MANAGEMENT REPORT BRASKEM 2010 - Latibex · MANAGEMENT REPORT The Management of Braskem S.A....

MANAGEMENT REPORT

The Management of Braskem S.A. (“Braskem”) submits for your consideration this Management Report and the corresponding Financial Statements, accompanied by Independent Auditors and the Audit Board for the fiscal year ended December 31, 2010.

Pursuant to Federal Law 11,638/07, the results presented herein reflect the adoption of International Financial Reporting Standards (IFRS) in 2010, waccurate comparisons. In addition, unless stated otherwise, Braskem’s consolidated results reflect, for all periods stated, the pro and Sunoco Chemicals, since the beginning ofreflect the results of these companies

1. Message from Management

The year 2010 was an important one in Braskem's history.its growth and international expansion strategy, launching a new, broad and promising business platform with products made from renewable raw materials, combined with consistent growth in its operational performance. If 20Braskem could transform into reality the opportunities arising from its financial solidity, new scale and greater competitiveness.

The acquisitions of Quattor in Brazil and the polypropylene States, which were announced in the first quarter of the year, allowed Braskem to consolidate its position in the Americas as the leader in thermoplastic resinpotential for creating value for in particular the substantial increases in the capacity utilization rateEBITDA, which almost doubled from the previous yearU.S. operations (Braskem America

With the acquisition of Quattorin the petrochemical sector. The operation was unanimously and fully approved by the Directors of the Administrative Council of Economic Defense (CADE) on February 23, 2011, confirming that the relevant market in the

Supported by the operating reliabilityteams, Braskem benefited from a very positive scenario in the Brazilian economy, which drove growth of 15% in domestic thermoplastic resinproducts, in line with the trend in the international market.revenue of R$34.7 billion and net revenue of R$27.the pro-forma 2009 results, respectively.R$4.1 billion. Net income came to R$1.8

As part of its international expansion plan, in 2010 Braskem confirmed its participation in the Ethylene XXI project in Mexico, jointly with the local group Idesa, for the annual production of 1

2010 MANAGEMENT REPORT

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BRASKEM 2010

The Management of Braskem S.A. (“Braskem”) submits for your consideration this Management Report and the corresponding Financial Statements, accompanied by the opinions of the Independent Auditors and the Audit Board for the fiscal year ended December 31, 2010.

Pursuant to Federal Law 11,638/07, the results presented herein reflect the adoption of International Financial Reporting Standards (IFRS) in 2010, with the 2009 results restated to ensure

In addition, unless stated otherwise, Braskem’s consolidated results reflect, forma consolidation of 100% of the results of Quattor Participações

since the beginning of 2010. The annual financial statements of the Company reflect the results of these companies as of their acquisition, in April 2010.

Message from Management

The year 2010 was an important one in Braskem's history. The Company made important progress in its growth and international expansion strategy, launching a new, broad and promising business platform with products made from renewable raw materials, combined with consistent growth in its

If 2009 was marked by overcoming the global economic crisis, in 2010, Braskem could transform into reality the opportunities arising from its financial solidity, new scale

The acquisitions of Quattor in Brazil and the polypropylene assets of Sunoco Chemicals in the United States, which were announced in the first quarter of the year, allowed Braskem to consolidate its position in the Americas as the leader in thermoplastic resins production and to tap enormous

value for Shareholders. This was confirmed by the results of these businesses, in particular the substantial increases in the capacity utilization rates at the Quattor units

almost doubled from the previous year to R$984 million, which also occurred at the Braskem America), where EBITDA rose by 73% to US$114 million.

acquisition of Quattor, Braskem became the preferred vehicle of Petrobras for its activities The operation was unanimously and fully approved by the

Administrative Council of Economic Defense (CADE) on February 23, 2011, that the relevant market in the petrochemical industry is the global market.

reliability of its industrial assets and the management capacity of its teams, Braskem benefited from a very positive scenario in the Brazilian economy, which drove growth of 15% in domestic thermoplastic resins demand and led to increases in the prices of its products, in line with the trend in the international market. In this context, Braskem recorded sales revenue of R$34.7 billion and net revenue of R$27.8 billion, for growth of 22% and 23%

esults, respectively. The Company’s consolidated EBITDA increased 27% to Net income came to R$1.889 million, up from R$398 million in 2009.


MANAGEMENT REPORT

The Management of Braskem S.A. (“Braskem”) submits for your consideration this Management the opinions of the

Independent Auditors and the Audit Board for the fiscal year ended December 31, 2010.

Pursuant to Federal Law 11,638/07, the results presented herein reflect the adoption of ith the 2009 results restated to ensure

In addition, unless stated otherwise, Braskem’s consolidated results reflect, forma consolidation of 100% of the results of Quattor Participações

The annual financial statements of the Company

made important progress in its growth and international expansion strategy, launching a new, broad and promising business platform with products made from renewable raw materials, combined with consistent growth in its

09 was marked by overcoming the global economic crisis, in 2010, Braskem could transform into reality the opportunities arising from its financial solidity, new scale

assets of Sunoco Chemicals in the United States, which were announced in the first quarter of the year, allowed Braskem to consolidate its

production and to tap enormous This was confirmed by the results of these businesses,

at the Quattor units and in its also occurred at the

of Petrobras for its activities The operation was unanimously and fully approved by the Board of

Administrative Council of Economic Defense (CADE) on February 23, 2011, industry is the global market.

of its industrial assets and the management capacity of its teams, Braskem benefited from a very positive scenario in the Brazilian economy, which drove

increases in the prices of its In this context, Braskem recorded sales

billion, for growth of 22% and 23% in relation to The Company’s consolidated EBITDA increased 27% to


million tons of polyethylene and 1 million tons of ethylene uestimated investments of US$2.5 billion, the project will be installed at the Coatzacoalcos Petrochemical Complex in the state of Veracruz, with operations scheduled to start in 2015.addition to meeting the demand inpolyethylene, the initiative will complement the Company’s growth strategy in the North American market. Braskem also reinforced its international presence with the offices in Singapore and Colombia.

In Brazil, Braskem concluded in September, within the estimated schedule and budget, the installation of its first project to produce Green Polyethylene, with the using sugarcane ethanol as feedstock. The 200 ktons/year plant, which is located in Triunfo, Rio Grande do Sul, required investment world’s largest producer of biopolymers, takibecoming the global leader in sustainable chemicals.its plans to invest in the construction of a Green Polypropylene production unit with minimum capacity of 30 ktons/year, in a location still to be determined.

Braskem’s total investment, including Quattor, Braskem America and Mexico, R$1.8 billion in 2010, twice the amount invested in 2009.allocated to modernize assets and expand capacity, which included, in addition to the Green Ethylene unit, the disbursements to be invested in the construction of a new PVC plant in the city of Alagoas with capacity of 200 ktons/year, which should become operational in 2012.invested R$365 million in scheduled maintenance ethylene units located in Camaçari, Bahia.

This program of investments to modernize assetsrealized in full conformity with Braskem’s commitment to financial discipline and returns above the cost of capital. Braskem recorded net debt of Rreduction of 14% from December 2009.EBITDA, which stood at 3.59x in 2009, closed 2010 at 2.43x, reflecting the lower net debt in the year and the growth in operating income,

Aware of the need to strengthenincreased its investments in research and development and in client support, and established a new strategy in this area that will make it one of the private companies in Brazilinnovation and technology by 2015from biomass will be a priority in this effort to create value for the industry and for Brazil, drawing on Brazil’s recognized competence i

To further accelerate the reaching of this target, the Company entered into a partnership with Laboratório Nacional de Biociências expanding its partnerships in this area, which already include the University of Campinas, Fapesp and the Danish company Novozymes.(CENPES) was also strengthened in other segments of strategic importance to the country.

Characterized by the 2010 Sustainability Guide as a model Brazilian company in this area, Braskem formulated its 2020 Vision on Sustainable Development, participated activeagenda on climate change and maintained a path of continuous improvement in its health, security


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million tons of polyethylene and 1 million tons of ethylene using natural gas as feedstock.estimated investments of US$2.5 billion, the project will be installed at the Coatzacoalcos Petrochemical Complex in the state of Veracruz, with operations scheduled to start in 2015.addition to meeting the demand in the Mexican market, which is currently a net importer of polyethylene, the initiative will complement the Company’s growth strategy in the North American

Braskem also reinforced its international presence with the inauguration of new commercial fices in Singapore and Colombia.

In Brazil, Braskem concluded in September, within the estimated schedule and budget, the installation of its first project to produce Green Polyethylene, with the startup of an ethylene plant using sugarcane ethanol as feedstock. The 200 ktons/year plant, which is located in Triunfo, Rio Grande do Sul, required investment around R$500 million. As a result, Braskem has become the world’s largest producer of biopolymers, taking an important step towards its strategic vision of becoming the global leader in sustainable chemicals. In line with this goal, Braskem also announced its plans to invest in the construction of a Green Polypropylene production unit with minimum

in a location still to be determined.

Braskem’s total investment, including Quattor, Braskem America and Mexico, came to R$1.8 billion in 2010, twice the amount invested in 2009. A substantial part of these funds was allocated to modernize assets and expand capacity, which included, in addition to the Green Ethylene unit, the disbursements to be invested in the construction of a new PVC plant in the city of

200 ktons/year, which should become operational in 2012.invested R$365 million in scheduled maintenance shutdowns last year, in particular at one of the ethylene units located in Camaçari, Bahia.

This program of investments to modernize assets, expand capacity and make acquisitions realized in full conformity with Braskem’s commitment to financial discipline and returns above the

Braskem recorded net debt of R$9.8 billion at the end of 2010, which represents a from December 2009. Financial leverage, as measured by the ratio of net debt to

x in 2009, closed 2010 at 2.43x, reflecting the lower net debt in the year and the growth in operating income, as measured by EBITDA.

need to strengthen Brazil's petrochemical industry and plastics chainincreased its investments in research and development and in client support, and established a new strategy in this area that will make it one of the private companies in Brazil that most invests in

by 2015. Research in the field of biotechnology for making chemicals from biomass will be a priority in this effort to create value for the industry and for Brazil, drawing on Brazil’s recognized competence in this field.

To further accelerate the reaching of this target, the Company entered into a partnership with Laboratório Nacional de Biociências (LNBio) for the installation in Campinas of a research unit, expanding its partnerships in this area, which already include the University of Campinas, Fapesp and the Danish company Novozymes. The technological partnership with the Petrobras Research Center

ES) was also strengthened in other segments of strategic importance to the country.

Characterized by the 2010 Sustainability Guide as a model Brazilian company in this area, Braskem formulated its 2020 Vision on Sustainable Development, participated actively in the international agenda on climate change and maintained a path of continuous improvement in its health, security

MANAGEMENT REPORT

sing natural gas as feedstock. With estimated investments of US$2.5 billion, the project will be installed at the Coatzacoalcos Petrochemical Complex in the state of Veracruz, with operations scheduled to start in 2015. In

the Mexican market, which is currently a net importer of polyethylene, the initiative will complement the Company’s growth strategy in the North American

inauguration of new commercial

In Brazil, Braskem concluded in September, within the estimated schedule and budget, the of an ethylene plant

using sugarcane ethanol as feedstock. The 200 ktons/year plant, which is located in Triunfo, Rio As a result, Braskem has become the

ng an important step towards its strategic vision of In line with this goal, Braskem also announced

its plans to invest in the construction of a Green Polypropylene production unit with minimum

came to approximately A substantial part of these funds was

allocated to modernize assets and expand capacity, which included, in addition to the Green Ethylene unit, the disbursements to be invested in the construction of a new PVC plant in the city of

200 ktons/year, which should become operational in 2012. Braskem last year, in particular at one of the

capacity and make acquisitions was realized in full conformity with Braskem’s commitment to financial discipline and returns above the

9.8 billion at the end of 2010, which represents a Financial leverage, as measured by the ratio of net debt to

x in 2009, closed 2010 at 2.43x, reflecting the lower net debt in the year

Brazil's petrochemical industry and plastics chain, Braskem increased its investments in research and development and in client support, and established a new

that most invests in Research in the field of biotechnology for making chemicals

from biomass will be a priority in this effort to create value for the industry and for Brazil, drawing on

To further accelerate the reaching of this target, the Company entered into a partnership with for the installation in Campinas of a research unit,

expanding its partnerships in this area, which already include the University of Campinas, Fapesp and The technological partnership with the Petrobras Research Center

ES) was also strengthened in other segments of strategic importance to the country.

Characterized by the 2010 Sustainability Guide as a model Brazilian company in this area, Braskem ly in the international

agenda on climate change and maintained a path of continuous improvement in its health, security

and environment indicators. On this front, the highlight was the reduction of 11% in greenhouse gas emissions and of 7% in energy consu

Braskem maintains a set of social and environmental programs to contribute to the development of the communities where it operates.Grand Prix, in partnership with the company Plásticos Suzplastic waste in various parks through the city of São Paulo and later transformed it into benches and plant containers that were donated to the municipal government, and the construction of the Parque da Amizade (Amizade polypropylene unit is located.

Braskem reaffirms its commitment to developing the entire petrochemical and plastics production chain in Brazil, which is essential for supporting Braskem'expansion while supporting clients that also operate or aspire to operate in the international market.

Acknowledgements

Braskem’s Management once again thanks its transforming into reality the strategic projects that have strengthened the our Clients for the confidence they once again placed in Braskem during 2010.foundation that drives us in our constant pursuit of excellence.Suppliers and Members for their dedication and competence, which were fundamental our results.

2. Outlook

The scenario projected for 2011 is positive, with world GDP expected to grow 4.4% in the year, according to the IMF. The main positive drivers of this growth in the world economy are the stronger economic activity in the United States resulting from the neadopted by the government and the continued positive outlook for emerging countries.

The fronts requiring closer attention include the slowing of the Chinese economy as a result of further monetary tightening by authorities to control inflation, the deterioration in issues related to sovereign debt in the Eurozone and the potential worsening of the social unrest in Arab countries.

Although the dynamics of the Brazilian economy have not decoupled from the global concountry remains well positioned due to both its positive growth outlook (GDP growth of 4.5%) and financial solidity.

Braskem believes Brazil's thermoplastic resins market will grow by from 9% to 10% in 2011. In this scenario, Braskem’s strategy remains focused on strengthening its business, which includes: (i) partnerships with its clients and the sustainability of the Brazilian petrochemical chain; (ii) pursuing operational efficiency and cost reductions; and (iii) the policy to maintain its fin

The Company has two major scheduled maintenance shutdowns at its crackers slated for 2011: (i) at the end of May, operations at the Rio de Janeiro unit (former Riopol) will be halted for 30 days; and (ii) in October, one of the lines of theProduction planning for the year should partially offset the maintenance shutdown periods, with


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On this front, the highlight was the reduction of 11% in greenhouse gas emissions and of 7% in energy consumption.

Braskem maintains a set of social and environmental programs to contribute to the development of the communities where it operates. These initiatives were augmented in 2010 by the Recycling Grand Prix, in partnership with the company Plásticos Suzuki, which organized the collection of plastic waste in various parks through the city of São Paulo and later transformed it into benches and plant containers that were donated to the municipal government, and the construction of the

Park) in the city of Paulínia, São Paulo, where Braskem’s newest

Braskem reaffirms its commitment to developing the entire petrochemical and plastics production chain in Brazil, which is essential for supporting Braskem's continued growth and international expansion while supporting clients that also operate or aspire to operate in the international market.

Braskem’s Management once again thanks its Shareholders for their unqualified support in transforming into reality the strategic projects that have strengthened the Company

for the confidence they once again placed in Braskem during 2010. This partnership is the us in our constant pursuit of excellence. Lastly, we would like to thank our for their dedication and competence, which were fundamental

The scenario projected for 2011 is positive, with world GDP expected to grow 4.4% in the year, according to the IMF. The main positive drivers of this growth in the world economy are the stronger economic activity in the United States resulting from the new policies aming at boosting the economy adopted by the government and the continued positive outlook for emerging countries.

The fronts requiring closer attention include the slowing of the Chinese economy as a result of further thorities to control inflation, the deterioration in issues related to

sovereign debt in the Eurozone and the potential worsening of the social unrest in Arab countries.

Although the dynamics of the Brazilian economy have not decoupled from the global concountry remains well positioned due to both its positive growth outlook (GDP growth of 4.5%) and

Braskem believes Brazil's thermoplastic resins market will grow by from 9% to 10% in 2011. In this remains focused on strengthening its business, which includes: (i)

partnerships with its clients and the sustainability of the Brazilian petrochemical chain; (ii) pursuing operational efficiency and cost reductions; and (iii) the policy to maintain its financial health.

The Company has two major scheduled maintenance shutdowns at its crackers slated for 2011: (i) at the end of May, operations at the Rio de Janeiro unit (former Riopol) will be halted for 30 days; and (ii) in October, one of the lines of the Triunfo petrochemical complex is scheduled to stop for 40 days. Production planning for the year should partially offset the maintenance shutdown periods, with

MANAGEMENT REPORT

On this front, the highlight was the reduction of 11% in greenhouse gas

Braskem maintains a set of social and environmental programs to contribute to the development of These initiatives were augmented in 2010 by the Recycling

uki, which organized the collection of plastic waste in various parks through the city of São Paulo and later transformed it into benches and plant containers that were donated to the municipal government, and the construction of the

Park) in the city of Paulínia, São Paulo, where Braskem’s newest

Braskem reaffirms its commitment to developing the entire petrochemical and plastics production s continued growth and international

expansion while supporting clients that also operate or aspire to operate in the international market.

for their unqualified support in ompany. We also thank

This partnership is the Lastly, we would like to thank our

for their dedication and competence, which were fundamental for achieving

The scenario projected for 2011 is positive, with world GDP expected to grow 4.4% in the year, according to the IMF. The main positive drivers of this growth in the world economy are the stronger

w policies aming at boosting the economy adopted by the government and the continued positive outlook for emerging countries.

The fronts requiring closer attention include the slowing of the Chinese economy as a result of further thorities to control inflation, the deterioration in issues related to

sovereign debt in the Eurozone and the potential worsening of the social unrest in Arab countries.

Although the dynamics of the Brazilian economy have not decoupled from the global context, the country remains well positioned due to both its positive growth outlook (GDP growth of 4.5%) and

Braskem believes Brazil's thermoplastic resins market will grow by from 9% to 10% in 2011. In this remains focused on strengthening its business, which includes: (i)

partnerships with its clients and the sustainability of the Brazilian petrochemical chain; (ii) pursuing ancial health.

