2. Disclaimer
This presentation contains forward-looking statements. These forward-looking
statements are not historical data, but rather reflect the targets and
expectations of Braskem’s management. The terms “anticipate,” “believe,”
“expect,” “foresee” “intend,” “plan,” “estimate,” “project,” “aim” and similar
terms are used to indicate forward-looking statements. Although we believe
these forward-looking statements are based on reasonable assumptions, they are
subject to various risks and uncertainties and were prepared using the
information currently available to Braskem.
This presentation was updated on March 31, 2010, and Braskem does not assume
any responsibility for updating it in light of new information and/or events.
Braskem is not liable for any investment decisions taken based on the
information contained in this presentation.
2
3. Agenda
Braskem
A global player
Acquisitions: opportunities and challenges
Project pipeline: growth with value accretion
Braskem consolidated
The petrochemical industry
Final considerations
3
4. Agenda
Braskem
A global player
Acquisitions: opportunities and challenges
Project pipeline: growth with value accretion
Braskem consolidated
The petrochemical industry
Final considerations
4
5. A leading Brazilian company going global
2010 – a milestone in Braskem’s history: becoming a world-class player and
advancing its strategy to become one of the world’s five largest global
petrochemical companies in terms of enterprise value
Acquisition of Quattor and Sunoco Solid ownership structure
Creation of a global player; Firmly committed shareholders;
Diversification of raw materials; Injection of R$3.5 billion by Odebrecht and
Foothold in the U.S. market: one of the largest Petrobras as an acquisition pre-condition;
consumer markets for thermoplastic resins; BNDES maintained its interest by contributing
Value accretion through synergies. R$240 million in capital;
Braskem is the priority vehicle for
petrochemical investments in Brazil;
Competitive projects
Professional management;
Leader in all new sources of competitive raw Maintenance of Governance standards.
materials in Latin America, comparable to the
conditions in Middle East;
Financial solidity
Geographic and raw material diversification;
Protection of the Brazilian market; Solid operating results;
Development of high value added products Strategic debt profile;
(green polyethylene). Prepared for opportunities arising from a
potential downcycle of the petrochemical
industry. 5
6. Track record of success with clear
objectives
6,460
Resins Capacity (kton/y)
3,595
Acquisitions 2,341 4,275
1,410
Organic Growth 520
1,821 2,185 2,185
Leader in the
54% capacity 80% capacity
increase
Americas
increase
Leader in Latin
America
Acquisitions
Petroquímica Quattor + 2020
Ipiranga, Copesul Triunfo Sunoco
and Paulínia
Politeno
Polialden 2010
Trikem 2009
OPP 2008
2006 2007
2005
2004
2003
2002
2006
To be one of the world’s
top 5 petrochemical
capital increase
After R$3.74 bi
companies in terms of
enterprise value
Become leader in
thermoplastic resins
FX devaluation
in Latin America 2008 Crisis
2.72x 3.73x 2.67x 3.46x 3.12x
1Q10
Source: Braskem
Net Debt/EBITDA (R$) 6
9. Strong cash generation and competitive
margins
Key Financial 1Q10 4Q09 1Q09 % %
Indicators (R$ ‘000)* (A) (B) (C) (A)/(B) (A)/(C)
Braskem positions itself as a
Sales Revenue 6,245 5,960 4,307 5 45 consolidator of the global
petrochemical industry
EBITDA 903 751 545 20 66
Opportunistic acquisitions during
1.9 1.8 the economic crisis
EBITDA Margin 14.5% 12.6% 12.6%
p.p. p.p.
