Braskem S.A. (BRKM5) Earnings Call Transcript & Summary

Good afternoon everyone, and thank you for waiting. Welcome to Braskem's Second Quarter of 2025 Results Conference Call. With us here today, we have Mr. Roberto Ramos, Braskem's CEO; Mr. Felipe Jens, Braskem's CFO; and Ms. Rosana Avolio, Investor Relations, Strategic Planning and Corporate Market Intelligence Director. We inform you that this event is being recorded. The presentation will be held in Portuguese with simultaneous translation into English. [Operator Instructions] After Braskem's remarks, there will be a question-and-answer session. At that time, further instructions will be given. This event's audio will be available on the Investor Relations website after it concludes. We remind you that participants may choose what language -- what -- may submit questions to Braskem's Board, which will be answered by the Investor Relations department. Before proceeding, we'd like to clarify that any statements that may be made during this conference call regarding Braskem's business prospects, projections, operational and financial goals constitute beliefs and assumptions of the company's management as well as information currently available to Braskem. Future considerations are not a guarantee of performance and involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions and other operational factors may affect Braskem's future results. and may lead to results that differ materially from those expressed in such future conditions. Now I'll turn the conference over to Ms. Rosana Avolio, Investor Relations Strategic Planning and Corporate Market Intelligence Director in your presentation.