The Company has two major scheduled maintenance shutdowns at its crackers slated for 2011: (i) at the end of May, operations at the Rio de Janeiro unit (former Riopol) will be halted for 30 days; and

Triunfo petrochemical complex is scheduled to stop for 40 days. Production planning for the year should partially offset the maintenance shutdown periods, with

capacity utilization at Braskem’s crackers remaining around 90%, which is above the estimated wcapacity utilization rate (84%).

In commodity markets, political instability in Arab countries, where some of the world’s largest oil reserves are located, have negatively impacted oil production and increased price volatility, consequently driving naphtha and petrochemical prices higher worldwide. Although the global petrochemical industry is still recovering, oversupply is expected for 2011, due to the new production capacities that became operational in the previous year. On the other hand, various to mitigate the impact of these new production capacities, leading the industry’s profitability to continue to exceed expectations: (i) the scheduled maintenance shutdowns; (ii) the trade sanctions imposed to Iran; (iii) the lack of qualifnew players in the Middle East; (iv) the gasregion; and (v) the expectations of uncompetitive plants closures. For the medium and long tthe growth in demand is expected to exceed that in supply, leading to a reversal in the petrochemical cycle.

Braskem has growth projects aimed at maintaining its leadership in thermoplastic resin production in the Americas, which are detailed in the

In this light, Braskem maintains its commitment to sustainable growth and development, and will continue to act proactively to pursue the best opportunities, seeking to create value for shareholders and increase competitiveness throughout the entire petrochemical and plastics production chain, without losing its focus on financial discipline.

3. Performance

3.1. Economic and Financial Performance

� Revenue

Braskem recorded consolidated gross revenue of R$28.4 billion in 2009. In U.S. dollar terms, gross revenue was US$19.7 billion, for growth of 36% from the US$14.6 billion registered in 2009.

Similarly, Braskem’s consolidated net revenue in 2010 was R$27.billion in 2009 and negatively impacted by the 12% appreciation in the Brazilian real against the U.S. dollar in the period. In USD, consolidated net revenue was US$15.8 billion, 36% higher than in 2009.

The main drivers of net revenue growth were:the international market, driven by the hikes in raw material prices;in the Brazilian market, which led to stronger sales in the domesticseized to export basic petrochemicals, such as propylene and BTX, which registered sales volume growth of 6% and 11%, respectively.

Revenue from exports in 2010 was US$4.2 billion (26% of net revenue), 56% higher than in 2009, mainly due to the high prices in the international market.


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capacity utilization at Braskem’s crackers remaining around 90%, which is above the estimated w

In commodity markets, political instability in Arab countries, where some of the world’s largest oil reserves are located, have negatively impacted oil production and increased price volatility,

phtha and petrochemical prices higher worldwide. Although the global petrochemical industry is still recovering, oversupply is expected for 2011, due to the new production capacities that became operational in the previous year. On the other hand, various to mitigate the impact of these new production capacities, leading the industry’s profitability to continue to exceed expectations: (i) the scheduled maintenance shutdowns; (ii) the trade sanctions imposed to Iran; (iii) the lack of qualified labor, operational instability and unscheduled shutdowns at new players in the Middle East; (iv) the gas-supply problems associated with oil production in that region; and (v) the expectations of uncompetitive plants closures. For the medium and long tthe growth in demand is expected to exceed that in supply, leading to a reversal in the petrochemical

Braskem has growth projects aimed at maintaining its leadership in thermoplastic resin production in the Americas, which are detailed in the section “Strategic Investments – Growth Projects”.

In this light, Braskem maintains its commitment to sustainable growth and development, and will continue to act proactively to pursue the best opportunities, seeking to create value for shareholders

crease competitiveness throughout the entire petrochemical and plastics production chain, without losing its focus on financial discipline.

Economic and Financial Performance

Braskem recorded consolidated gross revenue of R$34.7 billion in 2010, for growth of 22% from In U.S. dollar terms, gross revenue was US$19.7 billion, for growth of 36%

from the US$14.6 billion registered in 2009.

Similarly, Braskem’s consolidated net revenue in 2010 was R$27.8 billion, growing 23% from R$22.billion in 2009 and negatively impacted by the 12% appreciation in the Brazilian real against the U.S.

, consolidated net revenue was US$15.8 billion, 36% higher than in 2009.

f net revenue growth were: (i) the high prices of basic petrochemicals and resins in the international market, driven by the hikes in raw material prices; (ii) the continued strong demand in the Brazilian market, which led to stronger sales in the domestic market; and (ii) the opportunities seized to export basic petrochemicals, such as propylene and BTX, which registered sales volume

of 6% and 11%, respectively.

Revenue from exports in 2010 was US$4.2 billion (26% of net revenue), 56% higher than in 2009, mainly due to the high prices in the international market.

MANAGEMENT REPORT

capacity utilization at Braskem’s crackers remaining around 90%, which is above the estimated world

In commodity markets, political instability in Arab countries, where some of the world’s largest oil reserves are located, have negatively impacted oil production and increased price volatility,

phtha and petrochemical prices higher worldwide. Although the global petrochemical industry is still recovering, oversupply is expected for 2011, due to the new production capacities that became operational in the previous year. On the other hand, various factors continue to mitigate the impact of these new production capacities, leading the industry’s profitability to continue to exceed expectations: (i) the scheduled maintenance shutdowns; (ii) the trade sanctions

ied labor, operational instability and unscheduled shutdowns at supply problems associated with oil production in that

region; and (v) the expectations of uncompetitive plants closures. For the medium and long terms, the growth in demand is expected to exceed that in supply, leading to a reversal in the petrochemical

Braskem has growth projects aimed at maintaining its leadership in thermoplastic resin production in Growth Projects”.

In this light, Braskem maintains its commitment to sustainable growth and development, and will continue to act proactively to pursue the best opportunities, seeking to create value for shareholders

crease competitiveness throughout the entire petrochemical and plastics production chain,

R$34.7 billion in 2010, for growth of 22% from In U.S. dollar terms, gross revenue was US$19.7 billion, for growth of 36%

billion, growing 23% from R$22.6 billion in 2009 and negatively impacted by the 12% appreciation in the Brazilian real against the U.S.

, consolidated net revenue was US$15.8 billion, 36% higher than in 2009.

(i) the high prices of basic petrochemicals and resins in (ii) the continued strong demand

and (ii) the opportunities seized to export basic petrochemicals, such as propylene and BTX, which registered sales volume

Revenue from exports in 2010 was US$4.2 billion (26% of net revenue), 56% higher than in 2009,

� Cost of Goods Sold (COGS)

In 2010, Braskem’s cost of goods sold (COGS) was R$23.5 billion, up 21% from 2009.material prices and higher sales volume of resins and basic petrochemicals were the key performance, which was partially offset by the operational efficiency at the Quattor assets.

The average Amsterdam–Rotterdamprice of naphtha in 2010 was US$713/tthe average in 2009 of US$534/tthe bulk of its naphtha feedstock from Petrobras, with the remainder imported directly from suppliers in North Africa, Argentina, Mexico and Venezuela.

Regarding the average gas prices, Belvieu prices of ethane and propane and 38% from the previous year to US$60cts/gal and US$116 cts/gal, respectively, while USG propylene rose product's lower availability in that market.

� Selling, General and Administrative Expenses

Selling, General and Administrative Expenses (SG&A) amounted to R$1.9 billion in 2010, up 17% from 2009.

Selling expenses increased 9% to R$806 million, to the adjustment of accounting practices at Quattor and the termination of the export agreement with Riopol, which amounted tohave been R$20 million lower than in 2009.

General and administrative expenses in 2010 were R$1.0 billion, R$206 million higher than in 2009, basically reflecting the nonrecurring other advisory services related to the QuattorQuattor’s accounting criteria to the standards used by Braskem, with an impact of R$62 million;the expenses with advertising and third

Exports

22,647

Net Revenue (R$ million)


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In 2010, Braskem’s cost of goods sold (COGS) was from 2009. The higher raw

material prices and higher sales volume of resins and basic petrochemicals were the key drivers of this performance, which was partially offset by the better

the Quattor assets.

Rotterdam-Antwerp (ARA) price of naphtha in 2010 was US$713/ton, up 34% from the average in 2009 of US$534/ton. Braskem acquires the bulk of its naphtha feedstock from Petrobras, with the remainder imported directly from suppliers in

, Argentina, Mexico and Venezuela.

average gas prices, the benchmark Mont propane increased by 25%

and 38% from the previous year to US$60cts/gal and respectively, while USG propylene rose 59% to US$1,346/ton,

in that market.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses (SG&A) amounted to R$1.9 billion in 2010, up 17%

Selling expenses increased 9% to R$806 million, primarily impacted by nonrecurring the adjustment of accounting practices at Quattor and the termination of the export agreement

amounted to around R$88 million. Excluding these effects, selling expenses R$20 million lower than in 2009.

General and administrative expenses in 2010 were R$1.0 billion, R$206 million higher than in 2009, nonrecurring expenses of R$52 million with technical consulting services and

other advisory services related to the Quattor and Braskem America transactions;Quattor’s accounting criteria to the standards used by Braskem, with an impact of R$62 million;

advertising and third-party services of R$42 million. In addition to the

23% 26% 23% 26%

22,647

27,829

2009 2010

11,620

15,833

2009 2010

Net Revenue (US$ million)

+23% +36%

Net Revenue (R$ million)

Gas as

feedstock, 16.9%

Electric Energy,

4.3%

Natural Gas,

2.4%

Other Variable

Costs, 7.2%

Labor, 3.1%

Services, 1.5%

Others, 0.9%

Deprec / Amort,

7.0%

Freight, 3.9%

COGS 2010

(1) Does not include naphtha / condensate / crude oil processing

and Quantiq costs

MANAGEMENT REPORT

, impacted by the

Selling, General and Administrative Expenses (SG&A) amounted to R$1.9 billion in 2010, up 17%

nonrecurring expenses related the adjustment of accounting practices at Quattor and the termination of the export agreement

Excluding these effects, selling expenses would

General and administrative expenses in 2010 were R$1.0 billion, R$206 million higher than in 2009, with technical consulting services and

the adjustment of Quattor’s accounting criteria to the standards used by Braskem, with an impact of R$62 million; and

In addition to the

Naphtha , 53.1%

Freight, 3.9%

COGS 2010 (1)

(1) Does not include naphtha / condensate / crude oil processing

nonrecurring expenses, this increase mainly reflected the adjustments to the salary structure, the wage increases under the collective

� EBITDA

Braskem’s consolidated EBITDA in 2010 was R$4.1 billion, 27% higher than the R$3.2 billion registered in 2009, despite the currency. The main drivers of this growth were:efficiency of the Quattor assets;demand in Brazil's domestic market;better situation in the petrochemical industry, especially in the second half of 2010;capture of R$170 million in synergiesamount of R$244 million. In U.Sbillion in 2010. EBITDA margin in 2010 was 14.6%, expanding 0.6 p.p. from 14.0% in 2009.margin excluding the effects of

Note: Restatement of EBITDA and Net Income at the appendix Income Statement

� Net Financial Result

Since Braskem holds net exposure to the U.S. dollar (more dollarpegged assets), any shift in the path of the exchange rate has an impact on the accounting financial result. On December 31, 2010, this net exposure was composesuppliers, which was partially offset by 43% of accounts receivable and 14% of cash. Given its heavily dollarized operational cash flow, the the Company’s revenue is directly or indirectly pegged to the variation in the U.S. dollar exchange rate, and most of its costs are also pegged to this currency.

The net financial result closed 2010 with an expense of R$1,618 million, compared with net financial income of R$266 million in 2009. This variation was mainly due to the appreciation in the Brazilian real against the U.S. dollar of 25% in 2009, which had a positive impact of R$2.8 billion, versus the appreciation in the BRL against

Excluding the effects of foreign exchange in 2010 was an expense of R$1,668 million, down R$336 million from 2009, reflecting the lower deband the adjustment in the debt profile after the acquisitions made in 1Q10. This amount includes nonrecurring expenses of R$462 million related to: (i) the impact of R$43 million


of 29

nonrecurring expenses, this increase mainly reflected the adjustments to the salary structure, the wage increases under the collective labor agreement and the provisioning for profit

Braskem’s consolidated EBITDA in 2010 was R$4.1 billion, 27% higher than the R$3.2 billion registered in 2009, despite the downcycle of the petrochemical industry and the stronger local

The main drivers of this growth were: (i) the significant improvement in the operational efficiency of the Quattor assets; (ii) increase in thermoplastic resins sales, followingdemand in Brazil's domestic market; (iii) the high resin and basic petrochemical prices, reflecting the

tter situation in the petrochemical industry, especially in the second half of 2010;synergies. This value was also impacted by nonrecurring expenses in the

S. dollar terms, EBITDA increased by 41% from 2009 to reach US$2.3 EBITDA margin in 2010 was 14.6%, expanding 0.6 p.p. from 14.0% in 2009.

margin excluding the effects of naphtha/condensate/oil resales stood at 15.6% in 2010.

ment of EBITDA and Net Income at the appendix Income Statement

Since Braskem holds net exposure to the U.S. dollar (more dollar-pegged liabilities than dollarpegged assets), any shift in the path of the exchange rate has an impact on the accounting financial result. On December 31, 2010, this net exposure was composed as follows: 63% of debt and 76% of suppliers, which was partially offset by 43% of accounts receivable and 14% of cash. Given its heavily dollarized operational cash flow, the Company considers this exposure adequate. Practically 100% of

venue is directly or indirectly pegged to the variation in the U.S. dollar exchange rate, and most of its costs are also pegged to this currency.

The net financial result closed 2010 with an expense of R$1,618 million, compared with net financial R$266 million in 2009. This variation was mainly due to the appreciation in the Brazilian

real against the U.S. dollar of 25% in 2009, which had a positive impact of R$2.8 billion, versus the the USD of 12% in 2010, for a positive impact of only R$405 million

Excluding the effects of foreign exchange variation and monetary restatement, the net financial result in 2010 was an expense of R$1,668 million, down R$336 million from 2009, reflecting the lower deband the adjustment in the debt profile after the acquisitions made in 1Q10. This amount includes nonrecurring expenses of R$462 million related to: (i) the impact of R$43 million

3,181

4,055

2009 2010

EBITDA (R$ million)

+27%

MANAGEMENT REPORT

nonrecurring expenses, this increase mainly reflected the adjustments to the salary structure, the agreement and the provisioning for profit sharing.

Braskem’s consolidated EBITDA in 2010 was R$4.1 billion, 27% higher than the R$3.2 billion the petrochemical industry and the stronger local

) the significant improvement in the operational following the growing

(iii) the high resin and basic petrochemical prices, reflecting the tter situation in the petrochemical industry, especially in the second half of 2010; and (iv) the

This value was also impacted by nonrecurring expenses in the terms, EBITDA increased by 41% from 2009 to reach US$2.3

EBITDA margin in 2010 was 14.6%, expanding 0.6 p.p. from 14.0% in 2009. EBITDA /condensate/oil resales stood at 15.6% in 2010.

pegged liabilities than dollar-pegged assets), any shift in the path of the exchange rate has an impact on the accounting financial

d as follows: 63% of debt and 76% of suppliers, which was partially offset by 43% of accounts receivable and 14% of cash. Given its heavily

considers this exposure adequate. Practically 100% of venue is directly or indirectly pegged to the variation in the U.S. dollar exchange

The net financial result closed 2010 with an expense of R$1,618 million, compared with net financial R$266 million in 2009. This variation was mainly due to the appreciation in the Brazilian

real against the U.S. dollar of 25% in 2009, which had a positive impact of R$2.8 billion, versus the % in 2010, for a positive impact of only R$405 million

, the net financial result in 2010 was an expense of R$1,668 million, down R$336 million from 2009, reflecting the lower debt and the adjustment in the debt profile after the acquisitions made in 1Q10. This amount includes nonrecurring expenses of R$462 million related to: (i) the impact of R$43 million due to the

transference from the Special Installment Repayment Program program in 4Q10; (ii) the R$90 million in expenses incurred as a result of the agreement reached with the trade union in the state of Bahia in 3Q10; and (iii)of debt, mainly at Quattor, which reduced the average cost of debt at the end of the period to 6.6% in U.S. dollar and 83.4% of the CDI rate in Brazilian real.

In order to protect its cash flow and investment programs, Braskem adopts Financial Management Policy and Risk Management Policy. In December 2010, the derivative transactions aimed at hedging its assets and liabilitiesamounts which are perfectly fit tonegative or positive adjustments to these hedges will be offesetto assets and liabilities.

*Non-recurring expenses are classified in the item “Other Expenses”.

� Net Income

In 2010, Braskem reported net income of R$1from R$398 million in 2009. In addition to the solid operational performance in the period, as confirmed by the 27% growth in consolidated EBITDA, Braskem's net income was positively impacted by the recognition of R$405 million in deferred incomeQuattor’s accrued losses and others IFRS adjustmentsQuattor Group and the PP assets of Sunoco Chemicals at market value, in accordance with IFRS, in the amount of approximately R$inventories and amortization of intangible assets).

Dividends

Million of R$

Financial Expenses

Interest Expenses

Monetary Variation (MV)

Foreign Exchange Variation (FX)

IOF/Income Tax/Banking Expenses

Net Interest on Fiscal Provisions

Others*

Financial Revenue

Interest



Net Interest on Fiscal Credits

Others

Net Financial Result

Million of R$

Net Financial Result



Net Financial Result Excluding FX and MV


of 29

Special Installment Repayment Program (PAES) to the Refis tax renegotiation program in 4Q10; (ii) the R$90 million in expenses incurred as a result of the agreement reached with the trade union in the state of Bahia in 3Q10; and (iii) R$329 million in expenses with the prepayment

t Quattor, which reduced the average cost of debt at the end of the period to 6.6% in U.S. dollar and 83.4% of the CDI rate in Brazilian real.

its cash flow and reduce volatility in the financing of its working capital and investment programs, Braskem adopts credit and risk management procedures in line with its Financial Management Policy and Risk Management Policy. In December 2010, the

aimed at hedging its assets and liabilities, with maturity, currencfit to assets or liabilities being hedged. In any given scenario,

negative or positive adjustments to these hedges will be offeset by negative or positive adjustments

recurring expenses are classified in the item “Other Expenses”.

Braskem reported net income of R$1,889 million, which represented a significantIn addition to the solid operational performance in the period, as

confirmed by the 27% growth in consolidated EBITDA, Braskem's net income was positively impacted million in deferred income and social contribution taxes (IR/CSSL) on

and others IFRS adjustments, and by the recognition of the assets of the Quattor Group and the PP assets of Sunoco Chemicals at market value, in accordance with IFRS, in

roximately R$869 million (net of income tax and social contribution, realization of inventories and amortization of intangible assets).