Strong cash flow
Disciplined in reducing fixed costs
EBITDA
COMPANY Renegotiation of raw material
Margin 1Q10
agreements since March 2009
SABIC 34,9%
Growing productivity gains and
MEXICHEM 21,5% Potential for margin
gains through good operational excellence – already in
RELIANCE 15,2% operating practices. the 1st quartile worldwide
Braskem pre-
BRASKEM 14,5% Notable improvement in HSE
acquisitions:16.3%
FORMOSA 13,9% results since 2002
WESTLAKE 10,3% Green polyethylene helping to
DOW 10,1%
reduce effects from GHGs
GEORGIA GULF 6,6%
Source: Braskem, Bloomberg Pro-forma figures for 2009: Braskem + Quattor + Sunoco 9
10. Quattor acquisition
Opportunities
Bahia
PP HOMO/COPO (1979)
Capacity: 115 kty Asset concentration in Southeast
Technology: Slurry Shell (~70% Brazilian resin consumption);
Optimization of logistics distribution
related to reduction in external
storage;
Camaçari
Cracker (2005) Diversified RM matrix – balance
Capacity: 520 kty ethylene between naphtha-natural gas;
Rio de Janeiro
Technology: ABB Lummus –
ethane/propane Joint administration of raw material
Mauá Duque de
HDPE/LLDPE (2005) agreements;
Paulínia Caxias Capacity: 540 kty
Technology: Gas phase - Unipol Renegotiation of service and insurance
PP HOMO/COPO (1992) contracts;
Triunfo
Cracker (1972)
Capacity: 310 kty Unification of production and
Technology: Bulk – Lipp
Capacity: 700 kty ethylene* maintenance practices;
Technology: ABB Lummus
(naphtha) Unification of Technology and
LDPE/ EVA (1972) Innovation centers;
Capacity: 120 kty
Reduction of working capital costs;
Sao Paulo
Technology: HP Autoclave
HDPE/ LDPE (2008) Tax and logistical synergies;
Capacity: 240 kty
Technology: Slurry – Chevron Phillips
Organizational restructuring.
LDPE (1965)
Capacity: 140 kty
Technology: Tubular Challenges
PP HOMO/COPO (2003) Stability of raw material supplies;
Capacity: 450 kty
Technology: Spheripol Integration of cultures.
*200 kta expansion effectively coming online in 2010 10
11. Quattor - key indicators
Operational Indicators
Operating rate (%) 2009 1Q10
Ethylene 68%(1) 74%(1) SIMULATION 1Q10*
PE 61% 67% Utilization rate: 90%
Financial Indicators
R$ million 2009 1Q10
Net Revenue 4,772 1,233 SIMULATION 1Q10*
EBITDA 534 109 EBITDA: R$193
Outlook as of 2Q10
Main impact on operational profit in 1Q10
Supply from Mauá complex
Limited operating rate
normalized in May 2010;
Petrobras’ commitment to
*Assumptions normalize supply to enable
Higher production = higher sales Riopol to operate at full
Average price 1Q10 capacity by August 2010.
Excludes synergies
(1) Considering the 200 kty expansion 11
12. Corporate Governance post acquisition
Odebrecht as the controlling shareholder, with all results fully consolidated,
reinforcing Braskem’s condition as a publicly traded private company;
Braskem executives entrusted with the Company’s management and business plan,
approved by a simple majority of the Board of Directors;
Sharing of strategic decisions, with consensus approval by Board of Directors, including
for:
– divestments greater than 10% of long-term assets
– acquisitions greater than 30% of long-term assets
Investment decisions based on objective criteria for returns and profitability, such as
project IRR and NPV.
Clear financial policy that stipulates the strict conditions, with derivatives used solely
for hedging;
Being the sole vehicle for petrochemicals investments gives Braskem the right to:
- Act as the leader for all investments identified by Petrobras that are of interest to
Braskem;
- If not interested, the right to sell the products.
12
13. Braskem America (former Sunoco)
Opportunities
Global-scale, state-of-the-art assets –
technology and age similar to Brazil’s
R&T Center polypropylene (PP) assets;
Pittsburgh, Development of a global production
PA
base;
Consolidation of industrial assets;
Competitive costs for some 70% of raw
materials;
Neal, WV Marcus Hook, PA
1 PP 1 PP Platform for greenfield projects in
Latin America.
Challenges
La Porte, TX
1 PP Knowledge of North American
distribution market;
Financial Indicators Add value to supplier ⇔ client chain
R$ million 2009 1Q10 (substitute distributor);
Highly disperse market;
Net Revenue 1,866 547
Resumption in demand vs.
EBITDA 140 65* uncertainty of economic recovery.
