Non deal roadshow
Transcript of Non deal roadshow
Meeting with Investors
March, 2010
Forward-looking Statements
This presentation contains forward-looking statements. These statements are statements that are not
historical facts, and are based on management’s current view and estimates of future economic
circumstances, industry conditions, company performance and financial results. The words "anticipates",
"believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are
intended to identify forward-looking statements. Statements regarding the declaration or payment of
dividends, the implementation of principal operating and financing strategies and capital expenditure
plans, the direction of future operations and the factors or trends affecting financial condition, liquidity
or results of operations are examples of forward-looking statements. Such statements reflect the current
views of management and are subject to a number of risks and uncertainties. There is no guarantee that
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views of management and are subject to a number of risks and uncertainties. There is no guarantee that
the expected events, trends or results will actually occur. The statements are based on many
assumptions and factors, including general economic and market conditions, industry conditions, and
operating factors. Any changes in such assumptions or factors could cause actual results to differ
materially from current expectations.
The forward-looking statements in this presentation are valid only on the date they are made (December
31, 2009) and the Company does not assume any obligation to update them in light of new information
or future developments
Braskem is not responsible for any transaction or investment decision taken based on the information in
this presentation.
Agenda
� Braskem overview and roadmap strategy
� Acquisitions
� Braskem post transactions
� Projects in the pipeline� Projects in the pipeline
� The global petrochemical industry
� Key differentiators
� 2009 Figures
Braskem overview (before transactions)
� Leading petrochemical company in Latin America
� Diversified portfolio of petrochemical products, with focus on PE, PP and PVC
� Annual capacity of 3,595 kty
� 17 facilities in Brazil
� 1st and 2nd generations integrated: states of BA, RS, AL, SP. Naphtha based crackers. Petrobras is Camaçari
Maceió
� 1 PVC
� 1 Chlorine - Soda
4Source: Braskem
RS, AL, SP. Naphtha based crackers. Petrobras is main supplier with 60/65% of feedstock supply
� Listed in 3 stock exchanges: BM&FBovespa, NYSE and Latibex
� 100% tag along
� Key Financials 2009
� Net Revenue: R$ 15.2 billion
� EBITDA: R$ 2.5 billion
Triunfo
Paulínia
� 1 Naphtha cracker
� 3 PE
� 1 PVC
� 1 Chlorine – Soda
� 1 PP
� 1 Naphtha cracker
� 5 PE
� 2 PP
ConvertersBasic petchem Resins
Industrial integration
Oil/Gas-refineries
Enhanced competitiveness through value chain integration
Naphtha / Gas PE/ PP/ PVC
4%
30%
5%
13%6%
2%5%
17%
3%
6%
4%4%1%
5Source: Braskem / Abiquim
2009 Braskem’sDomestic Sales Breakdown
FOOD PACKAGING
RETAIL
CONSUMER GOODS
CONSTRUCTION
AUTOMOTIVE
HYGIENE AND CLEANINGCOSMETICS AND PHARMACEUTICAL
AGRIBUSINESS
ELECTRIC AND ELECTRONIC
INDUSTRIAL
CHEMICAL AND AGROCHEMICALSOTHERS
INFRASTRUCTURE
Track record of strong and consistent growth aligned to its strategic direction
Vision 2020Top 5 Global Petrochemical
2020
2007Polialden
Politeno
Ipiranga /Copesul
Paulínia
2009
Petroquímica Triunfo
2002
20062007
2005 2008
Source: Braskem
Trikem
Polialden
Become leader inthermoplastic resinsin Latin America
Be a Top 5Global Petrochemical
Formulation of2012 Vision
Formulation of 2020 Vision
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Leader in the Americas,
rank among the 5 largest
petrochemical companies
worldwide and to be
positioned as the preferred
Strategic directionVision 2020 Braskem
positioned as the preferred
partner for global alliances
7Source: Braskem
Agenda
� Braskem overview and roadmap strategy
� Acquisitions
� Braskem post transactions
� Projects in the pipeline� Projects in the pipeline
� The global petrochemical industry
� Key differentiators
� 2009 Figures
Benefits and strategic drivers of Quattor acquisition
� Creation of a world scale player
� Diversification of feedstock supply
� Scale increase and geographic complementarities
� Operational synergies
� Strategic alignment with Petrobras: Comperj and Suape participation
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� Value creation for all shareholders
Consolidation of Odebrecht and Petrobras shares in their activities in the
petrochemical sector, strengthening Braskem and the Brazilian production
chain to compete in the international market and ensuring the basis for
global growth, consolidating the leadership in the Americas
Source: Braskem