2010 2009

Financial Expenses (2,011) 639

Interest Expenses (932) (878)

Monetary Variation (MV) (441) (572)

Foreign Exchange Variation (FX) 431 3,501

IOF/Income Tax/Banking Expenses (31) (33)

Net Interest on Fiscal Provisions (268) (963)

(770) (416)

Financial Revenue 393 (373)

272 252

Monetary Variation (MV) 86 60

Foreign Exchange Variation (FX) (25) (719)

Net Interest on Fiscal Credits 8 7

52 27

Net Financial Result (1,618) 266

2010 2009

Net Financial Result (1,618) 266

Foreign Exchange Variation (FX) 405 2,782

Monetary Variation (MV) (355) (511)

Net Financial Result Excluding FX and MV (1,668) (2,005)

MANAGEMENT REPORT

the Refis tax renegotiation program in 4Q10; (ii) the R$90 million in expenses incurred as a result of the agreement reached with

R$329 million in expenses with the prepayment t Quattor, which reduced the average cost of debt at the end of the period to 6.6%

volatility in the financing of its working capital and and risk management procedures in line with its

Financial Management Policy and Risk Management Policy. In December 2010, the Company held six currency, rates and

assets or liabilities being hedged. In any given scenario, possible by negative or positive adjustments

significant increase In addition to the solid operational performance in the period, as

confirmed by the 27% growth in consolidated EBITDA, Braskem's net income was positively impacted and social contribution taxes (IR/CSSL) on

, and by the recognition of the assets of the Quattor Group and the PP assets of Sunoco Chemicals at market value, in accordance with IFRS, in

million (net of income tax and social contribution, realization of

The Company’s management is proposing to the Annual Shareholders’ Meeting to be held on April 29, 2011, the payment of dividends amounting to R$666 million, based on the adjusted net income of R$1.7 billion (see note 26 – Shareholders’ Net Equity

� Capital Structure, Liquidity and Credit Rating

On December 31, 2010, Braskem period in 2009, reflecting the strategy to improve its debt profile following the acquisition of Quattor.

Net debt stood at US$5,905 million at the close of 2010, down earlier, already considering for both periods the placement of R$3.74 billion in the private share offering.

The balance of USD-denominated cash and financial investments increased by 51% to US$1,734 million. This reduction reflects theby loan of US$350 million that does not include any restrictive covenants on withdrawals during times of Material Adverse Change (MAC Clause).default swap) and high credit ratings participated in the operation.

The operations carried out to adjust Braskem's debt levels and terms and the debt profile included funding operations in the capital markets that raised a combined US$1.2 billion with terthan 10 years, in order to replace more expensive obligations with average terms shorter than 4 years. The highlights were the reopening in the amount of US$350 million and with maturity in May 2020 of the bond issue that initially was issued in 6.875% p.a., which represents the lowest yield ever obtained by the Company;October of US$450 million in perpetual bonds with a coupon of 7.375% p.a., which represents a yield similar to that of companies with investment

Braskem’s financial leverage, as measured by the ratio of net debt to EBITDA, which stood at 3.52009, closed 2010 at 2.43x, reflecting income.

The following charts show Braskem’s gross debt by category and indexer.

9,839

11,417

Dec 10

Dec 09

Dec 10

Dec 09

Gross Debt

Net Debt

R$ million

2.43x

3.59x

Dec 10

Dec 09

Net Debt/EBITDA

-32%


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The Company’s management is proposing to the Annual Shareholders’ Meeting to be held on April payment of dividends amounting to R$666 million, based on the adjusted net income

Shareholders’ Net Equity – item (f) Net Income Allocation)

Capital Structure, Liquidity and Credit Rating

On December 31, 2010, Braskem held gross debt of US$7,639 million, declining 2period in 2009, reflecting the strategy to improve its debt profile following the acquisition of

Net debt stood at US$5,905 million at the close of 2010, down 10% from US$6,earlier, already considering for both periods the placement of R$3.74 billion in the private share

denominated cash and financial investments increased by 51% to US$1,734 This reduction reflects the strategy to optimize cash carrying costs through

by loan of US$350 million that does not include any restrictive covenants on withdrawals during times of Material Adverse Change (MAC Clause). Only prime banks with low default rates (credit default swap) and high credit ratings participated in the operation.

The operations carried out to adjust Braskem's debt levels and terms and the debt profile included funding operations in the capital markets that raised a combined US$1.2 billion with terthan 10 years, in order to replace more expensive obligations with average terms shorter than 4

The highlights were the reopening in the amount of US$350 million and with maturity in May the bond issue that initially was issued in the amount of US$400 million, with a yield of

6.875% p.a., which represents the lowest yield ever obtained by the Company;October of US$450 million in perpetual bonds with a coupon of 7.375% p.a., which represents a yield

of companies with investment-grade ratings.

Braskem’s financial leverage, as measured by the ratio of net debt to EBITDA, which stood at 3.5reflecting the lower net debt in the year and the growth in operating

The following charts show Braskem’s gross debt by category and indexer.

11,417

12,728

17,637-28%

-14%

5,905

6,557

Dec 10

Dec 09

Dec 10

Dec 09

Gross Debt

Net Debt

US$ million

2.56x

4.00x

Dec 10

Dec 09

Net Debt/EBITDA

-36%

MANAGEMENT REPORT

The Company’s management is proposing to the Annual Shareholders’ Meeting to be held on April payment of dividends amounting to R$666 million, based on the adjusted net income

item (f) Net Income Allocation).

held gross debt of US$7,639 million, declining 25% from the same period in 2009, reflecting the strategy to improve its debt profile following the acquisition of

% from US$6,557 million a year earlier, already considering for both periods the placement of R$3.74 billion in the private share

denominated cash and financial investments increased by 51% to US$1,734 through access to a stand-

by loan of US$350 million that does not include any restrictive covenants on withdrawals during Only prime banks with low default rates (credit

The operations carried out to adjust Braskem's debt levels and terms and the debt profile included funding operations in the capital markets that raised a combined US$1.2 billion with terms longer than 10 years, in order to replace more expensive obligations with average terms shorter than 4

The highlights were the reopening in the amount of US$350 million and with maturity in May the amount of US$400 million, with a yield of

6.875% p.a., which represents the lowest yield ever obtained by the Company; and the issue in October of US$450 million in perpetual bonds with a coupon of 7.375% p.a., which represents a yield

Braskem’s financial leverage, as measured by the ratio of net debt to EBITDA, which stood at 3.59x in the lower net debt in the year and the growth in operating

6,557

7,639

10,129-25%

-10%

The following chart shows the company's amortization schedule as of December 31, 2010.of Braskem’s total debt matureequivalents cover the payment of obligations maturing over the next 22 months.by loans, coverage is longer than

Credit Risk Rating – Global Scale

In early 2010, the credit risk rating agencies Standard &global risk ratings for Braskem's issues in both local and foreign currencies of ‘BB+’, ‘Ba1' and 'BB+', respectively, all with stable outlookssignificant expansion in Braskem’s activities maintenance of the ratings confirms the confidence deleverage quickly. On the national scale, Braskem's ratings als

Foreign Gov.

Entities

Capital Market

38%

Gross Debt by Category

2,4961,733

393

583*

201112/31/10

Cash

13%

2,889

Invested in US$

Invested in R$


of 29

The following chart shows the company's amortization schedule as of December 31, 2010.of Braskem’s total debt matures in 2011, and its high liquidity ensures that its casequivalents cover the payment of obligations maturing over the next 22 months.

longer than 24 months.

Global Scale

2010, the credit risk rating agencies Standard & Poor’s, Moody’s and Fitch reaffirmed their global risk ratings for Braskem's issues in both local and foreign currencies of ‘BB+’, ‘Ba1' and 'BB+', respectively, all with stable outlooks, considering the acquisitions announced. In a year marked by

Braskem’s activities via acquisitions, which increased debt temporarily, the maintenance of the ratings confirms the confidence in Braskem’s ability to capture synergies and

On the national scale, Braskem's ratings also remained unchanged in the year:

Foreign Gov.

Entities

1%

Brazilian Gov.

Entities

26%

Banks

35%

Gross Debt by Category

CDI

12%

BRL -

6%

USD-PRE

56%

USD-POS

6%

TJLP

20%

Gross Debt by Index

1,733

1,245

1,8201,694

1,0731,360

1,244

2,594

2012 2013 2014 2015 2016/

2017

2018/

2019

10%

14%13%

8%

11%10%

Amortization Schedule(1)

(million of R$)

12/31/2010

(1) Does not include transaction costs

*US$350 million of Stand byInvested in US$

MANAGEMENT REPORT

The following chart shows the company's amortization schedule as of December 31, 2010. Only 13%

in 2011, and its high liquidity ensures that its cash and cash Considering stand-

Poor’s, Moody’s and Fitch reaffirmed their global risk ratings for Braskem's issues in both local and foreign currencies of ‘BB+’, ‘Ba1' and 'BB+',

In a year marked by increased debt temporarily, the

Braskem’s ability to capture synergies and o remained unchanged in the year:

- PRE

6%

PRE

2,594

2020

onwards

20%

Does not include transaction costs

*US$350 million of Stand by

‘brAA+’ with a stable outlook from ‘Aa2.br’ with a stable outlook from

In January 2011, Fitch Ratings revised its outlook continuous improvement in the Company’s cash and reduction in net leverage, especially in a year industry.

3.2. Operations

� Polymers Performance

Brazil's thermoplastic resin market was marked by strong demandgrew by 15% in relation to 2009.the positive performance of the Brazilian economy, goods and infrastructure. In this context, the PE, PP and PVC markets ended the year with production growth of 17%, 11% and 18%, respectively.

Imports accounted market share of 26% in virtually all quarters, dsolid growth in the PVC market;of the low ethane costs in that country.

In this scenario, Braskem’s domestic sales of PE and PP increased 12% aimpacted by the lower capacity utilization rates of the Quattor assets at the and by the scheduled maintenance limited production capacity. Aggregate grew by 11% from 2009 to reach 3,413 kton.

In 2010, Braskem strengthened its leadership in the domestic market by acquiring the assets of Quattor, which was also supported by (i) the continuity of ipartnership relationship maintained with Clients with the aim of creating value for the entire petrochemical chain; and (iii) the development of solutions and innovative products through new investments and/or replacement o

Braskem’s resins exports declined by 11% from 2009, reflecting the reallocation of sales to the domestic market, which offered higher profitability.

In 2010, Braskem recorded resin production of 5.4 million tons, up 6% from 2009, due to the continued positive performance in the Brazilian marketmarket and the gradual recovery in utilization rates at the Quattor assets.to the higher operational efficiency and joint efforts with Psupply. Another highlight was PE production in Rio Grande do Sul, which registered records in October and December.

1 Demand was measured by the Company’s internal estimates, Abiquim data (PVC) and the Alice import system.


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from Standard & Poor's, ‘brAA’ with a positive outlook from Moody’s.

In January 2011, Fitch Ratings revised its outlook from “stable” to “positive”, recontinuous improvement in the Company’s cash generation capacity, maintenance of strong liquidity and reduction in net leverage, especially in a year marked by the low cycle in the petrochemical

Brazil's thermoplastic resin market was marked by strong demand1 over the whole of 2010, which grew by 15% in relation to 2009. Demand reached 4.9 million tons, and was positively impacted by the positive performance of the Brazilian economy, in particular the sectors related to consumer

In this context, the PE, PP and PVC markets ended the year with production growth of 17%, 11% and 18%, respectively.

Imports accounted market share of 26% in virtually all quarters, due to: (i) the stronger solid growth in the PVC market; and (iii) the gains in PE competitiveness in the U.S. market as a result of the low ethane costs in that country.

In this scenario, Braskem’s domestic sales of PE and PP increased 12% and 10%, respectively, impacted by the lower capacity utilization rates of the Quattor assets at the beginningand by the scheduled maintenance shutdowns. Domestic PVC sales grew by 10%,

Aggregate thermoplastic resins sales volume in the domestic market grew by 11% from 2009 to reach 3,413 kton.

In 2010, Braskem strengthened its leadership in the domestic market by acquiring the assets of Quattor, which was also supported by (i) the continuity of its commercial strategy;partnership relationship maintained with Clients with the aim of creating value for the entire

and (iii) the development of solutions and innovative products through new investments and/or replacement of materials.

exports declined by 11% from 2009, reflecting the reallocation of sales to the domestic market, which offered higher profitability.

In 2010, Braskem recorded resin production of 5.4 million tons, up 6% from 2009, due to the continued positive performance in the Brazilian market, the opportunities seized in the export

and the gradual recovery in utilization rates at the Quattor assets. This improvement is due to the higher operational efficiency and joint efforts with Petrobras to normalize raw material

Another highlight was PE production in Rio Grande do Sul, which registered records in

Demand was measured by the Company’s internal estimates, Abiquim data (PVC) and the Alice import system.

MANAGEMENT REPORT

Standard & Poor's, ‘brAA’ with a positive outlook from Fitch and

“positive”, reflecting the , maintenance of strong liquidity

in the petrochemical

over the whole of 2010, which Demand reached 4.9 million tons, and was positively impacted by

in particular the sectors related to consumer In this context, the PE, PP and PVC markets ended the year with

stronger BRL; (ii) the and (iii) the gains in PE competitiveness in the U.S. market as a result

nd 10%, respectively, beginning of the year

Domestic PVC sales grew by 10%, held back by the sales volume in the domestic market

In 2010, Braskem strengthened its leadership in the domestic market by acquiring the assets of ts commercial strategy; (ii) the

partnership relationship maintained with Clients with the aim of creating value for the entire and (iii) the development of solutions and innovative products through new

exports declined by 11% from 2009, reflecting the reallocation of sales to the

In 2010, Braskem recorded resin production of 5.4 million tons, up 6% from 2009, due to the , the opportunities seized in the export

This improvement is due etrobras to normalize raw material

Another highlight was PE production in Rio Grande do Sul, which registered records in

Demand was measured by the Company’s internal estimates, Abiquim data (PVC) and the Alice import system.

� Basic Petrochemicals Performance

The year 2010 was marked by higher prices for basic petrochemicals,and butadiene, which experienced average increases of 56% from 2009.to this scenario: (i) the higher competitiveness of gas in relation to naphtha favored the use of light raw materials (e.g. ethane), limiting the supply of cracker byproducts such as propylene, benzene and butadiene; (ii) the lower capacity utilization rates at U.S. refineries, further affecting the supply of propylene; (iii) the resumption of the upward path of oil prices in the lscheduled and unscheduled maintenance Middle East.

In 2010, total ethylene and propylene sales increased by 6% from the previous year to 932 kton,while total BTX sales grew by 5%.by higher demand from the textile industry and by the capacity expansion at the cracker located in Mauá, São Paulo, which was concluded in 3Q09.

These increases reflect the higher supplyefficiency at Quattor, with a higher supply of gas in both São Paulo and Rio de Janeiro, which led to an increase in the capacity utilization rate from 77% in 2009 to 84% in 2010;utilization at the South cracker, which in the year registered record production of ethylene in one of its lines and of propylene in both lines.

The average utilization rate of the Company’s petrochemical complexes in 2010 was 87%, versus 86% in 2009, reflecting the lower capacity utilization at the Quattor plants in the first half of 2010 and the scheduled maintenance shutdown

Thermoplastic Resins

Sales - Domestic Market

PE´s

PP

PVC

Total Resins

Sales - International Market

PE´s

PP

PP - Braskem America

PVC

Total Resins

Total Sales

PE´s

PP

PVC

Total Resins

Thermoplastic Resins

Production

PE´s

PP

PVC

Total Resins


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Basic Petrochemicals Performance

The year 2010 was marked by higher prices for basic petrochemicals, especially propylene, benzene and butadiene, which experienced average increases of 56% from 2009. Several factors contributed

(i) the higher competitiveness of gas in relation to naphtha favored the use of light ne), limiting the supply of cracker byproducts such as propylene, benzene

(ii) the lower capacity utilization rates at U.S. refineries, further affecting the supply (iii) the resumption of the upward path of oil prices in the last quarter;

scheduled and unscheduled maintenance shutdowns and continued operational problems in the

In 2010, total ethylene and propylene sales increased by 6% from the previous year to 932 kton,5%. Another highlight were cumene sales, which increased 20%, driven

by higher demand from the textile industry and by the capacity expansion at the cracker located in Mauá, São Paulo, which was concluded in 3Q09.

These increases reflect the higher supply of products, resulting from (i) the higher operational efficiency at Quattor, with a higher supply of gas in both São Paulo and Rio de Janeiro, which led to an increase in the capacity utilization rate from 77% in 2009 to 84% in 2010; and (ii) the high cautilization at the South cracker, which in the year registered record production of ethylene in one of its lines and of propylene in both lines.

The average utilization rate of the Company’s petrochemical complexes in 2010 was 87%, versus 86% 09, reflecting the lower capacity utilization at the Quattor plants in the first half of 2010 and the

shutdown at the cracker in the state of Bahia in 4Q10, which affected

Performance (tons)

Thermoplastic Resins2010 2009 Change%

CONSOLIDATED (A) (B) (A)/(B)

Sales - Domestic Market

PE´s 1,674,825 1,491,181 12

1,233,301 1,123,589 10

PVC 504,780 457,430 10

Total Resins 3,412,907 3,072,200 11

Sales - International Market

PE´s 823,328 939,714 (12)

330,729 421,491 (22)

PP - Braskem America 840,095 838,676 0

PVC 194 40,262 (100)

Total Resins 1,994,346 2,240,143 (11)

Total Sales

PE´s 2,498,153 2,430,896 3

2,404,125 2,383,757 1

PVC 504,974 497,691 1

Total Resins 5,407,252 5,312,343 2

Performance (tons)

Thermoplastic Resins2010 2009 Change%


Production

PE´s 2,536,776 2,369,726 7

2,437,643 2,305,863 6

PVC 475,559 479,077 (1)

Total Resins 5,449,978 5,154,666 6

MANAGEMENT REPORT

especially propylene, benzene Several factors contributed

(i) the higher competitiveness of gas in relation to naphtha favored the use of light ne), limiting the supply of cracker byproducts such as propylene, benzene

(ii) the lower capacity utilization rates at U.S. refineries, further affecting the supply ast quarter; and (iv) the

and continued operational problems in the

In 2010, total ethylene and propylene sales increased by 6% from the previous year to 932 kton, Another highlight were cumene sales, which increased 20%, driven

by higher demand from the textile industry and by the capacity expansion at the cracker located in

of products, resulting from (i) the higher operational efficiency at Quattor, with a higher supply of gas in both São Paulo and Rio de Janeiro, which led to

and (ii) the high capacity utilization at the South cracker, which in the year registered record production of ethylene in one of

The average utilization rate of the Company’s petrochemical complexes in 2010 was 87%, versus 86% 09, reflecting the lower capacity utilization at the Quattor plants in the first half of 2010 and the

at the cracker in the state of Bahia in 4Q10, which affected

production for 52 days. Despite this scenario, the Company regand propylene production in relation to 2009.

