Growing Giants: Brazil’s Braskem Aims For Global Leadership

Braskem, Brazil’s largest chemical company, has been pumping up its international presence with the goal of becoming a global leader in sustainable chemicals by 2020, according to the company’s CEO, Carlos Fadigas, who rang the closing bell at the New York Stock Exchange today.



Braskem has been quietly expanding over the years, acquiring 12 companies, including U.S.-based Sunoco Chemicals last year, for $350 million in shares. Today it owns 31 facilities in Brazil and in the U.S. While its stock climbed over 98% over the last 12 months (Braskem is listed in the NYSE, Brazil’s BM&FBovespa and Madrid’s Latibex) the company pulled in revenues of $15.8 billion in 2010.

Thanks to its “solid balance sheet” (its net debt to EBITDA in 2010 was 2.56x) and investment grade rating by Moody’s, Fadigas told a group of reporters at the NYSE this morning that he sees more opportunities in the horizon for acquisitions in the United States, Mexico and Canada. “We believe there’s some consolidation that should happen over time in the United States,” said Fadigas.



The past couple of years have presented great opportunities for companies in emerging markets with an appetite for growth to find deals in developed markets. As Brazil’s Finance Minister Guido Mantega said during a summit yesterday, emerging markets are out of the 2008 financial crisis — developed markets are not (yet). (Read Mantega: Inflation Under Control In Brazil As QE2 Pressures Real)



Some Brazilian companies and private investors that have taken advantage of the deals available in developing markets include JBS, which has become the world’s largest meat producer in the process, and a group of Brazilian billionaire bankers (Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira) who bought Burger King last year.



Aside from a strong balance sheet, Fadigas said Braskem is reaping benefits in multiple fronts. Among them is a burgeoning middle class with an appetite for plastic. Braskem, which produces over 15 million tons of thermoplastic resins and other petrochemical products annually, says Brazil will need a new thermoplastic plan per year until 2020. It also expects its partnership with Brazil’s national oil and gas company, Petrobas (which holds a 47% stake in Braskem) to be advantageous, especially as gas supply from pre-salt exploration grows. A third benefit, according to Fadigas, are Brazil’s abundant raw materials. Thanks to the country’s sugarcane plantations, Braskem is able to produce “green” polyethylene from sugar cane-based ethanol.