Good morning, ladies and gentlemen. We appreciate everyone for participating in Braskem's earnings call for the second quarter of 2025. According to the agenda on Slide #3, we will start with the main company's highlights in the period, which can be found from Slide #4. In the second quarter, the performance of the industry continues to be affected by the continuation of the downturn in the petrochemical industry in addition to the global tariff uncertainties. In this scenario, the utilization rate of petrochemical plants remained stable in relation to the previous quarter, especially in Brazil and the assets in the United States and Europe, both with 74% of utilization, while Mexico impacted by the general maintenance shutdown showed a drop of 35 percentage points in its utilization rate when compared to the previous quarter. In addition, Braskem recorded an average global extent frequency rate of 1.11 events per 1 million hours worked, well below the global industry average, which reinforces the nonnegotiable commitment to the safety of the company's operations. Regarding its results, the company reported a consolidated recurring EBITDA of $74 million, 67% lower when compared to the first quarter of 2025 in face of a challenging conjunctural scenario. In addition, despite the lower working capital consumption when compared to the previous quarter, the company presented operating cash consumption of $31 million, an increase of $129 million compared to the previous quarter. Regarding its debt profile, the company ended the quarter with an average debt maturity of about 9 years and with more than 68% of the maturity as of 2030. Braskem's cash position at the end of the second quarter was approximately $1.7 billion, sufficient to cover debt maturity in the next 30 months, not considering the international revolving credit line available in the full amount of $1 billion and maturing in December 2026. The company's total liquidity, including this line ended at approximately $2.8 million in the quarter. Now let's move on to the next slide. The performance of each segment of the company will be presented below, starting with Brazil on Slide 6. the petrochemical plants in the Brazil segment presented an average utilization rate in line with the first quarter of 2025, with emphasis on the gas-based plant in Rio de Janeiro, which operated at 95%. Regarding sales, the volume of resin sold in the Brazilian market and in the international markets were higher compared to the previous quarter, impacted by the anticipation of purchases in the transformation chain due to the lower prices in the international market in the quarter due to tariff uncertainties and the market expectation of price increases throughout the second half of 2025. As for the international spreads that impacted the segment, although the average resin spreads increased in the quarter due to the 17% increase in the PP spread. The lower PE spread at 4% had an influence on the results of the business. Recurring EBITDA for the segment was $152 million, 24% lower than the previous quarter, mainly impacted by the stock effect of fix stock acquired in the previous period, appreciation of the average real against the average dollar in the period. And the increase in fixed cost is cost and other expenses resulting from the reclassification of expenses from the corporate unit to the business due to changes in the company's organizational structure. Now let's move on to the next slide, please. In the second quarter of 2025, the utilization rate of the green ethylene plant was 71%, 16 percentage points lower than in the previous quarter. impacted by the inventory optimization carried out in the period. On the other hand, sales of green polyethylene were higher due to the increase in demand from new and existing customers. with emphasis on the higher volume sold in Brazil compared to the previous quarter. In this context, the green polyethylene business was 18% higher in revenue in conjunction with the company's ETBE business. The positive quarterly results benefit the company's transformation journey, focusing on its migration to renewables pillar, with the objective of strengthening the resilience and longevity of the business. Currently, the presence of its own innovative ecosystem focused on developing renewable solutions and the strategic partnerships established through Sustainea and Braskem Siam supports the investment of this journey. Now let's move on to the next slide, please. In the United States and Europe segment, the plant utilization rate remained in line with the second quarter of 2025 compared to the previous quarter at 74% of utilization. On the other hand, the volume of PP sales in the segment was higher than in the previous quarter by 7,000 tons. Despite the higher volumes, Sales volumes in the segment, recurring EBITDA was negative by $8 million, mainly impacted by the following inventory effect due to the average cost of goods sold, referring to the feedstocks acquired in the previous period which partially offset the improvement in spreads in the segment and the higher SG&A explained by the reclassification of expenses from the corporate unit to the business due to changes in the company's organizational structure. Now moving on to the next slide, we will discuss the segment Mexico. In June, the general maintenance shutdown of Braskem Idesa plant began which significantly impacted the segment's operation in the period that operated at a utilization rate of 44% in the second quarter of 2025. The volume of polyethylene sales in the period was also lower compared to the first quarter of the year, impacted by the lower availability of product due to the scheduled shutdown and also the lower supply of ethane by PEMEX, impacting the inventory formation process prior to the general maintenance shutdown. In this scenario, this segment's recurring EBITDA in the period was negative by $9 million also impacted by the lower spread of 10 basis point ethylene in the period at about $95 per ton, the higher expenses of the storage and ethane tankage due to the scheduled shutdown, which was partially offset by the positive impact on other revenues. Now next slide. In the second quarter of 2025, the Mexico segment performance was impacted by a combination of significant factors. The reduced domestic ethane supply in recent months, below the volume contracted with PEMEX has posed an additional operational challenge, especially in a context of a downturn in the global petrochemical cycle, where international spreads are expected to remain challenged in the short and in the medium term. These factors have exerted additional pressure on Braskem Idesa results, which operates with a significant debt structure, imposing constraints that require continued attention to cash creation and financial discipline in this segment. Now next slide, moving on to the next chapter. I will discuss the consolidated results of the company, starting with the update regarding the work from in Alagoas. By the end of June 2025, all work fronts in Maceió continue to advance according to plan. the relocation and compensation front continued to show evolution in its indicators and ended the semester with 99.9% of execution of the residence relocation program. The percentage also applies to the number of proposals submitted for the financial compensation and reallocation support program, of which about 99.5% were accepted at 99.4% were paid. In parallel, the execution of the closure and the monitoring of the salt cavities still being implemented. After the provision of all actions, if necessary, that ensure that the 35 cavities reach maintenance free state in the long term. We highlight in this quarter the approval by the AMM of the confirmation of the ceiling of cavity 18. With this, there are already 6 naturally filled cavities. Regarding the financial provision, the total provision for the Alagoas event was about BRL 17.5 billion, of which about BRL 13.1 billion have already been disbursed. And approximately BRL 439 million have been recorded in other obligations payable. Therefore, the total balance provisioned at the end of the second quarter of 2025 was BRL 4.7 billion, 8% lower than the balance at the end of the first quarter of 2025. Now let's move on to the next slide. In the second quarter of 2025, despite the greater working capital management when compared to the previous quarter due to the resilience measures implemented the company presented a cash consumption of BRL 175 million, given the results presented in the quarter. the lower recurring cash consumption when compared to the previous quarter of approximately BRL 1 billion was mainly interested by lower semiannual interest payments on the debt securities issued in the international market by the company, which are concentrated in the first and third quarters of the year. Considering the