Braskem S.A. (NYSE:BAK) Q4 2019 Earnings Conference Call - Final Transcript
Apr 08, 2020 • 02:00 pm ET
Thank you. [Operator Instructions] We have a question from Bruno Montanari.
Good afternoon. Thanks for taking the question. I have a few questions. I'll stick to two of them. We have seen quite a sharp increase in naphtha spreads since the beginning of the year as a result of the decline in oil price. So thinking about higher spreads and potentially lower demand, how should be think about the net benefit or net damage of these to the Company's cash flows in 2020, assuming that spread of course stay at current levels? From what you mentioned it doesn't seem like demand has declined a lot. On the other side of the equation, spreads are much higher, more than double. So that could be my first question.
And second question, listening to your comment, Pedro, about lowering people inside your plant by 60%, does this mean you could operate as a leaner company after the crisis, of course, not with the bare minimum? But if you can navigate such a period with that much less people, I was wondering how the future could look like once we get out of this very unfortunate situation and a quick one, a quick third one, what would you say could be your overall utilization rate at the worst of the demand contraction both in Brazil and the U.S. and Europe. Thank you very much.
Pedro van Langendonck Teixeira de Freitas
Thank you, Bruno for the questions. I'll tackle the first one -- starting with the first one. So we did see an increase in naphtha spreads and there is a, if you look overall, the region slowed down in demand and again very uncertain scenario for even for the next week I would say, what to say over the next month. So we could still see a further decrease in demand or stability or even growth, we don't know, right? It's very hard to predict that right now. Very hard to answer your question on increased naphtha spreads versus demand. I think it will depend a lot on how long those two effects remain in place because I mean we were coming into a downturn in the cycle. So assuming that the structural situation of the industry from a supply-demand -- from a stable supply-demand perspective would be lower spreads in general. You can still go through a period where oil prices remain low and then the spreads would be good, but it's very hard to say when it comes back and then whenever it comes back, how does it affect demand itself, so the interplay there is very complex to predict. I'm afraid I don't have a very good answer for you. I would say that right now that interplay I would say is probably likely positive, so better spreads against lower demand, but that can change, as I said, even next week. So, very hard to predict that over the course of the year. On the second question --
And if I can add just one comment on that.