conf call 1t13_10052013_eng

11
1Q13 Earnings Conference Call Investor Relations São Paulo, May 13, 2013

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Page 1: Conf call 1t13_10052013_eng

1Q13 Earnings Conference Call

Investor Relations

São Paulo, May 13, 2013

Page 2: Conf call 1t13_10052013_eng

Forward-looking Statements

2

This presentation contains forward-looking statements. These statements are not historical facts and are based on management’s 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 (March 31 2013) 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.

Page 3: Conf call 1t13_10052013_eng

Highlights

3

Crackers utilization rates of 90% in 1Q13.

Braskem’s thermoplastic resin sales up 6% in comparison with the 4Q12, following the domestic demand trend and amounting to 921 kton. Market share expanded to 71% in 1Q13 vs. 70% in 4Q12.

EBITDA in 1Q13 reached R$ 937 million or US$ 470 million. Excluding nonrecurring items in 4Q12, EBITDA increased 10% in U.S. dollar.

Integrated project in Mexico:

– Construction progress (26% of physical completion) and evolution in the conditions precedents (CPs) to the first disbursement of the project finance, which will occur in the second quarter;

– Expansion in pre-marketing activities.

Incentive to the Chemical Industry:

– In May, the federal government approved the measure that reduces the rate of PIS and COFINS taxes on the acquisition of raw materials (from 5.6% to 1%) and inputs for second generation (from 9.25% to 1%), maintaining the tax credit at 9.25%.

– The incentives announced are aimed at supporting recovery in the competitiveness of the industry and strengthening investment in new production capacity, in order to meet the growing demand and reversing the sector’s trade deficit.

Page 4: Conf call 1t13_10052013_eng

Brazil’s thermoplastic resins market

4Sources: Alice / Braskem

Brazil’s thermoplastic resins market (in million tons) and Braskem Market Share

Thermoplastic resins: 1Q13 x 1Q12

1Q12

2Q12

3Q12

4Q12

1Q13

Braskem Sales Profile - 1Q13

9%

5%

Braskem's Sales

Brazilian Market28%

8%

7%10%

18%

6%

5%

9%

9%

AGRIBUSINESS

AUTOMOTIVE

RETAIL

OTHERS

FOOD PACKAGING

CONSUMER GOODS

HYGIENE AND CLEANINGINDUSTRIAL

CONSTRUCTION

1Q13

68%70% 70% 70% 71%

Braskem's Market Share

1.21.31.3

1.11.2

68%70% 70% 70% 71%

1.21.31.3

1.11.2

Page 5: Conf call 1t13_10052013_eng

EBITDA – 1Q13 versus 4Q12

5

R$ million EBITDA recovery due to the higher sales volume, especially in the domestic market, and better spreads following the international market trend.

1,399

516883

64

48 4030 937

EBITDA 4Q12

Non- recurrent items

Recurring 4Q12 EBITDA

FX Volume ContributionMargin

Fixed Costs +SG&A + Others

EBITDA 1Q13

FX impact on costs

(287)FX impact on revenue

223

( )( )

Page 6: Conf call 1t13_10052013_eng

Brazilian and Foreign Gov.

Entities21%

Capital Market

50%

Gross Debt by Category

Longer debt profile with diversified financing sources. Commitment to maintaining liquidity

Agency Rating Outlook Date

Fitch BBB- Negative 04/25/2013

S&P BBB- Stable 11/09/2012

Moody’s Baa3 Negative 04/24/2013

Rating Braskem – Global Scale

Diversified Funding Sources

Net Debt / EBITDA (US$)

6

US$ million 4Q12 1Q13

Net Debt 6,859 7,376 +8%

EBITDA (LTM) 2,003 2,036 +2%

Net Debt/EBITDA 3.42x 3.62x* +6%

* Ex-bridge loan of Mexico Project = 3.34x in 1Q13

Banks 29%

3,056

1,757815

1,927 1,568 1,508767

2,759

3,970 3,9881,298

1,658

197

(2)