Regarding the supply of feedstock, gas supply to the ABC petrochemical complex (PQU) was normalized in May 2010. At the Rio de Janeiro complex (former Riopol), feedstock over the course of the year, with gas supply to the plant expected to stabilize as of 2Q11.Quattor set an ethylene production record in December, driven by the Rio de Janeiro unit, which registered capacity utilization of 95%

3.3 Quattor

On January 22, 2010, Braskem announced the acquisition of Quattor, which thermoplastic resins producer in the Americas petrochemical market, and in turn helped increase the competitiveness of the R$7.4 billion and disbursed R$647.3 million for the 60%

The acquisition involved a capital increase at injected by Odebrecht and R$2.5 billion Braskem's capital structure to maintain its financial flexiand international expansion.

Quattor’s merger process led to the identification of opportunities to capture synergies and create value. Synergies are monitored on four fronts: industrial, logistics, inputs and of the annual and recurring synergies of R$495 million in EBITDA for 2012 concentrated in the industrial and logistics initiatives.opportunities on the financial front to care in course, having already provided a positive impact of R$150 million in 2010include tax gains and the lower carrying cost of debt.support the capture of these synergies, of which

Employees at Braskem and Quattor have been exchanging experiences since the acquisition's announcement, working to accelerate the process of integrating employees at Braskem and Quattor are involved in identifying and creating opportunities, and by December 2010 certain initiatives had been implemented to allow for the capture of R$377 million in

Performance (tons) Basic

Total Sales

Ethylene

Propylene

Cumene

BTX*

Production

Ethylene

Propylene

Cumene

BTX*

BTX* - Benzene, Toluene, Orthoxylene and Paraxylene


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Despite this scenario, the Company registered growth of 6% in both ethylene and propylene production in relation to 2009.

Regarding the supply of feedstock, gas supply to the ABC petrochemical complex (PQU) was At the Rio de Janeiro complex (former Riopol), feedstock

over the course of the year, with gas supply to the plant expected to stabilize as of 2Q11.Quattor set an ethylene production record in December, driven by the Rio de Janeiro unit, which registered capacity utilization of 95% in the month.

On January 22, 2010, Braskem announced the acquisition of Quattor, which made it the leading producer in the Americas and an important competitor in the international

and in turn helped improve the performance of Brazil's competitiveness of the country's production chain. Braskem assumed gross debt of

R$7.4 billion and disbursed R$647.3 million for the 60% interest held by Unipar.

involved a capital increase at Braskem of R$3.74 billion, of which R$1 billion was 2.5 billion was injected by Petrobras. The objective was to reinforce

capital structure to maintain its financial flexibility for advancing its investment

Quattor’s merger process led to the identification of opportunities to capture synergies and create Synergies are monitored on four fronts: industrial, logistics, inputs and financial, with the bulk

of the annual and recurring synergies of R$495 million in EBITDA for 2012 concentrated in the industrial and logistics initiatives. In addition to the operational synergies, there are still opportunities on the financial front to capture R$490 million in NPV. The capture of these synergies are in course, having already provided a positive impact of R$150 million in 2010include tax gains and the lower carrying cost of debt. The Company plans to invest R$support the capture of these synergies, of which 50% should be disbursed before the end of 2011.

Employees at Braskem and Quattor have been exchanging experiences since the acquisition's announcement, working to accelerate the process of integrating Braskem’s culture.employees at Braskem and Quattor are involved in identifying and creating opportunities, and by December 2010 certain initiatives had been implemented to allow for the capture of R$377 million in

Performance (tons) Basic

Petrochemicals2010 2009 Change%


Total Sales

Ethylene 517,260 498,731 4

Propylene 414,443 383,048 8

Cumene 288,890 239,806 20

1,121,010 1,070,373 5

Production

Ethylene 3,276,626 3,086,103 6

Propylene 1,520,142 1,429,812 6

Cumene 286,284 243,940 17

1,310,545 1,249,111 5

BTX* - Benzene, Toluene, Orthoxylene and Paraxylene

MANAGEMENT REPORT

istered growth of 6% in both ethylene

Regarding the supply of feedstock, gas supply to the ABC petrochemical complex (PQU) was At the Rio de Janeiro complex (former Riopol), feedstock supply increased

over the course of the year, with gas supply to the plant expected to stabilize as of 2Q11. As a result, Quattor set an ethylene production record in December, driven by the Rio de Janeiro unit, which

made it the leading and an important competitor in the international

Brazil's trade balance and assumed gross debt of

R$3.74 billion, of which R$1 billion was The objective was to reinforce

its investment program

Quattor’s merger process led to the identification of opportunities to capture synergies and create financial, with the bulk

of the annual and recurring synergies of R$495 million in EBITDA for 2012 concentrated in the In addition to the operational synergies, there are still

The capture of these synergies are in course, having already provided a positive impact of R$150 million in 2010, which mainly

invest R$275 million to the end of 2011.

Employees at Braskem and Quattor have been exchanging experiences since the acquisition's Braskem’s culture. More than 200

employees at Braskem and Quattor are involved in identifying and creating opportunities, and by December 2010 certain initiatives had been implemented to allow for the capture of R$377 million in

2011. The main gains were on the industrial improve planning at plants, such as the production and sale of aromaticsthe production mix in second generation plantsasset maintenance plan strategyshutdowns are examples of the industrial frontfreight operations due to better planninoperations. On the supply front, the highlights were the integrated purchase of input and the renegotiation of third-party contracts.

Another highlight was the integration of the risk management safety indicators and the marketbetter conditions and clauses.

On February 23, 2011, Brazil’s anti(CADE), approved without restrictions the acquisitions of Quattor Participações S.A., Unipar Comercial e Distribuidora S.A. and Polibutenos S.A. Indústrias Químicas.transaction had already received favorable opinions from th(SEAE) of the Ministry of FinanceTransaction, Braskem, seeking to promote transparency in its commercial relationship and the competitiveness of the production chain, assumed commitment to:

(I) notify in advance the existence clauses, in line with the draft bill to restructure Brazil's Antitrust System and with best international practices involving antitrust issues;

(II) submit semiannually a report to CADE c

(III) submit copies of the resinBrazilian market; and

(IV) submit a list of its resins international market.

3.4 Braskem America

On February 1, 2010, Braskem announced its first international acquisition: the polypropylene (PP) assets of Sunoco Chemicals. With the acquisition of these assets, Braskem gained access to a major consumer market, reinforcing its global expansion strategy.

In early April, following approval by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice, Braskem announced the conclusion of the acquisition of these assetsUS$350 million. With this operation, Braskem now has production capacity of 950 kton in North America, which combined with its Brazilian assets, brings the total to 2.9 million tons, making it the third-largest resin producer worldwide.

Over the course of 2010, the U.S. team underwent organizational adjustments that ranged from its alignment with Braskem’s culture and industrial practices to a shift in its commercial policy to emphasize Braskem’s proximity to clients and its spirit of cus


of 29

n the industrial and logistic fronts. The implementation of initiatives to improve planning at plants, such as the production and sale of aromatics and butadienethe production mix in second generation plants, reducing its number of grades; and asset maintenance plan strategy, optimizing teams and better planning of the schedule maintenance shutdowns are examples of the industrial front. On the logistics front, a highlight was the gains in freight operations due to better planning for domestic and export markets, distribution and storage

On the supply front, the highlights were the integrated purchase of input and the party contracts.

Another highlight was the integration of the risk management areas, which improved operationmarket's risk perception, and led to the renewal of insurance

On February 23, 2011, Brazil’s anti-trust authority, the Administrative Council of Econom(CADE), approved without restrictions the acquisitions of Quattor Participações S.A., Unipar Comercial e Distribuidora S.A. and Polibutenos S.A. Indústrias Químicas. The approval of the transaction had already received favorable opinions from the Economic Oversight Department (SEAE) of the Ministry of Finance and of the Economic Law Department (SDE)Transaction, Braskem, seeking to promote transparency in its commercial relationship and the competitiveness of the production chain, assumed with CADE, under a regime of confidentiality, a

notify in advance the existence in the future of any resin import contracts that contain exclusivity clauses, in line with the draft bill to restructure Brazil's Antitrust System and with best international practices involving antitrust issues;

submit semiannually a report to CADE consolidating its resins imports in the period;

submit copies of the resins supply contracts signed with companies abroad for sale in the

purchase contracts that contain exclusivity clauses for s

On February 1, 2010, Braskem announced its first international acquisition: the polypropylene (PP) With the acquisition of these assets, Braskem gained access to a major

consumer market, reinforcing its global expansion strategy.

In early April, following approval by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice, Braskem announced the conclusion of the acquisition of these assets

With this operation, Braskem now has production capacity of 950 kton in North America, which combined with its Brazilian assets, brings the total to 2.9 million tons, making it the

largest resin producer worldwide.

Over the course of 2010, the U.S. team underwent organizational adjustments that ranged from its alignment with Braskem’s culture and industrial practices to a shift in its commercial policy to emphasize Braskem’s proximity to clients and its spirit of customer service.

MANAGEMENT REPORT

he implementation of initiatives to butadiene; improving

and centralizing the optimizing teams and better planning of the schedule maintenance

On the logistics front, a highlight was the gains in g for domestic and export markets, distribution and storage

On the supply front, the highlights were the integrated purchase of input and the

areas, which improved operations, insurance policies with

trust authority, the Administrative Council of Economic Defense (CADE), approved without restrictions the acquisitions of Quattor Participações S.A., Unipar

The approval of the e Economic Oversight Department

the Economic Law Department (SDE). As part of the Transaction, Braskem, seeking to promote transparency in its commercial relationship and the

CADE, under a regime of confidentiality, a

in the future of any resin import contracts that contain exclusivity clauses, in line with the draft bill to restructure Brazil's Antitrust System and with best international

imports in the period;

supply contracts signed with companies abroad for sale in the

purchase contracts that contain exclusivity clauses for sale in the

On February 1, 2010, Braskem announced its first international acquisition: the polypropylene (PP) With the acquisition of these assets, Braskem gained access to a major

In early April, following approval by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice, Braskem announced the conclusion of the acquisition of these assets for

With this operation, Braskem now has production capacity of 950 kton in North America, which combined with its Brazilian assets, brings the total to 2.9 million tons, making it the

Over the course of 2010, the U.S. team underwent organizational adjustments that ranged from its alignment with Braskem’s culture and industrial practices to a shift in its commercial policy to

Opportunities were identified to improve operations and competitiveness, with the industrial optimization of the LaPorte plant, where the viability of producing other specialty resins and expanding capacity will be evaluated, resulting in lo

The recovery in demand in the U.S. market, which led to improvements in the domestic sales mix and to increases in the PP - propylene spread and in margins due to the competitive feedstock supply agreements, boosted operational performance in 2010.EBITDA margin of 8.8%, up 1.1 p.p. from 2009.million.

4. Innovation & Technology

In accordance with its 2020 Vision of innovating to better serve people, Braskem revised its Innovation and Technology strategy to provide innovative technological solutions to assure its global leadership in sustainable chemicals.

In this context, we highlight below some of the achievements in the area of Innovation & Technology in 2010:

a) Execution of an agreement with the State of Bahia for the development of technologies focused on sustainability. The fiber UTEC, which was developed by Bis the first project under the partnership and the world’s first fiber developed for applications involving pre-salt oil exploration and military armor.

b) The establishment of a solid partnership between Braskem and the Pe(CENPES) for the development of joint projects of strategic interest to the country and to the competitiveness of the national petrochemical industry, based on the development of polymers made from renewable sources and technologiesovercoming the technological challenges inherent to oil exploration.

c) A partnership with Novozymes, a global leader in the production of industrial enzymes, for the research and development of polypropylene (PP) made f

d) A partnership agreement with Laboratório Nacional de Biociências (LNBio) to conduct research in the area of biotechnology, seeking to develop products that are economically competitive as well as sustainable, based on the use of renewable ra

Through these projects, Braskem reaffirms its commitment to sustainable development and the perpetuity of its business.

Working in partnership with research institutions of renowned competence has provided important results for Braskem, which led to another 30 patents being filed during 2010, for a total of 406 patents registered by the Company

In 2010, the Polymers Business Unit launched a record number of projects in its innovation pipeline, whose present value is US$511 million, creation of Braskem’s Innovation Program in 2003.

• PE resins for packaging applications in the meatpacking industry:balance of properties to allow products to be packed and preserved so as to maintain quality throughout the entire logistics operation for meat exports.in the polyethylene market is 11 kton/year.


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Opportunities were identified to improve operations and competitiveness, with the industrial optimization of the LaPorte plant, where the viability of producing other specialty resins and expanding capacity will be evaluated, resulting in lower fixed and variable costs.

The recovery in demand in the U.S. market, which led to improvements in the domestic sales mix propylene spread and in margins due to the competitive feedstock supply

operational performance in 2010. EBITDA increased 49% to p.p. from 2009. In U.S. dollar terms, EBITDA increased 73% to

In accordance with its 2020 Vision of becoming the Global Leader in Sustainable Chemicals and innovating to better serve people, Braskem revised its Innovation and Technology strategy to provide innovative technological solutions to assure its global leadership in sustainable chemicals.

s context, we highlight below some of the achievements in the area of Innovation & Technology

Execution of an agreement with the State of Bahia for the development of technologies focused The fiber UTEC, which was developed by Braskem with 100% local technology,

is the first project under the partnership and the world’s first fiber developed for applications salt oil exploration and military armor.

The establishment of a solid partnership between Braskem and the Petrobras Research Center (CENPES) for the development of joint projects of strategic interest to the country and to the competitiveness of the national petrochemical industry, based on the development of polymers made from renewable sources and technologies/products of particular importance for overcoming the technological challenges inherent to oil exploration. A partnership with Novozymes, a global leader in the production of industrial enzymes, for the research and development of polypropylene (PP) made from sugarcane. A partnership agreement with Laboratório Nacional de Biociências (LNBio) to conduct research in the area of biotechnology, seeking to develop products that are economically competitive as well as sustainable, based on the use of renewable raw materials.

Through these projects, Braskem reaffirms its commitment to sustainable development and the

Working in partnership with research institutions of renowned competence has provided important results for Braskem, which led to another 30 patents being filed during 2010, for a total of 406

ompany.

ss Unit launched a record number of projects in its innovation pipeline, whose present value is US$511 million, considering the launches and projects occurring creation of Braskem’s Innovation Program in 2003. The achievements included:

for packaging applications in the meatpacking industry: the resin offers an excellent balance of properties to allow products to be packed and preserved so as to maintain quality throughout the entire logistics operation for meat exports. The additional gin the polyethylene market is 11 kton/year.

MANAGEMENT REPORT

Opportunities were identified to improve operations and competitiveness, with the industrial optimization of the LaPorte plant, where the viability of producing other specialty resins and

The recovery in demand in the U.S. market, which led to improvements in the domestic sales mix propylene spread and in margins due to the competitive feedstock supply

EBITDA increased 49% to R$200 million, for In U.S. dollar terms, EBITDA increased 73% to US$114

becoming the Global Leader in Sustainable Chemicals and innovating to better serve people, Braskem revised its Innovation and Technology strategy to provide innovative technological solutions to assure its global leadership in sustainable chemicals.

s context, we highlight below some of the achievements in the area of Innovation & Technology

Execution of an agreement with the State of Bahia for the development of technologies focused raskem with 100% local technology,

is the first project under the partnership and the world’s first fiber developed for applications

trobras Research Center (CENPES) for the development of joint projects of strategic interest to the country and to the competitiveness of the national petrochemical industry, based on the development of polymers

/products of particular importance for

A partnership with Novozymes, a global leader in the production of industrial enzymes, for the

A partnership agreement with Laboratório Nacional de Biociências (LNBio) to conduct research in the area of biotechnology, seeking to develop products that are economically competitive as

Through these projects, Braskem reaffirms its commitment to sustainable development and the

Working in partnership with research institutions of renowned competence has provided important results for Braskem, which led to another 30 patents being filed during 2010, for a total of 406

ss Unit launched a record number of projects in its innovation pipeline, occurring since the

the resin offers an excellent balance of properties to allow products to be packed and preserved so as to maintain quality

The additional growth potential

• PE resin for use in protection films:ripening of tropical fruits serves as protection for the product, reduces the use of insecticides and leads to the lower exposure of rural workers to pesticides.the resin market over the medium and long term is 30

• PVC Roofing: Braskem developed in partnership with Precon, a traditional manufacturer of roofing materials in Brazil, an innovative model for PVC roofing.optimized for the demands of the Brazilian market and for economic feasibility, PVC roofing represents an innovative solution and an excellent option for substituting traditional materials. The potential market for this product in Brazil is very high, with additional consumption estimated at 100 kton/year over the medium and long term.

• Polypropylene paint buckets:was developed that meets the requirements of Brazil's paint industry.substituting traditional packaging are the lower costs and the vast potential for innovation in packaging formats and attributes.kton/year.

5. Capital Expenditure

In line with its commitment to capital discipline and makinginvestments with returns above their cost of capital, Braskem made operational investments of R$1.8 billion (excluding capitalized interest) in 2010, 99% higher than the R$894 million invested in 2009. Of the total investments in 2010, R$352 million were allocated to Quattor, R$32 million to Braskem America and R$47 million to the Ethylene XXI project in Mexico.

The bulk of the investments was allocated to capacity expansions, which included: (i) the project to build a new PVC plant in Alagoas, with disbursement of R$86 million; and (ii) the construction and startup of the plant to produce 200 kton/year of Green Ethylene (Triunfo, Rio Grande do Sul), which required investment of R$343 million in 2010.plant led Braskem to become the woproduction, and was delivered on time and within budget.

In keeping with its objective of maintaining its plants operating at high levels of operating efficiency and reliability, Braskem also disbursed R$365 million on scheduled maNovember 2010, a 52-day scheduled maintenance shutdownin the state of Bahia. Braskem also invested R$103 million in the area of health, safety and the environment (HSE) during 2010

For 2011, total investment is estimated at R$1.6 billion.allocated mainly to (i) scheduled maintenance operational investments (R$660 million);


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PE resin for use in protection films: the use of polyethylene films during the growth and ripening of tropical fruits serves as protection for the product, reduces the use of insecticides

ds to the lower exposure of rural workers to pesticides. The additional potential of the resin market over the medium and long term is 30 kton/year.