disbursements from the company presented a cash consumption of BRL 1.5 billion. Now let's move on to the next slide. Braskem ended the second quarter of the year, maintaining an extended profile of its corporate debt with an average maturity of 9 years and 68% of the debt concentrated as of 2030. Considering the company's liquidity level, the available cash of $1.8 billion is sufficient to cover its obligations for the next 30 months, without considering the available international credit line in the amount of $1 billion. Finally, the corporate leverage stood at 10.59x at the end of the second quarter of 2025 due to the lower -- lowest EBITDA in the last 12 months. Following our agenda, we will move on to the next slide. Thus, we conclude the overview of the second quarter of 2025. And I will now comment on the company's resilience and transformation program. The outlook for the international petrochemical industry remains challenged in the coming years, where by 2030, China will continue making significant investments in the expansion of ethylene and propylene chains using various feedstocks. This represents a significant increase in installed capacity with more than 40 new crackers planned, increasing ethylene capacity by about 100 million tons and propylene by around 70 million tons, which we reinforces the expectation of oversupply and increased idleness in the sector. The average either rate of ethylene production without considering a rationalization of the industry already shows an upward trend, and the data projects a growing gap between supply and demand by the end of the decade, which will put pressure on the margins of the entire industry. Next slide. In a challenging chemical and petrochemical scenario, it's important to highlight the importance of the chemical industry for Brazil. The national chemical industry is home to the fourth largest chemical industry in the world, responsible for 11% of the industrial GDP and occupying the third position among the largest industrial sectors in the country. The chain generates 2 million direct and indirect jobs and is present in practically all segments of the economy from fertilizers to pharmaceuticals, from personal hygiene to pesticides. In addition, it's an important competitive advantage the production of chemical inputs in Brazil is now the cleanest in the world with carbon emissions up to 51% lower than those of the main international industries. However, despite its relevance and potential, the Brazilian chemical industry faces important structural challenges. Today, the industry operates with the highest level of [indiscernible] industry, reflecting the growing pressure from imports and an uncompetitive cost structure. In the case of the Brazilian petrochemical company, the production based on naphtha will continue to present a growing gap in competitiveness in relation to ethane, challenging the margins for the producers who use naphtha as a feedstock. Now let's move on to the next slide. In this context, Braskem remains committed to the execution of the initiatives that out in its resilience and transformation program. with a focus on overcoming the structural challenges of the global petrochemical industry and the national chemical sector. In this scenario, the company has been implementing initiatives aimed at sustainable value generation with an emphasis on maximizing EBITDA and generating greater cash. Now moving on to the next slide. Regarding initiatives related to the defense of the Brazilian chemical industry, Braskem together with ABIQUIM and other companies operating in the sector reinforces the importance of implementing mechanisms to protect the marginal industry in order to ensure greater competitive balance. As an example, Bill 892/25 stands out, which establishes the special sustainability program for the chemical industry. Presiq promoting the sustainability and competitiveness of the sector through fiscal incentives. Braskem refirm its support for the approval of the project recognizing it as an essential measure to strengthen the entire production chain. Additionally, with the proximity of the end of the special regime for the chemical industry rate scheduled for the end of 2026, it's urgent to adopt measures to ensure the competitiveness of the Brazilian chemical industry in the face of the structural and contractual challenges of the sector. For Braskem, the resumption of the tax credit on the purchase of feedstocks to the level of 8.25% rate originally approved in the implementation of REIQ in 2013, represents an opportunity for competitive quality, creating value for the entire chain and for the country. Additionally, with the end of REIQ, the proposal would be the institution of a new financial regime between 2025 and 2029 with incentives for purchase of feedstocks and for the expansion of the production capacity. At the same time, the approval of antidumping measures is essential to correct market distortions and protect the domestic market, especially in the face of the growing pressure caused by the increase in imports made with unfair pricing practices. Several countries such as the United States, Europe and China and South Korea have already implemented robust policies and courage to the chemical industry with trillions of dollars in subsidies, support for innovation and trade defense mechanisms. Although each adopts specific strategies, they all share the same goal to strengthen the chemical industry and essential basis for several other production chains in addition to generating significant multiplier effects for their economies. Now let's move on to the next slide. Within the transformation pillar, the optimization of naphtha-based assets is one of the company's objectives, aiming firstly to maximize the utilization rate of the most competitive production lines, such as the one in Rio de Janeiro, which operated at 95% in the last quarter. Another advance was the approval of resources via REIQ investments of initiatives that enable the expansion of the capacity of PVC assets in Alagoas. Meanwhile, the company is also evaluating the hibernation of the least competitive production lines globally, which considers the criteria such as plant age, technology use, production cost, scale and operational synergies aiming at a greater efficiency and profitability. Now let's move on to the next slide. In relation to this front, we will seek to enable the expansion of our gas-based assets with a focus on greater competitiveness and the resilience of the business. by expanding the use of more competitive feedstock. This includes projects to expand gas-based capacity the expansion of the flexibility of petrochemical plants in Brazil and initiatives that ensure the operational stability of our crackers, such as the recent expansion of our own fleet dedicated to transport ethane between the United States, Brazil and Mexico. As an example of an initiative to expand gas-based assets is Transforma Rio, a project to increase the capacity of the capacity of the petrochemical complex in Rio de Janeiro by 230,000 tons with equivalent expansions of the so far, BRL 233 million have been approved for the contracting of conceptual base engineering studies. The final investment decision of the project is conditioned to the signing of a long-term gain supply contract, and the use of resources within the scope of rate investment. In addition to promoting greater competitiveness for the company, the project has potential to unlock important social economic benefits for the region, such as increased revenue and national collection in addition to the need for around 7,500 jobs during its execution. Now let's move on to the final slide. To conclude, I would like to reinforce our priorities that guide our actions in 2025. We will continue to advance in the transformation of our assets with a focus on competitiveness, efficiency and sustainability. This journey is essential to ensure the resilience of our business in the face of the challenge of the sector. At the same time, implementing agency initiatives for the petrochemical cycle with special attention to the financial preservation and cash flow management, ensuring solidity and responsibility in our decisions. We will also continue our work in the competitiveness agenda of the Brazilian chemical industry, seeking measures to promote competitive quality and strengthen the sector as a whole. And finally, we will maintain our commitment to the agreement signed in Maceió, fulfilling each stage with transparency and responsibility. All this without giving up safe actions in our operations. safety is and will continue to be a nonnegotiable value in our strategy, guiding Braskem's every action and decision. Thus, we conclude the presentation of Braskem's results for the second quarter of 2025. Thank you very much for everyone's attention. We will now start the Q&A session.

