apimec 220311 eng
DESCRIPTION
TRANSCRIPT
Meeting with Investors
4Q10 and 2010 Results
Meeting with Investors
4Q10 and 2010 Results
Carlos FadigasCEO
Marcela DrehmerCFO
Carlos FadigasCEO
Marcela DrehmerCFO
Sao Paulo, March 22, 2011Sao Paulo, March 22, 2011
4Q10 and 2010 Results4Q10 and 2010 Results
Forward-looking Statements
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 (December 31, 2010) 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.
2
Agenda
� 4Q10 and 2010 Results
� Growth with Value Creation
3
� Petrochemical Industry
� Outlook and Priorities
Agenda
� 4Q10 and 2010 Results
� Growth with Value Creation
4
� Petrochemical Industry
� Outlook and Priorities
Highlights
� Braskem’s EBITDA stood at R$1.1 billion in 4Q10 with a 14.9 %
EBITDA margin
� 2010 EBITDA reached R$4.1 billion, up 27% from 2009
• Quattor’s EBITDA increased 78% reaching R$1 billion
� Braskem’s domestic resins sales increased 11%
� Net Income of R$1.9 billion in 2010
� Distribution of R$666 million in dividends
3,181
4,055
2009 2010
EBITDA (R$ million)
+27%
1,638
2,308
2009 2010
EBITDA (US$ million)
+41%
5
� Braskem is committed to its financial solidity:
� Debt prepayment and long term bonds issues lengthened the average debt term
to 12.5 years
� Net Debt/EBITDA ratio fell from 3.59x (Dec/09 pro forma) to 2.43x in Dec/10
� The Administrative Council of Economic Defense (CADE), approved without restrictions
the acquisition of Quattor
� Synergies from the acquisition are expected to reach R$377 million in annual
EBITDA for 2011
� Ethylene XXI Project – Mexico
� Letters of interest to the project finance surpassed its financing needs
� Strategic partnership with Ineos and Lyondell Basell for the use of their technology at the polyethylene plants
Exports 23% 26%
22,647
27,829
2009 2010
+23%
Net Revenue (R$ million)
86% 87%78% 83% 80% 85%
94% 93%
2009 2010 2009 2010 2009 2010 2009 2010
Ethylene Polyethylene Polypropylene PVC
63%71%
83% 89% 94%
4Q09 1Q10 2Q10 3Q10 4Q10
Capacity utilization rates were positively impacted by the improvement of Quattor’s assets
Braskem consolidated operating rates %%
Quattor - Ethylene
� Raw material supply regularization, in the Southeast and Rio de Janeiro complex, gradually increased
the operating rates of Quattor’s assets:
� RJ unit presented a record rate of 93% in the last quarter of the year
� Continuous operational improvement of existing assets (record production rates in the south
complex)
� Scheduled maintenance shutdown at Bahia’s cracker in the 4Q10 had a higher influence in the PVC
production, partially impacting the average operating rate of PE and PP
*2009 data does not include Quattor expansion of 200 kton
2009 2010 2009 2010 2009 2010 2009 20104Q09 1Q10 2Q10 3Q10 4Q10
Source: Braskem 6
North America
29%Asia
Europe
10%
Others
14%
� Origin of Imports in 2010
(PE, PP and PVC)
� Braskem’s Sales Profile – 2010
� Braskem’s Performance – 2009 Vs. 2010 (Thousand tons)
Domestic market performance
3,072 3,413
2009 2010
Braskem
+11%
Argentina
21%
Colombia
15%
Mexico
1%
Asia
10%
Source: Abiquim, Braskem
Americas account for 67% of imports
� Braskem’s Sales Profile – 2010
� Imports represented 26% of the
domestic market
7
29%
18%
13%
9%
7%
6%
4%
4%
10%
FOOD
PACKAGING
RETAIL
HYGIENE AND
CLEANING
CONSUMER
GOODS
CONSTRUCTION
AUTOMOTIVE
AGRIBUSINESS
INDUSTRIAL
OTHERS
� Contribution margin was positive impacted by the
higher sales volume and the improvement in resin-
naphtha spread. FX impacted by the appreciation in
Brazilian real.