Braskem developed in partnership with Precon, a traditional manufacturer of in Brazil, an innovative model for PVC roofing. With technical performance

optimized for the demands of the Brazilian market and for economic feasibility, PVC roofing represents an innovative solution and an excellent option for substituting traditional

The potential market for this product in Brazil is very high, with additional consumption estimated at 100 kton/year over the medium and long term.

Polypropylene paint buckets: In partnership with Bomix, a rectangular polypropylene bucket meets the requirements of Brazil's paint industry. The main reasons for

substituting traditional packaging are the lower costs and the vast potential for innovation in packaging formats and attributes. The potential for PP consumption by this

In line with its commitment to capital discipline and making investments with returns above their cost of capital, Braskem made operational investments of R$1.8 billion (excluding capitalized interest) in 2010, 99% higher than the R$894

Of the total investments in 2010, allocated to Quattor, R$32 million to

Braskem America and R$47 million to the Ethylene XXI

The bulk of the investments was allocated to capacity (i) the project to build a new PVC

, with disbursement of R$86 million; and (ii) the construction and startup of the plant to produce 200 kton/year of Green Ethylene (Triunfo, Rio Grande do Sul), which required investment of R$343 million in 2010. This new plant led Braskem to become the world leader in biopolymer production, and was delivered on time and within budget.

In keeping with its objective of maintaining its plants operating at high levels of operating efficiency and reliability, Braskem also disbursed R$365 million on scheduled maintenance

scheduled maintenance shutdown was carried out at the ethylene cracker Braskem also invested R$103 million in the area of health, safety and the

during 2010.

total investment is estimated at R$1.6 billion. The investments are estimated toscheduled maintenance shutdowns (approximately R$390 million);

operational investments (R$660 million); (iii) capacity expansions (around R$500 million).

12366

365

109

230

6

343

10347

352

32

2010

Braskem America

Quattor

Mexico

HSE

Green PE

Quantiq

Equipment Replacement

Capacity Increse/PVC Alagoas

Maintenance Shutdowns

Productivity

Others

1,777

Investments

(R$ million)

MANAGEMENT REPORT

the use of polyethylene films during the growth and ripening of tropical fruits serves as protection for the product, reduces the use of insecticides

The additional potential of

Braskem developed in partnership with Precon, a traditional manufacturer of With technical performance

optimized for the demands of the Brazilian market and for economic feasibility, PVC roofing represents an innovative solution and an excellent option for substituting traditional

The potential market for this product in Brazil is very high, with additional

In partnership with Bomix, a rectangular polypropylene bucket The main reasons for

substituting traditional packaging are the lower costs and the vast potential for innovation in The potential for PP consumption by this market is 40

In keeping with its objective of maintaining its plants operating at high levels of operating efficiency intenance shutdowns. In

was carried out at the ethylene cracker Braskem also invested R$103 million in the area of health, safety and the

are estimated to be R$390 million); (ii)

R$500 million).

Braskem America

Quattor

Mexico

HSE

Green PE

Quantiq

Equipment Replacement

Capacity Increse/PVC Alagoas

Maintenance Shutdowns

Productivity

Others

5.1. Strategic Investments – Expansion Projects

Braskem, in line with its strategy of diversifying its energy matrix and increasing its competitiveness by gaining access to feedstockscertain projects, which include:

� PVC capacity expansion

In May 2010, Braskem's Board of Directors approved the investment of US$470 million to expand PVC capacity in Alagoas state to 200 kallows for gains in productivity and operational costs, while using the surplus volume of EDC (ethylene dichloride) that is currently exported.PVC in Brazil. Operations are scheduled to begin in May 2012.

The Company made progress in the negotiations to finance this project, whose NPV is estimated at US$450 million, with approval given for a financing line of up to R$525 million from the Brazilian Development Bank (BNDES) with repayment in 9 years and for aBNB bank with repayment in 12 years.including the tax incentives, such as Regime for the Development of Oil Infrastructure in the North, Northeast and Midwest Regions (REPENEC).

� Butadiene

Braskem plans to invest approximately R$300 million to build a new butadiene plant, using the crude C4 stream. With construction slated to begin in 2011, the project, which Board of Directors for approval, provides for the installation of a new line with capacity of 100 kton/year. The new plant should increase Braskem’s butadiene supply by kton/year as of 2013. In 2010, butadiene prices were 50% higher than 2009 prices, mainly due to thegrowing global demand and limited supply.

� Green Polypropylene Project

Braskem also advanced its strategy to become the global leader in sustainable chemicals and announced, in October 2010, a project to produce Green Polypropylene at K Fair, one of the most important events in the plastic industry.the plant, which will have minimum expected to become operational in the second half of 2013.Board of Directors.

� Mexico Project – Ethylene XXI

In the context of its strategy to expand internationally and gain access to feedstocks at competitive condition, Braskem, jointly with the Mexican group IDESA, participated and won the natural gas auction held at the end of 2009 to icapacity of 1 million tons of polyethylene resins using ethane as feedstock.with PEMEX Gas y Petroquímica Básica guarantees the supply of 66,000 barrels of ethane/day for years.

Fixed investments will amount to US$2.5 billion and will be structured using a Project Finance model (70% debt and 30% equity), with conclusion of works and startup scheduled for January 2015.


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Expansion Projects

Braskem, in line with its strategy of diversifying its energy matrix and increasing its competitiveness by gaining access to feedstocks at competitive conditions, is conducting studies and implementing

In May 2010, Braskem's Board of Directors approved the investment of US$470 million to expand PVC capacity in Alagoas state to 200 kton/year. The project features cutting-edge technology, which allows for gains in productivity and operational costs, while using the surplus volume of EDC (ethylene dichloride) that is currently exported. The objective is to meet the increasing demand for

Operations are scheduled to begin in May 2012.

The Company made progress in the negotiations to finance this project, whose NPV is estimated at US$450 million, with approval given for a financing line of up to R$525 million from the Brazilian Development Bank (BNDES) with repayment in 9 years and for a R$200 million financing line from

with repayment in 12 years. In 2011, a total of R$380 million should be disbursed, such as those granted under the federal government's

lopment of Oil Infrastructure in the North, Northeast and Midwest Regions

invest approximately R$300 million to build a new butadiene plant, using the crude With construction slated to begin in 2011, the project, which will be

Board of Directors for approval, provides for the installation of a new line with capacity of 100 The new plant should increase Braskem’s butadiene supply by approximately 30% to 446

In 2010, butadiene prices were 50% higher than 2009 prices, mainly due to thedemand and limited supply.

Green Polypropylene Project

Braskem also advanced its strategy to become the global leader in sustainable chemicals and announced, in October 2010, a project to produce Green Polypropylene at K Fair, one of the most important events in the plastic industry. In 2011, the basic engineering studies will be concluded, and

minimum green propylene production capacity of 30 ktons/yearexpected to become operational in the second half of 2013. The project is under approval by the

Ethylene XXI

In the context of its strategy to expand internationally and gain access to feedstocks at competitive condition, Braskem, jointly with the Mexican group IDESA, participated and won the natural gas auction held at the end of 2009 to install an integrated industrial complex with annual production capacity of 1 million tons of polyethylene resins using ethane as feedstock. The agreement signed with PEMEX Gas y Petroquímica Básica guarantees the supply of 66,000 barrels of ethane/day for

Fixed investments will amount to US$2.5 billion and will be structured using a Project Finance model (70% debt and 30% equity), with conclusion of works and startup scheduled for January 2015.

MANAGEMENT REPORT

Braskem, in line with its strategy of diversifying its energy matrix and increasing its competitiveness at competitive conditions, is conducting studies and implementing

In May 2010, Braskem's Board of Directors approved the investment of US$470 million to expand edge technology, which

allows for gains in productivity and operational costs, while using the surplus volume of EDC The objective is to meet the increasing demand for

The Company made progress in the negotiations to finance this project, whose NPV is estimated at US$450 million, with approval given for a financing line of up to R$525 million from the Brazilian

R$200 million financing line from In 2011, a total of R$380 million should be disbursed, already

under the federal government's Special Incentives lopment of Oil Infrastructure in the North, Northeast and Midwest Regions

invest approximately R$300 million to build a new butadiene plant, using the crude will be submitted to the

Board of Directors for approval, provides for the installation of a new line with capacity of 100 approximately 30% to 446

In 2010, butadiene prices were 50% higher than 2009 prices, mainly due to the

Braskem also advanced its strategy to become the global leader in sustainable chemicals and announced, in October 2010, a project to produce Green Polypropylene at K Fair, one of the most

ring studies will be concluded, and acity of 30 ktons/year, is

The project is under approval by the

In the context of its strategy to expand internationally and gain access to feedstocks at competitive condition, Braskem, jointly with the Mexican group IDESA, participated and won the natural gas

nstall an integrated industrial complex with annual production The agreement signed

with PEMEX Gas y Petroquímica Básica guarantees the supply of 66,000 barrels of ethane/day for 20

Fixed investments will amount to US$2.5 billion and will be structured using a Project Finance model (70% debt and 30% equity), with conclusion of works and startup scheduled for January 2015. This

will be largest petrochemical investment to be myears, as well as the largest investment ever made by a Brazilian company in that country.

Demand for polyethylene in Mexico in 2010 was 1.8 million tons, with imports accounting for 70% of total demand. In addition to playing a key role in the development of the domestic petrochemical industry, this project will make Braskem the largest resin producer in the local market.also well positioned strategically, due to their proximity to the U.S

The following events occurring over the course of 2010 merit mention:Venture Braskem IDESA Sapi, with Braskem holding a 65% interest and Idesa a 35% interest;formation of a strategic partnership with Ineostwo of its three plants in the project;advisor; and (iv) the receipt of formal statements from various financial institutions interested in supporting the project, whose amount

In early 2011, Braskem announced a strategic partnership with Lyondell Basell for the use of Lupotech T technology at the low density polyethylene (LDPE) plant, which has capacity of 300 kton/year. For 2011, we also expect:construction and engineering agreement;request for financial support was submitted in January 2011 to export cragencies and development banks.

� Other projects under development in Latin America:

▫ Peru:

In 2010, Braskem, Petrobras and PetroPeruthe petrochemical complex project to be installed in southern Peru.capacity estimated at roughly 1.0 million tons, the ethane to be used as feedstock will be transported via pipeline (to be built by the company Kuntur) from the Malvinas region, where Petrobras is developing one of the natural gas fields.should be inaugurated to support the team involved in the project and thworking in the country.

▫ Venezuela

Braskem, through a 50/50 joint venture with Petroquímica de Venezuela (Pequiven), has two investment projects in the country: one for the production of polypropylene (Propilsur) and another for the integrated production of ethylene and polyethylene (Polimérica).working with Venezuela's state oil company PDVSA and the Ministry of Energy and Petroleum, have concluded the analysis for a new project model for the Propilsur JV.confirmed, a new supply agreement should be signed for the construction of a polypropylene plant with capacity of 300 kton/year at the Paraguaná Refinery Complex in the state of Falcón.Polimérica project is currently feedstock in the Jose region. peninsula indicates that in the future raw materialenabling the resumption of the project

▫ Bolivia

Braskem remains interested in evaluating the feasibility of a project to build an ethanepetrochemical complex in southern Bolivia.


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will be largest petrochemical investment to be made by the private sector in Mexico in the last 15 years, as well as the largest investment ever made by a Brazilian company in that country.

Demand for polyethylene in Mexico in 2010 was 1.8 million tons, with imports accounting for 70% of In addition to playing a key role in the development of the domestic petrochemical

industry, this project will make Braskem the largest resin producer in the local market.also well positioned strategically, due to their proximity to the U.S. market.

The following events occurring over the course of 2010 merit mention: (i) the creation of the Joint Venture Braskem IDESA Sapi, with Braskem holding a 65% interest and Idesa a 35% interest;formation of a strategic partnership with Ineos for implementing polyethylene (HDPE) technology at two of its three plants in the project; (iii) the hiring of Bank Sumitomo as the project's financial advisor; and (iv) the receipt of formal statements from various financial institutions interested in

amount exceeds US$5.0 billion.

In early 2011, Braskem announced a strategic partnership with Lyondell Basell for the use of Lupotech T technology at the low density polyethylene (LDPE) plant, which has capacity of 300

For 2011, we also expect: (i) to define cracker technology; (ii) conclusion of the engineering agreement; and (iii) structuring of the Project Finance, wh

request for financial support was submitted in January 2011 to export credit agencies, multilateral agencies and development banks. Construction is slated to begin in 2012.

Other projects under development in Latin America:

In 2010, Braskem, Petrobras and PetroPeru concluded the analysis phase and the technical design of the petrochemical complex project to be installed in southern Peru. With annual polyethylene capacity estimated at roughly 1.0 million tons, the ethane to be used as feedstock will be

a pipeline (to be built by the company Kuntur) from the Malvinas region, where Petrobras is developing one of the natural gas fields. During 2011, Braskem’s office in the city of Lima should be inaugurated to support the team involved in the project and the commercial team already

Braskem, through a 50/50 joint venture with Petroquímica de Venezuela (Pequiven), has two investment projects in the country: one for the production of polypropylene (Propilsur) and another

the integrated production of ethylene and polyethylene (Polimérica). Braskem and Pequiven, working with Venezuela's state oil company PDVSA and the Ministry of Energy and Petroleum, have concluded the analysis for a new project model for the Propilsur JV. Once the supply of feedstock is confirmed, a new supply agreement should be signed for the construction of a polypropylene plant with capacity of 300 kton/year at the Paraguaná Refinery Complex in the state of Falcón.

currently suspended due to the lack of definition regarding The discovery of important gas fields offshore of the

that in the future raw materials will be available at competitive conditionsthe project to build an integrated olefins and polyethylene

Braskem remains interested in evaluating the feasibility of a project to build an ethanepetrochemical complex in southern Bolivia.

MANAGEMENT REPORT

ade by the private sector in Mexico in the last 15 years, as well as the largest investment ever made by a Brazilian company in that country.

Demand for polyethylene in Mexico in 2010 was 1.8 million tons, with imports accounting for 70% of In addition to playing a key role in the development of the domestic petrochemical

industry, this project will make Braskem the largest resin producer in the local market. The assets are

(i) the creation of the Joint Venture Braskem IDESA Sapi, with Braskem holding a 65% interest and Idesa a 35% interest; (ii) the

for implementing polyethylene (HDPE) technology at (iii) the hiring of Bank Sumitomo as the project's financial

advisor; and (iv) the receipt of formal statements from various financial institutions interested in

In early 2011, Braskem announced a strategic partnership with Lyondell Basell for the use of Lupotech T technology at the low density polyethylene (LDPE) plant, which has capacity of 300

conclusion of the and (iii) structuring of the Project Finance, whose formal

edit agencies, multilateral

concluded the analysis phase and the technical design of With annual polyethylene

capacity estimated at roughly 1.0 million tons, the ethane to be used as feedstock will be a pipeline (to be built by the company Kuntur) from the Malvinas region, where

2011, Braskem’s office in the city of Lima e commercial team already

Braskem, through a 50/50 joint venture with Petroquímica de Venezuela (Pequiven), has two investment projects in the country: one for the production of polypropylene (Propilsur) and another

Braskem and Pequiven, working with Venezuela's state oil company PDVSA and the Ministry of Energy and Petroleum, have

Once the supply of feedstock is confirmed, a new supply agreement should be signed for the construction of a polypropylene plant with capacity of 300 kton/year at the Paraguaná Refinery Complex in the state of Falcón. The

spended due to the lack of definition regarding the supply of offshore of the Paranaguá

be available at competitive conditions, and polyethylene complex.

Braskem remains interested in evaluating the feasibility of a project to build an ethane-based

6. Capital Markets and Investor Relations

Braskem Class "A" preferred stock traded on the São Paulo Stock Exchange (BM&FBovespa) (BRKM5) closed 2010 at R$20.37 per share, for a gain of 45% from the price at the close of 2009 of R$14.08,while the Ibovespa index increased by 1% in the year to reach 69,301 points.

The key factors influencing this gain in the period were:economy; (ii) the market's more positive outlook regarding the petrochemical cycle;improvement in the Company’s at Quattor and the subsequent increase in its cash generation capacity;operational performance of Braskem’s assets aftersynergies.

Despite the appreciation in the Brazilian real against the U.S. dollar, Braskem’s ADRs (BAK) traded on NYSE Euronext closed 2010 quoted at US$25.10 per ADR, for a gain of 53% from 2009.period, the S&P 500 index gained 13%.

Braskem’s class “A” preferred stock traded on the Latibex (XBRK) ended the year at for a gain of 61% in the period, while the benchmark FTSE100 Europe index increased by 5.2%.again, the results benefited from the stronger Brazilian real.

The stock price appreciation had a positive impact on financial trading volume.financial trading volume in Braskem class “A” preferred stock traded on the BM&FBovespaincreased by 61% to R$21.0 million, from R$13.0 million in 2009.recorded average daily financial trading volume of US$3.4 million in 2010, up 60% from 2009. On the Latibex, average daily financial trading volume i€15,200 in 2009.

In the composition of the Ibovespa index valid for the period Januaryranked 53rd in terms of liquidity, with a weighting in the index of 0.57%, improving by three pfrom the previous portfolio (valid from September to December 2010).

For the 6th consecutive year, Braskem stock was included as a component of the Corporate Sustainability Index (ISE), placing it in a select group of companies composing the portfperiod from January to December 2011. Created by the BM&FBovespa in partnership with capitalmarket trade associations, the Getúlio Vargas Foundation, Instituto Ethos and the Ministry of the Environment, the ISE index reflects the return of a pwith a recognized commitment to social responsibility and corporate sustainability, and to promoting good practices in Brazil's corporate environment.components of this index.

In June 2010, Braskem was elected by the Brazilian Association of Publicly Traded Companies (Abrasca) as the highlight in the Oil & Gas, Chemicals & Petrochemicals sector in terms of value creation for the period between 2007 and 2009.period and 150% of value in 2009.

In July 2010, Braskem received, for the third time, the Transparency Trophy from the National Association of Finance, Administration and Accounting Executives (Anefac), which recognizes companies that publish the highestquality of Braskem's disclosure practices and confirms the commitment to transparency and respect that underpins its relationship with investors, clients, sup


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Markets and Investor Relations

preferred stock traded on the São Paulo Stock Exchange (BM&FBovespa) (BRKM5) closed 2010 at R$20.37 per share, for a gain of 45% from the price at the close of 2009 of R$14.08,

eased by 1% in the year to reach 69,301 points.

