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1Q13 Earnings Conference Call Investor Relations São Paulo, May 13, 2013
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Forward-looking Statements 2 This presentation contains forward-looking statements. These statements are not historical facts and are based on management’s objectives and estimates. The words "anticipate", "believe", "expect", "estimate", "intend", "plan", "project", "aim" and similar words indicate forward-looking statements. Although we believe they are based on reasonable assumptions, these statements are based on the information currently available to management and are subject to a number of risks and uncertainties. The forward-looking statements in this presentation are valid only on the date they are made (March 31 2013) 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.
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Highlights 3 Crackers utilization rates of 90% in 1Q13. Braskem’s thermoplastic resin sales up 6% in comparison with the 4Q12, following the domestic demand trend and amounting to 921 kton. Market share expanded to 71% in 1Q13 vs. 70% in 4Q12. EBITDA in 1Q13 reached R$ 937 million or US$ 470 million. Excluding nonrecurring items in 4Q12, EBITDA increased 10% in U.S. dollar. Integrated project in Mexico: –Construction progress (26% of physical completion) and evolution in the conditions precedents (CPs) to the first disbursement of the project finance, which will occur in the second quarter; –Expansion in pre-marketing activities. Incentive to the Chemical Industry: –In May, the federal government approved the measure that reduces the rate of PIS and COFINS taxes on the acquisition of raw materials (from 5.6% to 1%) and inputs for second generation (from 9.25% to 1%), maintaining the tax credit at 9.25%. –The incentives announced are aimed at supporting recovery in the competitiveness of the industry and strengthening investment in new production capacity, in order to meet the growing demand and reversing the sector’s trade deficit.
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Brazil’s thermoplastic resins market 4 Sources: Alice / Braskem Brazil’s thermoplastic resins market (in million tons) and Braskem Market Share Thermoplastic resins: 1Q13 x 1Q12 1Q122Q123Q124Q121Q13 Braskem Sales Profile - 1Q13
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EBITDA – 1Q13 versus 4Q12 5 R$ million EBITDA recovery due to the higher sales volume, especially in the domestic market, and better spreads following the international market trend.
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Longer debt profile with diversified financing sources. Commitment to maintaining liquidity AgencyRatingOutlookDate FitchBBB-Negative 04/25/2013 S&PBBB-Stable 11/09/2012 Moody’sBaa3Negative 04/24/2013 Rating Braskem – Global Scale Diversified Funding Sources Net Debt / EBITDA (US$) 6 US$ million4Q121Q13 Net Debt6,8597,376+8% EBITDA (LTM)2,0032,036+2% Net Debt/EBITDA3.42x3.62x * +6% * Ex-bridge loan of Mexico Project = 3.34x in 1Q13 Banks 29% Bridge Loan 7%
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Growth projects and Capex 7 Maintaining its commitment to capital discipline, Braskem made R$ 297 million in operating investments in 1Q13: ~90% of the total, or R$ 261 million, was allocated to maintenance and productivity improvement. CAPEX Mexico: The expected disbursement of US$ 619 million regarding the Bridge Loan shall occur until June/13. The investments through equity are expected to begin in the second quarter. R$ million 70%
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8 Integrated Project with a production capacity of 1 million tons of PE – JV Braskem (75%) and Idesa (25%) First disbursement shall occur until June/2013, after meeting some contractual obligations. Construction in line with the schedule. Physical completion of 26%. More than 6 thousand workers on site (direct and indirect). Project Highlights Competitive feedstock. North American gas as reference price. Start-up of the complex in a period of high spreads in the petrochemical cycle. Supply the net importer Mexican market. Braskem is well positioned to benefit from the North American gas First project to start operations in the North American region
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Global outlook and petrochemical industry Source: IHS, Equity Research Reports Emerging countries should be the main driver of world economic growth Expectation that demand growth is higher than supply gradual recovery of spreads. Brazilian Government committed to developing the chain and strengthening the competitiveness of local producers: - Extension of Reintegra Program; - Combating imports; - Reduction of payroll taxes for manufacturers; - Brasil Maior Plan (REIQ). 9 Ethylene: Additional Capacity (Million ton) Global outlook and petrochemical industry 7.8 9.5 5.0 6.2 4.7 China Iran U.S China: Uncertainty regarding the feasibility of new projects High costs/investments in order to access feedstock Infrastructure problems (logistics, availability of water for extraction and etc) Iran: U.S. embargo affects products sale USA: Greenfield projects in U.S. are expected to come on stream as of 2016/2017 Ethylene Demand (Million ton)
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Braskem's Priorities Focus on continually strengthening the relationship with Clients and expanding market share. Advance in the industrial policy for the petrochemical chain, focusing on tax reduction on investments, technological development and renewable chemicals. Boosting Braskem’s competitiveness by the continuous improvement of its operational efficiency and diversification of its feedstock. Ensure that the greenfield project in Mexico progress in line with its schedule and cost: start-up is expected in 2015. Advancing on the engineering studies for the industrial units of the Comperj (FEL3) project and defining the feedstock to be used by the complex. Maintaining liquidity and financial health in a scenario marked by global crisis. 10
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1Q13 Earnings Conference Call Investor Relations São Paulo, May 13, 2013
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