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Braskem SA (BAK) Q2 2021 Earnings Call Transcript

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BAK earnings call for the period ending June 30, 2021.

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Braskem SA (BAK -0.46%)
Q2 2021 Earnings Call
Aug 6, 2021, 10:00 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good afternoon, ladies and gentlemen, and thank you for holding. Welcome to the Braskem's Conference Call to discuss the Results of the Second Quarter. Today, we have with us Mr. Roberto Simoes, the Company's CEO; Pedro Freitas, the CFO; and Rosana Avolio, the Investor Relations Director. We would like to inform you that this event is being recorded and during the presentation, all participants will be in the listen-only mode. Ensuing this, we will begin the question-and-answer session when further instructions will be given. [Operator Instructions] Both, the audio and slide show for the presentation are being broadcast simultaneously via webcast and can be accessed through website

Please bear in mind that forward-looking statements that may be made during this conference call regarding the company's business prospects, operating and financial projections are based on beliefs and assumptions of the company management as well as on information currently available to the company. These forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the company's future results and the lead to results that differ materially from those expressed in the forward-looking statements.

I would now like to turn the conference over to Rosana Avolio, Investor Relations Director. You may proceed, ma'am.

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Rosana Avolio -- Director of Investor Relations

Good afternoon, ladies and gentlemen, and thank you for participating in Braskem's earnings conference call. Today, we will present the results of the second quarter 2021.

Let's go on to the slide number 3, where we will speak about the Petrochemical scenario in the quarter. In the second quarter of 2021, Petrochemical spreads continued to improve; this phenomenon is mainly explained by a healthy global demand in the period and supply constraints in the United States, following the Uri Winter Storm in the country's Gulf Coast. In the second quarter of 2021, the company had recurring result of BRL1.8 billion, 198% higher than in the first quarter 2021, represents further BRL69 [Phonetic] per common shares and Class A shares for the entire year until the end of the quarter 2021, Braskem had a net profit of BRL9.9 billion. I would like to highlight that in December 2020 the company had accrued losses at BRL12.5 billion [Phonetic] at the end of July 2021, the company reversed a bit toward creating profit at BRL5.4 billion.

We go on to the next slide. Slide number 6 shows you the highlights of the Brazilian operation. In the second quarter, the utilization rate of crackers in Brazil was 76%, down 6% to 1% vis-a-vis the first quarter of the year. This lower utilization rate is explained by the scheduled general maintenance at the ABC Petrochemical Complex at Sao Paulo and the Brazilian demand decreased in relation to the first quarter of the year due to the normalization of demand in the region but showed healthy level. On the other hand, exports improved during the quarter. The recurring operating results of Brazil was up around BRL1.1 billion, results 20% above the first quarter of the year.

We go on to the next slide to speak about the latest development for the tax regime for the chemical industries. The special tax regime known as REIQ was introduced for the competitiveness of Brazil's chemical industry by reducing the fees, co-fees, tax rate, leverage on base petrochemical feedstock. In March of this year, the Brazil government proposed to churn in REIQ through a provisional measure. After certain modifications, both in Brazil, in June it was passed by the federal government and this was sanctioned by the federal government and converted into Federal Law 14,183/2021. The law provides special reduction of the waiting for years and to have a special regime in solid terminated in January of 2025.

We will speak about the geological events in our Alagoas. The chart on the left provides sufficient balance related to the geological event in our Alagoas at the end of the second quarter. The balance registered was BRL7.7 billion and during the quarter Braskem reversed provisions in the amount of BRL72 million. The graph on the right presents the disbursement schedule of the total balance of provision of BRL7.7 billion, 58% was recorded under current liabilities, and 32% under non-current liabilities. The company cannot predict with certainty the future developments in respect that this matter or it's related expenses and the costs incurred may be different than both, currently estimated or provisioned.

So, speaking about the geological events at Alagoas; we updated by the new allocation coal plants. Braskem continues to offer financial compensation to the families living in the risk area, and the number of families were located was 13,807, which means 96% of families in the risk areas are then relocated, reenforcing the company's non-negotiable commitment to allow families to live in safe areas. The number of financial compensation increased by 50%, but then acceptance rate of the proposals submitted remaining of high levels. Regarding the payments made under this program, about BRL1.2 billion have been disbursed until the end at the second quarter. Now these amounts were considered since the beginning of the program.