The key factors influencing this gain in the period were: (i) the solid performance of the Brazilian (ii) the market's more positive outlook regarding the petrochemical cycle;

ompany’s post-acquisition debt structure; (iv) the higher operational efficiency at Quattor and the subsequent increase in its cash generation capacity; (v) the continued solid operational performance of Braskem’s assets after the acquisitions; and (vi) the announcement of

Despite the appreciation in the Brazilian real against the U.S. dollar, Braskem’s ADRs (BAK) traded on NYSE Euronext closed 2010 quoted at US$25.10 per ADR, for a gain of 53% from 2009.period, the S&P 500 index gained 13%.

Braskem’s class “A” preferred stock traded on the Latibex (XBRK) ended the year at for a gain of 61% in the period, while the benchmark FTSE100 Europe index increased by 5.2%.

enefited from the stronger Brazilian real.

The stock price appreciation had a positive impact on financial trading volume. In 2010, average daily financial trading volume in Braskem class “A” preferred stock traded on the BM&FBovespaincreased by 61% to R$21.0 million, from R$13.0 million in 2009. On the NYSE, Braskem's ADR (BAK) recorded average daily financial trading volume of US$3.4 million in 2010, up 60% from 2009. On the Latibex, average daily financial trading volume in XBRK in 2010 moved up by 29% to

In the composition of the Ibovespa index valid for the period January-April 2011, Braskem stock in terms of liquidity, with a weighting in the index of 0.57%, improving by three p

from the previous portfolio (valid from September to December 2010).

consecutive year, Braskem stock was included as a component of the Corporate Sustainability Index (ISE), placing it in a select group of companies composing the portfperiod from January to December 2011. Created by the BM&FBovespa in partnership with capitalmarket trade associations, the Getúlio Vargas Foundation, Instituto Ethos and the Ministry of the Environment, the ISE index reflects the return of a portfolio composed of stocks from companies with a recognized commitment to social responsibility and corporate sustainability, and to promoting good practices in Brazil's corporate environment. In 2010, 38 companies qualified to become

In June 2010, Braskem was elected by the Brazilian Association of Publicly Traded Companies (Abrasca) as the highlight in the Oil & Gas, Chemicals & Petrochemicals sector in terms of value creation for the period between 2007 and 2009. Braskem generated 40% of value in the threeperiod and 150% of value in 2009.

In July 2010, Braskem received, for the third time, the Transparency Trophy from the National Association of Finance, Administration and Accounting Executives (Anefac), which recognizes ompanies that publish the highest-quality balance sheets in the country. The award recognizes the

quality of Braskem's disclosure practices and confirms the commitment to transparency and respect that underpins its relationship with investors, clients, suppliers and the general public.

MANAGEMENT REPORT

preferred stock traded on the São Paulo Stock Exchange (BM&FBovespa) (BRKM5) closed 2010 at R$20.37 per share, for a gain of 45% from the price at the close of 2009 of R$14.08,

(i) the solid performance of the Brazilian (ii) the market's more positive outlook regarding the petrochemical cycle; (iii) the

(iv) the higher operational efficiency (v) the continued solid

the acquisitions; and (vi) the announcement of

Despite the appreciation in the Brazilian real against the U.S. dollar, Braskem’s ADRs (BAK) traded on NYSE Euronext closed 2010 quoted at US$25.10 per ADR, for a gain of 53% from 2009. In the same

Braskem’s class “A” preferred stock traded on the Latibex (XBRK) ended the year at €9.29 per XBRK, for a gain of 61% in the period, while the benchmark FTSE100 Europe index increased by 5.2%. Once

In 2010, average daily financial trading volume in Braskem class “A” preferred stock traded on the BM&FBovespa (BRKM5)

On the NYSE, Braskem's ADR (BAK) recorded average daily financial trading volume of US$3.4 million in 2010, up 60% from 2009. On the

n XBRK in 2010 moved up by 29% to €19,600, from

April 2011, Braskem stock in terms of liquidity, with a weighting in the index of 0.57%, improving by three positions

consecutive year, Braskem stock was included as a component of the Corporate Sustainability Index (ISE), placing it in a select group of companies composing the portfolio in the period from January to December 2011. Created by the BM&FBovespa in partnership with capital-market trade associations, the Getúlio Vargas Foundation, Instituto Ethos and the Ministry of the

ortfolio composed of stocks from companies with a recognized commitment to social responsibility and corporate sustainability, and to promoting

In 2010, 38 companies qualified to become

In June 2010, Braskem was elected by the Brazilian Association of Publicly Traded Companies (Abrasca) as the highlight in the Oil & Gas, Chemicals & Petrochemicals sector in terms of value

ted 40% of value in the three-year

In July 2010, Braskem received, for the third time, the Transparency Trophy from the National Association of Finance, Administration and Accounting Executives (Anefac), which recognizes

The award recognizes the quality of Braskem's disclosure practices and confirms the commitment to transparency and respect

pliers and the general public.

The acquisition of the Quattor assets enabled sponsored by Latin Finance, a prominent financial publication

To conclude the awards received in 2010, Braskem, in the Oil, Gas & Petrochemicals sector in Latin America, received the follow recognitions from the magazine category best investor relations team, based on the choice of sellcategory best investor relations professional, based on the choice of buyplace in the category best CEO, bas

7. Sustainability

Underpinned by its values and public commitment to the principles of Sustainable Development, Braskem has developed an agenda based on evaluating its practices in terms of economic, social and environmental responsibility, seeking to draft its programs related to this issue.people, minimizing risks, increasing efficiency, generating competitive advantages, fostering innovation in products and processes and identifying new business opportunities.

A signatory to the Global Compact since 2007 and a member of the Brazilian Global Compact Committee (CBPG) since 2008, in 2010, Braskem became a member of the board of this group by becoming a vice-president company of the Committee.coordinated by the United Nations Development Program (UNDP) that aims to strengthen social responsibility in various countries, advocating the universal principles of human rights, labor renvironmental protection and ethical behavior.and participated in business discussions related to climate change, which is one of the most pressing environmental problems of today, and also participatConference (COP16) in Cancun.

This led to the creation of the 2020 Vision for Sustainable Development, based on the understanding of the company’s growth opportunities, the social and environmental impacts caused by and the contributions that could be made to some of the most important social and environmental challenges of today. To consolidate the social and environmental aspects of the 2020 Vision, seven macro objectives were defined, which encompass shighlighted below:

• In chemical safety, Braskem is the leader in Latin America in the Global Product Strategy (GPS) project developed by the International Council of Chemical Associations (ICCA), which recognition and dissemination of risks to people and the environment resulting from the use of chemicals.

• Reduction of 11% in the level of greenhouse gas emissions.raw material for making ethanol helps reduc

• In the area of water efficiency, according to the ICCA, since 2002, Braskem’s water consumption has remained at a level equivalent to approximately oneworld chemical industry.

• In its macro objective of energy efficiency, Braskem reduced by 7% the level of its energy consumption.


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Quattor assets enabled Braskem to receive the best M&A of the year , a prominent financial publication.

To conclude the awards received in 2010, Braskem, in the Oil, Gas & Petrochemicals sector in Latin America, received the follow recognitions from the magazine Institutional Investor:category best investor relations team, based on the choice of sell-side analysts; (ii) 3category best investor relations professional, based on the choice of buy-side analysts;place in the category best CEO, based on the choice of sell-side analysts.

Underpinned by its values and public commitment to the principles of Sustainable Development, Braskem has developed an agenda based on evaluating its practices in terms of economic, social and environmental responsibility, seeking to draft its corporate sustainability policy

programs related to this issue. These initiatives should be grounded in the principles of valuing people, minimizing risks, increasing efficiency, generating competitive advantages, fostering

processes and identifying new business opportunities.

A signatory to the Global Compact since 2007 and a member of the Brazilian Global Compact Committee (CBPG) since 2008, in 2010, Braskem became a member of the board of this group by

ident company of the Committee. The Global Compact is a UN program coordinated by the United Nations Development Program (UNDP) that aims to strengthen social responsibility in various countries, advocating the universal principles of human rights, labor renvironmental protection and ethical behavior. In the second half of 2010, Braskem accompanied and participated in business discussions related to climate change, which is one of the most pressing environmental problems of today, and also participated in the United Nations Climate Change

This led to the creation of the 2020 Vision for Sustainable Development, based on the understanding of the company’s growth opportunities, the social and environmental impacts caused by and the contributions that could be made to some of the most important social and environmental

To consolidate the social and environmental aspects of the 2020 Vision, seven macro objectives were defined, which encompass some of the initiatives already captured that are

, Braskem is the leader in Latin America in the Global Product Strategy (GPS) project developed by the International Council of Chemical Associations (ICCA), which recognition and dissemination of risks to people and the environment resulting from the use of

Reduction of 11% in the level of greenhouse gas emissions. Using sugarcane as the renewable raw material for making ethanol helps reduce CO2 emissions by 750,000 tons/year.

In the area of water efficiency, according to the ICCA, since 2002, Braskem’s water consumption has remained at a level equivalent to approximately one-fifth the average water consumption of the

In its macro objective of energy efficiency, Braskem reduced by 7% the level of its energy

MANAGEMENT REPORT

receive the best M&A of the year award

To conclude the awards received in 2010, Braskem, in the Oil, Gas & Petrochemicals sector in Latin : (i) 2nd place in the (ii) 3rd place in the

side analysts; and (iii) 1st

Underpinned by its values and public commitment to the principles of Sustainable Development, Braskem has developed an agenda based on evaluating its practices in terms of economic, social and

stainability policy and redefine its These initiatives should be grounded in the principles of valuing

people, minimizing risks, increasing efficiency, generating competitive advantages, fostering

A signatory to the Global Compact since 2007 and a member of the Brazilian Global Compact Committee (CBPG) since 2008, in 2010, Braskem became a member of the board of this group by

The Global Compact is a UN program coordinated by the United Nations Development Program (UNDP) that aims to strengthen social responsibility in various countries, advocating the universal principles of human rights, labor rights,

In the second half of 2010, Braskem accompanied and participated in business discussions related to climate change, which is one of the most pressing

ed in the United Nations Climate Change

This led to the creation of the 2020 Vision for Sustainable Development, based on the understanding of the company’s growth opportunities, the social and environmental impacts caused by its business and the contributions that could be made to some of the most important social and environmental

To consolidate the social and environmental aspects of the 2020 Vision, seven ome of the initiatives already captured that are

, Braskem is the leader in Latin America in the Global Product Strategy (GPS) project developed by the International Council of Chemical Associations (ICCA), which promotes the recognition and dissemination of risks to people and the environment resulting from the use of

Using sugarcane as the renewable emissions by 750,000 tons/year.

In the area of water efficiency, according to the ICCA, since 2002, Braskem’s water consumption fifth the average water consumption of the

In its macro objective of energy efficiency, Braskem reduced by 7% the level of its energy

• The development of green polyethylene made from sugarcane ethanol, a material.

• Demonstrating its concern with the recycling project Recicla Sul, which supports the technical development of 38 plastic sorting and mechanical recycling centers located in the state of Rio Grande do Sul.founders of Instituto Socioambiental Plastivida.

• As part of its commitment to people, Braskem has programs to develop the competencies of its employees; invests in private-sector social initiatives focused on environmental education, culture and social inclusion; and has consultative boards located in areas surrounding its plants to strengthen the relationship with the local community.

In 2010, the Company implemented the Braskem Recycling Grand Prix project, which was launched at the Interlagos Racetrack during the three days of the Brazil leg of the Formula 1 GP, and lasted until November 28 with the collection of plastic waste at five parks of the city of São Paulo.campaign collected more than 13.5 tons of plastic, which were sent for reclocated in the municipality, encouraging São Paulo's citizens to dispose of waste adequately and presenting 500 pieces of furniture produced from the recycled plastic to the parks participating in the campaign.

The development of Green Productsreinforces Braskem’s commitment to promote sustainable development, which is in step with society’s desire for initiatives that effectively contribute to lowering COethylene plant, inaugurated in September 2010, provides the environmental benefit of reducing COemissions by 500,000 tons per year.

In parallel with the launch of the largeinnovative characteristics, Braskem created the Code of Conduct for Ethanol Suppliers, which instructs these suppliers on how to operate sustainably by implementing good social and environmental practices in all production process.

In recognition of its commitment to sBrazil featured in the 2010 Sustainability Guide published by

7.1. Corporate Governance

Since the disclosure of its Public Commitment upon its creation on August 16, 2002, reaffirmed its commitment to align the interests of all of its shareholders as well as its commitment to ethics, competitiveness and excellence in all actions in order to assure better returns for shareholders, while adding value to its assets

Guided by this vision, Braskem developed a management model that adopts recognized corporate governance practices to ensure their proper functioning.the Audit Board, which have company also has committees supporting the Board of Directors that have the basic function of assessing matters of interest to the Board in order to improve the quality and speed of the deliberation process.

Braskem’s corporate governance practices feature:


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The development of green polyethylene made from sugarcane ethanol, a

Demonstrating its concern with the post-consumption of plastic materials, Braskem supports the recycling project Recicla Sul, which supports the technical development of 38 plastic sorting and mechanical recycling centers located in the state of Rio Grande do Sul. Braskem is also one of the

Instituto Socioambiental Plastivida.

As part of its commitment to people, Braskem has programs to develop the competencies of its sector social initiatives focused on environmental education, culture

d has consultative boards located in areas surrounding its plants to strengthen the relationship with the local community.

implemented the Braskem Recycling Grand Prix project, which was launched Racetrack during the three days of the Brazil leg of the Formula 1 GP, and lasted

until November 28 with the collection of plastic waste at five parks of the city of São Paulo.campaign collected more than 13.5 tons of plastic, which were sent for recycling in five cooperatives located in the municipality, encouraging São Paulo's citizens to dispose of waste adequately and presenting 500 pieces of furniture produced from the recycled plastic to the parks participating in

f Green Products made from renewable raw materials is another point that commitment to promote sustainable development, which is in step with

society’s desire for initiatives that effectively contribute to lowering CO2 emissions.ethylene plant, inaugurated in September 2010, provides the environmental benefit of reducing COemissions by 500,000 tons per year.

In parallel with the launch of the large-scale production of this new thermoplastic resin with such aracteristics, Braskem created the Code of Conduct for Ethanol Suppliers, which

instructs these suppliers on how to operate sustainably by implementing good social and environmental practices in all production process.

In recognition of its commitment to sustainability, Braskem was one of the 20 model companies in Brazil featured in the 2010 Sustainability Guide published by Exame magazine.

Since the disclosure of its Public Commitment upon its creation on August 16, 2002, reaffirmed its commitment to align the interests of all of its shareholders as well as its commitment to ethics, competitiveness and excellence in all actions in order to assure better returns for shareholders, while adding value to its assets and remunerating its capital.

Guided by this vision, Braskem developed a management model that adopts recognized corporate governance practices to ensure their proper functioning. In addition to the Board of Directors and the Audit Board, which have expanded powers in accordance with the Sarbanescompany also has committees supporting the Board of Directors that have the basic function of assessing matters of interest to the Board in order to improve the quality and speed of the

Braskem’s corporate governance practices feature:

MANAGEMENT REPORT

The development of green polyethylene made from sugarcane ethanol, a renewable raw

of plastic materials, Braskem supports the recycling project Recicla Sul, which supports the technical development of 38 plastic sorting and

Braskem is also one of the

As part of its commitment to people, Braskem has programs to develop the competencies of its sector social initiatives focused on environmental education, culture

d has consultative boards located in areas surrounding its plants to

implemented the Braskem Recycling Grand Prix project, which was launched Racetrack during the three days of the Brazil leg of the Formula 1 GP, and lasted

until November 28 with the collection of plastic waste at five parks of the city of São Paulo. The ycling in five cooperatives

located in the municipality, encouraging São Paulo's citizens to dispose of waste adequately and presenting 500 pieces of furniture produced from the recycled plastic to the parks participating in

is another point that commitment to promote sustainable development, which is in step with

emissions. The new green ethylene plant, inaugurated in September 2010, provides the environmental benefit of reducing CO2

scale production of this new thermoplastic resin with such aracteristics, Braskem created the Code of Conduct for Ethanol Suppliers, which

instructs these suppliers on how to operate sustainably by implementing good social and

ustainability, Braskem was one of the 20 model companies in

Since the disclosure of its Public Commitment upon its creation on August 16, 2002, Braskem has reaffirmed its commitment to align the interests of all of its shareholders as well as its commitment to ethics, competitiveness and excellence in all actions in order to assure better returns for

Guided by this vision, Braskem developed a management model that adopts recognized corporate In addition to the Board of Directors and

expanded powers in accordance with the Sarbanes-Oxley Act, the company also has committees supporting the Board of Directors that have the basic function of assessing matters of interest to the Board in order to improve the quality and speed of the

� Listing on the Level 1 Special Corporate Governance segment of the São Paulo Stock Exchange (BM&FBovespa) since February 13, 2003;

� 100% tag-along rights for all Braskem shareholders in the

� Audit Board with the broad powers envisioned by the Sarbanes

� A Code of Conduct defining the values, principles and procedures that guide the corporate conduct, which is constantly reviewed to ensure it refand best practices;

� Corporate policies, which include policies on securities trading, financial management, social responsibility, insurance and guarantees, compensation, health, safety, environment, and investments;

� A long-term incentive plan designed to align the interests of the company’s management with the goal of creating value for shareholders.2006, the plan links executive compensation to the longstock price;

� An Ethics Committee that works jointly with the Internal Auditor and the Audit Board.function is to document, address, recommend and make decisions to resolve the denouncements made through the company’s ethics hotline, which communications channel to report violations of the Code of Conduct, with the objective of enforcing compliance with the code and continually improving the company’s internal procedures and controls;

� An information system for the Board of Braskem Portal, providing the members of these bodies with the information they need to exercise their roles and responsibilities in a secure, transparent, fair and timely manner.

� External Audit

The Company’s policy on the hiring of independent auditors to perform services unrelated to the external audit is based on principles that preserve the independence of audit professionals.accordance with internationally acceptedaudit their own work; (b) auditors must not (c) auditors must not promote the interests of their clients.

In accordance with CVM Instruction 381/03, the value of the the audit firms PricewaterhouseCoopers Independent Auditors that were unrelated to the external audit functions did not exceed 5% of the total value of the fees these firms received.