* R$18 million non-recurring positive impact from inventory adjustments. 13
14. Agenda
Braskem
A global player
Acquisitions: opportunities and challenges
Project pipeline: growth with value accretion
Braskem consolidated
The petrochemical industry
Final considerations
14
15. Expansion with increased
competitiveness
BRAZIL
Green Ethylene
Operational start-up: 3Q10
Physical progress – 75%
Costs in line with budget
Expected NPV ~US$180 million
PVC Expansion
Operational start-up : 1st half 2012
Expansion of 200 kty in PVC capacity New Projects
Investments of US$470 million
Industrial Assets
Expected NPV ~US$450 million
Projects with Petrobras
Support for Brazil’s infrastructure projects
Source: Braskem 15
16. Expansion with increased
competitiveness
LATIN AMERICA
Mexico: Ethylene XXI Project
Operational start-up: early 2015
Partnership between Braskem (65%) and the
Mexican group IDESA (35%) for the purchase of
ethane from PEMEX
Integrated project: 1 Mty of ethane and 1 Mty of
PE
Investment estimated at up to US$2.5 billion
over 5 years
Venezuela: JV’s with Pequiven with
Project Finance structure New Projects
Propilsur Industrial Assets
Operational start-up: 2013
Projects with Petrobras
300 kty PP in Paranaguá complex
Investment estimated at US$500 million
Source: Braskem 16
17. Consolidated project pipeline
PeruProj.
(+ 600 to 1,000 kty ethylene/PE)
Ethylene XXI - Mexico Polimerica – Venezuela
(+ 1,000 kty ethylene (+ 1,300 kty ethylene and
and + 1,000 kta PE) + 1,000 kty PE)
Green PE Propilsur – Venezuela Suape
(+ 200 kty ethylene) (+ 300 kty PP) Comperj
PVC Expansion
(+ 200 kty)
2010 - 2012 2013 - 2015 Projects under evaluation
Resin Capacity CAGR for 2010-2015: +4.3%
Diversification of raw materials and world-class assets
Fiscal discipline
Excellent track record of projects execution
Source: Braskem 17
18. Investments in 2010 total R$1.6 bi
2010 Estimated Investments
In millions of R$
1,617
Green PE
254
Mexico
72 Venezuela
35
52 PVC Alagoas
BRASKEM
462 Operational
Maintenance New Projects
317
Industrial Assets
BRASKEM AMERICA
56
QUATTOR Projects with Petrobras
360
QUANTIQ / VARIENT
10
Source: Braskem 18
19. Agenda
Braskem
A global player
Acquisitions: opportunities and challenges
Project pipeline: growth with value accretion
Braskem consolidated
The petrochemical industry
Final considerations
19
20. Braskem consolidated
Financial Indicators:
2009 LTM Mar/10
R$ billion Braskem B + Q + S Braskem B + Q + S Potential for margin gains
Stabilization in raw material
Net Revenue 15.2 21.9 16.5 23.8 supplies;
EBITDA 2.5 3.1 2.7 3.5 Margin equalization Braskem
(16%) vs. Quattor (9%);
Net Debt/EBITDA 2.67x 3.46x 2.37x 3.12x Substitution of 1Q09 by 1Q10
# Plants: 17 29 17 29
80% Capacity
6,460
Increase
510
3,595 1,965
510 PVC
Industrial Assets
PP
1,090
PE
3,035
1,995
Listed on three stock exchanges: BM&FBovespa, NYSE and Latibex
Source: Braskem 20
21. Braskem’s consolidated debt profile after
debt restructuring
Funding
R$ million (03/31/2010) Quattor + Sunoco R$ million (03/31/10) R$ million (03/31/10)
operations in
Acquisition April and May
Gross Debt: 9,810 Gross Debt: 17,176 and
Gross Debt: 14,066
Net Debt: 6,500 Net Debt: 10,909 scheduled Net Debt: 10,909
payments
Average Term: 9.7 years R$3.74 bi Average Term: 6.6 years Average Term: 8.2 years
Net Debt/EBITDA: 2.37x capital Net Debt/EBITDA: 3.12x Net Debt/EBITDA: 3.12x
increase
65% of debt pegged to USD 44% of debt pegged to USD 59% of debt pegged to USD
Braskem Cash: + 3,311
Quattor Cash: + 542
Capital Increase: + 3,742
(-) UNIPAR Payment - (700)
(-) SUNOCO Payment - (630)
Bond Issuance (US$400 mi) + 712
SUNOCO, EPP and NCA fin. + 694
3,157 Debt Prepayment: - (4,514)
2,371 Cash = 3,157
2,078
1,674 1,735
1,178 622 804 1,222
3,157 1,142 989
614 478
478 607 623
1,456 1,416 389 289 1,118 157
700 1,060 1,057
491 511 267 623
101
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020
onwards
Braskem Quattor New debt Cash Net capital increase
Source: Braskem 21
22. Braskem: Ratings confirmed after
acquisition
RATING Post-Acquisitions
Upgrade Conditions:
‣ Maintenance of high liquidity (cash or equivalents -
+ stand-by) above R$3 billion. Cash above R$3 billion since
Ba3 BBB- Dec/2008.