Please move on to slide number 10, where we present the main highlights of the United States and European operations. Since Q1 the capacity utilization rate rose by 20 percentage points. In Europe, the utilization rate increased vis-a-vis the previous quarter due to the rebuilding of inventories and leaving the demand in the region in the United States as their sales volume in the quarter grew by 14% compared to the prior quarter, setting a new quarterly record. It reinforces our leadership in the U.S. polypropylene market. The segments recording operating results in the second quarter was $492 million, 56% higher vis-a-vis the previous quarter.

In the next slide, we will speak about the highlights of the Mexican operation. In Mexico, the capacity utilization rate stood at 58% in line with the prior quarter, reflecting the higher supply of ethene by PEMEX in June which was partially offset by the unscheduled shutdown due to isolated instability and power supply to Braskem Idesa. The sales volume for the quarter was 155,000 tons, a growth of 50% when compared to the first quarter. The segment's recurring operating results in the second quarter was $200 million, a growth of 113% when compared to the prior quarter. We go on to the next slide to speak about the company's cash generation. In the quarter, the Braskem recorded positive operating cash generation of around BRL1.5 billion. The main positive impacts were the strong recurring operating result and the monetization of fiscal fixed tax credits in the quarter. These positive impacts were partially offset by the negative variation in working capital and higher income tax paid.

We go on to Slide 13 to speak about the company's progress in reducing the gross debt level. Given it's robust cash position and strong cash generation, the company concluded several liability management operations in the second quarter totaling $643 million further reduction. In the first half of the year, Braskem reduced it's gross debt by approximately 16% which represents an amount of $1.3 billion. Additionally Braskem also concluded in July of this year additional operations to reduce it's gross debt of around $355 million additional. As a result, the total reduction during the year has obtained $1.7 billion. By the end of June, Braskem continued to maintain a very long debt maturity profile and strong liquidity position with a maturity concentrated in the long-term. The average debt term was around $14 million. The current liquidity position is sufficient to cover the payment of all our virtual maturing [Phonetic] over the next 78 months. It is important to highlight that in May of 2021, the risk rating entity Fitch Rating upgraded Braskem's outlook to BB+ which reflects the company's permanent commitment to maintaining a liquidity position, and cost discipline and reducing it's leverage ratio.

Now let's go to slide 15 in which we will talk about corporate market. With the objective of being reassigned as an investment grade company, Braskem continued to report corporate leverage reflecting it's solid credit matrix, with leverage ratio is down 30; and in the quarter a 1.1 times businesses around of six times in the last 12 months. We would like to highlight that the lowest leverage ratio presented by the history and the relevant achievements for the company's credit matrix, Braskem reiterates that it maintains the role of cash position and rebound debt maturity profile and is committed to an efficient capital allocation and cost discipline to be reassigned an investment grade company.

Let's go to the next slide now. It is important to highlight on this slide that the main factor is stand-alone as the rating agencies, the company has celebrating important progress regarding corporate leverage that continue to reduce it's leverage ratio, which in the second quarter was at it's lower level ever seen in terms of making the strong liquidity position. Braskem ended the quarter with robust cash position of $2.3 million; this is above the minimum established financial policies. Braskem also continues to deliver consistent cash generation free cash for [Technical Issues]. The company remains committed to capital allocation [Technical Issues] investment grade credit company.

Now, we will talk about the transfers that program continuing in next slide. The opportunity [Technical Issues]; currently in addition to the recurring annual gains of $147 million in stage 4 and 5, Braskem envisages a set of improvement initiatives in stage 1, 2, and 3 that could generate recurring annual gains of $293 million per year, bringing the total bookings to $440 million until 2023. I'd like to highlight that the company's previously estimated cost recurring annual gains of around 100 properties in the end by new initiatives.

