 billion reals. Another main impact was the reduction of exposures that we had with the suppliers and the financial institutions of the South London Liberals. And the third impact was on the rest of the accounts because of lower sales of the previous quarter. We have 35 days to receive the accounts. So this was the impact that we felt in the first quarter. In relation to the second quarter, there was a material change in the external scenario that had been supporting this threat in the international market for the interest for Briscan. So Briscan has its local supplier in Brazil and also suppliers outside Brazil by means of agreements. So we have a very important collateral in the receiving of the free stocks. And this allows suppliers to capture all those easy spreads that we have been observing. From the cash viewpoint, and this has been the biggest short-term challenge that we have with cash management, when we see the turnover of receivables accounts and payable accounts. So we have been making weekly decisions whenever there is a material change in the scenario the company gets together, and we discuss on a weekly basis to make decisions, especially in relation to production and sales, which is the heart of the company. And so far we made a decision to have the operation similar to what we've been doing so far so that we can capture the advantages. So in relation to the cash flow, The challenge that I just mentioned, there is a very important work done by the commercial team so that we can have a reduction of the accounts receivable, and we have been very successful so far. Of course, the difficult is to maintain as such for the months to come, and the company has been successful. talking to the main suppliers of feedstock so that we can increase the credit limit and also expand the payment terms. Alejandra, this is how we have been managing, in other words, in a very cautious way because the scenario is very uncertain and they bring opportunities to the industry and FibroScan. But we have to be very cautious. and we have to be on the lookout of the cash position and preserving the liquidity of the company. Well, and moving on to the next question, the question is the following. In relation to the spread increase as was observed in March, It's already captured in the first quarter versus what to expect for the second quarter. And what's the current expectation for the average spread for the next quarter considering the continuation of the conflict? How do you see the short-term scenario and the structure of the sector after the war? In relation to the first quarter of 2026, and we wanted to have everything very transparent in the earnings released, In fact, we did not see any material impact. If we observe the average spread of January, February, and March, in March we saw a significant increase in the prices of feedstock and the petrochemical product prices. So we didn't see a lot of impact yet, because so far, Our decision, our commercial policy of pricing is done on a monthly basis. So months had a lot of planning and had a lot of planning. So we go back to what I said in relation to preserving cash and preserving liquidity. So March was a month when we were getting prepared, when we were defining our strategy in order to capture the highest possible value without hurting the liquidity of the company. So the impact of those spreads that we even included the view from external consulting firms. So this is not our vision, but the market consulting firm's vision. So consulting firms have the expectation that chemical spreads will increase, bringing numbers as a reference. Due to the presentation, we mentioned that the historical level of the spread of chemicals in Brazil and the historical average refers to years of 2010 and 2025. So, we consider multiple cycles. So, we consider the mid-cycle. This is the size of the cycle. So, we consider an increase of about 30% of the spread of chemicals in Brazil. quarter of the year. In relation to residents, we expect an increase of 20% considering the historical based on the consulting firms. And we see the same movement in relation to other regions where the company operates. So we are very confident for the second quarter, but we have been very cautious, as I said, and this has been the main driver of the company. In other words, the preservation of the liquidity. And at the end of the review, when you asked about the short and long terms, we have been working with some scenarios. The conflict in the Middle East made it hard to find a historical benchmark to understand what would be the potential impact to expect for the next month should the conflict continue. So what are those scenarios? Those are scenarios that vary according to the time of the conflict and the time for the things to return to normal after the conflict. As our case base is based on the consulting firms, so the conflict might end in three months. So, in other words, it might end in the next week. Everybody has been watching the news and we see that prices change. throughout the day, and if we consider a three-month conflict, we believe that this normality will happen in 10 months. In other words, we observe, in line with the consulting firms, a better spread, estimated for this year, just as for next year. Now let's go back to the industry foundation. As this conflict, regardless of how long the normality will continue, happen, the foundation of the industry is still of a surplus. It's a foundation where we continue observing new capacities, we continue observing regions that are searching for self-sufficiency, and in fact, this trend of new offers across the world of polypropylene, of polyethylene, tend to materialize. of course, with a demand that is growing, but still we're going to have an oversupply where the global market is likely to be close to reach a balance at the end of the decade. Just a consideration to mention, depending on the time of conflict, because we believe that if the conflict lasts longer than six months, we will start to see impacts or an expectation of an impact on the growth on the global demand. And that can even hurt the spreads in the long term. Roberto?