(3)

(4)

2013 2014 2015 2016 2017 2018/2019

2020/2021

2022 onwards

3/31/13Cash

11%10%

8% 8%

4%

15%

21% 21%

4,911

Invested in US$Invested in R$

Amortization Schedule(1)

(R$ million)3/31/2013

(1) Does not include transaction costs(2) US$600 million stand by and R$450 million (3) Mexico Project Cash(4) Bridge loan Mexico which will be repaid in the disbursement of the project finance

1,265 Bridge Loan

7%

Page 7: Conf call 1t13_10052013_eng

1,332

204

173

536

2013e

Maintenance/ Equipment Replacement/ Others Productivity/ HSE

Comperj/ Acrylic Acid/ Splitter Mexico

2,244

261

11 25

1Q13

297

Investments(R$ million)

Growth projects and Capex

7

Maintaining its commitment to capital discipline, Braskem made R$ 297 million in operating investments in 1Q13:

~90% of the total, or R$ 261 million, was allocated to maintenance and productivity improvement.

CAPEX Mexico:

The expected disbursement of US$ 619 million regarding the Bridge Loan shall occur until June/13.

The investments through equity are expected to begin in the second quarter.

R$ million

70%

1,332

204

173

536

2013e

Maintenance/ Equipment Replacement/ Others Productivity/ HSE

Comperj/ Acrylic Acid/ Splitter Mexico

2,244

Page 8: Conf call 1t13_10052013_eng

8

Integrated Project with a production capacity of 1 million tons of PE – JV Braskem (75%) and Idesa (25%)

First disbursement shall occur until June/2013, after meeting some contractual obligations.

Construction in line with the schedule. Physical completion of 26%.

More than 6 thousand workers on site (direct and indirect).

Project Highlights

Competitive feedstock. North American gas as reference price.

Start-up of the complex in a period of high spreads in the petrochemical cycle.

Supply the net importer Mexican market.

Braskem is well positioned to benefit from the North American gas

First project to start operations in the North American region

Page 9: Conf call 1t13_10052013_eng

2013e 2014e 2015e 2016e 2017e

Africa & India Europe & CIS M.East Americas Asia

Global outlook and petrochemical industry

Source: IHS, Equity Research Reports

Emerging countries should be the main driver of world economic growth

Expectation that demand growth is higher than supply gradual recovery of spreads.

Brazilian Government committed to developing the chain and strengthening the competitiveness of local producers:

- Extension of Reintegra Program;

- Combating imports;

- Reduction of payroll taxes for manufacturers;

- Brasil Maior Plan (REIQ).9

Ethylene: Additional Capacity (Million ton)

Global outlook and petrochemical industry

7.8

9.5

5.06.2

4.7

ChinaChina China

China

China

Iran IranIran

U.S

China: Uncertainty regarding the feasibility of new

projects

High costs/investments in order to access feedstock

Infrastructure problems (logistics, availability of water for extraction and etc)

Iran: U.S. embargo affects products sale

USA: Greenfield projects in U.S. are expected to come

on stream as of 2016/2017

Ethylene Demand (Million ton)

Page 10: Conf call 1t13_10052013_eng

Braskem's Priorities

Focus on continually strengthening the relationship with Clients and expanding market

share.

Advance in the industrial policy for the petrochemical chain, focusing on tax reduction

on investments, technological development and renewable chemicals.

Boosting Braskem’s competitiveness by the continuous improvement of its operational

efficiency and diversification of its feedstock.

Ensure that the greenfield project in Mexico progress in line with its schedule and cost:

start-up is expected in 2015.

Advancing on the engineering studies for the industrial units of the Comperj (FEL3)

project and defining the feedstock to be used by the complex.

Maintaining liquidity and financial health in a scenario marked by global crisis.

10

Page 11: Conf call 1t13_10052013_eng

1Q13 Earnings Conference Call

Investor Relations

São Paulo, May 13, 2013