apresentação citigroup 14a conferência anual da américa latina (inglês)

José Marcos Treiger IRO

Luiz Henrique Valverde IR Manager

March, 2006

Meeting with Investors 14 th. Annual Latin America Conference

New York City

Forward‐looking Statements Forward‐looking Statements

This presentation contains forward‐looking statements. Such statements are not statements of historical facts, and reflect the beliefs and expectations of Braskem’s management. The words “anticipates”, “wishes”, “expects”, “estimates”, “intends”, “forecasts”, “plans”, “predicts”, “projects”, “targets” and similar words are intended to identify these statements. Although Braskem believes that expectations and assumptions reflected in the forward‐looking statements are reasonable based on information currently available to Braskem’s management, Braskem cannot guarantee future results or events.

Forward‐looking statements included in this presentation speak only as of the date on which they are made (December 31, 2005), and the Company does not undertake any obligation to update them in light of new information or future developments.

Braskem shall not be responsible for any transaction or investment decisions that are taken based on information included in this presentation.

Agenda

4 Growth & Value Creation

4 Company Overview

4 4Q05 & FYE 2005 Results

29.5% 29.5% 35.0% 33.9% 100.0% 63.7%

POLIALDEN

FREE FLOAT PETROS PREVI PETROQUISA 2.6% 8.4% 1.2%

ODEBRECHT 46.8% 31.7%

NORQUISA 9.1% 2.5% 10.0% 48.6% 25.4% 2.4% 11.0%

Current Shareholder Structure ( * ) Market Capitalization of US$ 3 billion and Free float of 47%

% Voting Capital % Total Capital

Controlling Shareholder

Investments in Affiliated Companies

Source: Braskem

* As of December 31, 2005

First integrated petrochemical company in Brazil

New approach to the Brazilian petrochemical sector

Oil exploration 1 st Generation 2 nd Generation 3 rd Generation

INTEGRATION

New dynamics in the value chain

Naphtha and Condensate Naphtha and Condensate Competitiveness Competitiveness

1. Braskem’s affiliates: a) Braskem jointly controls Copesul with the Ipiranga Group b) Braskem owns 33.9% of Politeno´s total capital

2. Jointly owned by Suzano, Unipar, Petroquisa e BNDES

Source: CMAI and Braskem – 2005

5.8 million tons in total annual capacity of petrochemical and chemical products

Thousand tons / year

Ethylene

PVC

PE

PP

700

700

1,400

Dow

1,135

Copesul 1

520

540

1,060

Rio Polímeros 2

520

150

670

Ipiranga

500

130 630

Unipar

85

476

561

Solvay

350

Politeno 1

1,280

870

580

525

3,255

Braskem

625

Suzano

Braskem: Player with the largest scale in the region

Braskem: A diversified portfolio of products Braskem: A diversified portfolio of products

Revenues Breakdown Revenues Breakdown ‐ ‐ 2005 2005 %

Ethylene

PP

PET

PVC

Propylene

PE

BTX (Benzene Toluene, Xylenes)

Others (includes EDC, Isoprene, gasoline, utilities among others)

Resins

46%

20%

14%

10%

2% 11%

9%

12%

4%

2%

3%

13%

Caustic Soda

Caprolactam

Butadiene

Source: Braskem and FIERGS/CEPAL (jan/2006) for economic forecasts

4 Perspectives for 2006:

4 Lingering of global economic growth, led by China and India

4 In Brazil:

4 Gradual reduction in interest rates 4 Increase in public investments in

infrastructure 4 Probable domestic demand boost

coupled with higher expected GDP growth

4 Increase in disposable income

Braskem: present across several industries and in the daily lives of millions of people Braskem: present across several industries and in the daily lives of millions of people

4 Market segmentation for Braskem’s resins in 2005

* Includes personal hygiene, infrastructure, electronics, auto parts and others

% of Revenues % of Revenues

*

FOOD AND BEVERAGES 33%

CONSUMER GOODS (NON‐DURABLE)

15%

CIVIL CONSTRUCTION 15%

OTHERS 16%

RETAIL 9%

AGRICULTURE 7%

COSMETICS AND PHARMACEUTICALS

5%

2002 2003 2004 2005

Gross Revenue over R$ 15 billion Significant and consistent revenue growth Gross Revenue over R$ 15 billion Significant and consistent revenue growth