He's going to add to it. Good morning, everyone.

I'd just like to add that it's hard to make a firm assessment, but we are working on that. to see what exactly is the extent of the damage caused to the cracker polyethylene and polypropylene plants in the conflict region, but also to the gas generation fields, because the major change that occurs in the industry to progressively abandon NAFTA and move toward ethane as a feedstock has been possible because there were major ethane producers. In the region, that means Qatar, Qatar and Iran. share the largest gas field in the planet, which is 1,000 trillion cubic feet of gas.

In Qatar, this is called the North Field or the North Dome.

Qatar produces 77 billion tons a year of LOG and ethane as well. They are a major supplier of ethane, including for China. This field has been attacked by Iran. As you know, Iran and Qatar share this geological structure and Iran attacked Qatar, but that's what happens in a war. So we now need to reassess these fields because the situation may have changed. I don't know if you've been following, but since Trump applied the U.S. gas export tariffs, China stopped buying it from the US and started buying ethane exclusively from Qatar and Russia. Now, with this recent visit that Trump made to Beijing, conversations have resumed between the US and China, working toward attempting to reduce those tariffs, aiming for China to once again by a thing from the US. To me, this seems like an indication that part of Qatar's export capacity is out of order, and therefore may have suffered a damage that could take a while to be repaired. If they need to replace a compressor, that takes two years to produce a compressor, for one example. So what I think will happen is that we will see greater stress when it comes to obtaining feedstocks, and many companies are going to end up short on feedstocks. This, in turn, will translate into higher prices, because if you have a permanent increase in feedstocks, then you need to raise your prices. So, in my view, It could be that spreads may not evolve, but the nominal spreads will need to remain at a high level because the increase in feedstocks, whether that's NAFTA or ethane, I believe it's going to be permanent for a number of years until there is a complete replenishment of these these products and feedstocks and everything that has been impacted by the attacks, including NAFTA.

Thank you, Roberto. Moving on. Rodrigo with BTG asks the following. I would like to discuss the working capital of the company, especially in the light of the higher prices of feedstock in Brazil and the financing restrictions. It would be important to understand if the increase of feedstock prices has fully reported in the balance of the first quarter of 2026, or because of the delay in pricing, we are going to have higher expenses with feedstock in 2026. If I'm not mistaken, the third quarter is the best demand period. How can we think about the permission of inventory in the next month, especially in a moment when imported resins may be losing competitiveness in the local market? I'm going to start answering the question and then Roberto can compliment. In relation to the working capital and the dynamics of prices of feedstock, both feedstock in Brazil and imported feedstock, a reminder, NAFTA in Brazil, considering the current operations level, it's about 45%, 50%. from local suppliers, and the remaining amount is imported, and we pay cash practically. In the first quarter, and considering the average of the previous month, when I talk about the local suppliers, in the first quarter, March, NAFTA price increased almost 50%. In fact, this consumption in the inventory, depending on how we are modeling the analysis, is going to be observed especially in the second quarter. So the first, I think, increase between March and April, especially in April, and in the month of May because of the transit inventory that would demand a longer period. And now, considering the average term of payment, I mean, considering the feedstock and other supplies of the company in a general way, I'm talking about accounts, payable accounts, the average price of payment considering the historical levels of the company is about 20 days. So, when I observe the receiving term, because what we have seen is that the price of the revenue increased in relation to the feedstocks. And we have seen that the industry, not only the companies, but the industry at large, whoever has availability would pass through the increases in the feedstock and their prices. The receiving price has been about 30 or 35 days. And historically, I mentioned 35 days, but... But in the short term, I even mentioned previously when I answered the question I answered at the beginning of the call, there is a work which is very important that is done by the commercial team, trying to find an alignment of our cash flow alignment. So the effects of the war, material impact on the equity of the company or on the cash flow of the company, We are going to start observing them as of the second quarter, as we have already observed in the month of April. In relation to your question, when you ask about the demand, the best demand, you are right when you say that. Usually, the third quarter is the best with the best global demand and also in the regions. especially because it's an anticipation of clients form their inventories for the year-end parties. But this year, because of the conflict, the trend will be different. We have seen a level of demand in the world, and my comment is at the global level that the demand is different from the others. So the conflict started on February 28th, and we started receiving additional orders due to the uncertainties. But now, if we consider what the external consultants say, they consider that the conflict will end at the end of this month. So we see that the demand has weakened, because the expectation is that the conflict will end. And, of course, we will still need a moment of normality, but prices tend to fall. So, Rodrigo, the seasonality of the demand may be different from what we usually observe.

