braskem apres citi 23mar final
TRANSCRIPT
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Meeting with Investors
March, 2012
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Forward-looking Statements
2
This presentation contains forward-looking statements. These statements are not
historical facts and are based on managements objectives and estimates. The
words "anticipate", "believe", "expect", "estimate", "intend", "plan", "project",
"aim" and similar words indicate forward-looking statements. Although we
believe they are based on reasonable assumptions, these statements are based
on the information currently available to management and are subject to a
number of risks and uncertainties.
The forward-looking statements in this presentation are valid only on the date
they are made (December 31, 2011) and the Company does not assume any
obligation to update them in light of new information or future developments.
Braskem is not responsible for any transaction or investment decision taken
based on the information in this presentation.
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Agenda
Overview
The petrochemical industry
Braskem key differentiators
Looking forward: Accretive pipeline in the Americas
Brazil
International expansion
Renewable chemicals
Results
Priorities
3
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Leading presence in the Brazilian market: onlyintegrated petrochemical company in 1stand 2nd
generationDominant player of thermoplastic resins (PE+PP+PVC)
inSouth America
Largest PPproducer in USA
Leader in sustainable chemicals (focus on renewableraw materials)
Listed in 3 stock exchanges: BM&FBovespa, NYSE and
Latibex - 100% tag alongMarket Cap of US$7 billion and EV ofUS$13 billion
(03/15/12)
Investment grade by all 3global rating agencies:
Industrial Assets
28 facilities in Brazil, 5in USAand 2inGermany
Naphtha, hybrid and gas based crackers
Petrobras as the main supplier in Brazil(~70% of naphtha needs and 100% of gasneeds)
4
1 gas cracker
1 PP
1 PE
1 hybrid cracker
2 PP
3 PE
1
Philadelphia
1 naphtha cracker
1 ethanol cracker
5 PE
2 PP
1 PVC
1 chlorine-soda1 naphtha cracker
4 PE
1 PP
1 PVC
1 chlorine-soda
2 PP
(Wesseling
and
Schkopau)
3 Texas
1
W.Virginia
Braskem: leader in thermoplastic resins production in the Americas
R$ billion 2009 2010 2011
Net Revenue 22.6 27.8 33.2
EBITDA 3.2 4.1 3.7
Net Debt/EBITDA 2.67x 2.43x 3.20x
US$ billion 2009 2010 2011
Net Revenue 11.6 15.8 19.9
EBITDA 1.6 2.3 2.2Net Debt/EBITDA 2.98x 2.56x 2.83x
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Agenda
5
Overview
The petrochemical industry
Braskem key differentiators
Looking forward: Accretive pipeline in the Americas
Brazil
International expansion
Renewable chemicals
Results
Priorities
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-1
0
1
2
3
4
5
6
7
8
2011 2012 2013 2014 2015 2016
Million
Africa & India Europe & CIS M.East Americas Asia
Global additional capacity
3.6
2.2
6.5
7.3
3.2
6.3
Source: CMAI Mar/12
Iran
China
China
China
China
Iran
Iran
Very small capacity addition in 2012
compared to potential additionaldemand of 6 million ton/year
Limited/no further availability ofsubsidized gas for new projects inMiddle East (2015/16) hybridcrackers (naphtha/gas)
Iran sanctions could delay announcedinvestments (ethane as feedstock)
Projects in U.S. are not sufficient todisrupt the world supply and demandbalance
China will still be a net importer
Greenfield project: 4-5 years start-up
Most of the feedstock associated withthe new additional capacity is oilprice driven
Ethylene: additional capacity
6
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Outlook for the petrochemical industry scenario remainspositive
Global GDP: average growth of 3.4%