R$ million Gross Revenue Gross Revenue

11,284

8,858

14,342 15,193

20% CAGR

US$ million Gross Revenue Gross Revenue

R$ million Net Revenue Net Revenue

18% CAGR

US$ million Net Revenue Net Revenue

26% CAGR

9,191

6,991

11,044 11,607

3,688 3,013

4,900

28% CAGR

6,252

3,008 2,375

3,771

4,775

2002 2003 2004 2005

2002 2003 2004 2005 2002 2003 2004 2005

Source: Braskem

* Excludes nonrecurring effects in the amount of R$ 779 million

EBITDA Evolution Consistent growth in US$ since 2002 EBITDA Evolution Consistent growth in US$ since 2002

R$ million EBITDA EBITDA

16% CAGR

1,776

1,335

2,549

2,090

2002 * 2003 2004 2005

US$ million EBITDA EBITDA

457

871 851

581

23% CAGR

2002 2003 2004 2005

Source: Braskem

Net Income Net Income

Consistent improvement in Profitability Net income reaches US$ 270 million in 2005 Consistent improvement in Profitability Net income reaches US$ 270 million in 2005

R$ million Net Income Net Income US$ million

215

(794)

691 677

2003 2004 2005 2002

59

(301)

245 268

2003 2004 2005 2002

Source: Braskem

2002 2003 2004 2005

Net Net Debt Debt / EBITDA / EBITDA

5.1

3.5

1.5 1.4

1,929 2,166

1,457 1,211

2002 2003 2004 2005

2002 2003 2004 2005

20% 22% 43%

48%

Debt Debt / Equity / Equity

Sound Capital Structure and decreasing financial leverage Sound Capital Structure and decreasing financial leverage

80% 78% 57% 52%

Net Net Debt Debt Evolution Evolution US$ million

Source: Braskem

Agenda


4 Company´s Overview


2005 2004

ETHYLENE ETHYLENE

2005 2004

PE PE

2005 2004

PP PP

2005 2004

PVC PVC

High Capacity Utilization Rates Reflecting sound operating performance High Capacity Utilization Rates Reflecting sound operating performance

4 Capacity utilization rate

Comparison to 2004

Source: Braskem

94% 93% 94% 91% 91% 87% 90% 95%

+ 7.5%

+ 8.4% Sales of Thermoplastic Resins (ton) Sales of Thermoplastic Resins (ton)

Production of Thermoplastic Resins (ton) Production of Thermoplastic Resins (ton)

Total Sales 9% increase in resins sales comparing 4Q05 vs. 4Q04 Total Sales 9% increase in resins sales comparing 4Q05 vs. 4Q04

4 4Q05 Performance impacted by the period’s seasonality

4 Low inventory level at customers by the end of 2005

Source: Braskem

(1) Consolidates sales in the domestic and export markets, including the Southern Cone.

4Q05 3Q05 4Q04 Var.% Var.%

(A) (B) (C) (A) / (B) (A) / (C)

Ethylene k ton 290 291 295 0% ‐2%

THERMOPLASTIC RESINS k ton 401 486 369 ‐17% 9%

PP k ton 121 149 107 ‐19% 14%

PE k ton 175 210 166 ‐17% 5%

PVC k ton 105 127 96 ‐18% 9%

Sales ‐ main products (1)

000 Ton

Total Sales Commercial flexibility in a low growth domestic market

4 An 8% increase in sales of thermoplastic resins driven by the 51% increase in export volume

000 Ton

2005 2004 Var.%

(A) (B) (A) / (B)

ETHYLENE k ton 1,170 1,099 6%

THERMOPLASTIC RESINS k ton 1,728 1,594 8%

PP k ton 518 461 12%

PE k ton 768 705 9%

PVC k ton 442 428 3%

Sales ‐ Main Products (1)

Source: Braskem

(1) Consolidates sales in the domestic and export markets, including the Southern Cone.