Now on Slide 18 we really want to talk about the highlights regarding the [Technical Issues]. By contrast, you think now to the social mentioned that was nice second tender their bonds right in relation to recognize vacant land vector the efforts of companies that promote the culture of gender equality of women empowerment of the recognition as a result of the year. In 2020, Braskem marked the 30% women in leadership. In the economic dimension importance of that [Technical Issues]. In the second quarter, [Technical Issues] then in the international standards that some from the management reinforced this commitment to similar innovation in product in addition now [Technical Issues] at the end of July that they were up getting 125% growth than the past and that we represented to $2.4 million -- and other the carbon, about 76% presented other than environment impact until March there with a relevant contribution of new rates and results that the company represented 15% of sales volume and 60% of the contribution margin of the product.

On the next slide, we will talk about the petrochemical scenario in 2021 and 2022 based on the various forecasts disclosed by the independent consulting firms. CCAE spreads are expected to remain at the same level over the whole year of 2021 and 2022; the highlight is really the spread of polyethylene which are expected to remain at levels above the upside of the petrochemical industry. On Slide 3, we will talk about some scenario portfolio with the expectation for seeing until we see that from the previous slide, external consultancies are projecting some spreads for 2021 and 2022, especially in the U.S. but our forecasts are calling for spreads to widen the third quarter of this year.

On the next slide, we will see the short-term perspective. However, there it is expected higher asset in production and normalization of operations in that cracker compounds. In terms of sales volume, an increase in total sales volume is expected with the maintenance on the prioritization strategy for serving the Brazilian and South American market. Pre-amount of spreads will remain at levels above the industry up cycle in contrast to spreads for PP and PVC, which are expected to narrow in the period. In the Europe, the outlook for PP production and sale is to remain stable in relation to the second point the PP processing spreads in the country should remain at sound level mainly due to continued growth of demand in PP in the region.

In Mexico, the capacity utilization; we're afraid of PA production should rise an expectation of higher ethane imports from the U.S. These sales volume should increase due to higher available inventory product spread in Mexico should remain at sound levels, in line with the previous quarter.

Now our next slide. In this slide, we can know that Braskem remains as an interesting investment opportunity in the novel petrochemical sector no has achieved important advances, in the period multiple remains discounted compared to its peers. We would like to highlight that team is a global companies with characteristics, similar to a pure contiguous with a well-diversified feedstock profile, leadership position in it's market among other.

Now, on Slide 26 to conclude today's presentation. On this slide, we would like to recap the company priority for 2021 branch. The two main priority are concluding that processes related to the deal, large event in Alagoas and we solution for insure reliable ethane supply to [indecipherable] and we continue to make important advances to our resolving, both of these issues that can also and we committed to financial to the efficient allocation of capital with the objective to be reassigned as an investment grade company another priorities, strengthening Braskem public image and reputation and through innovation and digital transformation. The company's priorities are improving the effectiveness of this information action and accelerated digital transformation and that these continues to make progress in implementing the ESG commitment with the goal of becoming an industry reference in here, just last thing we want to reinforce that safety are and will always be a key focus on authorization that the perpetual non-negotiable value of our strategy.

That concludes today's presentation of Braskem results for the second quarter. Thank you, everyone for your attention. Let's go to the Q&A session.

Questions and Answers:


[Operator Instructions] The first question from Ricardo Rezende from JP Morgan.

Ricardo Rezende -- JPMorgan -- Analyst

Hey, good afternoon, Rosana, Roberto and Pedro. The first question refers to your capital allocation. As you showed in the presentation and referring to your cash, it seems to have a very good outlook. You have a cumulative profit which is quite high. Therefore the natural question that emergent, is what should we expect in terms of dividends for the second semester, which is the discussion regarding this the second question, you referred to the United States. And situation the that is happening there, there was an isolated event. If you have any plan and how are you going to work with the other market in reference to the United States and what are you going to do in terms of arbitrage?