R$ million
1,979
FX impact
on costs 2,089
FX impact
on revenues(3,140)
EBITDA performance: 2010 vs. 2009
**2009 non-recurring effect amounts R$135 millionSource: Braskem *SG&A: R$244 million of non-recurring expenses in 2010
3,181
523
1,051
441 135
4,055
EBITDA
2009
Volume Contribution
Margin
FX Fixed Costs
SG&A
Non recurring
effect 2009
EBITDA
2010
( )
( ) ( )
* **
8
Value creation through acquisitions
Quattor’s EBITDA Performance (R$ million)
107
214
302
361
+99%
+41%
+19%
554
984
+78%
9
Braskem America’s EBITDA Performance (US$ million)
1Q10 2Q10 3Q10 4Q10 2009 2010
37
22
32
23
1Q10 2Q10 3Q10 4Q10
-30%
26*
*Excluding the non-recurring positive ajustment in the
inventory booking criteria of R$ 10 MM.
66
114
2009 2010
+73%
2011 EBITDA*: R$377 million 2012 EBITDA*: R$495 million
350
495
87
59
R$ million
377
82
61
R$ milhõesR$ million
Synergies from Quattor acquisition totaling R$377 million in EBITDA for 2011
* Annual and Recurring
350
Industrial Logistics Supply EBITDA Synergies
Source: Braskem
234
Industrial Logística Suprimentos EBITDA SinergiasIndustrial Logistics Supply EBITDA Synergies
10
Identification of new opportunities, efficient and rapid implementation of initiatives to
capture synergies
� Integrated planning for industrial units
� Centralized maintenance plan assets strategy
� Optimization of freight and gains in distribution and storage
� Joint purchase of materials for industrial operations
Dec 2009
Gross Debt: R$ 17,637 MM
Net Debt: R$ 11,417 MM
EBITDA: R$ 3,181 MM
Average Debt Term: 6.6 years
Gross Debt/EBITDA: 5.54x
LEV
ER
AG
EDec 2010
Gross Debt: R$ 12,728 MM
Net Debt: R$ 9,839 MM
EBITDA: R$ 4,055 MM
Average Debt Term: 12.5 years
Gross Debt/EBITDA: 3.14x
-14%
-28%
Indebtedness and leverage decrease
Net Debt/EBITDA: 3.59x Net Debt/EBITDA: 2.43x-32%
4Q10 3Q10 4Q09 Chg. Chg. 2010 2009 Chg.
(A) (B) ( C) (A)/(B) (A)/( C) (D) (E) (D)/(E)
Net Financial Result (541) 183 (981) - -45% (1,618) 266 -
Foreign Exchange Variation (FX) 106 638 166 -83% -36% 405 2,782 -85%
Monetary Variation (MV) (65) (40) (140) 63% -54% (355) (511) -31%
Net Financial Result (583) (416) (1,006) 40% -42% (1,668) (2,005) -17%
R$ Mil l ion
Non-recurring Financial Expenses: approx. R$250 million in 4Q10 and R$464 million in 2010Source: Braskem 11
Debt reduction and lengthening the average maturity of debt
DEBT PROFILE
2010Foreing
Entities
1%
Gov.
Entities
26%Capital
Market
38%
393
583*
13% 14%13%
20%
Amortization Schedule(1)
(million of R$)
12/31/2010
Foreing
Entities
5%
Gov.
Entities
22%
Banks
52%
Capital
Market
21%
2009
→→→→ More balanced source of
funds.
Banks
35%
Issue of US$450 million in perpetual bonds, project finance prepayment and
others financing operations lengthened the average debt term to 12.5 years
12
2,4961,733
1,245
1,8201,694
1,0731,360
1,244
2,594
2011 2012 2013 2014 2015 2016/
2017
2018/
20192020
onwards12/31/10
Cash
10%8%
11%10%
2,889
(1) Does not include transaction costs
*US$350 million of Stand byInvested in US$
Invested in R$
Agenda
� 4Q10 and 2010 Results
� Growth with Value Creation
13
� Petrochemical Industry
� Outlook and Priorities
“BECOME THE GLOBAL
SUSTAINABLE CHEMICAL
LEADER, INNOVATING FOR
Strategic Direction
LEADER, INNOVATING FOR
BETTER SERVE THE
PEOPLE”.