[Operator Instructions] And our first question comes from Gabriel Barra, Citi.

I have 2 of them. We discussed a lot about measures to improve the company's results and how to improve resiliency. And when we look at micro numbers and spreads, as you mentioned, there is a longer delay in recovery for the spreads than we had expected. This is, in fact, taking longer than we imagined. And the company's leveraging peaked at almost 3x this quarter. I know there's matters related to costs, but this is rather high leveraging in our perspective, and this does make us a little concerned about the leverage rate in the company's bottom line. And also on the topic of the recent interview that the company gave talking about sales of assets and bringing in a potential partner for green production. I'd like to see if Roberto or Felipe perhaps can tell us a little bit about how you can work in a more difficult and compressed spread scenario and bring the company to a healthier portfolio. You mentioned a lot about green, but could you also talk about other assets that may be discussed or perhaps about rationalizing capacity? And what is the route to improve the company's leverage over the coming years? The second question, I think, is inevitable, but we must discuss the company's control. I know it's complicated for you, but we must comment also about the recent press conference you gave with regard to Petrobras. Could you give us an update about how these discussions are going with annuities and the different investment plans and perspectives and so on. I think you've also looked at other players as well and their proposals, could you give us an update -- a broader update about how these discussions are going. It would help us to understand more about the future of the company. And this context of the divestment of Novonor over the past 2 years.