Quattor overview
Net Revenue R$ 4.1 billion
EBITDA R$ 462 million Resins capacity (kton/y)
1,915
Key Financials (2009 LTM*):
* LTM: Oct/08 to Sep/09
1,040
875
PP
PE
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Profile:
9 petrochemical plants with 1st and 2nd
generations partially integrated: states of SP, RJ
Private company
Source: Braskem / Company estimates / Quattor
Transaction stages
1. Creation of BRK Investimentos Petroquímicos SA (BRK) that will hold Braskem’s common shares owned by Odebrecht (ODB) and Petrobras(PTB), followed by a capital increase of R$ 3,5 billion, R$ 1 billion from ODB and R$ 2.5 billion from PTB
BRK
ODB PTB
66,8% 33,2%
BRK
ODB PTB
53.8% 46.2%
CapitalODB/PTB
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2. Braskem capital increase through Private Offer of R$ 4.5 billion, with a minimum subscription of R$ 3.5 billion assured by BRK. The Offer share price will be R$ 14.40 per share
3. Braskem acquires Unipar 60% stake of Quattor Participações for R$ 647.3 million from Unipar
4. Braskem merges Quattor shares, consolidating Petrobras/Petroquisa 40% interest in the Company
5. Braskem acquires 33.3% of Polibutenos and 100% of Unipar Comercial for R$ 52.7 million
Transaction is expected to be concluded by June
Source: Braskem
Benefits and strategic drivers of Sunoco acquisition
� Internationalization through the acquisition of an important player in the north American market
� World scale player, technologically upgraded and with access to competitive feedstock
� Development of global production base in a market with further industry consolidation opportunities
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� Foothold in the U.S. enhancing market for greenfield projects in Latin America
Adding Sunoco Chemicals to the Braskem group furthers our objective of
being among the top 5 global petrochemical companies in the world.
Source: Braskem
Sunoco Chemicals
Pittsburgh, PA
Marcus Hook, PA
Neal, WV
� R&T Center
� 1 PP
Profile:
3 PP plants and 1 R&T Center: Texas, Philadelphia and West Virginia
Net Revenue R$ 1.9 billion
EBITDA R$ 140 million
Key Financials (2009*):
* Company estimates
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La Porte, Tx
Neal, WV
� 1 PP
� 1 PP
� 1 PPPhiladelphia and West Virginia
- Capacity: 950 kty
Public company
Favorable cost position and flexible product mix
Transaction:
� On February 1, 2010 Braskem acquired 100% of the shares of Sunoco Chemicals1, made up of the Sunoco Polypropylene Business
� Braskem America, a wholly owned subsidiary of Braskem, S.A. acquired the business for $350 million in cash, to be paid within 60 days
1 The Phenol Business does not form part of this transaction Source: Sunoco / UBS
Agenda
� Braskem overview and roadmap strategy
� Acquisitions
� Braskem post transactions
� Projects in the pipeline� Projects in the pipeline
� The global petrochemical Industry
� Key differentiators
� 2009 Figures
Braskem - # 1 Resin Producer in the Americas, now with plants in the USA
Gross Revenue R$ 27.5 billion
Net Revenue R$ 21.2 billion
EBITDA R$ 3.1 billion
Resins capacity (kton/y)
6,460
510
Key Financials (2009*):
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Profile:
Source: Braskem
29 petrochemical plants : 26 in Brazil and 3 in the USA
Listed on 3 stock exchanges: BM&FBovespa, NYSE and Latibex
* Braskem 2009; Quattor LTM: Oct/08 to Sep/09; Sunoco: 2009 (Company estimates) 15
3,035
2,915
PVC
PP
PE
Leader in the Americas and a top 8 global player in resins capacity
4th
1th
3,035
4,077 4,200
2,525 1,995
1,050
2,311
2,915 1,230 627
1,731
1,090
822 875
510
510
1,210
2,340
PVC
PP
PE
6,460
4,827
3,595
4,256
3,082
2,340 2,3111,915
5,307
950
Capacity in the America
s (kt/y)
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8th
12th
Braskem post
operations
Exxon Mobil
Dow Lyondell Basell
Braskem Formosa Shintech Chevron Philips
Quattor Sunoco
1,050 1,040 950 PE
transactions
Lyondell Basell
ExxonMobil
SINOPEC Dow Formosa SABIC Ineos Braskem post
operations
Total IPIC Reliance PetroChina Braskem
10,914
9,3118,668
7,749 7,284 7,1096,541 6,460
4,681 4,564 4,303 4,0793,595
transactions
World Capacity (kt/y)
Quattor AcquisitionCorporate Governance Principles
� Maintenance of Braskem as a Private Company
� Sharing of the strategic decisions (consensus approval)
� Principles for the nomination of the CEO and Executive Management
- Odebrecht nominates Chairman of the Board, CEO and CFO;
- Petrobras nominates Vice Chairman of the Board, the Chief Investments and Portfolio Officers;
- Other Executive Officers will be selected by the CEO and submitted to the Board of Directors for approval;
- For all the positions, members from among the best professionals in the market will be selected , renowned for their competence in exercising their functions.