Pedro Freitas -- Vice President of Finance, Procurement & Corporate Affairs

Good afternoon, Ricardo. Thank you very much for your questions, actually when it comes to capital allocation as you mentioned, of course, it is necessary to think about higher dividends and continue on with our leverage policy. Now, we have made a decision that states that the payment will be below 2.5%. This will enable us to think about dividends so it will be above the minimum rate and at present, we are 1.1 which [indecipherable] it is very low, it is perhaps the lowest in our historical trend. Therefore it is natural to pay out dividend, something that we have been doing. And I believe that it would be reasonable, if the scenario continues on as it is, to once again we revise this issue. We have as yet not made a decision. Once again, this is something that we are discussing. And once we come to an opinion, we will disseminate it.

Regarding the price of PP, this mismatch comes about for a certain reason. The market there is somewhat weak because of some issues related to the pandemic and to other issues in Asia, for example, we have a greater availability of PP and what we are lacking are containers to [indecipherable] system, the area and in the United States, we have the situation where the market is quite balanced and the prices of course were reflective situation. We base ourselves on market prices, of course, the market is in a situation where the prices have increased and we're as far as taking the most, the advances that had been higher margins in the United States. The market has become regionalized in terms of prices. Brazil, once again is still where it was, but the United States and others have taken off, they have become attached than the market prices. So we see a scenario that while at last will be quite positive. And I do believe that it will in June until at least the end of the year, if there is a recovery in this, perhaps the price will increase. It depends a great deal around the supply and demand dynamic and it all will depend a great deal on the logistics outflow that will happen in North America. Now you have come up with a provocation of we shall look for markets more connected to the United States.

Now, what we have ourselves are sales from Brazil to Mexico, the exports from Brazil to other regions and this has been included in our sales and operation methods we include all of the possible regions and we are revising to see where our exports will go. We -- the great priority of course is the domestic market. But regardless of those in Mexico, which is a reference with the United States, we have now PP contract in Mexico. We have assessed all the possible opportunities. Once again, it's a supply and demand dynamics that has become regionalized and of course we have to focus on the supply part and we do believe that this will continue to exist for some time and when it returns, literally do not know what will happen.

Rosana Avolio -- Director of Investor Relations

Thank you very much, Pedro. Thank you for the response. The next question, from Guilherme Levy from Morgan Stanley.

Guilherme Levy -- Morgan Stanley -- Analyst

Hey, good afternoon and congratulations for your quarterly results. I have two questions, the first referring to cash generation. At the beginning of the year, we had a significant working capital and good cash generation. I would like to better understand what is happening with your consumption of working capital during the year? Do you still have very high spreads and I think that they have reached a peak during this semester. My second question, I would like to better understand what is it that motivated that very timely shut down in Mexico? And what is happening with that instability in terms of electrical energy and when we will have a resumption of two production there?

Pedro Freitas -- Vice President of Finance, Procurement & Corporate Affairs

Thank you. Guilherme for your questions. When it comes to cash generation, as you mentioned, we have had important investments in working capital during this quarter. And of course, this is a fact and Rosana alluded to this in the presentation. As we have published several, we have feedstock management policy and the feedstock that we import, we are able to obtain in the market with terms of up to 160 days. Historically, therefore, we are making the most of this length in terms of payment that our suppliers have offered us. What happened is that, we are in this situation of a very strong cash generation, perhaps a cash surplus. We have paid down several debts to create our exposure but evidently, if you pay cash, you will obtain a discount. Therefore, we took the decision to look for side payments. There was no need to lengthen the payments and we decided not to lengthen payment to suppliers, we had reduced the payment term and this had a one-off impact on our working capital.

The second point that was relevant and perhaps the most relevant of three points is the second and it refers to the price of resins and feedstock of raw material when we carry out our procurement, when we make up our feedstocks in biosynthesis is what demand greater working capital. In the third place, we had a refurbishment of stocks. As you will recall last year, we had a great deal of sales and the sales have been strong this year as well as last year. I will refer to Brazil, we sold more than 1,600 tons per quarter and in the second quarter we saw 1.5 million tons. When we look at this curve, we decreased our sales somewhat and we were able to restore some of our inventories that were somewhat below their normal levels and this is another figure that is included in this calculation. And of course, there could be the possibility about [indecipherable] of this working capital for our operating cash to avoid any sort of indebtedness and of course, this is very important and would be a good sign of Braskem's sound financial position.

