presentation hsbc u.s. road show
TRANSCRIPT
2
Forward-looking Statements
This presentation contains forward-looking statements. These statements do
not represent historical fact, but rather reflect the beliefs and expectations
of Braskem’s management. The words “anticipate”, “wish”, “expect”,
“estimate”, “intend”, “forecast”, “plan”, “predict”, “project”, “target” and
similar words are intended to identify these statements. Although Braskem
believes that the expectations and assumptions reflected in these forward-
looking statements are reasonable and based on information currently
available to management, Braskem cannot guarantee future results or events.
The forward-looking statements included in this presentation are valid only
on the date on which they are made (March 31, 2008), and the Company does
not undertake 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.
5
• #2 Ebitda Margin in the Americas (1Q08 LTM)
Braskem # 1 Petrochemical Company in Latin America
• #1 Petrochemical Company in LATAM
Resins Production Capacity (kton)
5
0
1,000
2,000
3,000
CPS* Solvay EcopetrolMexichemBraskem
3,440
1,515
682521 438
692
Dow
Source: Braskem/ CMAI
1Q08 LTM FINANCIALS
• Net Revenue: US$ 10.2 bi
• EBITDA: US$ 1.6 Bi
• Assets: US$ 12.1 bi
• EV: US$ 8.0 bi
*CPS: Companhia Petroquímica do Sudeste – 60% of Unipar and 40% of Petrobras
0%
5%
10%
15%
20%
Mexichem Nova Chemical
Unipar
15%
DOW Westlake Ultrapar
Median
Braskem
3,500
6
Strong and consistent growth via Organic and Acquisitions Routes
Source: Braskem
1994 1996 1998 2000 2002 2004 2005 2006 2007
Organic
Acquisitions
1,000
2,000
3,000
4,000
5,000
US$ 1,357 MM
US$ 2,375 MM
US$ 9,712 MM
1,2281,234
1,528 1,734
3,045 3,225
3,621
5,551
• Revenues ► CAGR (’94-’07) – 16.3%
• Production capacity ► CAGR (’94-’07) – 12.3%
New PP Plant
start-up
New PE Plant
start-up
Creation ofBraskem
PP DBNEthylene DBN
PVC DBN
PolitenoAcquisition
Copesul / IPQAcquisition
3,145
KtonRevenues
6
7
• # 3 Resins Producer in Americas - petrochemical “pure-play”(kton)
7
0%
5%
10%
15%
20%
Mexichem Solvay Westlake DowUnipar
18%
LG Ultrapar Nova Chemical
Median
Braskem
• #2 Global Ebitda Margin - petrochemical “pure-play” (03-07 average)
Source:Braskem / CMAI March 2008
PVC
PEPP
FormosaDow
615
6464
5,774
5,0955,095
LyondellBasell Braskem
3,440
ShintechIneos
2,8132,813
1,833
4,646
1,8151,815
1,110
515515
978978
761
1,2101,210
2,949
926926
2,1612,040
730730
1,515
CPS
3rd 7th
7851,235
Large Scale combined with superior profitability
8
AgendaAgenda
� Overview
� Key Differentiators
� Key Financial & operational Figures
� Upside Drivers
8
99
Braskem has most of its operations in the leading economy in LATAM…
• Brazil: 1/3 of LATAM GDP • LATAM GDP (US$ billion) *
Brazil: 1,838
México: 1,353
Argentina: 524
Venezuela: 335
Colombia: 320
Others: 1,070
Total: 5,440
Colombia 6%
Mexico
25%
Argentina
10%
Venezuela 6%
Brazil
33%
Others
20%
Source: The Economist (Mar2008)
(*) PPP – Purchasing Power Parity
10
…and is exposed to a dynamic market with strong growth rates…
• Domestic demand for resins
Source: Abiquim – domestic sales + imports
PEPPPVC
2,880
3,435 3,3773,694
2001 2004 2005 2006
4,048
2007
1,695
990
692
1,833
1,114
1,964
1,228
856
6.0%CAGR
10%
9%
749
• USA Demand for resins
(Kton)
23,276
25,90424,749
25,020
2001 2004 2005 2006
24,306
2007
6,350
6,081
6,287
12,826
6,142
12,601
5,563
0.7%CAGR
-3%1%
5,907
12,318
Source: NAD - CMAI
1111
…with high level of consolidation