415

617 710

959

Destination of Exports Destination of Exports – – 2005 2005

North America 47%

Europe 21%

South America 20%

ROW 12%

Exports reach ~ US$ 1 billion Strategic and commercial flexibility reflected in a record performance in 2005 Exports reach ~ US$ 1 billion Strategic and commercial flexibility reflected in a record performance in 2005

4 Exports increase more than US$ 500 million in only 3 years

2002 2003 2004 2005

Exports Exports US$ million

Source: Braskem

% of net revenue % of net revenue

23% 25% 19% 20%

2002 2003 2004 2005

Naphtha ARA price increases 26% in 2005 Naphtha ARA price increases 26% in 2005

Naphtha impact on Naphtha impact on CoGS CoGS R$ million

2004 2005 Price Volume Foreign Exchange

4,707

5,281

1,176 187

(789)

Quarterly price evolution for oil and Quarterly price evolution for oil and naphtha (Brent and ARA) naphtha (Brent and ARA)

2003 0

100

200

300

400

500

600

Brent oil (US$/barrel)

Naphtha ARA ‐ US$/ton

0

10

20

30

40

50

60

70

80

90

100

2004 2005

Source: Braskem

4 Increase in naphtha prices negatively impacts CoGS by over R$ 1 billion

378 476

+26%

Average Price Average Price – – Naphtha ARA (US$/ton) Naphtha ARA (US$/ton)

2004 2005 274

2003

+38%

Naphtha ARA annual average ‐ US$/ton

274

378

476

390

440

490

540

590

640

Evolution of Naphtha ARA prices Evolution of Naphtha ARA prices

Source: Bloomberg

4 High volatility with a recent downward trend

2005 2006

30‐day moving average

20‐day moving average

Daily Naphtha Prices ARA (US$/ton)

EBITDA Analysis – 4Q05 vs. 4Q04 Foreign exchange and naphtha offset the effect of better prices and volumes EBITDA Analysis – 4Q05 vs. 4Q04 Foreign exchange and naphtha offset the effect of better prices and volumes

Main Variations Main Variations R$ million

58

148

(378)

(92)

661

83

480

4Q04 4Q05 Price Volume Raw Materials

Foreign Exchange

Source: Braskem

Others

EBITDA Analysis ‐ 2005 vs. 2004 Foreign exchange and naphtha offset the effect of better prices and volumes EBITDA Analysis ‐ 2005 vs. 2004 Foreign exchange and naphtha offset the effect of better prices and volumes

Main Variations Main Variations

2004 2005 Price Volume Raw Materials

Foreign Exchange

Others

R$ million

129

(1,826)

1,977

(652) (87)

2,549

2,090

Foreign Foreign exchange exchange impact on impact on costs costs

Foreign exchange Foreign exchange impact on impact on

revenue revenue

1,234

(1,886)

Source: Braskem

EBITDA Analysis in US$ High levels of raw materials and thermoplastic resins prices EBITDA Analysis in US$ High levels of raw materials and thermoplastic resins prices

Source: Braskem

Main Variations Main Variations

2004 2005 Price Volume Raw Materials

Others

US$ million

149

(720)

662

(110)

870

851

Indebtedness Profile Average debt maturity of 11 years with only 12% due in the short term Indebtedness Profile Average debt maturity of 11 years with only 12% due in the short term

4 Indebtedness Profile

Gross Debt: Gross Debt: 5,004 5,004

Cash and Cash equivalents: Cash and Cash equivalents: 2,170 2,170

Net Debt: Net Debt: 2,834 2,834

R$ million

Amortization Agenda

12%

2006

26%

17%

9%

2007 2009 2011 to 2014

13%

Dec/05 Cash and cash equivalents

867 867 620 620 376 376 446 446 670 670

2008

890 (in R$) 890 (in R$)

1,280 (in US$) 1,280 (in US$)

Average maturity: 11

in years Subordinated debentures with payment of interest and principal scheduled for July 2007, fully subscribed by the controlling shareholder.

2016 to ...

7%

355 355

(On 12/31/2005)

931

2,170

359 359

2015

7%

Trade Finance

44%

TJLP 26%

CDI 18%

Fixed 1%

US$ 55%

43%

12%

2010

8%

380 380

Source: Braskem

Source: Braskem

P&L Summary 2005 Results reflect the strength of Braskem’s business model P&L Summary 2005 Results reflect the strength of Braskem’s business model

4Q05 4Q04 Var.% 2005 2004 Var.%

(A) (B) (A) / (B) (C) (D) (C) / (D)