7.2. Health, Safety and Environment

In its management of Health, Safety and the Environment, Braskem has made continuous advances by applying the 16 Strategic Elements of its Health, Safety and Environment Program (SEMPRE) at all of its units. In 2010, improvements were made to the SEMPRE the Responsible Care program, while the VERIFICAR program was audited for the first time in accordance with the standards established by the Brazilian Chemical Manufacturers’ Association (Abiquim), in line with the volunt


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Listing on the Level 1 Special Corporate Governance segment of the São Paulo Stock Exchange (BM&FBovespa) since February 13, 2003;

along rights for all Braskem shareholders in the event of the sale of control;

Audit Board with the broad powers envisioned by the Sarbanes-Oxley Act;

A Code of Conduct defining the values, principles and procedures that guide the corporate conduct, which is constantly reviewed to ensure it reflects current legal requirements

Corporate policies, which include policies on securities trading, financial management, social responsibility, insurance and guarantees, compensation, health, safety, environment, and

term incentive plan designed to align the interests of the company’s management with the goal of creating value for shareholders. Approved in September 2005 and in effect since 2006, the plan links executive compensation to the long-term performance of th

An Ethics Committee that works jointly with the Internal Auditor and the Audit Board.function is to document, address, recommend and make decisions to resolve the denouncements made through the company’s ethics hotline, which communications channel to report violations of the Code of Conduct, with the objective of enforcing compliance with the code and continually improving the company’s internal

An information system for the Board of Directors and the Audit Board accessed through the Braskem Portal, providing the members of these bodies with the information they need to exercise their roles and responsibilities in a secure, transparent, fair and timely manner.

policy on the hiring of independent auditors to perform services unrelated to the external audit is based on principles that preserve the independence of audit professionals.

ly accepted standards, these principles consist of: (a) auditors must not (b) auditors must not exercise managerial functions at their

auditors must not promote the interests of their clients.

In accordance with CVM Instruction 381/03, the value of the services rendered to the Company by the audit firms PricewaterhouseCoopers Independent Auditors that were unrelated to the external audit functions did not exceed 5% of the total value of the fees these firms received.

Health, Safety and Environment

In its management of Health, Safety and the Environment, Braskem has made continuous advances by applying the 16 Strategic Elements of its Health, Safety and Environment Program (SEMPRE) at all

In 2010, improvements were made to the SEMPRE management system to align it with the Responsible Care program, while the VERIFICAR program was audited for the first time in accordance with the standards established by the Brazilian Chemical Manufacturers’ Association (Abiquim), in line with the voluntary commitment to implement the Responsible Care program.

MANAGEMENT REPORT

Listing on the Level 1 Special Corporate Governance segment of the São Paulo Stock Exchange

event of the sale of control;

A Code of Conduct defining the values, principles and procedures that guide the Company's lects current legal requirements

Corporate policies, which include policies on securities trading, financial management, social responsibility, insurance and guarantees, compensation, health, safety, environment, and

term incentive plan designed to align the interests of the company’s management with Approved in September 2005 and in effect since

term performance of the company’s

An Ethics Committee that works jointly with the Internal Auditor and the Audit Board. Its function is to document, address, recommend and make decisions to resolve the denouncements made through the company’s ethics hotline, which is a confidential communications channel to report violations of the Code of Conduct, with the objective of enforcing compliance with the code and continually improving the company’s internal

Directors and the Audit Board accessed through the Braskem Portal, providing the members of these bodies with the information they need to exercise their roles and responsibilities in a secure, transparent, fair and timely manner.

policy on the hiring of independent auditors to perform services unrelated to the external audit is based on principles that preserve the independence of audit professionals. In

(a) auditors must not functions at their clients; and

services rendered to the Company by the audit firms PricewaterhouseCoopers Independent Auditors that were unrelated to the external audit functions did not exceed 5% of the total value of the fees these firms received.

In its management of Health, Safety and the Environment, Braskem has made continuous advances by applying the 16 Strategic Elements of its Health, Safety and Environment Program (SEMPRE) at all

management system to align it with the Responsible Care program, while the VERIFICAR program was audited for the first time in accordance with the standards established by the Brazilian Chemical Manufacturers’ Association

ary commitment to implement the Responsible Care program.

Braskem’s investments in the area of HSE totaled R$103 million and led to improvements in the Company’s performance indicators for these areas.

In 2010, with the merger of Braskem, Quattor and Braswithout lost work time per million manwhich represents a reduction of 56% from the previous year.man-hours worked for both employees and the employees of partners was 0.62, which represents a 39% reduction from the previous year.

In the area of Process Safety, with the merger of Braskem, Quattor and Braskem a change in the Risk Rating classification of the safety inspections conducted at the plants.four plants were audited and had their standard", due to the continuous for production processes and facilities.the others are considered "standardEngineering, an internally recognized consultproducers worldwide operating in the same management conditions.

In the area of Chemical Safety

dossiers of 33 chemical substancesaccordance with the requirements of Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), of which 28 have already had their registrthe implementation of its Global Product Strategy (GPS), the International Council of Chemical Associations (ICCA) launched a Web portal with information on Chemical Substances Safety, where the chemical safety summaries Abiquim, the site also features a translation of the GPS Implementation Guide, with the objective of providing, in 2011, basic training to persons involved in the implementation of GPS.initiative aimed at promoting the recognition and dissemination of risks to people and the environment resulting from the use of chemical products.strategy of the United Nations Environment Programme International Chemicals Management (SAICM), which has a similar objective.

In the area of Health Management

the health and physical, mental and social

10.07

8.497.52

4.85

6.53

4.93

2002 2003 2004 2005 2006 2007

Accident Rate with and without Lost Work Time(1,000,000 mh)


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Braskem’s investments in the area of HSE totaled R$103 million and led to improvements in the performance indicators for these areas.

In 2010, with the merger of Braskem, Quattor and Braskem America, the accident rate with and

per million man-hours worked, including subsidiaries and partners, was 2.02, which represents a reduction of 56% from the previous year. The lost-time accident rate

for both employees and the employees of partners was 0.62, which represents a 39% reduction from the previous year.

, with the merger of Braskem, Quattor and Braskem Amclassification of the safety inspections conducted at the plants.

had their risks ratings revised upwards, with three classified as continuous improvements and the pursuit of excellence in

production processes and facilities. Of the 26 plants, 15 are considered "above standardstandard". The audits and ratings were conducted by

Engineering, an internally recognized consulting firm that establishes criteria operating in the same industry, with the process assessing

Chemical Safety, Braskem submitted to the European Chemicals Agency (ECHA) dossiers of 33 chemical substances from Braskem BV, Braskem America and Quattoraccordance with the requirements of Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), of which 28 have already had their registrations approved. Moving forward in the implementation of its Global Product Strategy (GPS), the International Council of Chemical Associations (ICCA) launched a Web portal with information on Chemical Substances Safety, where the chemical safety summaries on Braskem’s products are registered. Prepared in partnership with Abiquim, the site also features a translation of the GPS Implementation Guide, with the objective of providing, in 2011, basic training to persons involved in the implementation of GPS.initiative aimed at promoting the recognition and dissemination of risks to people and the environment resulting from the use of chemical products. This initiative is aligned with the global strategy of the United Nations Environment Programme (UNEP) called Strategic Approach to International Chemicals Management (SAICM), which has a similar objective.

Health Management, Braskem’s strategies and initiatives involve activities to promote the health and physical, mental and social wellbeing of employees in order to achieve a perfect

4.93

6.13

4.63

2.02

2007 2008 2009 2010

Accident Rate with and without Lost Work Time(1,000,000 mh)

3.06

2.452.18

1.70 1.70

1.07

2002 2003 2004 2005 2006 2007

Lost-time Accident Rate(1,000,000 mh)

MANAGEMENT REPORT

Braskem’s investments in the area of HSE totaled R$103 million and led to improvements in the

accident rate with and

hours worked, including subsidiaries and partners, was 2.02, time accident rate per million

for both employees and the employees of partners was 0.62, which represents a

America, there was classification of the safety inspections conducted at the plants. In 2010,

classified as "above excellence in risk management

above standard" while by Aon Energy Risk

criteria for comparing with the process assessing the safety and

, Braskem submitted to the European Chemicals Agency (ECHA) the from Braskem BV, Braskem America and Quattor for approval in

accordance with the requirements of Registration, Evaluation, Authorization and Restriction of Moving forward in

the implementation of its Global Product Strategy (GPS), the International Council of Chemical Associations (ICCA) launched a Web portal with information on Chemical Substances Safety, where

on Braskem’s products are registered. Prepared in partnership with Abiquim, the site also features a translation of the GPS Implementation Guide, with the objective of providing, in 2011, basic training to persons involved in the implementation of GPS. GPS is an ICCA initiative aimed at promoting the recognition and dissemination of risks to people and the

This initiative is aligned with the global (UNEP) called Strategic Approach to

, Braskem’s strategies and initiatives involve activities to promote wellbeing of employees in order to achieve a perfect

0.66

1.01

0.62

2008 2009 2010

time Accident Rate

balance between corporate sustainability and personal satisfaction, and to comply with the programs to prevent, monitor and diagnose in advance work

The programs for systematic monitoEnvironmental Risk Prevention Programs (PPRAs), led to the better management of preventive and control actions related to chemical, physical, biological and ergonomic risks in accordance with internationally recognized standards.

In the Environmental area, in 2010, Braskem achieved the best results since 2002 in all its ecoefficiency indicators, primarily due to the investments and focused initiatives for improvement implemented by the groups.

Braskem's continued improvement in ecoefficiency indicators is shown in the following charts, with the figures including Braskem, Quattor and Braskem

2.111.96

1.52 1.541.45

2002 2003 2004 2005 2006

Liquid Effluent Generation (m³/ton)

6.67

5.34

4.29 4.31 4.12

2002 2003 2004 2005 2006

Solid Waste Generation(kg/ton)

12.58

12.16

11.77

12.21

11.89 11.89

2002 2003 2004 2005 2006 2007

Energy Consumption

(GJ/ton)


of 29

balance between corporate sustainability and personal satisfaction, and to comply with the programs to prevent, monitor and diagnose in advance work-related illnesses.

The programs for systematic monitoring of worksites, which are provided for under the Environmental Risk Prevention Programs (PPRAs), led to the better management of preventive and control actions related to chemical, physical, biological and ergonomic risks in accordance with

lly recognized standards.

area, in 2010, Braskem achieved the best results since 2002 in all its ecoefficiency indicators, primarily due to the investments and focused initiatives for improvement

ontinued improvement in ecoefficiency indicators is shown in the following charts, with the figures including Braskem, Quattor and Braskem America:

1.381.54

1.421.28

2007 2008 2009 2010

Liquid Effluent Generation (m³/ton)

3.81 4.03

2.92

2.21

2007 2008 2009 2010

Solid Waste Generation(kg/ton)

11.89

12.29

11.44

10.65

2007 2008 2009 2010

Energy Consumption

Liquid Effluent Generation

Improvement of 10% from 2009 and reduction in absolute generation of 20,030,819 m

3/year

Solid Waste Generation

Improvement of 24% from 2009 and reduction in absolute generation of 34,702,265 kg/year

Energy Consumption

Improvement of 7% from 2009 and reduction in absolute generation of 166,932,471 GJ/year

MANAGEMENT REPORT

balance between corporate sustainability and personal satisfaction, and to comply with the

ring of worksites, which are provided for under the Environmental Risk Prevention Programs (PPRAs), led to the better management of preventive and control actions related to chemical, physical, biological and ergonomic risks in accordance with

area, in 2010, Braskem achieved the best results since 2002 in all its ecoefficiency indicators, primarily due to the investments and focused initiatives for improvement

ontinued improvement in ecoefficiency indicators is shown in the following charts, with

Liquid Effluent Generation

Improvement of 10% from 2009 and reduction in absolute generation of

Solid Waste Generation



In the area of Greenhouse Gases

dioxide), CH4 (methane), N2O (nitrous oxide) and HFC 134 (hydro fluorocarbon, refrigeration fluid).

In 2010, Braskem completed the emissions inventories at all of its plants and corporate centers, a base year of 2009. Excluding Quattor7,060,829 tonCO2, while indirect emissions totaled 3,224,681 t6% in 2009 from 2008. Macroeconomic factors, such as the economic crisis and lower oil prices, adversely affected production, which in turn led to lower emissions.a public commitment assumed by Braskem in August 2009, entitled "É preciso amadurecer para ser verde" (You Have to Mature to Be Green), which provided, among other mCompany would “continue to reduce greenhouse gas emissions by increasing energy efficiency and identifying new technology opportunities” and “reinforce its contribution in the reduction of greenhouse gas gases through the use of renewabledeclined by 11% between 2008 and 2009, anticipating the target set for 2013.maintained, but will consider the merger of the plants of Braskem, Quattor and Braskem

7.3. Social Responsibility

Braskem’s corporate philosophy is firmly rooted in valuing people through education and work, a willingness to serve, the capacity and desire to evolve and the drive to surpass results.this vision in relation to our corporate mthe surrounding communities, with their traditions and culture that constitute a rich intangible heritage that must be preserved and treasured.private social investment in programs aligned with Braskem’s principles and values.important of these programs are described below:

Lagoa Viva Environmental Education Program

neighboring Braskem’s Chlorineways to generate income based on sustainable practices.hydroponics, beekeeping as well as postoccupations that ultimately promote the social mobility of this community.

Cinturão Verde (Greenbelt) – Created in 1987, this a 150salt marsh and related ecosystems in the Pontal da Barra districOcean and Lake Mundaú in Maceió.

5.074.81 4.64 4.84 4.70

2002 2003 2004 2005 2006

Water Consumption(m³/ton)


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Greenhouse Gases (GHG), Braskem conducts inventories of the gases COdioxide), CH4 (methane), N2O (nitrous oxide) and HFC 134 (hydro fluorocarbon, refrigeration fluid).

In 2010, Braskem completed the emissions inventories at all of its plants and corporate centers, Excluding Quattor and Braskem America, direct emissions in 2009 totaled

, while indirect emissions totaled 3,224,681 tonCO2. Direct emissions declined by Macroeconomic factors, such as the economic crisis and lower oil prices,

y affected production, which in turn led to lower emissions. This step was complemented by a public commitment assumed by Braskem in August 2009, entitled "É preciso amadurecer para ser verde" (You Have to Mature to Be Green), which provided, among other mCompany would “continue to reduce greenhouse gas emissions by increasing energy efficiency and identifying new technology opportunities” and “reinforce its contribution in the reduction of greenhouse gas gases through the use of renewable raw materials”. Braskem’s emissions indicator declined by 11% between 2008 and 2009, anticipating the target set for 2013. maintained, but will consider the merger of the plants of Braskem, Quattor and Braskem

Braskem’s corporate philosophy is firmly rooted in valuing people through education and work, a willingness to serve, the capacity and desire to evolve and the drive to surpass results.this vision in relation to our corporate mission stretches beyond the Company’s facilities to include the surrounding communities, with their traditions and culture that constitute a rich intangible heritage that must be preserved and treasured. One way to achieve these objectives is through

te social investment in programs aligned with Braskem’s principles and values.important of these programs are described below:

Lagoa Viva Environmental Education Program - Launched in 2001 in Pontal da Barra, a community ine-Soda industrial in Maceió, Alagoas, this project fosters alternative

ways to generate income based on sustainable practices. Classes teaching music, English, hydroponics, beekeeping as well as post-graduate programs provide training in aoccupations that ultimately promote the social mobility of this community.

Created in 1987, this a 150-hectare ecological reserve located on the salt marsh and related ecosystems in the Pontal da Barra district, situated between the Atlantic Ocean and Lake Mundaú in Maceió. The reserve’s objective is to enable the full development and

4.72 4.88

4.19 4.12

2007 2008 2009 2010

Water Consumption(m³/ton)

Water Consumption

Improvement of 2% from 2009 and reduction in absolute generation of 64,552,076 m

3/year

MANAGEMENT REPORT

(GHG), Braskem conducts inventories of the gases CO2 (carbon dioxide), CH4 (methane), N2O (nitrous oxide) and HFC 134 (hydro fluorocarbon, refrigeration fluid).

In 2010, Braskem completed the emissions inventories at all of its plants and corporate centers, with and Braskem America, direct emissions in 2009 totaled

Direct emissions declined by Macroeconomic factors, such as the economic crisis and lower oil prices,

This step was complemented by a public commitment assumed by Braskem in August 2009, entitled "É preciso amadurecer para ser verde" (You Have to Mature to Be Green), which provided, among other measures, that the Company would “continue to reduce greenhouse gas emissions by increasing energy efficiency and identifying new technology opportunities” and “reinforce its contribution in the reduction of

Braskem’s emissions indicator This target will be

maintained, but will consider the merger of the plants of Braskem, Quattor and Braskem America.

Braskem’s corporate philosophy is firmly rooted in valuing people through education and work, a willingness to serve, the capacity and desire to evolve and the drive to surpass results. The scope of

facilities to include the surrounding communities, with their traditions and culture that constitute a rich intangible

One way to achieve these objectives is through te social investment in programs aligned with Braskem’s principles and values. Some of the most

Launched in 2001 in Pontal da Barra, a community Soda industrial in Maceió, Alagoas, this project fosters alternative

Classes teaching music, English, graduate programs provide training in a wide variety of

hectare ecological reserve located on the t, situated between the Atlantic

The reserve’s objective is to enable the full development and


natural reproduction of the fauna and flora, effectively transforming the area into an ecological refuge. More than 175,000 peoppublic, have already visited the Cinturão Verde (Greenbelt).seedlings planted, 200 plants species for conservation, 400 animals from the Brazilian fauna for reproduction, and the “Red Propolis from Alagoas”, which was discovered and has potential to receive the geographic identification seal (origin name).receive awards, including the Atlantic Forest BiosphCenter (UNESCO) and the Fauna and Flora Conservation Vivarium (IBAMA).

Recycling Projects — Braskem is investing in the development of a project which includes the regions of São Paulo, Alagoas and Bahia.condition of garbage collectors and the quality of existing recycling centers in each location.results of this analysis, training and development of collectors will be implemented and investments will be made in equipment and technology in 2011, guaranteeing the increase in income and social inclusion of the professionals involved.

Recicla Sul Project - Promoted by the Rio Grande do Sul State Justice and Social Development Department, and led by Fundação Vonpar with the participation of Fundação Banco do Brasil, Centro de Assessoria Multiprofissional (CAMP), Maxiquim and teachers of the SapSul-Rio-Grandense Federal Institute (IFSUL), this project seeks to include recycling material collectors in productive society and to strengthen recycling units by providing technological support to the recycling centers. The project currently benefits 38 warehouses in Rio Grande do Sul state, with investments made to improve the facilities, selection equipment and workplace safety and to provide training in the areas of management and production processes.

This initiative promotes social inclusion and the proper destination of urban solid waste, helping to preserve the environment.

Forest Factory – A project that promotes the cultivation and planting of native species seedlings in the Costa dos Coqueiros Ecologic Corridor and theto recover areas of Atlantic Rainforest, with an emphasis on the reforestation of natural springs and the riparian buffer zones in the region between the Camaçari Industrial Complex and the Sauípe Eco Park. In 2010, 150,000 seedlings were planted, which recovered more than 100 hectares, and 120 people were trained to prepare 500,000 seedlings to be planted in 2011.