- Investment Grade
Jan/09 May/09 +
‣ Capitalization of Braskem as pre-condition for
Ba1 BB+ acquisition. Shareholder movements;
stable
Mar/09 -
Jan&Feb/10 ‣ Successful integration with capture of synergies and
increase in cash generation;
Ba2 BB The acquisitions: ‣ Decrease in Net Debt/EBITDA ratio to 2.5x. In first post-
‣ Strengthened strategic positioning; acquisition quarter we already reduced this ratio from
3.46x to 3.12x
Ba3 BB- ‣ Increased # of plants, sites and geographic diversification;
‣ Diversification of raw material mix;
More disciplined and less volatile domestic market ;
B1 B+
‣
‣ High governance standards;
‣ Petrobras participation.
2009 2010
Braskem Ratings (National Scale) Braskem Ratings (Global Scale)
Moody’s Aa2.br / Stable Outlook Moody’s Ba1 / Stable Outlook
Fitch AA / Stable Outlook Fitch BB+ / Stable Outlook
S&P AA+ / Stable Outlook S&P BB+ / Stable Outlook
Source: Braskem 22
23. Raw material matrix
Diversification to compete globally
Raw Material Profile* (2009) Braskem Post-Acquisitions* Braskem Post-Projects*
8% 3%
37% 30%
13% Implementation of
Project Pipeline** 24%
17% 18%
92%
56% 58% 15%
69%
46%
14%
Quattor Sunoco Braskem More balanced and diversified supply of raw materials
Liquid (2) Refinery propylene Gas (1) Competitive natural gas price vs. international reference prices
Propane Naphtha / Condensate
USGC reference to competitive prices ~70% of naphtha supplied by Petrobras with
competitive price formula
Natural Gas 30% direct imports from various international suppliers
100% Petrobras supply with competitive prices versus
international prices
Ethanol
*Based on resin-production capacity. Sunoco buys propane directly
(1) Ethane, Propane and HLR; (2) Naphtha and condensate ** Considering the Mexico Project and Green PE 23
24. Agenda
Braskem
A global player
Acquisitions: opportunities and challenges
Project pipeline: growth with value accretion
Braskem consolidated
The petrochemical industry
Final considerations
24
25. Overview of the world petrochemical
cycle
Ethylene: projected utilization in 2010
What did we learn in 2009?
Plants with high operating costs were closed
60,000 90 89 during the crisis
85 84 86 *
50,000 84 83
80
79 80 Demand driven by emerging countries,
40,000 75 74 primarily China
30,000
Effective new capacity 50% below projections:
20,000
delays, learning curve, lack of skilled labor,
10,000
problems with raw material supply
0
Europe N. America Asia M. East World Braskem
2010-2014 Outlook
Capacidade Operating rate 2010 (%) Uncompetitive assets shall be permanently
* Braskem:1Q10
2009 operating rate (%) shuttled down
Restrictions on gas extraction linked to oil
Kt
Additional capacity and closures announced production (OPEC)
12,000
Estimated delay ~3 million tons expected for 2010 should be
10,000
postponed: Iran (Morvarid and Illam) and Saudi
8,000 Arabia (Sharq and Saudi – Al Jubail)
6,000
Demand growth over 6 million ton/year should
4,000 exceed additional supply in 2011
2,000
Higher domestic consumption in emerging
0 countries like Brazil, China and India
-2,000 2009 2010 2011 2012 2013 2014
Industry consolidation increasing players’
-4,000 competitiveness
MIDDLE EAST ASIA OTHERS
NORTH AMERICA W. EUROPE May2009 Forecast 25
Source: CMAI
26. Brazil’s macroeconomic outlook
Annual real GDP growth
• Brazil’s economy is still relatively closed, with exports 7,0% 6,1%
5,8%
corresponding to 14% of GDP, distributed among 6,0%
4,7% 4,6%
various trade partners. 5,0%
4,5% 4,4% 4,4%
3,5%
4,0% 5,2%
4,4% 4,3% 4,3%
• Strong external solvency ratings and floating exchange 3,0%
rate system curbed speculation against the BRL during 2,0% 1,3%
the crisis. 1,0%
-0,2%
0,0%
• Brazil’s banking system is well capitalized and highly -1,0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
regulated.