Net Revenue R$ MM 2,848 2,798 2% 11,607 11,044 5%

EBITDA R$ MM 480 661 ‐27% 2,090 2,549 ‐18%

EBITDA Margin % 16.9% 23.6% ‐ 6.8 pp 18.0% 23.1% ‐ 5.1 pp

Net Financial Results R$ MM (440) (60) 633% (662) (1,181) ‐44%

Equity Income R$ MM (25) 15 ‐ 60 76 ‐21%

Net Income R$ MM (5) 487 ‐ 677 691 ‐2%

Income Statement

Free Cash Flow over R$ 1.2 billion R$ 717 million invested in 2005 Free Cash Flow over R$ 1.2 billion R$ 717 million invested in 2005

Free Cash Flow* Free Cash Flow*

1,179

1,258

R$ million

7%

*after taxes and capex

717

374

2005 2004

Investments Investments R$ million

2004 2005

92%

Distribution of R$ 326 million to shareholders 60% increase when compared to 2004 Distribution of R$ 326 million to shareholders 60% increase when compared to 2004

326

204

2005 2004

Dividends and Interest on Equity Dividends and Interest on Equity R$ million

60%

48

30

2005 2004

Dividend Pay Dividend Pay‐ ‐out out %

60%

Agenda


4 Company´s Overview


92.5% 91.5% 92.6%

Global utilization rates (%) Global utilization rates (%)

The petrochemical cycle: global balance remains favorable Capacity utilization rates should stay above 90% through 2008 The petrochemical cycle: global balance remains favorable Capacity utilization rates should stay above 90% through 2008

4 Ethylene capacity additions

Source: CMAI, March06

2006 2007 2008

Iran Iran 000 ton

2006 2007 2008

China China 000 ton

1,537

920

2006 2007 2008

Middle East Middle East (ex‐Iran) 000 ton

0

ü Demand growth during the 06‐08 period should exceed that of supply, keeping utilization rates above 90%

ü There are still uncertainties concerning the capacity additions schedule in Iran

1,700

295

2006 2007 2008

Asia Asia (ex‐China) 000 ton

505

2,307

2006 2007 2008

2,510

1,270

646

1,925

760

106%

100%

126%

141%

Jan05 Feb05 Mar05 Apr05 May05 Jun05 Jul05 Aug05 Sep05 Oct05 Nov05 Dec05

PEAD Asia (CMAI) Normalized

PEAD Braskem (domestic) Normalized

Polyethylene Prices International and Braskem’s (normalized)

Polyethylene Prices International and Braskem’s (normalized)

Short‐term price evolution Spreads over international prices above 30% Short‐term price evolution Spreads over international prices above 30%

Source: CMAI / Braskem

Spreads over Asian prices (December 2005)

PP PP

PE PE + 34%

+ 33%

PVC PVC + 43%

107%

100%

143% 142%


PP Asia (CMAI) Normalized

PP Braskem (domestic) Normalized

93% 100%

135%

153%


PVC Asia (CMAI) Normalized

PVC Braskem (domestic) Normalized

Polypropylene Prices International and Braskem’s (normalized)

Polypropylene Prices International and Braskem’s (normalized)

PVC Prices International and Braskem’s (normalized)

PVC Prices International and Braskem’s (normalized)

Brazilian domestic market Brazilian domestic market – – Sales Volume Sales Volume

Ytd Feb 05 Ytd Feb 06

Performance in the Domestic Market Performance in the Domestic Market Sales increase of 7% for thermoplastic resins Sales increase of 7% for thermoplastic resins

PP PP PE PE PVC PVC Resins Resins

+ 17%

‐ 7%

+ 17%

+ 7%

Increase in Capital expenditures: confidence in the future R$ 900 million to be invested in 2006 Increase in Capital expenditures: confidence in the future R$ 900 million to be invested in 2006

Investments Investments

2003 2004 2005 2006

176

374

717

900

R$ million

26%

Capacity Increases

Equipment

Safety, Health & Environmental Protection

Technology

Productivity

Quality and others

244

202

151

134

118

51

Growth with Value Creation Investments with high rates of return Growth with Value Creation Investments with high rates of return

4 Capacity Expansions Venezuela

4Polyethylene (1Q06) 4 Investment: R$ 9.9 Million; 4 Additional Capacity: + 30 k ton / year

(+3.5%); 4 Rate of Return: 58%; 4 Location: Camaçari, State of Bahia

4Isoprene (November 2006) 4 Investment: US$ 29 Million; 4 Additional Capacity: + 9 k ton / year

(+50%); 4 Rate of Return: 49%; 4 Location: Camaçari, State of Bahia

4Paulínia (4Q07) 4 Investment: US$ 240 million 4 Additional Capacity: +350 k ton / year