Can you hear me? All right. Thank you. Thank you, Gabriel. With regard to the company's financial status, in fact, as you aptly put it, it's a double-digit leverage rate largely not due to debt but due to nonfulfillment of EBITDA. As we've discussed over the half of the year and recently in the conference call, there are a number of measures that we can bring in to bring these levels to lower numbers. And they are things we look at in our strategy, and they largely involve growing our EBITDA. We have a transformation plan called fly up to green and switch to gas which is going to significantly improve our productivity and as a result, generate EBITDA for the company and consequently, give us more comfortable levels when it comes to leverage. But part of that strategy also involves, as you mentioned, liquidity initiatives for the company that touch on not just the measures that we've just presented with regard to competitive standing competitive quality with regard to the Brazilian petrochemical industry so that we can remain on the growth agenda and impact positively on the EBITDA. But also, as you mentioned, Gabriel, the company is not focused on selling assets to generate cash as long as there's something more important, which is the transformation plan. So assets, and we've always said this, Roberto has said this, all of our conversations over this time, assets that are not necessarily directly linked to the company's future, which is our transformation plan, they may potentially be monetized in part or in whole and thereby generate some cash for the company. Of course, this in times when our liquidity is tighter, this becomes more important, but this is not a sale that is solely focused on that. It's actually part of a much greater and more structured plan, which is our transformation plan. And so these are parts of the transformation plan that remain tightly connected to everything we've been discussing about with you when it comes to a potential reduction in shareholder stake in any one of these assets. Roberto?

I'll take the second question. Just to remind you, Gabriel, in classic situations like this one, what we aim to do is to manage working capital as well as we can. So we work with our suppliers to lengthen payment plans and work with clients to tighten our receivables plans. So we have a number of different initiatives. They are all being pursued very diligently, and it's relevant to mention that at the price level for resins today, levels that are imposed by the growing imports of products that arrive here at levels lower than their practice in their respective countries where they're produced. Well, this is an imbalance that must be corrected. And so it depends on us to show the severity of this to the Brazilian government and for them to make the necessary measures. With regard to the sales of Novonor and with regard to Braskem, it's important to remind everyone that when you have a company interested in purchasing the other the purchasing company researches the company they're interested in purchasing. That's the due diligence process. Now as part of the due diligence process, it's inevitable that you will have a management presentation or the management size, in other words, a presentation to the future purchasing company's management presenting your plans and how things are going. And this is what we have done, and it's what we always do whenever such a situation arises. There's nothing special. Now I always repeat this. And unfortunately, I cannot make my message be correctly received, but we are not part of those negotiations. We are not party to these meetings and discussions because we cannot control the Braskem shares that are owned by other shareholders. That's up to the individual shareholders, the banks or the other companies. I can speculate, but I mean everyone can speculate. I know that there is a level of exclusivity that was granted, which I believe expires on August 20 something. And we are waiting to see whether or not this operation or the trade will be completed, and our schedule, our day-to-day is significantly occupied by our business, so we really can't waste a lot of our time mulling over the stoping. I always say this, whatever shareholder comes to control Braskem, the challenges that they will encounter are the same ones we have to date. And resolving those challenges involves our management our capacity to implement the necessary solutions. So therefore, wasting our internal time and energy trying to become involved in a negotiation that does not truly pertain to the company but instead to its shareholders, does not really add value, it actually consumes a lot of our energy.

Our next question comes from Tasso Vasconcellos with UBS.

Roberto, on the topic of your last comment, and also with the interview you gave earlier, you mentioned that a new controlling shareholder could potentially revise some of the company's plans. So where do you see greater room for these changes, some kind of geography change or in the company's business model or the product mix? Or I don't know, are there other locations where this type of change and more drastic ones can occur? And also along those lines, what impact might those changes have to the process, whether that is in use or burn of our cash or in improvements to operations in the very short term? And the second question, which is I think, for Filipe, the company burned cash in the order of BRL 700 million in the first half of this year. So what is your perspective or your forecast for the second half of the year? Is the company perhaps going to be more cash neutral closer to the end of the year? Or are we still going to work under a scenario where the company continues to have a little bit of cash burn? And is there a significant improvement of spreads without the government's intervention such as REIQ proceed antidumping for 2026. Those are my questions.