Demand should outpace capacity increasehigher operating ratesinternational spreads improvement
Emerging markets are the key drivers
Ethylene: Supply and Demand Overview
Source: CMAI mar/12
CAGR 11-16: 3.3%
CAGR 11-16: 4.5%
84.9 85.2 87.4 87.5 87.4 89.6 89.2Operating Rate
122125
131137
143 150
156144
147 150156
163167
173
2010 2011 2012e 2013e 2014e 2015e 2016e
Demand Nameplate Capacity
7
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Agenda
8
Overview
The petrochemical industry
Braskem key differentiators
Looking forward: Accretive pipeline in the Americas
Brazil
International expansion
Renewable chemicals
Results
Priorities
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A winning history. Consistent delivery of results: successful
trajectory of organic growth and acquisitions
Capacity (kton/year)
Leadership in Brazil Going GlobalLeadership in the Americas
PVC ExpansionSunoco PP Plants
Politeno
EBITDA 1(US$ million)
Braskem (Aug, 2002)CopeneNitrocarbonoProppet PolialdenTrikemOPP
CAGR: 19%
Market Cap
(US$ bi) 0.2 1.6 4.6 2.9 2.6 3.7 1.2 4.0 9.1 6.6
*Pro-forma figures for 2009: Quattor+Braskem America
Dow PP Plants
1,200 1,280 1,280 1,280 1,2802,480 2,480
3,752 3,752 3,752 3,7521,765 1,765 1,865 1,9102,341
3,071 3,441
6,460 6,460 6,4307,680
200 200
200
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
457581
872 851 764
1.6261.385
1.638
2.308 2.246
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Green
Ethylene
Ethylene
Resins
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Braskem: unique position in the global industry
South America:Second player has around10% of Braskems capacity
South America# 12 players
North America# 32 players
M.East# 38 players
W.Europe# 29 players
N.Asia~# 150 players
S.Asia~# 40 playersBraskem: 5,510
PBB Polisur (Dow): 650
Ecopetrol: 548
Solvay Indupa: 541
Polinter: 495
Mexichem: 416
Pequiven : 185
Petroken (LYB): 180
Petroq. Cuyo: 130
PETROQUIM : 120
Propilven : 115
Petro Dow: 42
Capacity (000 Metric Tons)
Braskem responsible for over 60% of the capacity share of thermoplastic resins* in SouthAmerica65% market share in Brazil.
Source: Analysts reports, CMAI capacity list * PE, PP and PVC 40% Petrobras Energia; 50,5% Admire Trading Corp and 9,5% Panam SA
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20 22 23 2326 25
2006 2007 2008 2009 2010 2011e
Brazilian demand: potential of further growth
11Source: Abiquim, Braskem, CMAI, Ipeadata and IBGE.
Brazil
Per-capita Consumption of PE, PP and
PVC* kg/person
Brazilian's thermoplastic demand (MMton)
CAGR: 5.8%
3,74,0
4,2 4,3
4,9 4,9
2006 2007 2008 2009 2010 2011
66
57
47
34
USA Eur ope Japan China
Real appreciation
Subsidized portsPRS 72**
Brazilian thermoplastic resins
demand growth
** Resolution Proposal of the Senate
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8/10/2019 Braskem Apres Citi 23Mar Final
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Braskem is well positioned to capture emerging market potential
per-capita growth
12
Average Income (March 2002 = 100 basis)
Higher income and wealth
distribution improvement stimulate
consumption demand in Brazil
Braskemssales profile: Consumer driven
30%
10%
9%11%
14%
6%
5%
5%
10%
AGRIBUSINESS
AUTOMOTIVE
RETAIL
OTHERS
FOOD PACKAGING
CONSUMER
GOODS
HYGIENE AND
CLEANINGINDUSTRIAL
CONSTRUCTION
207
80
100120
140
160
180
200
220
mar/ 02 jun/ 03 s et/04 dez/05 mar/ 07 jun/ 08 s et/09 dez/10
Average Income
Jan/12
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1,411 1,510 1,457 1,3612,040 2,238
358 342725
395
1,0921,547
1,084 1,2021,472
1,321
1,931
2,014
2006 2007 2008 2009 2010 2011
Braskem: raw material diversification and higher co-products value
improving its cost position
Source: Braskem
Raw Material Profile*
*Based on ethylene capacity.