� Braskem Executive Management in charge of operational issues, including the approval of Company’s Business Plan
� Preferred partner for investments in the Brazilian petrochemical industry – COMPERJ, Suape
- COMPERJ: petrochemical complex in Rio de Janeiro state (1st and 2nd generations)
- Suape: textile complex in Pernambuco state
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Acquisitions don’t significantly change leverage
Estimated Capital Increase R$4.5bi –Quattor Acquisition
Estimated Capital Increase R$4.5bi –Sunoco Chemicals
Acquisition
� Strong liquidity with cash and cash equivalents of approximately R$8 billion (US$4.3 billion)
� Capital structure with significant leverage (Net Debt/EBITDA) of approximately 3x
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Cash & Cash Equiv. 8,065 7,435
Gross Debt 17,386 17,386
Net Debt 9,322 9,952
Net Debt / EBITDA 3.17x 3.23x
Quattor data LTM Sep/09Source: Braskem, Unipar and Sunoco
� Considering capital increase of only R$3.5 billion, leverage level is still comfortable: 3.51 to 3.56x
Agenda
� Braskem overview and roadmap strategy
� Acquisitions
� Braskem post transactions
� Projects in the pipeline� Projects in the pipeline
� The global petrochemical Industry
� Key differentiators
� 2009 Figures
Growth with improved Competitiveness (1/2)
Mexico - Project Ethylene XXI: startup 2015
� Partnership with the Mexican group IDESA (65% Braskem, 35% IDESA) for the acquisition of ethane from PEMEX to be used as feedstock for an integrated petrochemical project : 1 Mtons/y of ethylene and 1 Mtons/y of PE
� Investment estimated in up to US$ 2.5 billion over the course of 5 years, planned to be financed by a project finance model with 70% debt and 30% equity
Venezuela: JV’s with Pequiven through Project Finances with only 30% equity (under review)
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with only 30% equity (under review)
Polipropileno del Sur – Propilsur: startup 2013
� ~350kton/y of PP and investments estimated at US$ 450 million (Paraguaná complex) or
� 450 kton/y of PP and investments estimated at US$1.2 billion (Jose complex)
Polietilenos de America – Polimerica: delayed
� 1.3 Mton of ethylene and 1.1 Mton/y of PE
Peru
� Braskem, Petrobras and PetroPerú concluded studies for the technical and economic pre-feasibility phase of an integrated project to produce 600 kton to 1,000 kton/y using the natural gas available in Peru as feedstock
Source: Braskem
Industrial assets
Greenfield projects
Projects with Petrobras
Growth with improved Competitiveness (2/2)
Brazil
Green Polyethylene: Commitment to Sustainability
� 200 kton/y of green PE
� Ethylene made from 100% renewable raw material, with sugarcane ethanol used as feedstock
� Investments of R$ 488 million and startup expected for 3Q10
� 70% of the ethanol volume required on final contract negotiation
� Partnerships with national and multinational customers: food, auto parts and cosmetic sectors
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auto parts and cosmetic sectors
PVC Alagoas
� 210 kton/y of PVC capacity expansion in Alagoas
� Investments around US$500 million and startup expected for the 2H2012
Partnership with Petrobras in new projects (under evaluation)
� Suape: textile complex in the northeast region
� Comperj: production and marketing of resins and basic petrochemicals to be developed in RJ state
Source: Braskem
Industrial assets
Greenfield projects
Projects with Petrobras
Agenda
� Braskem overview and roadmap strategy
� Acquisitions
� Braskem post transactions
� Projects in the pipeline� Projects in the pipeline
� The global petrochemical Industry
� Key differentiators
� 2009 Figures
Global scenario
� Petrochemical prices are expected to keep their bullish trend during the 1Q10 and
beginning of 2Q10:
�Oil volatility and higher monomer cost
�Production constrains in USA, Europe and Asia due to the cold weather
�Planned maintenance shutdowns
�Operational problems in the Middle East
� However, several factors could push prices down:
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� However, several factors could push prices down:
�New monetary policy in China (credit restrictions) versus economic growth
�Sustainability of the European demand
