Braskem S.A. (NYSE:BAK) Q4 2019 Earnings Conference Call - Final Transcript

Apr 08, 2020 • 02:00 pm ET

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Braskem S.A. (NYSE:BAK) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Executive
Rosana Avolio

In our results, Bruno, because of inventory costs, we have the positive benefits starting in April. Okay, this is an important point.

Executive
Pedro van Langendonck Teixeira de Freitas

Thank you, Rosana. That is indeed an important point. Our results cycle is different from the kind of the spot prices that we see today. So we do carry inventory costs over time, which take one or two months to hit our results. So first quarter we will still not see I would say the benefit of the higher spreads that we see today. On the operators and the point on can we operate leaner? We have a constant process of revising our operational footprint and I do not believe that we can operate materially leaner, leaner than in the past. The reason for that is that why and to understand that it's important to see why we were able to reduce the 60%. Actually, I mean we are only performing those maintenance activities that are immediately required for safety reasons or for critical operational reliability situations.

So, the day to day preventive maintenance -- predictive maintenance. That's not happening right now. It's more kind of the critical aspects of maintenance that are being addressed, we're not doing the rest. There are improvement projects, so investments, small investments that are done in the plants, we are not doing that. So one would say a consequence of that is that we can operate with fewer people, but we're not capturing potential value opportunities for the long-term. So we are going to do those, but we're not doing them now. We're probably going -- when the situation gets back to normal, then we will go back and implement those projects. The other thing we're doing is when you are running an operation, sometimes for example, you would have five field operators as a room, right? For a certain amount of time, you probably can operate with four. So that's the sort of thing that we are also -- we're also -- we have also looked at shift schedules and I mean for now, some people are working more than the normal. So we have fewer people, but they're working more hours. So all of that has also an impact on extra hours, on additional costs that the company may incur to have fewer people in the plant. So I would say the current situation is not sustainable and maybe when we come back, some opportunities will be captured to operate leaner, but I don't think, again, they are very material.

And on the last question, overall utilization, we can -- so I would say that we have many different ways of adjusting our utilization rate, right? So we can choose to stop the plant or we can reduce the overall level of optimization across all plants or can stop one line of the cracker or different approaches for that. So looking at overall utilization and how does that interplay with the future again, I'll go back to my first answer,