Net revenue (R$ million)
Naphtha crackers co-products
13
16%
78%
5%
Braskem 2012
33%
63%
4%
Braskem 2015e 1
gas naphtha ethanol
45%
52%
3%
Braskem 2018e 2
1 Considering Mexico Project2 Considering Comperj Project
662 703 602
1,254932 872
151 149 204
352
328 312530591
332
8301,121
984
2006 2007 2008 2009 2010 2011
Ethylene/Propylene Butadiene BTX
Sales volume (kton/year)
2,853 3,054
3,6543,077
5,063
5,799
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Innovation & Technology
Strengthening the value chain competitiveness
14
Structured resource base to support
Customer needs
Over R$ 390 million in R&D assets
More than 296 researchers
8 pilot plants + 24 laboratories + 2technology centers
More than 400 patents filed worldwide
Partnership with universities and R&Dcenters in Brazil and abroad
13% of resins revenues resulted fromnew products launched in the past 3years
Polyethylene
Grain bags Water tanks
+ 32kton/y
Geomembrane
+ 10kton/y+ 5kton/y
Roof Tiles
+ 120kton/y
Windows
+ 2kton/y
Building system
+ 30kton/y
PVC
P
olypropylene
Auto grade Wash machine
+ 4kton/y + 6kton/y
Bags
+ 2kton/y
NEW DEVELOPMENTS
Chamar visio neste slide
Strengthening the plastics
production chain
Supporting the individual development ofeach Customer
Boosting Customers competitiveness, while
ensuring sustainable growth
Strengthening Brazils plastics productionchain
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Government Initiatives
Supporting the competitiveness of the Brazilian Industry
Brasil MaiorInvestment and
Innovation Incentives
Government Incentives
Lei do Bem
Innovation Incentives
Benefits
Tax Benefit: between 60% to 80% of Innovation
expenditures can reduce the companys tax base
Full depreciation and 50% IPI reduction: equipments
purchase dedicated to research
Exports: 3% credit on exports revenues (REINTEGRA)
BNDES/ FINEP*: attractive financing programs (below
Brazilian interest rate)
IPI:Warehouse goods and automotive industry: higher
product demand
Innovation Incentives:
Stimulate technological developments Intensify industry's competitiveness in domestic and foreign markets
* Studies and Projects Financing - (Financiadora de Estudos e Projetos) 15
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Agenda
16
Overview
The petrochemical industry
Braskem key differentiators
Looking forward: Accretive pipeline in the Americas
Brazil
International expansion
Renewable chemicals
Results
Priorities
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Our strategy is based on 3 major drivers of growth
17
Key differentiators
Adding value to the current streams
Strategically positioned to capture the futurefeedstock availability (pre-salt exploration: Comperj)
Committed to the competitiveness of the domesticplastic chain
Brazil
Expanding presence in countries with feedstockadvantage
Preferred partner to develop the industry in LatinAmerica
Ongoing project: Mexico Ethylene XXI
InternationalExpansion
Largest biopolymer player in the world Well positioned to capture ethanol advantage
Technological breakthrough in green: PE, PP and otherstreams (under analysis)
SustainableChemicals
To be the
global leader insustainablechemicals,
innovating tobetter serve
people
Innovation & Technology
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Brazil
Adding value to the existing streams
18
PVC Expansion:
Sole integrated producer in the vinyls chain in the Brazilian market
Additional capacity of 200 kton/y in Alagoas (northeast complex) using
its current EDC surplus (intermediated product to produce PVC)
Start-up: May 2012
Construction: in the final phase. 80% of works completed
Capex of US$470 million and expected NPV of ~US$450 million
Investment to date: R$ 604 million (2010-2011)
Market-driven project: to supply the growing domestic demand of PVC
Demand increased 4% in 2011 with imports of 330kton/y
Scenario:
EDC
ExportsDomestic Sales