(+60%) 4 Location: Paulínia, State of São Paulo

Source: Braskem (2005)

Brazil / Bolivia Brazil / Bolivia

Alagoas Alagoas

Bahia Bahia

Paulínia Paulínia

Triunfo Triunfo

Venezuela

Brazil / Bolivia Brazil / Bolivia

* To be presented to Braskem’s Board of Directors

4PP: Venezuela: annual 400 k ton in partnership with Pequiven*

4PE: Brazil/Bolivia Complex: annual 600 k ton (2009)*

With the Venezuelan and Bolivian units, Braskem expects to consolidate its strategic

and differentiated position in the region

New New greenfield greenfield projects based on projects based on competitive raw materials competitive raw materials

Growth with Value Creation Strong strategic position in the region Growth with Value Creation Strong strategic position in the region

4 Reliability in the supply of raw materials 4 Naphtha supply guaranteed by long‐term

contract with Petrobras; 4 Partnerships in the international markets;

4 Naphtha supply contract for up to 600kt per year with PDVSA with competitive conditions;

4 Flexibility in raw materials supply (Naphtha and Condensate);

4 Competitiveness in logistics: 4 Investment on increasing the storage capacity

at Aratu´s Port terminal tank park – State of Bahia.

Growth with Value Creation Cost competitiveness

5 5

R$ 350 million per year in recurring synergies, already captured

Strong platform for growth

R$ million

240

Jun/03

260

Sep/03

285

Dec/03

208

Mar/03

310

Mar/04

330

(2 004 )

Target

350

Dec/04

Synergies

A WorldClass Company

New Levels of Competitiveness

• Best Practices • Simplification • Integration • Compliance to to SOx

Innovation & Technology

Braskem Business System Braskem Business System

Growth with Value Creation Value‐creating process leveraged by the Braskem Business System

Innovation & Technology to leverage Value Creation Important Achievements in 2005 Innovation & Technology to leverage Value Creation Important Achievements in 2005

R$ 58 million gain with the sale of technology to Petroquímica Paulínia

1st patent in nanotechnology filed by a Brazilian Petrochemical company

171 171 researchers researchers

Alliances Alliances with Universities and Research Centers with Universities and Research Centers

Modern Modern Management Management of the innovation process of the innovation process

136 136 patent registrations filed patent registrations filed

R$ 370 R$ 370 million in assets million in assets

7 7 pilot plants pilot plants

Launch of 20 new resins

Start‐up of the 7th pilot plant

World‐wide technological cooperation agreement

with BASELL

FINEP and ABIQUIM Awards

Technological Technological Autonomy Autonomy

Results Achieved by 2005 Results Achieved by 2005

Achieved by 2005

Target by 2005

On annualizing and recurring basis

R$ 256 million in productivity gains captured by 2005

Target by 2006

Target by 2007

R$ million / year

256 170

420

360

+ 51%

Braskem + Significant acceleration in capturing productivity gains Braskem + Significant acceleration in capturing productivity gains

A New Step in the Value Creation Process A New Step in the Value Creation Process

A new integrated management system encompassing all business processes

Project

4 110 employees allocated to the project

4 Investment of R$ 130 million

4 Implementation concluded by Oct. 06

4 NPV of R$ 260 million

The Petroquisa Option Potential for relevant synergies and future cash flow impacts The Petroquisa Option Potential for relevant synergies and future cash flow impacts

15.6%

85.0%

40.0%

From 10%

Up to 30%

VOTING CAPITAL VOTING CAPITAL INCREASE: INCREASE:

Braskem has 29.5% of Copesul’s capital and jointly controls it along with the Ipiranga Group

Assets Listed Assets Listed 09/29/2005

Option Deadline Option Deadline 03/31/2006

Assets Valuation Assets Valuation DCF

Designated assets & Designated assets & respective ownership interests : respective ownership interests :

4 Market leadership in the region

4 Consistent operational performance

4 Solid financial structure

4 Ongoing competitive improvements: and

4 Structural market growth opportunities in the region

4 Consolidation in the Brazilian Petrochemical Industry: an opportunity for value creation

4 Greenfield projects in the region based upon access to competitive raw materials

4 Technology autonomy to pursue internationalization

A Unique Investment Opportunity A Unique Investment Opportunity

High Standards of Corporate Governance High Standards of Corporate Governance