These were in the national -- network cable national electric network in Mexico, and [Technical Issues] on our automation emergency system, it is [Technical Issues]. And we have stop, this was an emergency shutdown because of the lack of power and this triggered the shutdown of the complex, emergency shutdown though is that I think impacted because we have to carry out some type of maintenance. And this will generate production loss during the month. I can't remember if it was May or June and this was 15,000 tons of production that were lost. Since June we have been branding stably with no production restrictions because of the reason, we still have a feedstock with structure the place in Maine. Yes, I'll just repeat this information. Therefore it was an isolated event, the impact was about 15,000 tons in production, but this has already been recovered.

Guilherme Levy -- Morgan Stanley -- Analyst

Thank you very much.


Our next question from Pedro Soares of BTG Pactual.

Pedro Soares -- BTG Pactual. -- Analyst

Good afternoon. Follow-up on dividends and capital allocations. I would like to see a number of points. Pedro, you have mentioned that you would pay something above the minimum -- it will be leveraged before 2 times, 2.5 times; but we -- but our spreads should come back to normal and this is something that you mentioned and that the leverage would increase on a very long level. But I would like to understand that in addition to your leverage target, is there an optimum level of gross debt in the long run? So, what are your priorities between paying out dividends and paying out taxes in some type of breakeven point here?

Rosana Avolio -- Director of Investor Relations

Well, this is a good question, Pedro, because we can discuss our financial strategy and how we see here our corporate leverage. If you've seen our history; so our net debt is between $5 billion and $6 billion we have been growing the Delta project. We're providing a results for the 89% of occupation rate; so our margins are very high in the U.S. and very attractive. Now, we could even explore the higher net debt -- we have that exchange between $5 billion and $6 billion; and it is used to this level. And now policy discussion with management that is highly conservative; I would say that rose that upto $7.5 billion. Give or take, it would be something reasonable. And I believe that we can coexist with this with no problem. You will see that there were moments where we exceed in $8 billion; but if you see our history $7 billion, $7.5 billion is OK, and we can coexist with this level.

Now, we ended the quarter with a gross debt of $6.8 billion; so it is below the level that I consider reasonable. We paid out $350 million in debt, and in July, after we paid things that we have a cash position that it's slightly above the optimum point for that scheme. So when do you see $200 million to $300 million of surplus of cash, and the increase of our leveraged about $1 billion; I think this is an excellent structure of capital and this suit optimizes our equity. So, we do dividends on one side and we want to pay out our shareholders because from three years they haven't received dividend in high time; they receive their dividends at the optimum capital structure. So we are under -- so we're not under leveraged, so you can see that there is space here; there is a lot we can do here, lots of the maneuvering.


Next question from Luiz Carvalho with UBS.

Luiz Carvalho -- UBS -- Analyst

Over to Pedro. Rosana, thank you and congratulations for your results. Two questions. Number one, after seeing your presentation, Slide 25 drew my attention, and you showed that gain clearly being a very important asset in terms of investments. And you showed -- and it's multiple remains discounted compared to it's peers. So, if there is something the management could do to unlock the value perception? And is there something in the sales process; do you think that grafting would be sold as a whole or separately? What could -- what could you tell us in terms of value perception? My second question is whether would you discuss this in other opportunities but we're now -- is there is a private investment -- investor; is there -- is there something that could be done jointly? Are there any potential opportunity or synergy to carry out joint businesses that could give you some type of additional return?

Pedro Freitas -- Vice President of Finance, Procurement & Corporate Affairs

Good afternoon. It's good to talk to you, and thank you for your question. Regarding the peers discount, well you can just see the figures and the figures shows that there is a discount; just to little bit back, this discount was lower the path 10 years ago, but our payment had a discounter, but it was 10%. And Braskem was a company that was a 100% -- visiting us 100%, phased in [indecipherable] diversified, and we went to after other forces with international exposure, with exposure to other types of feedstock. So, our growth in the past years, in my view should have diminished this discount and the discount today is 40%. So, we believe that this discount is not reasonable. I believe that the market caught up during the first quarter, in the beginning of the year there was a higher discounting as over 5 times the data, now we are at 3. What happened was the fierce multiple dropped; we continue believing that discount is not justified.