PVC
Present Future
21%25% 29%
2009 2010 2011
Producers' Domestic Sales Imports
1,1251,081
943 29%26%22%
kton
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Brazil
Adding value to the existing streams
19
Butadiene Expansion:
Additional capacity of 100 kton/y in Triunfo (south complex) using its
current crude C4 surplus
Start-up: July 2012
Construction: 69% of the project completed, test phase
Capex of R$300 million
Investment to date: R$ 127 million
Product pre-sale agreements of ~R$200 million
Market-driven project: to meet the growing global demand for
butadiene
2011 prices vs. 2010 rose by 55%
Raw material for the manufacturing of rubber tires and
synthetic rubbers
Comperj
2011: conclusion of the first phase of the FEL1 (Front End Loading)
engineering process
2012: final detailing of the scope of the petrochemical project at
Comperj (FEL2), based on the definition by Petrobras of the
feedstock to be used
2014e: definition on the development and installation of the project
and its approval by the CompanysBoard of Directors
Scenario:
Crude C4
Stream*
Present Future
* Sporadic sales or re turn to the cr acking process
Butadiene
100 kton/y
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International: Mexico
Feedstock diversification with competitive cost
20
Greenfield ProjectEthylene XXI:
JV (65% Braskem and 35% Idesa)
Largest petrochemical complex in Mexico
World scale integrated project: 1 Mton/y of ethylene +
1Mton/y of PE
Adding capacity to supply the local and growing market:
Current deficit: 1.1 Mton/y of PE (70% of total
demand supplied by imports)
Long term contract (20 years) with PEMEX-Gas, based on gasprice Mont Belvieu + discount
Start-up: 1sthalf 2015
Disbursement in 2011: R$ 191 million
Acquisition of equipment with long manufacturing
and delivery lead times was moved forward
Earthmoving works have begun
Capex of ~US$3 billion (70% debt and 30% equity)
2012 Priorities:
Project Finance structuring and conclusion of the due
diligence
Starting construction of the industrial plants
Pre-marketing for Mexican clients
Micros
60%Small
24%
Medium
12%
Big; 4%
Small
45%
Medium
28%
Big
27%
Converters Profile
Mexico Brazil
Ethylene XXI
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Sustainable chemicals
Strategic path forward for our Renewable Chemicals business
21
1stWave
Get to know the Market
2ndWaveGrow
3rdWave
Perpetuate
Sustainable growth toconsolidate PE and PP
Leadership
~2020 Leverage assets
and be pioneer
2010 - 2014
New capacities to increase
market positioning
and competitiveness
2015 - 2019
Phases
We arehere
Capacity
GreenPP
30kt+ Green PPExistent Technology
New capacity Green PPTechnology
Improvement
Bigger CapacitiesGreen PP
Bio chemical route
GreenPE
200 ktGreen PE(Triunfo-RS)
New capacitiesGreen PE
AdditionalCapacities
Capacity 230 kt+ TBD TBD
Green PE
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Green PEPartnership with leading global companies reinforce sustainability
strategy
National and international market Leader ensure that
Braskemsbiopolymer adds value to their business andsustainability strategy:
Danone
Faber-Castell
Johnson & Johnson
Estrela Amsterdam Arena
Nestl
Natura
P&G
Chanel Tigre
Braskem ranked as a Model Company in the 2011 Sustainability Guide by Examemagazine22
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Agenda
23
Overview
The petrochemical industry
Braskem key differentiators
Looking forward: Accretive pipeline in the Americas
Brazil
International expansion
Renewable chemicals
Results
Priorities
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2011 Highlights
Year performance
Average capacity utilization at crackers of 83%
Net revenue of R$33 billion (US$20 billion), up 19% (25%) from 2010
2011 EBITDA of R$3.7 billion, or US$2.2 billion
Power blackout
Higher supply of imported goods entering through subsidized ports + real appreciation
