braskem 2009 results
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Braskem's 2009 resultsTRANSCRIPT
Meeting with Investors Investors
4Q09 Results
Bernardo GradinCEO
Carlos Fadigas CFO
Luciana FerreiraIRO
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
2
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
� 4Q09 Results
� Growth with Value Creation
3
� Growth with Value Creation
Agenda
� 4Q09 Results
� Growth with Value Creation
4
� Growth with Value Creation
Global Scenario
� Recovery of resins and basic petrochemicals prices in the 4Q09:
� Increase in naphtha and oil prices
� Operational problems and feedstock availability (winter season)
� Recovery of Chinese demand and developed markets
� Delays in the startups of new capacities, planned maintenance shutdowns and
continued operational problems favor the short term scenario
� However, other factors may lead to a new downward trend in prices:
5Source: Braskem / CMAI
� However, other factors may lead to a new downward trend in prices:
� Credit restriction announced by the Chinese government
� Sustainability of the European demand recovery
� High unemployment rates in the USA negatively impacting the recovery in
consumption
� Additionally, the announcement of new capacities exceed the growth in world
demand, which shall impact the profitability of the global petrochemical industry in
2010 and 2011
Regional Scenario
� Braskem plants(a) operating at high rates
� The recovery of domestic demand for thermoplastic resins, intensified during
2H09, has led to a 1% growth in annual demand, which reached 4,2(b) million tons
� 4Q09 was not affected by seasonal downward cycle, consolidating the recovery
in the Brazilian market
� Brazilian demand for finished goods remains strong in the beginning of 2010, which
6
(a) Not including Quattor and Sunoco assets(b) Braskem estimates, as Abiquim did not disclose the Brazilian apparent consumption data.
Source: Braskem / CMAI
� Brazilian demand for finished goods remains strong in the beginning of 2010, which
should support higher prices in the region, following the upward trend in
international prices
� Argentina, after a seasonally weak period, shows signs of recovery in both prices
and demand
Highlights
� Resins production increased 10% in 2009, reaching 3.1 million tons
� Olefins and aromatics sales grow more than 20% in 2009
� Recovery in the domestic market and new opportunities in international markets
� Record production in 2Q09 and 3Q09
� EBITDA reaches R$ 2.5 billion in 2009 with margin of 16.2%, 2.83 p.p. higher than
7
� EBITDA reaches R$ 2.5 billion in 2009 with margin of 16.2%, 2.83 p.p. higher than 2008
� Braskem, in association with IDESA, announces an integrated project in Mexico for the production of 1 million ton/year of ethylene and 1 million ton/year of PEs
� In January 2010, Braskem announced the acquisition of Quattor, becoming the leading thermoplastic resins producer in the Americas
� And ten days later, the Company announced the acquisition of polypropylene assets belonging to Sunoco Chemicals, an important step in its internationalization process
Source: Braskem
Braskem still operating at high rates
Capacity Utilization Capacity Utilization %%
73%
97% 93%
65%
94% 90%69%
98%90% 95% 96% 99%
4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09
PE PP PVCETHYLENE
8Source: Braskem
Resins ProductionResins Production KtonKton
� Even with the reduction in operating
rates compared to the 3Q09,
crackers and 2nd generation units still
present good operating performance
in 4Q09
4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09
626
857 815
4Q08 3Q09 4Q09
-5%
Effluents(m3/t)
2.712002
1.232009
-54%
Brazil CI: 2.8
Water Consumption(m3/t)
5.492002
4.022009
-27%
World CI: 27.8
Total Recordable Cases Accidents Rate(employees and contractors – 1.000.000 mh)
5.122002
0.882009
-83%
Strong Improvement since 2002
Health, Safety and Environmental Results
2008 Brazilian Chemical Industry data (Abiquim 2009)2007 World Chemical Industry data (ICCA, 2009)
2009
Solid & Liquid Residues (kg/t)
9.932002
2.762009
-72%
Brazil CI: 2.8
Brazil CI: 11.9
2009
Energy Consumption (GJ/t)
11.962002
11.222009
-6%
World CI: 27.8
Brazil CI: 7.4
2009
Lost Time Cases Accidents Rate(employees and contractors – 1.000.000 mh)
0.852002
0.182009
-79 %
World CI: 3.9
Brazil CI: 11.8
Source: Braskem
1,056 1,120 1,087 910 902
1,060 1,157 1,151
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Demand stability in 4Q09 reflects good performance of the sectors
0%
Apparent Consumption
(000 tons)
+16%
10Source: Abiquim, Braskem estimates
Sectors related to consumer goods have driven the demand for thermoplastic resins
CONSUMER GOODS56%
DURABLE GOODS8%
AGRIBUSINESS5%
CONSTRUCTION21%
INDUSTRIAL6%
OTHERS4%
Seasonal slowdown didn’t occur in 4Q09 and market grows in 2009
Domestic Sales in 2009 vs. 2008Domestic Sales in 2009 vs. 2008 %%
9%
11
* Braskem estimates: Domestic sales + Imports
-2%
-8%
0% 1%
PE PP PVC Total
Resins
Brazilian
Market*
Source: Braskem
R$ million
EBITDA Prices increases are not sufficient to offset higher costs and lower sales volume
838
287 73
(217)
(112)
FX impact on Revenues
FX impact on costs
(324)
203
12Source: Braskem
(112)
(121)(69)
(65)
614
EBITDA
3Q09
Price Tax
Renegotiation
Program
Raw
Material
Other
Variable
Costs
FX Volume Fixed Cost/
SG&A
Others
EBITDA
4Q09
Main Economic Indicators
Main Economic Main Economic IndicatorsIndicators
4Q09 4Q09 (A)(A)
3Q09 3Q09 (B)(B)
4Q08 4Q08
( C)( C)
Chg. % Chg. % (A)/(B)(A)/(B)
Chg. % Chg. % (A)/( C)(A)/( C)
2009 2009 (D)(D)
2008 2008 (E)(E)
Chg. % Chg. % (D)/(E)(D)/(E)
Net Revenue 4,253 4,047 4,273 5 0 15,248 18,541 (18)
EBITDA 614 838 577 (27) 6 2,475 2,485 0
R$ million
EBITDA 614 838 577 (27) 6 2,475 2,485 0
Ebitda Margin 14.4% 20.7% 13.5% -6.3 p.p. 0.9 p.p. 16.2% 13.4% 2.8 p.p.