Parque da Amizade (Friendship Park)

built this municipal park that was inaugurated in January 2011.meters, the park is fully based on the concepts of sustainability, from its design to its operation.construction of the park is the result of an agreenvironmental project that compensates for the construction of the polypropylene plant that was inaugurated in April 2008.

Braskem Theatre Award – Created in 1994, this award recognizes the best theaBahia state in ten categories with the aim of valuing and awarding professionals in the performing arts, helping pave the way for new talent.specializing in cultural activities.

Braskem On Stage Award — The festival Porto Alegre on Stage is renowned as one of the leading theater festivals in Latin America.of Porto Alegre major national and international names


of 29

natural reproduction of the fauna and flora, effectively transforming the area into an ecological More than 175,000 people, including students from all over Alagoas state and the general

public, have already visited the Cinturão Verde (Greenbelt). The reserve has a total of 280,000 seedlings planted, 200 plants species for conservation, 400 animals from the Brazilian fauna for reproduction, and the “Red Propolis from Alagoas”, which was discovered and has potential to receive the geographic identification seal (origin name). These results enabled the Green Belt to receive awards, including the Atlantic Forest Biosphere Reserve (UNESCO), Environmental Education Center (UNESCO) and the Fauna and Flora Conservation Vivarium (IBAMA).

Braskem is investing in the development of a project which includes the regions of São Paulo, Alagoas and Bahia. In 2010, the Company began making the diagnosis of the social condition of garbage collectors and the quality of existing recycling centers in each location.results of this analysis, training and development of collectors will be implemented and investments will be made in equipment and technology in 2011, guaranteeing the increase in income and social inclusion of the professionals involved.

Promoted by the Rio Grande do Sul State Justice and Social Development Department, and led by Fundação Vonpar with the participation of Fundação Banco do Brasil, Centro de Assessoria Multiprofissional (CAMP), Maxiquim and teachers of the Sapucaia do Sul Campus of the

Grandense Federal Institute (IFSUL), this project seeks to include recycling material collectors in productive society and to strengthen recycling units by providing technological support to the

ject currently benefits 38 warehouses in Rio Grande do Sul state, with investments made to improve the facilities, selection equipment and workplace safety and to provide training in the areas of management and production processes.

es social inclusion and the proper destination of urban solid waste, helping to

A project that promotes the cultivation and planting of native species seedlings in the Costa dos Coqueiros Ecologic Corridor and the Forest Ring region, in the northern coast of Bahia to recover areas of Atlantic Rainforest, with an emphasis on the reforestation of natural springs and the riparian buffer zones in the region between the Camaçari Industrial Complex and the Sauípe Eco

In 2010, 150,000 seedlings were planted, which recovered more than 100 hectares, and 120 people were trained to prepare 500,000 seedlings to be planted in 2011.

Parque da Amizade (Friendship Park) — In partnership with the Municipality of Paulínia, Brasbuilt this municipal park that was inaugurated in January 2011. With total area of 300,000 square meters, the park is fully based on the concepts of sustainability, from its design to its operation.construction of the park is the result of an agreement with the municipality for its consideration as an environmental project that compensates for the construction of the polypropylene plant that was

Created in 1994, this award recognizes the best theaBahia state in ten categories with the aim of valuing and awarding professionals in the performing arts, helping pave the way for new talent. The selections are made by a commission of judges

The festival Porto Alegre on Stage is renowned as one of the leading theater festivals in Latin America. During its 17 years of existence, the festival has brought to the city of Porto Alegre major national and international names in theater, music and dance.

MANAGEMENT REPORT

natural reproduction of the fauna and flora, effectively transforming the area into an ecological le, including students from all over Alagoas state and the general

The reserve has a total of 280,000 seedlings planted, 200 plants species for conservation, 400 animals from the Brazilian fauna included for reproduction, and the “Red Propolis from Alagoas”, which was discovered and has potential to

These results enabled the Green Belt to ere Reserve (UNESCO), Environmental Education

Braskem is investing in the development of a project which includes the regions began making the diagnosis of the social

condition of garbage collectors and the quality of existing recycling centers in each location. From the results of this analysis, training and development of collectors will be implemented and investments will be made in equipment and technology in 2011, guaranteeing the increase in income and social

Promoted by the Rio Grande do Sul State Justice and Social Development Department, and led by Fundação Vonpar with the participation of Fundação Banco do Brasil, Centro

ucaia do Sul Campus of the Grandense Federal Institute (IFSUL), this project seeks to include recycling material collectors

in productive society and to strengthen recycling units by providing technological support to the ject currently benefits 38 warehouses in Rio Grande do Sul state, with

investments made to improve the facilities, selection equipment and workplace safety and to provide

es social inclusion and the proper destination of urban solid waste, helping to

A project that promotes the cultivation and planting of native species seedlings in Forest Ring region, in the northern coast of Bahia

to recover areas of Atlantic Rainforest, with an emphasis on the reforestation of natural springs and the riparian buffer zones in the region between the Camaçari Industrial Complex and the Sauípe Eco

In 2010, 150,000 seedlings were planted, which recovered more than 100 hectares, and 120

In partnership with the Municipality of Paulínia, Braskem With total area of 300,000 square

meters, the park is fully based on the concepts of sustainability, from its design to its operation. The ement with the municipality for its consideration as an

environmental project that compensates for the construction of the polypropylene plant that was

Created in 1994, this award recognizes the best theatre productions in Bahia state in ten categories with the aim of valuing and awarding professionals in the performing

The selections are made by a commission of judges

The festival Porto Alegre on Stage is renowned as one of the leading During its 17 years of existence, the festival has brought to the city

in theater, music and dance. Braskem has

sponsored the festival’s last four editions.which recognizes the best productions in Rio Grande do Sul state in the following categories:Production, Best Director, Best Actor, Best Actress and the People’s Choice Award for Best Production. The award ceremony takes place in the closing of the festival Porto Alegre on Stage.

Braskem Frontiers of Thought –

listen to great modern international thinkers, giving them the opportunity to listen to and discuss relevant topics from several fields of knowledge.

8. People Development

Braskem’s decentralized management model, which is supported by planned delegation and sharing in the profits based on individual performance, combined with an agile and efficient planning process and monitoring based on the Leaderrobust growth and create value for its shareholders and strategic stakeholders.

In line with its philosophy, Braskem invested R$8.2 million in 2010 in development initiatives, which totaled 269,000 hours of training.Introduction to the Odebrecht Business Technology (TEO), which provided training to more than 170 employees from Quattor and Braskem

In 2010, the program Horizons especially for employees approaching retirement and promotes appreciation and recognition and offers orientation, while seeking to facilitate the transition to retirement and present productive post-career paths.

Other highlights were: (i) the Leader Development Program (PDL), which trained more than 120 employees in 2010; (ii) the Entrepreneur Development Program (PDE), which has a strong cultural and practical base and seeks to enhance the entrepreneurial hand experience with the various generations of leaders at the organization, with 40 employees participating in this 5th edition; and (iii) the Odebrecht Organization MBA, which trains 21 Braskem employees in partnership with the business school INSPER and other companies.

Braskem’s Highlight Award, which is in its 4importance among the company’s employees.reapplication of the knowledge created by employees, and promotes the exchange of best practices to achieve organizational excellence, while fostering the retention and dissemination of knowledge throughout the organization.

Braskem’s Trainee Program was restructprogram is based on UNESCO’s four education pillars:be; and (iv) learn to live together with others.years, and now will provide specific training for various careers, divided into Industrial Trainee, which focuses on the areas of Processes, Production, Maintenance, Health, Safety and Environment (HSE) and Automation; or Trainee, which focuses on engineers, company. The company also provides a permanent communication channel with young people through the websites www.serestagiario.com.br and www.sertrainee.com.br.permanent source of informatioconstantly seeking the best career opportunities.trainee retention ratio, which stood at 78% in 2010.


of 29

sponsored the festival’s last four editions. The company also sponsors the Braskem on Stage Award, which recognizes the best productions in Rio Grande do Sul state in the following categories:

Director, Best Actor, Best Actress and the People’s Choice Award for Best The award ceremony takes place in the closing of the festival Porto Alegre on Stage.

– Held in the city of Porto Alegre, this event brings together people to listen to great modern international thinkers, giving them the opportunity to listen to and discuss relevant topics from several fields of knowledge.

decentralized management model, which is supported by planned delegation and sharing in the profits based on individual performance, combined with an agile and efficient planning process and monitoring based on the Leader-Member relationship, has enabled Braskem to record robust growth and create value for its shareholders and strategic stakeholders.

In line with its philosophy, Braskem invested R$8.2 million in 2010 in development initiatives, which totaled 269,000 hours of training. Another highlight was the priority given to the program Introduction to the Odebrecht Business Technology (TEO), which provided training to more than 170 employees from Quattor and Braskem America, through 6,000 hours of activities

In 2010, the program Horizons – Choosing the Future was implemented, which was developed especially for employees approaching retirement and promotes appreciation and recognition and offers orientation, while seeking to facilitate the transition to retirement and present productive

Other highlights were: (i) the Leader Development Program (PDL), which trained more than 120 employees in 2010; (ii) the Entrepreneur Development Program (PDE), which has a strong cultural and practical base and seeks to enhance the entrepreneurial capacities of participants through firsthand experience with the various generations of leaders at the organization, with 40 employees

edition; and (iii) the Odebrecht Organization MBA, which trains 21 Braskem rship with the business school INSPER and other companies.

Braskem’s Highlight Award, which is in its 4th edition, received 188 papers and has gained increasing importance among the company’s employees. The initiative encourages creativity and the

cation of the knowledge created by employees, and promotes the exchange of best practices to achieve organizational excellence, while fostering the retention and dissemination of knowledge

Braskem’s Trainee Program was restructured to support the Company’s growth strategy.program is based on UNESCO’s four education pillars: (i) learn to do; (ii) learn to know; (iii) learn to be; and (iv) learn to live together with others. The duration of the program was extended to 1.5

rs, and now will provide specific training for various careers, divided into Industrial Trainee, which focuses on the areas of Processes, Production, Maintenance, Health, Safety and Environment (HSE) and Automation; or Trainee, which focuses on engineers, administrators and the other areas of the

The company also provides a permanent communication channel with young people through the websites www.serestagiario.com.br and www.sertrainee.com.br. The hot sites provide a permanent source of information and a base for strengthening the relationship with youths, who are constantly seeking the best career opportunities. Braskem also continues to register a successful trainee retention ratio, which stood at 78% in 2010.

MANAGEMENT REPORT

The company also sponsors the Braskem on Stage Award, which recognizes the best productions in Rio Grande do Sul state in the following categories: Best

Director, Best Actor, Best Actress and the People’s Choice Award for Best The award ceremony takes place in the closing of the festival Porto Alegre on Stage.

together people to listen to great modern international thinkers, giving them the opportunity to listen to and discuss

decentralized management model, which is supported by planned delegation and sharing in the profits based on individual performance, combined with an agile and efficient planning

Braskem to record

In line with its philosophy, Braskem invested R$8.2 million in 2010 in development initiatives, which the priority given to the program

Introduction to the Odebrecht Business Technology (TEO), which provided training to more than 170

Future was implemented, which was developed especially for employees approaching retirement and promotes appreciation and recognition and offers orientation, while seeking to facilitate the transition to retirement and present productive

Other highlights were: (i) the Leader Development Program (PDL), which trained more than 120 employees in 2010; (ii) the Entrepreneur Development Program (PDE), which has a strong cultural

capacities of participants through first-hand experience with the various generations of leaders at the organization, with 40 employees

edition; and (iii) the Odebrecht Organization MBA, which trains 21 Braskem

edition, received 188 papers and has gained increasing The initiative encourages creativity and the

cation of the knowledge created by employees, and promotes the exchange of best practices to achieve organizational excellence, while fostering the retention and dissemination of knowledge

growth strategy. The (i) learn to do; (ii) learn to know; (iii) learn to

The duration of the program was extended to 1.5 rs, and now will provide specific training for various careers, divided into Industrial Trainee, which

focuses on the areas of Processes, Production, Maintenance, Health, Safety and Environment (HSE) administrators and the other areas of the

The company also provides a permanent communication channel with young people The hot sites provide a

n and a base for strengthening the relationship with youths, who are Braskem also continues to register a successful

Appendices:

Income Statement

CONSOLIDATED - Pro Forma

Gross Revenue

Net Revenue

Cost of Good Sold

GrossProfit

Selling Expenses*

General and Administrative Expenses*

Other operating income (expenses)

Non Recurring Expenses Related to Fixed Assets

EBITDA

EBITDA Margin

Depreciation and Amortization

Cost

Included in SG&A

* Net of depreciation

Pro Forma EBITDA

Depreciation included in CoGS and SG&A

Pro Forma EBITDA Impact El imination

Non-recurring expenses related to fixed assets considered

in other net operating income (expenses)

Business combination

Investment in subsidiaries and associated companies

Financial Result

Income Tax and Social Contribution

Net Income

EBITDA Restatement


of 29

Income Statement 2010 2009

CONSOLIDATED - Pro Forma (A) (B)

34,707 28,359

27,829 22,647

(23,465) (19,425)

4,364 3,222

(806) (737)

General and Administrative Expenses* (1,048) (842)

Other operating income (expenses) (104) (214)

Non Recurring Expenses Related to Fixed Assets (11) (413)

4,055 3,181

14.6% 14.0%

Depreciation and Amortization 1,720 1,454

1,638 1,340

82 114

2010 2009

(D) (E)

4,055 3,181

Depreciation included in CoGS and SG&A (1,638) (1,340)

Pro Forma EBITDA Impact El imination (178) (440)

Non-recurring expenses related to fixed assets considered

in other net operating income (expenses)(20) (103)

975 102

Investment in subsidiaries and associated companies 20 3

(1,328) 354

Income Tax and Social Contribution 2 (1,360)

1,889 398

EBITDA Restatement

MANAGEMENT REPORT

Change (%)

(A)/(B)

28,359 22

22,647 23

(19,425) 21

3,222 35

(737) 9

(842) 24

(214) (51)

(413) (97)

3,181 27

14.0% 0.5 p.p.

1,454 18

1,340 22

114 (28)

Change

(%)(D)/(E)

27

22

(59)

(81)

856

537

-

-

374

Current

Cash and Cash Equivalents

Available for Sale and Held for Trading

Accounts Receivable

Inventories

Recoverable Taxes

Prepaid Expenses

Others

Non Current

Held to Maturity

Compulsory Deposits and Escrow Accounts

Deferred Income Tax and Social Contribution

Recoverable Taxes

Associated Companies

Others

Investments

Fixed Assets

Intangible

Total Assets

Current

Suppliers

Financing

Hedge Accounting Opperations and Other Derivatives

Salary and Payroll Charges

Dividends and Interest on Equity

Tax Payable

Advances from Costumers

Others

Non Current

Financing

Hedge Accounting Opperations

Deferred Income Tax and Social Contribution

Taxes Payable

Others

Shareholders' Equity

Capital

Capital Reserves

Profit Reserves

Treasury Shares

Other Comprehensive Income

Retained Earnings (losses)

Company's Shareholders

Non Control ling Interest

Total Liabilities and Shareholders' Equity

* Pro Forma

ASSETS

LIABILITIES AND SHAREHOLDERS' EQUITY


of 29

12/31/2010 12/31/2009 Change (%)

(A) (B)

8,780 11,686

2,624 5,768

Available for Sale and Held for Trading 236 436

1,895 2,209

3,016 2,242

699 787

42 46

269 199

25,697 23,975

29 16

Compulsory Deposits and Escrow Accounts 250 234

Deferred Income Tax and Social Contribution 1,137 1,447

1,444 1,755

54 125

170 178

168 277

19,366 16,961

3,079 2,982

34,477 35,660

12/31/2010 12/31/2009 Change (%)

(A) (B)

8,462 10,049

5,201 3,943

1,724 3,931

Hedge Accounting Opperations and Other Derivatives 50 80

360 302

Dividends and Interest on Equity 420 8

390 1,278

50 86

266 422

15,607 16,594

11,004 13,706

Hedge Accounting Opperations 34 32

Deferred Income Tax and Social Contribution 2,201 1,156

1,584 1,337

784 363

10,390 8,721

8,043 9,216

846 417

1,339 0

(59) (10)

Other Comprehensive Income 221 315

Retained Earnings (losses) 0 (1,216)

10,390 8,721

18 297

Total Liabilities and Shareholders' Equity 34,477 35,660

ASSETS

LIABILITIES AND SHAREHOLDERS' EQUITY

CONSOLIDATED BALANCE SHEET

(R$ million)

MANAGEMENT REPORT

Change (%)

(A)/(B)

(25)

(55)

(46)

(14)

35

(11)

(10)

35

7

82

7

(21)

(18)

(57)

(4)

(39)

14

3

(3)

Change (%)

(A)/(B)

(16)

32

(56)

(37)

19

-

(69)

(41)

(37)

(6)

(20)

9

90

18

116

19

(13)

103

-

471

(30)

-

19

(94)

(3)

Chairman: Marcelo Bahia Odebrecht

Vice President: Paulo Roberto Costa

Members: Alfredo Lisboa Ribeiro Tellechea

Almir Guilherme Barbassa

Alvaro Fernandes da Cunha Filho

Eduardo Rath Fingerl

Francisco Pais

José de Freitas Macarenhas

Maria das Graças Silva Foster

Newton Sérgio de Souza

Paulo Henyan Yue Cesena

Board of Directors


of 29

Marcelo Bahia Odebrecht Chief Executive Officer: Carlos José Fadigas de Souza Filho

Directors: Décio Fabrício Oddone da Costa

Alfredo Lisboa Ribeiro Tellechea Edmundo José Correia Aires

Almir Guilherme Barbassa Manoel Carnaúba Cortez

Alvaro Fernandes da Cunha Filho Marcela Drehmer

Eduardo Rath Fingerl Mauricio Roberto de Carvalho Ferro

Patrick Horbach Fairon

José de Freitas Macarenhas

Maria das Graças Silva Foster

Newton Sérgio de Souza

Paulo Henyan Yue Cesena

ExecutiveManagement

MANAGEMENT REPORT

Carlos José Fadigas de Souza Filho

Décio Fabrício Oddone da Costa

Edmundo José Correia Aires

Manoel Carnaúba Cortez

Marcela Drehmer

Mauricio Roberto de Carvalho Ferro

Patrick Horbach Fairon

ExecutiveManagement

MANAGEMENT REPORT BRASKEM 2010 - Latibex · MANAGEMENT REPORT The Management of Braskem S.A....

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