Capture of synergies from Quattor acquisition of R$400 million in annual and recurring EBITDA,6% above initial expectation
Implemented in 2H12 of a program to reduce fixed costs, which neutralized the impacts frominflation (IPCA) of 6.5%, wage increases and integration of the new assets
Partnership with Basf to supply propylene to the acrylic complex to be built in Bahia
Conclusion of 1stphase of engineering project for Comperj (FEL1)
Leadership in the U.S. polypropylene market
Braskem considered investment grade by 3 major risk-rating agencies
Dividend proposal of R$482 million
24
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Uncertainties related to the global economy and imports limited
growth in the domestic resin market
Origin of Imports (PE+PP+PVC) Brazilian Thermoplastic Resins Market
(million tons)
Imports accounted for
29% of domestic resin
market in 2011
Over 60% of imports
entered Brazil through
subsidizedports
2010 2011
4.9 4.9
Argentina
22%
North America
24%
Colombia
13%
Asia
17%
Europe
9%
Others
15%
2011 GDP
2.7%
2011 Plastic goods volume 2011*
6.4%
2011 Plastic industry**
-1.5%
2011 Imports of converted plastics ***
7.5%
Domestic Consumption growth not captured by
Brazilian industry
Source: IBGE/ Abiplast / Alice / Braskem estimates
* Brazilian demand for plastic goods (apparent consumption) **Production from the plastic industry ***Imports volume of converted plastics
-1%
25
Attractive domestic market associated with the opportunistic
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153 158 150 158 175 159178
210 211 206250 253 234
267 288 28346 42 49 54 50 39 48
74 67 71
73 6764
86
11367
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Attractive domestic market associated with the opportunisticentrance through subsidized ports lead to an increase in the level of
imported material
199
350
401
4.2 MM ton 4.2 MM ton 4.9 MM ton 4.9 MM tonTOTAL
DEMAND
Kton
PVC: net importer market
Higher imports of manufactured products have impacted resins market
200 199 212225
198226
284 277 277
323 320299
353
811
933
1,197
1,403
% through
Subsidized Ports 45% 51% 62% 64%
Average FX 1.83 2.00 1.76 1.67
RESINS IMPORTS:
+15%
+28%
+17%
Economic and Financial crisis - USA & Europe
PVC
PE+PP
26
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R$ million
The lower sales volume and BRL appreciation were partially
offset by the better performance of basic petrochemicals and
the reduction in expenses.
EBITDA Performance2011 vs. 2010
4,055
338
136
332
221 3,742
EBITDA2010 Volume ContributionMargin FX Fixed Costs +SG&A + Others EBITDA2011
FX impact
on costs 1,355
FX impact
on revenue(1,687)
( )
( )
27
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Synergies from Quattor acquisitionIn 2011, synergies amounted to R$400* million, 6% above the estimate of R$ 377 million
Full synergies of R$495 million in annual and recurring EBITDA should be captured in 2012
Better planning of export activities
Reduction in the number of grades
Integrated acquisition of feedstocks, such as naphtha and propylene
Better integrated planning of petrochemical complexes and 2ndgeneration plants (thermoplastic
resins)
Synergies breakdown Income statement breakdown
Source: Braskem * Annual and recurring
268
400
67
65
Industrial Logistics Supply EBITDA Synergies
R$ million
115
400
277
124
Revenue COGS SG&A + Fixed Costs EBITDA Synergies
R$ million
28
St t t l th d bt fil d t it t t
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Risk Agency Rating Outlook Reviewed on
Fitch BBB- Stable 11/01/2011
S&P BBB- Stable 03/30/2011
Moodys Baa3 Stable 03/31/2011
Corporate Credit RatingGlobal Scale
Diversified funding sources
Net Debt/EBITDA (US$)
Braskemshigh liquidity ensures its cash and cash equivalents
cover the payment of obligations maturing over next 29 months
1Considers US$600 million in stand-by loans
Brazilian andForeign Gov.