Net Financial Result (655) 243 (2,250) - (71) 572 (3,696) -
Net Income (893) 645 (2,138) - (58) 917 (2,457) -
13Source: Braskem
Comfortable cash position covers2 years of debt amortization
R$ Million (12/31/09)
Gross Debt: 9,760Gross Debt: 9,760
Net Debt: 6,612Net Debt: 6,612
Average Term: 9.5 yearsAverage Term: 9.5 years
64% 64% of debt pegged to USD of debt pegged to USD
Net Debt / EBITDA (x) US$Net Debt / EBITDA (x) US$Net Debt / EBITDA (x) R$Net Debt / EBITDA (x) R$
3,148
2.74 2.67
Sep 09 Dec 09
-3%3.21 2.98
Sep 09 Dez 09
-7%
14Source: Braskem
2010 201112/31/09 2012 2013 2014/2015
2016/2017
2018/2019
2020onwards
1,854 1,834 1,642 1,267 1,213 1,163
585
1,224 871
1,295
In US$
In R$
19%17%
13% 12% 12%
6%
12%
9%
Agenda
� 4Q09 Results
� Growth with Value Creation
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� Growth with Value Creation
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 utilization rates 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
17
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 / SRI
0
2
4
6
8
10
12
2009 2010 2011 2012 2013
Delayed
Go ahead
Vision 2020: Leader in the
Americas, rank among the 5
largest petrochemical
companies worldwide and to
be positioned as the preferred
Strategic direction
be positioned as the preferred
partner for global alliances
18Source: Braskem * Enterprise Value
Drivers of the strategic direction
Raw material availability and
energy at low cost
1919Source: Braskem
Technological
Autonomy
International Expansion in
Attractive Markets
Corporate
Differentiation
Diversification of Products and Businesses
People
Benefits and strategic drivers of the acquisitions
Quattor:
� 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
� Value creation for all shareholders
Sunoco:
20
Sunoco:
� 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
� Foothold in the U.S. enhancing market for greenfield projects in Latin America
The acquisition of Quattor and Sunoco’s PP assets reinforces Braskem objective of
being among the top 5 global petrochemical companies in the world
510
Braskem - # 1 Resin Producer in the Americas, now with plants in the USA
Key Financials (2009 *):
Resins capacity (kton/year)
6,460
* Quattor LTM: Oct/08 to Sep/09
Gross revenue R$ 27.5 billion
Net revenue R$ 21.2 billion
EBITDA R$ 3.1 billion
3,035
2,915
PVC
PP
PE
2121
Profile:
29 petrochemical plants : 26 in Brazil and 3 in the USA
Listed on 3 stock exchanges: BM&FBovespa, NYSE and Latibex
Source: Braskem / Company estimates
Leader in the Americas and a top 8 global player in resins capacity
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
4th
1th
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 4,079 3,595
22
8th
12th
Braskem post
operations
Exxon Mobil
Dow Lyondell Basell
Braskem Formosa Shintech Chevron Philips
Quattor Sunoco
1,050 1,040 950 PE
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
23
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
Current assets distribution and projects location
Industrial Assets Greenfield Projects
Bahia - Brazil� 1 naphtha cracker� 3 PE� 1 PP� 1 PVC� 1 Chlorine - Soda
Alagoas - Brazil� 1 PVC� 1 Chlorine - Soda
São Paulo - Brazil
Rio Grande do Sul- Brazil� 1 Green PE
Alagoas – Brazil� 1 PVC
Mexico�1 gas cracker�3 PE
Peru�1 gas cracker
24
New Projects(1)
with Petrobras
Comperj – RJ, Brazil� 1st and 2nd
generations
Suape – PE, Brazil� Textile complex
São Paulo - Brazil� 1 naphtha cracker� 2 PP� 3 PE
Rio de Janeiro - Brazil� 1 gas cracker� 1 PP� 3 PE
Rio Grande do Sul - Brazil� 1 naphtha cracker� 5 PE� 2 PP
United States � 3 PP
�1 gas cracker�1 PE
Venezuela�1 gas cracker�1 PP�1 PE
Source: Braskem
(1) Analysis of economic viability, in accordance to the Investment Agreement
Management’s main priorities
� Continued strengthening of long-term relationship with Customers
� Support to the Brazilian petrochemical 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
25
Greater operational and financial strengthGreater operational and financial strengthInternationalizationInternationalization
(1 e 2 generation) projects
� Construction of Green PE plant: on schedule and within planned Capex
� Projects in Latin America: competitive feedstock
� Assessment of selective acquisitions in North America
� Support alliances with global companies
� Prioritizing financial health and liquidity
Meeting with Investors Investors
4Q09 Results
Bernardo GradinCEO
Carlos Fadigas CFO
Luciana FerreiraIRO