By Brazil Stock Guide – Braskem (B3: BRKM3, BRKM5 and BRKM6; NYSE: BAK) returned to profit in the first quarter of 2026. But the headline number hides a company still racing against time. Net income attributable to shareholders reached R$1.4 billion, reversing a R$10.3 billion loss in the previous quarter.
Strip out the R$2.9 billion foreign-exchange gain from the real’s appreciation against the dollar, and the underlying picture looks very different. Adjusted net debt rose 13% in the quarter to $8.5 billion. Leverage reached 16.81 times recurring EBITDA over the past 12 months, up from 7.98 times a year earlier. Cash consumption before financing activities hit R$5.1 billion, including R$486 million linked to the geological event in Alagoas.
The company said it and its advisers are moving forward with creditor advisers on a broad capital restructuring plan. It gave no timeline.
The quarter confirmed what investors already suspected. Braskem’s operating recovery is real, but still not enough. Consolidated recurring EBITDA reached $192 million, up 76% from the fourth quarter. The gain came from wider resin spreads in Brazil, a recovery in polypropylene demand in North America and Europe, and a $32 million positive impact from REIQ, a federal PIS/Cofins tax benefit on petrochemical feedstock expanded in March under Complementary Law No. 228, from 0.73% to 5.8%. Net revenue fell 12% from a year earlier to $2.95 billion.
Brazil Carries
The domestic business delivered the quarter’s most important result. Brazil/South America posted recurring EBITDA of $241 million, up 69% sequentially, supported by three forces at once: a 16% increase in average international resin spreads, the REIQ benefit in cost of goods sold, and lower recurring expenses after a difficult fourth quarter.
Ethylene utilization rose to 69%, from 59% in the previous period. Domestic resin sales increased 5% sequentially to 782,000 tons, driven by polyethylene demand in food, beverages and hygiene.
The segment’s EBITDA margin expanded to 11%, from 7% in the fourth quarter. Still, the caveat matters. On a yearly basis, recurring EBITDA in dollars was still below the first quarter of 2025, reflecting the persistent weakness of the global petrochemical cycle. Green ethylene utilization fell to 64%, from 87% a year earlier. Green PE volumes were cut in half sequentially, to 26,000 tons.
In the US and Europe, the polypropylene business moved back into positive territory after a negative fourth quarter. Recurring EBITDA reached $21 million, compared with a $32 million loss in the previous period. Higher PP sales volumes and a 6% improvement in average spreads supported the recovery. Utilization rose to 79%.
Part of the rebound came from pull-forward demand. Buyers in North America and Europe accelerated orders amid geopolitical uncertainty, lifting PP demand by 5% and 8%, respectively. Even so, the EBITDA margin remained thin, at 3%.
Mexico Breaks Down
Braskem Idesa, the Mexican joint venture, deteriorated sharply. Utilization plunged to 55%, from 85% in the fourth quarter, as Pemex reduced ethane supply and Braskem Idesa deliberately cut average imports to preserve liquidity. PE sales volume fell 37% sequentially to 140,000 tons.
Recurring EBITDA turned negative by $15 million. The ethane import terminal completed in 2025 — with capacity of 80,000 barrels per day, equal to 120% of Braskem Idesa’s full-capacity needs — has not yet removed the asset’s operational fragility.
Since February 2026, Pemex no longer has a contractual obligation to supply 30,000 barrels per day. That commitment was replaced by a right of first refusal through 2045. With ratings of D from S&P and RD from Fitch since November 2025, after missed interest payments on bonds due in 2029 and 2032, Braskem Idesa is evaluating options that may include a Chapter 11 process in the US. That could affect Braskem’s equity stake in the joint venture.
The Restructuring Clock
The REIQ benefit is temporary. It runs until December 2026, faces a 10% reduction from April and has a sector cap of R$2 billion. The currency gain that inflated net income could reverse if the real weakens. The R$4.6 billion recurring cash burn is structural, concentrated in semiannual interest payments on international bonds in the first and third quarters.
Corporate gross debt totals $9.4 billion. About 91% sits in foreign currency. The average cost is foreign-exchange variation plus 6.34% per year, with an average maturity of 7.4 years. Bonds due in 2028 trade around 53 cents on the dollar, pricing in meaningful restructuring risk. Interest coverage — recurring EBITDA over the past 12 months divided by interest paid — stands at 0.87 times, below a sustainable debt-service threshold.