Roberto, over to you.

Hi, Rodrigo. I'd just like to add that if you want to imagine a proxy between reduced oil demand and reduced naphtha and, consequently, resin demand, demand the international energy agency yesterday revised their oil demand to by 400 000 barrels and reduced the same uh forecast by 200 000 barrels that's something between 0.2 and 0.4 percent of the daily use of oil i believe

it's still a moderate impact.

They're obviously doing the math. For me, in my opinion, that's based on assuming that a conflict will begin resolving starting at the end of May. Now, that's the question everyone is asking and no one has the answer to, which is, How much longer is that region going to remain in a state of war? The fact that there is no bombing currently occurring, but the Strait of Hormuz is still closed, makes the risk rate to remain very high. And as a result, you don't have any guaranteed feedstocks provisions coming out from there. It's not just the case of NAFTA and gas, which is our problem. our working area, we work with. But Iran also is a major producer of sulfur, benzene, ethylene. These are all products that are produced at those refineries, which today are embargoed. So, yes, there's going to be lower demand. It's very difficult to estimate, because it's difficult to estimate Not when the conflict will end, because the conflict is, in theory, suspended. But I mean, when will the conflict be resolved? And what are the conditions that will allow this conflict to be resolved? Definitely, the extent of which, if you want to set up a proxy with oil, something between 0.2% and 0.4%, but we'll see what happens.

Thank you, Roberto. Thank you, Roberto. There are some questions related to the working capital. I have already addressed that topic. Then I'm going to turn over to Felipe for him to talk about the initiatives as to mitigate the potential working capital consumption based on what has been explained before. In other words, what are the main trends that are being implemented to mitigate the effect of the conflict on the cash flow of the company?

Thank you, Rosana.

The broader explanation has been given. Rosana mentioned the economic and stocks and sales aspects. But looking at the more micro and operational aspects, we have been engaging in operations, focusing on through sales for our receivables, to anticipate future receivables through programs done with financial institutions. We are also in negotiation and have completed some negotiations already with some important suppliers of the company that will allow working capital to build up and as a result improve our spreads. As we mentioned recently, this will allow us to capitalize on the company's economic condition. And we've also been discussing maintenance of a program that has been in practice since last year to monetize what we call non-liquid assets, so contingent and future assets of the companies that do have some economic value. sometimes very large, but difficult to establish exactly. So we keep an economic gain that we call an earn-out for BrassCamp, but in a way that also allows us to use these assets, so to give us immediate liquidity in the cash. Some of these have already been completed, and others are in the final implementation phase.

Thank you, Felipe. Moving on, I have a question by Raul with 911. This is a question. If the company has had a higher liquidity, the utilization rate of the petrochemical activities and assets in general would be higher as well?