• 2 Top producers share
• High Demand Growth and Elasticity
01-07 CAGR Resin Growth 01-07 GDP Elasticity
Brazil: 6.0% Brazil: 2x
USA: 0.7%
• Number of Producers
BRAZIL USA
Source: Braskem / CMAI
PEPP PVC
1212
9
42 2
PP PVCPE
100% 100%93%
30%51%42%
12
% Capacity Share
Region Company PE PP PVC
South America Braskem 46% 44% 32%
Unipar 23% 31% 0%
North America DOW 22% 4% 1%
NOVA 7% 0% 0%
Mexichem 0% 0% 4%
Westlake 6% 0% 8%
Northeast Asia LG Chemical 5% 2% 6%
Western Europe Solvay 0% 0% 15%
Braskem has unmatched regional capacity share in core products…
12
Source: Braskem / CMAI
131313
…with Growing & Sustained Leadership in Brazil…
Source: Braskem/Abiquim Dec 07
• PP Market Share • PVC Market Share
• PE Market Share
40% 38%49%
51% 55% 37%
9% 7% 14%
42% 41%
48% 50%
10% 9%
0%
20%
40%
60%
80%
100%
2001 2003 2005 2006 2007
BRASKEM PEER IMPORTS
57%48% 54%
29%32% 27%
14% 20% 19%
52% 53%
28% 30%
20% 17%
0%
20%
40%
60%
80%
100%
2001 2003 2005 2006 2007
BRASKEM PEER IMPORTS
29% 31%
52%
55% 50%
32%
16% 19% 16%
33% 37%
53% 46%
15% 17%
0%
20%
40%
60%
80%
100%
2001 2003 2005 2006 2007
BRASKEM PEER IMPORTS
141414
Source: Braskem / IBGE
…and Diversified customer basis in the fast-growing Brazilian market
% of Resin Sales% of Resin Sales
FOOD PACKAGING
CONSUMERGOODS
CIVIL CONSTRUCTION
RETAIL
AGRICULTURE
COSMETICS ANDPHARMACEUTICALS
CLEANINGMATERIAL
INFRASTRUCTURE
ELECTRIC AND ELECTRONIC
AUTOMOTIVE
OTHERS
17%
17%
23%
10%3%
2%4%
5%
3%
8%
8%
INDUSTRIALINDUSTRIAL + 6%
Growth by Sector in 2007Growth by Sector in 2007
CONSTRUCTION CONSTRUCTION
AUTOMOBILESAUTOMOBILES
HOME APPLIANCESHOME APPLIANCES
FERTILIZERSFERTILIZERS
CONSUMER GOODSCONSUMER GOODS
PLASTIC PACKAGINGPLASTIC PACKAGING + 4%
+ 5%
+ 5%
+ 5%
+ 15%
+6%
151515
Innovation and Technology as key value drivers
• Over US$ 160 million in R&D assets
• 200 researchers
• 8 pilot plants
• 187 patents filed
• Focus on nanotechnology and intelligent packaging
• 18% of resins sales derive from products launched in the last three years
• Partnership with universities and R&D centers in Brazil and abroad
Source: Braskem
161616
Spreads on Asian pricesSpreads on Asian pricesPVC: Braskem premium over internationalPVC: Braskem premium over international
PP: Braskem Premium over InternationalPP: Braskem Premium over InternationalPE: Braskem Premium over InternationalPE: Braskem Premium over International
Strong pricing power Over 30% spread on international prices
%%
%%
Source: CMAI / Braskem
PPPP
PEPE + 34%
+ 33%
PVCPVC + 42%
%%
%%
27%
34%
jan/
05m
ar/0
5m
ai/0
5
jul/0
5
set/0
5no
v/05
jan/
06m
ar/0
6m
ai/0
6
jul/0
6
set/0
6no
v/06
jan/
07m
ar/0
7m
ai/0
7
jul/0
7
set/0
7no
v/07
jan/
08m
ar/0
8
Spread PEAD Braskem / International US$
Average 27%
42%33%
jan/
05m
ar/0
5m
ai/0
5
jul/0
5
set/0
5no
v/05
jan/
06m
ar/0
6m
ai/0
6
jul/0
6
set/0
6no
v/06
jan/
07m
ar/0
7m
ai/0
7
jul/0
7
set/0
7no
v/07
jan/
08m
ar/0
8
Spread PP Braskem / International US$
Average 30%
42%
52%
jan/
05m
ar/0
5m
ai/0
5
jul/0
5
set/0
5no
v/05
jan/
06m
ar/0
6m
ai/0
6
jul/0
6
set/0
6no
v/06
jan/
07m
ar/0
7m
ai/0
7
jul/0
7
set/0
7no
v/07
jan/
08m
ar/0
8
Spread PVC Braskem / International US$
Average 42%
17
AgendaAgenda
� Overview
� Key Differentiators
� Key Financial & Operational Figures
� Upside Drivers
17
18
Production growth with higher operating reliability
PE PP PVC
1Q084Q07
ETHYLENE
93%
95%
Source: Braskem
Resin ProductionResin Production KtonKton
1Q07
86%
96%
Capacity Utilization Capacity Utilization %%