Roberto Simoes -- Chief Executive Officer

Now, the -- our logic -- we follow a solid logic and we are strongly inserted in the petrochemical industries. We do not have never 30 times because this is a hide-and-seek type business with some dimension; but when we see our figures and we compare it to our history, this does not make sense. And perhaps, you know better than I do; there is an upper section of the investor. There was a rally of 150% during the first quarter; is this still going to go up? So perhaps this is what is happening; we're trying to see why -- why did app get distorted? Value perception demand; the shareholder market and we are a modern company, we have the best petrochemical producer in the world. In terms of safety, we are the best in the world with a great potential of growth. In recycling, we are thinking about the future with Braskem being about insight [Technical Issues] platforms made it challenging. In some places they provides growth and we are positioning ourselves properly. And also renewables; we have a unique platform, nobody has what we have and the potential; you know growth is overwhelming so the market, what we have to show the market that we have all the reasons and that for not, for not having the discounters we have to give.

Regarding, well, we know great part of the team that is assuming rollout many of them used to work here in the past, these are people who are very competent and, we are waiting for the right moment to talk to them, we believe that it still not about that and at the moment to embark and invest the compensation. But when we find the right moment we will sit and talk to them in trying to find synergy. We already have an idea. We have some ideas, but of course we want to listen to their ideas and as of, there will be more potential in the US more the eastern areas.


Thank you. Thank you very much for your response. The next question is from Barbara [Phonetic] from JPMorgan.

Unidentified Participant

Good afternoon. And thank you for taking my questions. I know that you have a goal, the final amount so that you can reduce your leverage. Thank you.

Pedro Freitas -- Vice President of Finance, Procurement & Corporate Affairs

Hello, Barbara. How are you? To be very frank, we do not have a goal for gross debt. We do have an in-house goal for the net debt, but of course this is not made public simply reference to help us in our financial management, the, we have communication with the market when it comes to dividends, because this is very important and our Thank you. Leverage all dollar-wise terms, the figures, that we gave you are simply a benchmark for you to think about what would be a comfortable level for us, a comfortable limit for us.

Unidentified Participant

Thank you. Thank you very much.


[Operator Instructions] We have a question that came in through the chat from Ben Ivanson from Nova Scotiabank, who asked strategically we are interested in investing more in the regional diversification, or is there are some chemicals where we would like to have a greater exposure to these that be what we have at present.

Pedro Freitas -- Vice President of Finance, Procurement & Corporate Affairs

Ben, thank you for the question. I would say the following, the regional diversification has been an important part of Braskem strategy we have invested considerably outside of Brazil and we see our checks in Mexico, the new PP plant and they give us. These are our largest investments abroad. We have also invested in Brazil. Tim that yet in PBC by year.50:35 We are currently undergoing an expansion in the south of Brazil. We would have balanced our investments both in Brazil and outside, but the magnitude of course have been best Smart Brazil was much greater than abroad. This because thereby diversification logic. we are interested in continuing to follow up on the Asian market. We have a good platform in the Americas significant operation in Europe, a sales operation that is greater than the industrial one and concentrated mainly in Holland and Germany but extending throughout Europe as a whole and what we have that is proportionally smaller is Asia.

Shall we have an office in Singapore and other in India where we have our eye on Asia, and we consider a new potential source of investment. If we think of the renewable products. Asia is very important for that and because of this we are thinking. As Paul said, these avenues for growth. Our growth in renewables and PBS and yeah, well, Asia is very important when it comes to this product and along with this, a regional diversification based on products that we are, that we have, but where we can foresee a significant growth potential especially in Asia, when we speak about other products we are always assessing new products that come about an acquisition, something novel, the new in-house processes of technology and innovation are mainly focused on renewables, we are speaking of new products and this is the type of development, but we are seeking. But we are open to partnerships in the regions where we already operate, South America and we're open to different products. It will depend on different opportunities; the strategy is not to diversify just to diversify.

We want to value. What we have made, but we will be looking at what is available. If you look at the more of the projects that pre-salt in Brazil in the United States. This is well is of interest to us. We foresee great growth, new products that will be very much linked to renewables.