I mentioned that in theory, because any future controlling shareholder that comes to have control over the company, will have the right to analyze and criticize the company's actions. I'm convinced that our strategy is the best strategy applied to our reality because it focuses on neutralizing our weaknesses and maximizing our strengths. So minimizing or neutralizing our weaknesses means pacing consumption of naphtha as feedstock and starting to consume a more profitable feedstock. And in terms of emphasizing our strengths, I have a SWOT analysis in my head. We have to minimize weaknesses and threats and maximize strengths and opportunities. So in terms of maximizing strength, that's about our migration to green. That means increasingly ramp up production of green products, probably ethylene, but not just polyethylene, and adjusting production of fossil-based products to our success in converting the NASA to gas basis. I'm talking about periods here. But in my mind, in my perspective, that's the best strategy that Braskem can pursue. This does not necessarily mean I am utterly correct. It could be that some potential new shareholder could wish to emphasize one area or another. I was talking about period. I was not talking specifically about one particular point that could be highlighted or down regulated. Now with regard to financial health and banks, investors and analysts, our strategy, given the industry's status. Now I should mention that the industry constantly consumes cash for 2 years now. That's not just Braskem, our major international competitors, I won't name them, all have significant cash consumption year after year and an increase of other metrics. They ran into some problems. And we ran into problems that they didn't occur, which pertains to the salt mine. And this includes the Chinese competitors. They're building 32 tons of ethylene, and yet they're running their plants at under 70% utilization rate because they overbuild plants and the market hasn't absorbed that much material. So we remain with our strategy with the awareness that it is the correct strategy. And if such a time comes when a new shareholder, controlling shareholder changes, our strategy and calls upon us to change our back, so we will do. This doesn't mean that any of these strategies are more correct than ours. What we need to do is to spend less to improve the performance of our plants and to seek out products that give us better EBITDA, and that is exactly what we're doing.

Perfect. And on the topic of what Roberto said, which is exactly the answer to your second question, Tasso, yes, we should still consume some cash in the second half of the year. less so than in the first half, largely based on all of these measures we've been discussing, announcing and really hammering on about with regards to improving productivity, improving initiatives to improve our feedstocks and energy inputs at these plants. And as we've mentioned, performing other potential improvement measures, whether they are creating our green business, improving creation of our green businesses, making sure that it has the necessary resources to expand and to ensure that all of them will create cash. If not by the end of this year, at the longest in the very short or medium term so that we can deleverage, improve our EBITDA and reduce our consumption of cash in the more immediate term. This is a major focus of ours. We are involved in all of these measures, whether that's through or economic value or liquidity or different financial measures that allow the company to reduce the cash consumption within 2025 because both spreads and volume forecasts are not going to be very different for the second half of the year than they were in the first half of the year. As a result, our ability to generate operating cash within the company is something we are going to focus on through all of these initiatives.

Our next question comes from the Vicente Falanga with Bradesco BBI.

I have 2 questions. I'd like to understand the main takeaway that the company has sent to bondholders. The bonds are trading under 70 at face value. I know that there's many bonds coming to term, but most are in 2028. For my second question, I'd like to understand whether today, you see the assets that Braskem purchased in the U.S. such as Dow among other and strategic back in 2010 and 2012, the company really wished to increase its participation in the U.S., for instance, through the cracker project in Philadelphia, and for a number of reasons, that didn't occur. So I'd like to understand how strategic these assets are within the company's strengths portfolio.

