Braskem S.A. (NYSE:BAK) Q4 2019 Earnings Conference Call - Final Transcript
Apr 08, 2020 • 02:00 pm ET
2018 and 4% when comparing to the fourth quarter 2019 and also with the fourth quarter 2018. This improvement in the Brazilian market is mainly due to the great business and food sectors and the gradual recovering of construction sector. In the year, the utilization rate of the crackers was 85% below 2018 due to the lower supply of feedstock at the crackers in Bahia to the shutdown of chlor-alkali plant in Alagoas state, the scheduled shutdown of one of the production lines in Bahia as well. The international petrochemical spreads dropped especially the polyethylene spread that presented a 36% drop mainly because of the new capacity starting in United States combined with a weaker global demand. Considering this petrochemical scenario, Brazil's EBITDA in 2019 was 57% lower than 2018.
Moving to Slide 5, we will comment about the Alagoas situation. In the fourth quarter, the company has continued to operate the imported business model to keep its PVC production running and to import soda in order to supply the Brazilian market. Also, in the fourth quarter, Braskem reaffirmed its commitment with the safety of the communities affected by the geologic event through the following actions. Definitive closing of salt extraction activity in Maceio by signing an agreement with Alagoas state prosecutors creating a program and by signing an agreement with the Labor Prosecution Office for implementing a program to recover business and promote relocation for residents and workers.
Moving to Slide 6, we will talk about United States and Europe operations highlights. In the United States, the fourth quarter demand was 5.4% lower when compared with the previous quarter due to seasonality and a 10.3% drop when compared to the previous year due to the weaker auto industry performance and to the lower growth of the global economy. In Europe, the demand also showed a drop of 3.8% compared to the last quarter and a growth of 0.7% compared to last year. The spreads remain in sustainable levels in United States and in Europe. The spreads remain compressed because of the local economy and auto industry slowdown. Given that, the United States and Europe's EBITDA was 48% lower than 2018.
Moving to next slide, we will talk about Mexico operations. The demand in Mexico market showed a drop of 9% in this quarter due to seasonality of the period combined with the weakness of the Mexican economy. The Mexico operations were impacted by higher ethane supply and as a consequence, the utilization rate increased. This effect, combined to the commercial strategy of prioritizing sales in more profitable regions offset partially the lower polyethylene spreads in the region.
Moving to the next slide, we will talk about the company's free cash flow generation. In 2019, Braskem posted a consolidated EBITDA of BRL7.8 billion. Of this EBITDA, BRL1.9 billion were related to nonrecurring events of PIS and COFINS tax revenue totalizing a recurring EBITDA of approximately BRL6 billion. The variation in working capital was positive by BRL2.4 billion as a result