Real GDP On April 2010 On December 2009
• Household consumption corresponds to 61% of GDP,
while government consumption corresponds to 20%.
GDP is highly influenced by consumer behavior, which Average monthly income (March 2002 = base 100)
has been driven by growth in average income levels.
180
• Brazil is still an unleveraged economy, but with 160
growing access to credit (the ratio of available credit
to GDP is currently 45% and is expected to increase to 140
49% in 2010), which ultimately spurs consumption. 120
100
80
Average Income
Rendimento Médio
Source: Santander 26
28. Consumer driven
Braskem’s domestic sales breakdown in 2009
HYGIENE AND CLEANING
COSMETICS AND PHARMACEUTICALS
CONSUMER GOODS 6%
2% AUTOMOTIVE
13%
5%
RETAIL
5%
17% CONSTRUCTION
3%
FOOD PACKAGING ELECTRIC AND ELECTRONIC
30%
6% INDUSTRIAL
4%
4% INFRASTRUCTURE
4% 1%
AGRIBUSINESS
OTHER
CHEMCIALS AND AGROCHEMICALS
Source: Braskem / Abiquim 28
29. Market development
Construction of light slabs using Parts for tractors, harvesters and
polypropylene spheres. tools migrating to PE rotational
molding.
BUBBLEDECK Agro-machinery
Substitutes concrete wells for a
Project developed with Unipac and rotation-molded structure. Support from
Toyota-Tsusho. Flooring that allows CNO and partners Asperbras, Fortlev and
water permeability. Brinquedos Bandeirante
CROSSWAVE
Manholes
Substitution of asbestos by PP Substitution of fiberglass tanks for
fibers with fiber-cement volumes greater than 2,000 l.
reinforcement.
FIBER-CEMENT Large Tanks
New washer molds, with PP cabinets Plastic silos for grain storage.
(replacing steel) in final validation Partnership with Suzuki.
stage.
Silo Bags
TRAVELING BLOCK
29
30. Agenda
Braskem
A global player
Acquisitions: opportunities and challenges
Project pipeline: growth with value accretion
Braskem consolidated
The petrochemical industry
Final considerations
30
31. Why Braskem?
Pr/share
35 BRKM5 Performance
30 B+Q+S (R$ billion) 1Q10 Itaú Multiple
25 EBITDA LTM 3.5 3.5 3.5
20 Market Capitalization 8.8 11.9 13.6
15 + EV 19.7 22.8 24.5
10 EV/EBITDA 5.6x 6.5x 7.0x*
5 Price per share 11.3 15.3 17.4
0 Proj. NPV to 2012 > R$1 bi
jan-02 jan-03 jan-04 jan-05 jan-06 jan-07 jan-08 jan-09 jan-10 Value added by > R$1.3 /
R$ US$ projects to share price share
* Peer Multiple. Source: Bloomberg.
Largest thermoplastic resin producer in the Americas
Leader of important projects in Latin America with
competitive raw materials
Emerging consumer market with potential per-capita growth Huge potential for value creation
as additional driver
EBITDA increase
Above-peer profitability
Access to one of the world’s largest consumer markets EV/EBITDA multiple below
following the U.S. acquisition peers’ multiple (7-8x)
Successful trajectory of organic growth and acquisitions
Shareholders hold long-term view with strategic synergies
for growth and value creation
Leader in green chemicals 31