Entities
23%
Banks
37%
Capital
Market
40%
2.32x
2.83x
Sep 11
Dec 11
+22%
Strategy to lengthen debt profile and strong commitment to
maintaining liquidity
3,192
2,369
1,403 1,2931,822
1,134 1,214
1,908
3,295 3,221
823
1,125
*
2012 2013 2014 2015 2016 2017/
2018
2019/
20202021
onwards12/31/11
Cash
9% 8%
12%
7% 8%
12%
22% 21%
4,317
Invested in US$
Invested in R$
Amortization Schedule(1)
(R$ million)
12/31/2011
(1) Does not include transaction costs
* US$600 million stand by
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Capex
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Capex
Investments totaled R$2.1 billion in 2011
Main deviations from initially announced 2011 Capex:
Investments in Ethylene XXI - Mexico project due to the moving forward of earthmoving works and the advances made to
acquire equipment with long manufacturing and delivery lead-times;
Acceleration of PVCand Butadienecapacity expansion projects, in line with the Companys strategy to add valueto existing
streams;
Higher spending on maintenance, due to the unscheduled shutdowns at plants in the Northeast and the moving forward of
the scheduled shutdown on one of the lines at Camaari.
R$ million
1,644 102
289(36)
781
2,078
Investments
2011e
Mexico Capacity
Increase - Brazil
Equipment
Replacement
Maintenance
Shutdown
Others* Investments
2011
*Includes HSE, Productivity and Others investments
280
84
469
696
207
151
191
305
35
343
512
145
113
260Mexico
HSE
Equipment Replacement
Capacity Increase - Brazil
Maintenance
Productivity
Others
1,712
Investments
2012e
278
94
391
407
243
14289
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Short-term scenario still challenging
Source: CMAI, Analyst reports
Points of Concern
Volatility in naphtha and oil prices
Lack of clear strategy for tackling Europes sovereign debt crisis
and its impacts on world economic growth demand forpetrochemicals
Lengthy solution for subsidized ports problems
Potential Positive Factors
Scheduled shutdowns in USA and Asia
Positive signs from U.S. economy
Higher economic importance of emerging countries
- Growing demand for high value added productsplastics
Limited addition of new capacities in 2012 andrestocking trend in chain could lead to a recoveryin petrochemical spreads
Government committed to increasing thecompetitiveness of Brazilian industrial producers
- BrasilMaiorPlan (Reintegra)
- Combating imports
- Measures to control excessive BRL appreciation33
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2012 Braskemspriorities
Strengthening of the partnership with Clients and market share expansion
Ending of the VAT tax incentive (subsidized ports) and development of a Brazilian industrial policy
that reinforces the competitiveness of the national petrochemical and plastics chain
Expansion of Braskemscompetitiveness by capturing identified synergies, reducing fixed costs and
maximizing operating efficiency
Ensuring delivery of expansion projects on-time and on-cost, adding value to existing streams:
PVC (May/12) and Butadiene (July/12)
Finalizing project finance structure and advancing construction of Mexican greenfield project, with
startup expected in 2015
Further progress on engineering studies for Comperj (FEL2) and feedstock definition
Increasing Braskems leadership in renewable chemical
Maintaining liquidity and financial health in a scenario of global crisis
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Meeting with Investors
March, 2012
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Appendix
Braskem
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BraskemCorporate Governance Principles
50.1% / 38.1%
Minority
Shareholders
47.0% / 36.0%
Voting Shares / Total Shares
0.0% / 5.5% 2.9% / 20.1%
- World leader inE&P in deep
waters;
- Present in theindustry asinvestor, supplierand client;
- Investment Gradeby all 3 RatingAgencies.
- Conglomerate;
- More than 30-yearsin the petrochemicalindustry;
- Investment Grade byMoodys and Fitch.
Odebrecht as the controlling shareholder reinforces Braskemscondition as a listed privately-owned company
Rules for choosing the CEO and Directors
Odebrecht appoints the Chairman, the CEO and the CFO;
Petrobras appoints the Vice-Chairman, as well as three options for Portfolio & Investment Director, one
to be selected by the CEO; All the positions will be filled by highly qualified professionals with recognized competency for the
position.
Braskem Executive Directors in charge of operational issues and Companys Business Plan which shall beapproved by the Board
Sole vehicle for petrochemical investments of both shareholders, Braskem has the right:
to lead all petrochemical investments identified by Petrobras;
if not of its interest, has the right to commercialize such products.