ALL-TIME RECORDS
� Production in the last 12 months of 2,827 Kton
� Quarterly PVC production of 130 Kton in 1Q08
1Q084Q071Q07 1Q084Q071Q07 1Q084Q071Q07
88% 89%91%
96% 96%96%94%
104%
92%
702
1Q084Q07
704
LTM1Q08
LTM 1Q07
2,786 2,827
+1%
700
1Q07
19
Leadership position in robust domestic market: Demand +10%
Source: Braskem / Abiquim
Domestic Sales 1Q08 vs. 1Q07Domestic Sales 1Q08 vs. 1Q07 %% Resin Market Share 1Q08Resin Market Share 1Q08
+13%
+ 5 %+7%+ 6%
+10%
PVCPPResin
BraskemPE
Brazilian market*
Other
Imports
49%49%
22%
29%
*Domestic sales + Imports
20
648
4Q07 1Q08PricesFixed Costs/ SG&A
Volume Foreign Exchange
Source: Braskem
(32)
FX impacton costs
FX impacton revenue
Raw Materials
(263)
188
(136)
Other
Evolution of EBITDA Commercial strategy and reduction in fixed costs minimize impacts from higher Naphtha prices
Evolution of EBITDA Commercial strategy and reduction in fixed costs minimize impacts from higher Naphtha prices
583
83
(115)
11219
(89)
R$ million
21
Key Financial Figures
R$ million
Source: Braskem * Pro Forma Figures
21
1Q08 (A) 4Q07 (B) 1Q07*(C)
Change %
(A)/(B)
Change %
(A)/(C)
Sales 4,410 4,809 4,424 (8) (0)
EBITDA 583 648 853 (10) (32)
Margin 13.2% 13.5% 19.3% -0.3 p.p. -6.1 p.p.
Net Income before Minority 120 25 275 379 (56)
Minority Interest (37) 2 (148) - (75)
Net Income 83 27 127 204 (35)
ST+LT Debt 9,363 8,382 8,948 12 5
Cash (1,932) (2,259) (2,090) (14) (8)
Net Debt 7,431 6,123 6,859 21 8
Net Debt/EBITDA 2.56 1.93 2.28 33 12
22
2016 /2017
Source: Braskem
Lengthening of debt profileis a priority
in R$ million (3/31/08)
3/31/08
1,932
Gross Debt: 9,363
Net Debt: 7,431
2008
In US$
In R$
Cash and equivalents
2009 2010 2011 2012 /2013
2014 /2015
2018 /2020
Perpetual
13%13%
9%9%8%8%
6%6%7%7% 7%7%
US$ 73%
* Includes R$2.1 billion from bridge loan to acquire Ipiranga Group’s petrochemical assets
9%9%
Average Term:10 years
31%31%
974974
10%10%
1,2411,241
1,668
767767 827827 786786894894
534534 617617 614614
1,1431,143
789789
441
2.56
Dec-07 Mar-08
1.93
+33%
Net Debt / EBITDA (x)
Pré-fixado
2%
Bridge
Loan
23%
US$
23% Trade
Finance
27%
CDI
17%
TJLP
8%
23
AgendaAgenda
� Overview
� Braskem Key Differentiators
� Key Financial Figures
� Upside Drivers
23
2424
� R$ 200 million on annual and recurring basis in the EBITDA
24
NPV of US$ 1.1 billion in total synergies from Ipiranga acquisition
R$ million
200
TotalSynergies
69
Commercial Financial
9
Industrial
73
SupplyLogistics
25
Others
Source: Braskem
1410
Synergies in 2008 (R$ 108 million)
Total Synergies
25
Accelerated Synergies in 1Q08:R$ 136 million in annual and recurring gains
R$ million
Source: Braskem
Commercial
Industrial
Supply
Logistics
Synergies 1Q08
16
42
7
10
2008
39
29
16
13
Financial ex-Ebitda 59
Financial 2 7
Others 1 4
Actual Goal
Annualized
Impact on EBITDA 77 108
80
262626
�R$ 100 million estimated annual & recurring gains:
�R$ 30 million in production costs
�R$ 70 million in general and administrative expenses
�R$ 67 million already captured in 1Q08 on annualized and recurring basis
�Renegotiation of contracts: insurance, IT and telecom
�Supply chain integration: reduction in inventory levels of maintenance and production items
�Optimization of the organizational structure
Additional gains of R$ 100 million with Fixed Costs Reduction Program
272727
Strategic alignment with Petrobras
� Superior Industry Structure in Brazil: Consolidation around 2 large competitors (Braskem & CPS).