Our next question comes from Barbara from JPMorgan. If you allow me a follow-up, please.

Rosana Avolio -- Director of Investor Relations

Your sale of assets on the controlling company that is the vision that the company has in terms of the sale of assets. If there is any asset the present, we would not be deemed strategic that could be so that for-sale. If you could give us more color on this, please.

Pedro Freitas -- Vice President of Finance, Procurement & Corporate Affairs

Barbara. Thank you once again for another question. I'm going to put that question in the context of what we observed last year in the second semester of last year. We were at 7.1. And as you know we were working with all the possible opportunities to reduce our leverage. We included the sale of assets and these possibilities. Now, the assets that we understood that in a scenario of deleveraging we could disinvest from. We say that that equation value and the impact on the company, and of course, we were not able to come to a conclusion. All the Braskem assets internally are for sale, it all depends on the size of the check and the pressure that they bring to the table. And -- well, this is how I would state this; Braskem does have a commitment with all of our shareholders and we're going to do will be best for all of them. Now, if we receive an amount that we will think that is lower than the cheque that has been put on the table; as a natural part of the business, of course, we will assess this.

Now on the other hand; if this doesn't happen, there is no request from anybody to sell assets. At present we're supporting the process that we're thinking of a stake in Braskem and not selling off parts of Braskem. As you, think this is the way that we are thinking, and this is the guidance that we have followed simply to complement this well this discussion is being held with the shareholders at Braskem. We continue to seek for all possible business opportunities to create value, to continue to manage our company; this is the greatest value. That is very clear and I have a last question. A follow up, perhaps on the appropriate level of debt. Obviously, the present day cycle will change going forward which would be appropriate debt level if you could remark on this. We are comfortable because if you see our metric, the will play discount or upgrade, its own work. Our metrics today for being totally our and it's comfortable with them they at the investment grade and you see our metrics and figures we our at level much, much better level than any investment grade company; so we believe that it should be well recognized by the rate buying the rating agency. We have been dialoging with them, at the end of there the one satisfy we'll see the figures, we'll see the pack. We analyze different scenarios than how to leave goods in the fact then we analyze different scenarios and to give able to lower net debt and our growth debt. You know, we are witnessing metrics of these agency. And even though we're paying out dividends.


[Operator Instructions] We are bringing to remove our Q&A session. I would like to give the floor back to the company for their final comments.

Roberto Simoes -- Chief Executive Officer

So, I will like to thank all the participants for taking part on our earnings results call. And now I would like to [indecipherable] this was an additional good quarter in all the regions. And secondly, they continue with our trajectory to return to being investment grade. I would like to reinforce here that we have had significant deliveries that were presented this afternoon. With the reduction of our gross debt, representing $1.7 billion until the end of June and recording the lowest leveraging of the Braskem history of 1.1 times and in 12 years, the company labor talks with 6 part; and in the future, we will maintain a very sound position with a fairly good.

We like profile for the debt as you could hear during the question-and-answer session. Additionally, to this app; commitment with ESG exceeds and you can considerable strides and that area we have a change the Board. We have a compliance maybe and all of this has had a very positive impact. And we do have two independent members. And finally, we truly have confidence that the cash generation in the following quarters will be very good; everything points to this and our operational cash will continue at the comfortable level.

I would like to reiterate our continues commitment productivity and competitiveness of all of our operations, the cash generation of our business, and of course, we want to continue to work with all of our shareholders. Once again, we would like to express our thanks. And we hope to see you again during the released in the third quarter of this year. Thank you very much.

The Braskem conference call ends here. We would like to thank all of you for your participation. Have a good afternoon.

Duration: 63 minutes

Call participants:

Rosana Avolio -- Director of Investor Relations

Pedro Freitas -- Vice President of Finance, Procurement & Corporate Affairs

Roberto Simoes -- Chief Executive Officer

Ricardo Rezende -- JPMorgan -- Analyst

Guilherme Levy -- Morgan Stanley -- Analyst

Pedro Soares -- BTG Pactual. -- Analyst

Luiz Carvalho -- UBS -- Analyst

Unidentified Participant

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