Undoubtedly.

The answer is an outright yes. The challenge we have today is how can we raise funds that will allow us to increase utilization percentage? They're currently at 70%, but we could work at 90-plus percent because the market demands resins and parts. of the resin production capacity is currently reduced, whether it's because of the conflict zone or because of the lack of feedstocks.

This is our challenge.

Our process of trying to handle this is trying to convince all stakeholders, and I do mean all stakeholders, that includes shareholders and resource donators, that if we have greater access to working capital, we will have more EBITDA, and in turn, more cash. So it's immediate payback during the calendar year itself. I understand that the market perceives risk. I understand the risk perception.

But

Having access to feedstocks. Essentially, we consume NAFTA from the US or African markets.

In other words, from outside the epicenter of the world.

Of course, we have access to feedstocks, but it could be higher. And the demand level for resins, both in the Brazilian market and internationally, is significant. This is also very much true for our operations in Mexico. We are working with a very low load in Mexico. We could triple our current utilization there. Our challenge is how can we gain access to these resources that will allow us to purchase key stocks and sustain this working capital delta for that number of days. I do some math, see how much Breastcam gets in sales per month, and find out what a 15-day investment in our cash flow will be. That's our challenge, to increase our operational capacity.

Thank you, Roberto. I'm going to ask a question that came up a couple of times from some analysts and investors of the company. You related to the standby facility. Remember that we used it at the end of last year in the amount of $1 billion. So the question is related to the renegotiation of the standby, which will mature at the end of the year. Felipe?

Thank you.

Yes, this is a relevant liability for the company in 26 as we have published in our statements and our conference calls.

And without any doubt, this renegotiation of the standby is part of

the entire context of the capital restructure. It doesn't have a specific... It's not specifically being discussed in any particular place because since the last year, we've received a proposal to restructure the company's capital in a very broad way in order to stabilize the company and its finances. In other words, we don't want to attack or reorganize any one specific financial covenant or agreement. What we're talking about is a major, a broad restructuring that we're interested in, and something that will please all of our stakeholders, financial shareholders and everyone. So this is a very relevant discussion and it's at the crux of every discussion we have with all of our stakeholders and all of our financial stakeholders and shareholders as well. And we're going to do that without any chance of breakage here at the company.

Thank you, Felipe. In relation to EBITDA level, this is from Regis with XP. Could you comment on the level of possible EBITDA considering the current spread level? In the past 10 years, it would come to $2.4 billion. And he asks if it would make sense to think that in the second quarter, we are going to have the recurring level considering the inventory level is very low. Thank you, Regis, for your question. So let's talk about the expectations from the consultancy companies in relation to the second quarter of 2026. And I'm going to make the comparison considering the average of spreads from 2017 to 2025, almost 10 years, excluding the outdoor years, such as 2021, which had a difference impact on the spread. So we say that the potential of average spread for the second quarter, according to external consultancies in relation to the history, is a spread of nearly $800. And this average in this period that I mentioned is something about $470 per ton. So if we continue observing this level of spread, also considering the conflict, the continuity of the conflict, as we have explained here, and even comparing with some quarters where we had this level of spread, so the EBITDA potential is the potential close to a high cycle moment. So this high cycle we would have in 2027. the first quarter as a reference the first quarter of 2017 when we had similar levels of spreads realized in this first quarter of 2027 and compared to current expectations in the first quarter of 2017 so the EBITDA was nearly 1 billion dollars of course just using as a reference the context are different but only using spread as a reference so you're right when you say that there is a potential of creating value at the operational level, but putting together everything that was mentioned in this call in relation to the challenges, liquidity, and how you have been searching solutions to mitigate the impact of the 15 days of the management of the cash of the company for the second quarter of 2026.

Ladies and gentlemen, we now conclude the question and answer session, as well as Braskem's earnings conference call. We thank you all for joining us. Have a great day.