14
Structured resource base to support client needs:
� Over R$ 330 million in R&D assets
� More than 190 researchers
� 8 pilot plants
� More than 400 patents filed worldwide
Innovation pipeline: new developments to aggregate further value
Innovation and Technology Center
�Strenghtening the value chain competitiviness
PP
Coffee Bags
� Partnership with universities and R&D centers in Brazil and abroad
� 12% of Polymer Business Unit revenues results from new products launched
in the past 3 years
PE
BIOPOLYMERSInnovation pipeline
NPV: ~US$ 510 millionPP
PVC
15
PVC
Windows
PVC
Doors
Brazil
PVC Expansion
� Startup: May 2012
� Capacity: 200 kton/year
� Investment: US$470 million
� Disbursement 2011e: R$380 million
� Expected NPV: ~US$450 million
� Project Financing:
� BNDES: up to US$525 million
Growth strategyIncrease efficiency and the use of assets in the local market
142
391 Maintenance Shutdown
HSE
1,644
Investments
(R$ million)
16
� BNDES: up to US$525 million
� BNB: R$200 million
� Attractiveness: to supply the increasing Brazilian demand
278
89
243
407
94
142
2011e
Productivity
Capacity Increase / PVC Alagoas
Equipment Replacement
Mexico
Others
COMPERJ
� Project configuration and raw material definition together
with Petrobras
Brownfield Projects (under review)
� PE assets: RJ, RS, SP
� PP assets: SP, BA
Growth strategyOn the path to leadership in sustainable chemicals
Green PP
2013
�Successful track record for
�Innovation in bioplasticmarket
�Production integrated with
Development
�Partnerships for the development of competitive technologies
Green PE
2010
�Successful track record for implementing projects: term and costs
�Capture of 2.5t CO2/t PE
�Partnership with Clients
�Production integrated with green propylene
�Capture of 2.3t CO2/t PP�Cooperation agreement with
Cenpes (Petrobras Research Center)
�Development of other cracks streams to sustainable chemicals
�PE integrated project study
Braskem becomes a global leader in
biopolymers
17
Growth strategyProjects with competitive raw material
Ethylene XXI Project – JV Braskem and IDESA - Mexico
Characteristics
�Startup: January 2015
�Ethane acquisition from PEMEX
� Integrated project: 1 Mton ethylene and
1Mton PEs
� Investment: US$2.5 billion (project finance)
�Mexico imports 68% of its PE demand (1.8
million ton/year)
PEMEX Gas (Basic Petrochemicals)
Ethane
Cracker
Ethane
66,000 bpd 1,000 kton/y
Gas
Ethylene
million ton/year)
�Financial advisor: Sumitomo Bank
�Strategic partnership with Ineos and
Lyondell Basell for PE plants technologies
�Structuring of Project Finance: already
received US$5 billion in letters of interest
2011 Focus
�Selection of the cracker technology
�Structuring of Project Finance: due diligence, negotiation of financial contracts agreement
�Studies on environmental impacts and beginning of the process to obtain the construction licenses
�To finalize the engineering agreement, and the conclusion of the project engineering
�Definition and negotiation of EPC agreements (Engineering, Procurement and Construction)
1,000 kton/y
PEMEX
Exploration
and
Production
Gas
Manufacturing
Industry
Polyethylene
18
Agenda
� 4Q10 and 2010 Results
� Growth with Value Creation
19
� Petrochemical Industry
� Outlook and Priorities
Ethylene: Operating rate 2010
Industry in2010
� Operating rates decreased in 4Q10 driven
by the rigorous winter in the Northern
hemisphere and operational problems at in
Europe and Middle East
� Competitive cost base allowed the US to
operate at higher rates than other regions
throughout 2010
� Global operating rate at 83.5% in 2010, 3.1
MM ton
81
89 88
74
8384
84
94
82
78
86
91
50
60
70
80
90
0
5
10
15
20
Europe N. America Asia M. East World Braskem
Outlook on the global petrochemical industry
*
Source: CMAI, Parpinelli Tecnon
� Global operating rate at 83.5% in 2010, 3.1
p.p. over previous forecast
Global Scenario
� New capacity additions can lead to the
closing down of non competitive assets on
a permanent basis, especially in Europe
� High volatility in oil prices boosts naphtha
prices. Prices of resins and basic
petrochemicals follow this trend
� Expectation of improvement in the
industry profitability as of 2H11
Ethylene: Supply and Demand Balance
MM ton
Europe N. America Asia M. East World Braskem
Capacity 4Q Operating rate 4Q10 (%) Operating rate 3Q10 (%)
83.5 83.986.3
88.790.7 91.3
0
50
100
150
200
2010 2011e 2012e 2013e 2014e 2015e
Capacity Demand Operating Rate (%)
20* Impacted by the scheduled maintenance shutdown in Bahia’s cracker for 52 days.