�Unemployment rates continuing to discourage US consumers
� In Argentina, after a seasonal slowdown in industrial activity, market is expected to
improve during February
� Brazilian demand for finished products holding steady with room for price increases in
R$ given devaluation of the currency and strong international price environment
Potential positive factorsPoints of concern
Petrochemical Cycle Downcycle less severe than expected
� Uncertainty regarding the extent of the global economic recovery
� Incentives to sustain supply buildup
� Frequent delays in new capacities
� Operational and logistics problems
� Increased economic importance of emerging countries with relevant
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Supply & Demand Balance
� Incentives to sustain supply buildup
� China: import substitution
� New ethylene and resins capacities in the Middle East
� Stronger activity of capital investors in the commodity market
emerging countries with relevant domestic consumption, as Brazil and China
� Supply-demand geographical imbalance leads to logistics barriers
� Opportunities from assets on sale
� Limited capacity utilization helps to balance the market
Source: CMAI
84% 80%74%
90%
0 5,000
10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
North Europe Middle East Asia
Global supply of ethylene
� Lower global demand
growth and new
capacity additions
expected to come on
stream limiting the
2009 expected utilization rate:
Kton
North America
Europe Middle East Asia
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Nameplate Capacity Effective Production
utilization rates of the
actual players
� New capacity additions
could be delayed
New ethylene capacity additions globally (Mton):
Source: Parpinelli Tecnon / CMAI / SRI0
2
4
6
8
10
12
2010 2011 2012 2013
Delayed
Go ahead
Agenda
� Braskem overview and roadmap strategy
� Acquisitions
� Braskem post transactions
� Projects in the pipeline� Projects in the pipeline
� The global petrochemical Industry
� Key differentiators
� 2009 Figures
Brazil: dynamic market with still low per capita consumption
Brazil:
� PE, PP and PVC per capita consumption(Kg per person)
76
68
57
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
PE PP PVC
27
27
* Compound annual growth rate Source: CMAI
11.112.5 13.6
14.5 15.416.2 16.6 16.1
17.8 17.518.7 18.0
20.2
5.2%CAGR*
21.922.7
USA Europe Japan
749
856 1,043 950
In Brazil, companies are exposed to a dynamic market with resilient growth
� Domestic demand for resins (Kton/y)
3,696
4,048
5%CAGR
10%4,226
1%
3,435
2,880
3,377
4,270
4%
2001 2004 2005 2006 2007 2008 2009
2,8803,435
1,695 1,833 1,964 1,966 2,014
9901,114
1,228 1,218 1,306
692
749
PVC
PP
PE
28Source: Braskem / Abiquim – domestic sales + imports
2,880
21.417 20.805 21.032 21.48622.127
22.818
-500
500
1.500
2.500
3.500
North America will be the natural market for Braskem’s projects
PE and PP Capacity (Kton/y) versus Operating rate (%)
82%
80%
79%
81%
83%
86%
26.000
27.000
28.000
29.000
30.000
31.000
Net Exporter
Resins’ net balance (Kton/y)
-2.500
-1.500
-500 2008 2009 2010 2011 2012 2013
PEs PP Domestic Demand
29Source: CMAI
24.000
25.000
26.000
2008 2009 2010 2011 2012 2013
Capacity Operating rate
� Hypothetical and announced capacity shutdowns should lead to an increase in operating rates
� Even considering a lower demand recovery, North America shall be a net importer of PP as of 2011
Net Importer
Management’s main priorities
� Continued strengthening of long-term relationship with Customers
� Support to the Brazilian petrochemical and plastic chain sustainability
� Implementation of the acquisition stages of Quattor and Sunoco
Chemicals
� Analysis of Braskem’s interest in the Suape (textile center) and Comperj
(1st e 2nd generation) projects
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Financial strength and respect for minority shareholdersFinancial strength and respect for minority shareholdersOpportunities for internationalizationOpportunities for internationalization
(1st e 2nd generation) projects
� Conclusion of Green PE plant: on schedule and within planned Capex
� Projects in Latin America: competitive feedstock
� Assessment of selective acquisitions in North America
� Maintain financial health and liquidity
Meeting with Investors
March, 2010