With regard to our U.S. plants, they are an integral part of our strategy. Maintaining these plants in the U.S. is of essential importance for us because that is where 2 of our 3 main laboratories are located. The Pittsburgh laboratory, which is focused on technology products and catalysts for polypropylene, especially but also polyethylene and the Lexington laboratory, which is focused on our line of green product. Along these lines, one of our projects is to produce green polypropylene in the U.S. based on corn ethanol and therefore, the plants there are essential for us to process propylene or propane, the green propylene that we would then create. So we have no doubt that these plants are essential for us. And I'm personally not a fan of thinking about selling assets to amortized debt. Now with regard to the bonds, as you mentioned -- as you asked, Braskem as a conversion plan for gas and for green that involve investments very large investments. For instance, just one of them involves a $700 million investment. So to finance that, you will finance that through a bank financing, you're in construction. But after construction, you necessarily must migrate to long-term financing to match the assets and funding in terms of terms, you can't mismatch short, long-term funding or financing. So whether we use bank financing or own financing, we need to migrate to capital. So any type of migration that would be done with Braskem's debt. Now this would be considering that Braskem would need to reprofile its debt. And this would prevent us from getting access to this capital market. And this would impede us from our transformation plan and the investments we must perform. So in terms of financial technical discussions. It makes no sense to reprofile Braskem's debt. Furthermore, I believe that this is a mistaken diagnosis. Braskem's problem is not the size of its debt but its current EBITDA. It is resolved by increasing our EBITDA, and we increased EBITDA through all of these resiliency measures and tariff and commercial protections that we aim to obtain from the government. This will increase Braskem's EBITDA to the levels that we had 5 or 6 years ago. And as a result, our net EBITDA ratio will stop being relevant. In 2028, Braskem's EBITDA level will be much higher than it is today. So for me, in my opinion, this is a very superficial view of Braskem. And it's about bringing in a medication or a wrong diagnosis, and if you know finance, this is not the right diagnosis.

Our next question comes from Bruno Montanari with Morgan Stanley.

I'd like to follow up on some of the topics that were discussed. I think Vicente's last question is due to a headline that was published recently that said you may be thinking of selling the U.S. assets, but based on your response, I can see that, that is not the case. So I'd just like to double check whether it is totally out of the question. And another topic along those lines on the topic of restructuring the portfolio and reassessing strategies. This is something we've seen discussions for some time now, quite some time now. Currently, no real structural changes have occurred. So my question is about timing. What do you see in terms of execution for performing that transformation, given that the leverage rate has reached numbers that are kind of critical in the double-digit rate? And my second question, when we think about the government support for the industry as a whole, which makes sense. And you mentioned that various other regions have these types of incentives. However, your results in those regions where the incentives exist were worse than here in Brazil. So what types of additional measures would be needed in the U.S., Europe or Mexico for the company's results to improve. And if I may ask a third question, I understand that you are not party to the Novonor negotiations, but the company's management is involved in assessing Braskem's articles. So I'd like to ask you about Tagalong, Tagalong clause and what in the company's opinion, would be a trigger for that to count as change of control. Would it be only the total divestment of Novonor? Or would it be Novonor-losing effective controlling status and becoming a minor shareholder?