� New Geographic growth opportunities: linked to Petrobras’extensive footprint in Brazil and abroad
� Synergies:
� potential for operational integration with Petrobras refineries
� Innovation & Technology: partnership with Petrobras Research Center
� High corporate governance standards: New shareholders agreement
28
Ethylene global supply & demand balanceHigh capacity utilization rate in 2008
Source: CMAI, March of 2008
Supply Demand Utilization Rate
131140
149 154
119124
131 136
88%88%88%88%89%89%
91%91%
0
20
40
60
80
100
120
140
160
180
2008 2009 2010 2011
75
80
85
90
95
100
Utilization Rate %MM ton
160
142
89%89%
2012
75
80
85
90
95
100
1 2 3 4 5
28
29
Global supply & demandHigh Ethylene Utilization Rate in South America
EthyleneMM tons
159
Supply2012
9
Saudi Arabia Others
9
Supply2007
126
IranChina
8
Qatar
43
EHYTLENE UTILIZATION RATE (EHYTLENE UTILIZATION RATE (’’0707--’’12)12)
WORLD WORLD ≥≥≥≥≥≥≥≥ 88%88%
SOUTH AMERICA SOUTH AMERICA ≥≥≥≥≥≥≥≥ 92%92%
NORTH AMERICA NORTH AMERICA ≥≥≥≥≥≥≥≥ 85%85%
29
Source: CMAI
30
Significant resins production capacity increase…
Source: Braskem
Braskem Capacity Additions (2008-12)
* JV with Pequiven (49%) and Sojitz (2%)30
Product Capacity Investment Advantage Start-up(K ton) (US$ MM)
PP Paulínia 350 350 Diversification - Refinery Gas 2008
Green PE 200 NA Ethanol – 100% Renewable 2010
PP Venezuela* 450 900 Propane at competitive cost 2010
PVC Alagoas 200 350 Leadership and innovation 2010
PE Venezuela* 1,100 2,600 Ethane at competitive cost 2012
PP Bahia 300 NA Strengthen Market leadership 2012
Total 2,600
NA: Not Available
31
…Resulting in even larger scale and increased competitiveness
NaphthaFeedstock from Refinery
Ethanol
Camaçari - BA
Triunfo - RS
Paulínia - SP
Venezuela
9%9%
57%57%34%34%32%32% 55%55%
4%4%9%9%
Natural GasPolyethylene Polypropylene PVC
2008 2012 FYE
4.9 million
1,815
1,110
515515
3.4million
715
1,635
2,565
+43%
� Larger scale � Increased Competitiveness
31
Source: Braskem
32
PP Paulínia: Proven capacity in project management
� Start up in April 2008
� Spheripol technology
� Global scale: 350 Kton/year
� Located in the largest consumer market in Latin America
� Feedstock: Propylene from refinery
� Investments of R$ 700 million
333333
Braskem: High upside potential
Commitment to SustainabilityCommitment to Sustainability
� Dominance in the domestic market with superior profitability
� Exposure to the fast-growing domestic market
� NPV of US$ 1.4 billion derived from synergies and reduced fixed
costs
� Growth projects with increased profitability and high ROCE
� Proven expertise to implement greenfield projects
� Strategic alignment with Petrobras
� Innovation and Technology as key value drivers: green polymer
� Experienced management team focused on value creation