Governance
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3,035 3,0353,927
4,641
2,525
1,063
2,292
926 1,180
3,3902,885 1,230
1,911
863 815 440
710
510
1,376
2,640
7,135
6,430
5,1574,641
4,436
3,3022,640
2,2921,741 1,620
Braskem Braske m w/ PP
Dow e w/ PVC
Expansion
Exxon Mobil DOW LyondellBasell Formosa Shin-Etsu Chevron Phillips Ineos Total
PVC
PP
PE
1st
5,075 4,920
7,3225,768
8,289
3,0352,102
3,056 3,035 2,8242,059
4,6595,696
2,150
2,904
3,935
2,2731,705
2,885 2,968
2,715
930
351
710
3,169 1,729510
10,664 10,616
9,472 9,023
8,2897,680 7,544
6,490 6,4305,792
4,774
SINOPEC LyondellBasell Exxon Mobil SABIC DOW Braskem Formosa Ineos Braskem w/ PPDow e w/ PVC
Expansion
PetroChina Total PC
PVC
PP
PE
Global capacity (kty)
Americas capacity (kty)
Thermoplastic resins capacityGlobal ranking
8th
Source: CMAI, Braskem
6th
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154 158162 166
171 176
125 131 137143 150 156
2011e 2012e 2013e 2014e 2015e 2016e
Supply Demand
Global Ethylene and Resins supply/demand
Source: CMAI, Mar 2012
Global Resins Supply (Mton/y) Global Resins Demand (Mton/y)
* Compounded Annual Growth Rate
Global Ethylene Supply/Demand (Mton/y)
CAGR 11-16
2.5%
CAGR 11-16
3.2%
93 95 99 105 108 113
63 66 6973 76
78
51 54 5556 57
57
2011e 2012e 2013e 2014e 2015e 2016e
PE PP PVC
207 214224 234
240 248
76 80 84 89 9397
51 53 5659 62
6536 38
40 4143 44
2011e 2012e 2013e 2014e 2015e 2016e
PE PP PVC
163 171179 189
198 206
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Resins demand by region
Source: CMAI 2011 estimates
2012e
According to CMAI the Brazilian demand for resins will represent 3% of global
demand in 2012
2016e
Resins (PE, PP, PVC) Demand by region
40
North America;
17%
South America;
5%
Europe; 18%
Middle East;
12%
Africa; 3%
Asia ex-China;
22%
China; 22%North America;
16%
South America;
5%
Europe; 17%
Middle East;
13%Africa; 3%
Asia ex-China;
22%
China; 24%
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Source: Abiquim, Braskem
Origin of Imports 2011
Polyolefins (PE and PP) and PVC
imports accounted for 29% of the
domestic market
PE + PP PVC
Europe
12%
Asia
18%
Colombia
3%North America
26%
Argentina
20%
Others
21% Argentina
26%
North America
20%Colombia
35%
Asia
15%
Others
2%
Europe
2%
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Revenues breakdown
2011 RevenuesR$ 33,2 billion
38%
5%26%
10%
13%
7%
Polyolefins Vinyls Basic Petrochemicals International Business Resale Others + Quantiq
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International sales Breakdown2011
Source: Braskem
International sales ex-Resale (R$ 9,3bi)
The Export Market (ex-resale) represents 30% of Companys Net Revenue
43
Polyolefins
37%
Ethylene +
Propylene; 4%
Butadiene; 3%
BTX
9%
International
Business
34%
Others
13%
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South America43%
Europe
25%
Asia23% Africa
6%
North America
2%
Central America
1%
Polymers Export2011
Polymers Export by region (R$3.7 bi)
Qualified
Sales
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EBITDA Performance4Q11 vs. 3Q11
45
R$ million
EBITDA impacted mainly by the decrease in contribution margin
caused by the lower spreads in international markets, which
were partially offset by lower expenses.