Roberto, before I start on the topic of the assets, I want us to be very coherent about everything we do and everything we discuss. Again, everything comes down to our transformation plan that we have announced and have approved and have discussed exhaustively now by Roberto and -- that we have discussed at length and have received strong feedback that this is the route that many, many of the company's shareholders believe is the most correct way to address the challenges imposed by the fact that the global petrochemical industry is in. Given all of that, the existing assets, whether they are more aligned with the plan or less aligned with the plan they make always. And that's not just today. stop being part of the company's portfolio in whole or in part. As Roberto mentioned, the question of the U.S.-based laboratories these laboratories are extremely important for the company's transformation plan. And so they are absolutely in line with our future and all the measures we put in line. The asset itself is without a doubt an important relevant asset has generated cash and EBITDA more strongly in the past and it is likely to grow again in the future. We're always going to assess them as long as that doesn't deviate us from our transformation plan, as Roberto also mentioned in the company's growth so that we can address our leveraging, which was also questioned by Gabriel's first question. So it's important for us to be clear about this topic that everything results from our transformation plan. And things that are within or outside of the plan may be more or less susceptible to potential monetizations, be the partial or total depending on the assets we are discussing specifically. With regard to the transformation, actually, many steps are being taken. We're not just discussing them. For instance, in Rio de Janeiro, we have Transforma Rio, it's one of the largest investments that has ever been announced in the Brazilian petrochemical industry. It is extremely relevant, and it's one of the key components of our transformation plan. It is in full steam. The BRL 233 million plan. It's a BRL 4 billion investment. There's a team with dozens upon dozens of people involved, along with Petrobras working specifically on this topic to make sure that all the expenses are accounted for, including rate expenses every month. So this is a project that is in full motion as well as our green project, as we've mentioned, it's currently at a reasonably advanced phase. We are looking at potential interested parties -- parties who may be interested in a share of our green company, which will be here in Rio Grande do Sul and Bahia as well as Thailand. This is a process that, as you well know, generally takes several months or more than a year to be completed, we began in late 2024 at full steam on the first half of the year. These players are engaging in their due diligence for these assets. So it's they are dedicated. And the project is moving along very, very significantly. There is also the topic of Alagoas as we've discussed here. This agenda has been exhaustively discussed and worked on with various different stakeholders, whether they're public, private, class associations all aiming to improve productivity of our PVC plant. And as a result, optimize our feedstocks which provide the necessary material for that plant to produce. There's also an BRL 88 million investment in that plant to improve its productivity. There are actually 2 major projects that were approved both for new technologies and for producing PVC itself, 15,000 tons. We have over 30,000 tons of PVC coming in, and all of that makes the set of these plants which had been suffering because of their technology and age as well, the age of some of their components, especially the provision of feedstocks which now makes that plant, this is actually very recently this, have a completely different profile than what occurred during the first half of the year. Actually, I would say that this has concluded these measures are now complete within our transformation plan. And lastly, before I pass the floor back to Roberto, the question you asked about whether or not there is a tag along. This is a highly legal question. As you mentioned, there is a clear definition in the company's articles, which is open for anyone who wants to read and interpret what is written there. With regard to what does or does not trigger a Tagalong clause. And as Roberto also mentioned, we are not currently spending our time to analyze that because if and when that occurs and moves forward and those proposals are officially submitted the banks that hold the Novonor as well with regard to any proposals that may come to be made with regard to the Novonor shares then at that time, if and when that occurs, we will discuss that. But again, this is a highly legal discussion, which, of course, will at some point need to be defined, but on our part, this is not something we are provoking or defining. Roberto?

I will answer the other questions. On the topic of the results from the U.S., Germany and Mexico. Mexico has our best result by far. Their EBITDA is much higher than the EBITDA at our other plants because it's a much more modern site. Its thermal and energy profile is much more efficient. They suffer from lack of feedstock because our feedstock supplier consistently fails to provide us the necessary levels of feedstock. So we had to invest in the terminal to import ethylene from the U.S. With the end, as I mentioned last week, at the end of the hall and the beginning of investment in the plants, we are now going to start operating at a level -- a capacity level that really owns up to that complex. And you will see that the EBITDA margin is many times higher than what we have in Brazil. With regard to Brazil, our polypropylene plant in the U.S. and Germany are not integrated. So that means we buy propylene from suppliers. The price of propylene has fluctuated because we can purchase polymer grade or refinery grade propylene in the past, there was a spread between these 2 types of propylene. We capitalized on that spread to buy the cheapest one for us. And this arbitrage was somewhat reduced. But what we saw in the U.S. in the first semester was atypical. These plants have given us $1 billion per year in cash flow. So the news from this journalist who is very well informed when it comes to Braskem, I don't know what his prices are. $1 billion from the U.S. plant, that's something we had every year. So we are talking about a whole other level of value. And in Germany, our 2 plants in Germany suffer from the same problems at all of European petrochemical industry suffered. The cost of energy in Germany tripled when it comes to the end of using Russian gas and moving to U.S. gas, the value tripled per BTU. So the cost of energy reflects that. As a result, we are aligning our supply contracts for those plants so that we can gain access to less expensive propylene. But there's a crisis in the petrochemical industry in Europe as a whole and in Germany, in particular, the biller table has all the billiard balls in motion. So we are working to recover everything that we can.

Our next question comes from Nicolas [indiscernible]. Our next question comes from Leonardo Marcondes with Bank of America.