Demand growth shall overcome new capacity additions
EthyleneDemand
CAGR 10-15
4.4%
Supply
CAGR 10-15
2.8%
Asia
Africa
Middle East
Europe
6,521
2,805
4,5146,090
9,010
6.7% 3.4%
5.2%4.5% 4.4% 4.3%
6.8%
3.2%2.3% 2.6%
4.0%
2.1%
Capacity
(MM ton)
Source: CMAI, March/2011
� Limited additional capacity until 2015
� No new investments announced motivated by financial crisis
� Sanctions in Qatar restrict investments in petrochemicals
� No further availability of cheap gas for new projects
� Greenfield projects: 4-5 years to startup
Europe
Americas
Closures
Postponed/Delayed
Supply Growth %
Demand Growth %
21
2,067 743 962
(1,282) (1,227)(699) (150)
529
468
490
3,229
1,816
1,200
2,545
375
400
550
3,216
2,652
3,774
2,805
2,462
2010 2011 2012 2013 2014 2015
-19% Delayed
3,8143,423
3,417
9,010
Brazil: strong potential growth
2010 Market Share Brazilian’s thermoplastic demand (PE, PP, PVC) X GDP Growth%
Million tons
69%
26%
5%
Braskem
Others
Imports-0.6%
7.5%
4.5%
7.0 - 7.2
5.3 - 5.4
4.3
4.9
Source: Abiquim, Braskem, CMAI, Ipeadata and IBGE. 22
Per-capita Consumption of PE, PP and PVC (kg/person)
Brazil:
18 17 19 18 20 21 22 23 25
2002 2003 2004 2005 2006 2007 2008 2009 2010
6558
46
31
USA Europe Japan China
* Estimate: Resins Demand = 1.5x to 2.0x GDP
2009 2010 2011e 2015e
Brazilian's thermoplastic demand (MMton) GDP (Growth %)
Agenda
� 4Q10 and 2010 Results
� Growth with Value Creation
23
� Petrochemical Industry
� Outlook and Priorities
Outlook and Priorities
Petrochemical Market
� Political instability in Arab countries and oil price volatility
� Global petrochemical scenario continues to be marked by recovery, but oversupply is still
expected for 2011. Mitigating factors:
� Operational instability, delays on the startup of new plants and trade sanctions imposed on Iran
� Strong demand from emerging countries like China, India and Brazil
Braskem’s priorities
Strengthening of the Brazilian petrochemical and plastics production chain� Strengthening of the Brazilian petrochemical and plastics production chain
� To follow the domestic resins’ market growth: 9-10% in 2011
� Ensure capture of the identified synergies
� Adding value through the acquired assets
� Quattor: continue improvement in its operational efficiency
� Braskem America: return above capital employed
� Growth Projects
� PVC Alagoas
� Implementing project in Mexico, which is based on competitive raw materials
� To define Comperj’s configuration with Petrobras
� Expand the use of renewable feedstock
24
Meeting with Investors
4Q10 and 2010 Results
Meeting with Investors
4Q10 and 2010 Results
Carlos FadigasCEO
Marcela DrehmerCFO
Carlos FadigasCEO
Marcela DrehmerCFO
Sao Paulo, March 22, 2011Sao Paulo, March 22, 2011
4Q10 and 2010 Results4Q10 and 2010 Results