940
58
345
62
119 718
EBITDA
3Q11
Volume Contribution
Margin
FX Fixed Costs +
SG&A + Others
EBITDA
4Q11
FX impact
on costs (723)
FX impact
on revenue785
( )
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Debt Market: Successful transactions guarantee a good portfolio of
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Debt Market: Successful transactions guarantee a good portfolio of
outstanding bonds
47
Outstanding Bonds Maturity
Coupon
(% p.a.)
Yield **
(% p.a.)
US$84.3 million* Jan/2014 11.750 2.866
US$65.3 million* Jun/2015 9.375 4.072
US$130.7 million* Jan/2017 8.000 5.239
US$500 million Jun/2018 7.250 4.679
US$750 million May/2020 7.000 5.067
US$500 million Jul/2041 7.125 7.062
US$750 million +
US$250 million RetapApr/2021 5.750 5.026
US$450 million +
US$250 million RetapPerpetual 7.375 7.252
** Mid. As of Mar, 20th* Post Tender Offer expired in April , 20th
Re-Opening of Braskem 5.75% Notes due in 2021
Pricing Day: January 26th
, 2012Amount: US$250 million
Coupon: 5.750%
Yield: 5.750%
Transaction Highlights:
US$2.3 billion in demand from over 185 accounts. The transaction
was oversubscribed 9.2x
Re-opening executed at a yield 25 bps lower than the original
transaction
Lowest New Issue Concession for an Emerging Market
Corporate Bond Year-to-Date (10 bps)
Re-Opening of Braskem 7.375% Perpetual Bonds
Pricing Day: February 9th, 2012
Amount: US$250 millionCoupon: 7.375%
Yield: 7.345%
Transaction Highlights:
US$1.6 billion in demand from over 150 accounts. The transaction
was oversubscribed 6.5x
Priced at 100.375% face value
Source: Bloomberg and Citibank
Outstanding Bonds
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Source: Braskem
FacilityAmount in
Dec 11Currency Type
Contract
Date
Nippon Export andInvestment Insurance
US$14 MM US$ Maintenance Mar andSep/2005
Nippon Export and
Investment InsuranceUS$200 MM US$ Maintenance Mar/2011
*The company is prevented from issuing any new debt for the period if it overcomes the 4.5x Net debt / EBITDA ratio.
Covenants
48
2.32x2.83x
Sep 11 Dec 11
Net Debt/ EBITDA
(US$ million)
+22%
2.62x3.20x
Sep 11 Dec 11
Net Debt / EBITDA
(R$ million)
+22%
A i iti f D P l l B i
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Acquisition of Dows Polypropylene Business
49
Benefits and strategic drivers:
Leader in U.S. PP market, one of the worlds largest
PP consumers
Geographic diversification and global expansion of
industrial operations
Portfolio of complementary products
Focus on higher value-added products (co-polymers)
Access to U.S. propylene distribution chain
Transaction:
On July 27, Braskem acquired Dows
Polypropylene (PP) business,expanding its PP capacity by 1,050ktons/years
Braskem will pay US$323 million forthe business
BraskemPost
Transaction
LyondellBasell
ExxonMobil
Corp.
Total Braskem FormosaGroup
Ineos ConocoPhillips
1,425 1,4221,230 1,180
920 863 815
447
1st
4th
PPCapacityinthe
USmarket(kton/y)
Value creation through potential synergies with thecurrent business
NPV near US$140 million
Greater presence in the European market Proximity to new clients
Support to global leadership in biopolymers
PP is one of the worlds faster growing
thermoplastic resins
Fragmented markets in U.S. and Europe - potentialfor future consolidation
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B k i ith D PP b i i iti
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Portfolio
Optimization
Industrial Procurement Logistics / Supply
Chain
1-Time Costs TOTAL
Braskem synergies with Dow PP business acquisition
Components of Synergies
NPV of synergiesexpected to be around
$140MM
Annual run-rate
synergies
between US$ 18-
20 million
Timeframe of
capturing the
synergies to be
disclosed after
closing the deal
Portfolio
optimization
and product
mix savings
Quality &
reliability
improvements
at US assets
Raw material
optimization
Product
wheel in NA
& railcar
optimization
IT, closing
costs and
integration
costs *