oil, gas & petrochemicals conference

Oil & Petrochemicals ConferenceOil & Petrochemicals Conference

Luiz Henrique ValverdeIR Manager


José Marcos TreigerIRO


October 2005October 2005

22

Disclaimer

The material that follows is a presentation of general background information about BRASKEM as of the date of this presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. This presentation is strictly confidential and may not be disclosed to any other person. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on the accuracy, fairness, or completeness of the information presented herein.

This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performance. Potential investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environment of Braskem and its subsidiaries that may cause the actual results of these companies to be materially different from any future results expressed or implied in such forward-looking statements.

Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the risks and uncertainties set forth in a prospectus that may be obtained from the underwriters. Although Braskem believes that the expectations and assumptions reflected in the forward-looking statements are reasonable, based on information currently available to Braskem’s management, Braskem cannot and does not guarantee future results or events. Braskem expressly disclaims a duty to update any of the forward-looking statement.

Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the Securities Act of 1933. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the underwriters. Such prospectus will contain detailed information about BRASKEM and its business and financial results, as well as its financial statements.

This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.

Forward looking statements

33

A more ambitious strategic goal

To rank amongst the TOP 10 global petrochemical

companiesTo becomeLatin America’s leaderin thermoplastic resins

44

Strong platform for growth

A new approach to the Brazilian petrochemical sector

Oil exploration 1st Generation 2nd Generation 3rd Generation

INTEGRATION

NaphthaNaphtha andand CondensateCondensate CompetitivenessCompetitiveness

New dynamics in the value chain

55


R$ 350 million per year in recurring synergies already captured

R$ million

240

Jun/03

260

Sep/03

285

Dec/03

208

Mar/03

310

Mar/04

330(2004)

Target

350

Dec/04

66


Largest production scale in the region: cost competitiveness5.8 million tons in total annual capacity of petrochemical and chemical products

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

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

Thousand tons / year

Ethylene

PVC

PE

PP

828

610

1,438

Dow

1,135

Copesul1

520

540

1,060

Rio Polímeros2

520150

670

Ipiranga

500

130630

Unipar

85

476

561

Solvay

350

Politeno1

1,280

870

580

525

3,255

Braskem

625

Suzano

Source: CMAI and Braskem Source: CMAI and Braskem –– 2005 (year2005 (year--end capacities)end capacities)

77


Leading market shares in Brazil - 2004Polyethylene (PE)

16%55%

29%

PVC

14%

29%57%

Ethylene*

57%

43%

Polypropylene (PP)

9%

51%40%

BRASKEM IMPORTS OTHERS(*) Based on production capacity

Source: Braskem and Source: Braskem and ABIQUIM ABIQUIM -- 20042004

88


Consistent operational performance: ~US$ 1 Bi EBITDA last 12 months

635701

872794

947975

EBITDA – LTM*

EBITDA – LTM*

Gross Revenue– LTM*

*LTM – last twelve months

12,006

14,342

13,654

15,58115,866

R$ million

R$ million

US$ million

1,8562,066

2,4592,349

2,708 2,663

11,156

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05

3Q04 4Q04 1Q05 2Q051Q04 2Q04

Source: BraskemSource: Braskem

99


Solid financial and capital structure

2002 2003 2004 1H05

Net Debt/EBITDA

5.1

3.5

1.5 1.1

Net Debt Evolution

1,929 2,166

1,4521,221

2002 2003 2004 1H05

US$ million

2002 2003 2004 1H05

20% 22%43% 46%

Debt/ Equity

80% 78%57% 54%

Source: BraskemSource: Braskem

1010

High Standards of Corporate Governance


A Level 1 Company in BOVESPA since February 13th, 2003

Commitment to move up to BOVESPA’s Level 2, in 2005

100% tag-along rights - in case of transfer of control - for all shareholders and all classes of shares

Code of Conduct: sets values, principles and practices governing corporate behavior

Pre-established corporate policies:– Trading of securities– Financial management – Insurance and Guarantees– Health, Safety and Environment

Compliance with SOx by Dec 2005

1111

Strong platform for growth…

A World-Class Company

55

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


R$ million

240

Jun/03

260

Sep/03

285

Dec/03

208

Mar/03

310

Mar/04

330(2004)

Target

350

Dec/04

Synergies

New Level of Competitiveness

• Best practices• Simplification• Integration• SOx Compliance

New Integrated Management

System

Technology and Innovation

...new steps in the value creation process

Braskem Business Braskem Business SystemSystem

1212

New steps in the value creation process

Braskem Technology and Innovation Center

InnovationInnovationProjectsProjects

Focus on value creation for customers– Product customization– New applications– Client services

Premium Premium pricingpricing andandcustomercustomer loyaltyloyalty PotentialPotential

ValueValueRANPV* RANPV*

((US$ millionUS$ million))

(*) NPV@risk calculated for a 5-year period at a discount rate of 11%

1313


R$ 420 million in productivity gains planned for 2007R$ 192 million accomplished by 1H05

R$ million/year

Annualized and recurring basis

140

Achieved 1H05

Target 2005

Target 1H05

Target 2006

Target 2007

+ 37%

170

360

420

Investments: R$ 334 million IRR: 79%

192

1414


ERP Project: a new integrated management system encompassing all business processes

Investment of R$ 130 million

Implementation until January 2007

NPV of R$ 260 million

1515

Ethylene production capacity expansions in Asia and in the Middle East

Even with the forecasted expansion, capacity utilization levels shall remain high (above 90%) in the next years (2005-2007).

16002000

0

900

0

6000

2005 2006 2007 2008 2009 2010

1620

1000

1350

8501000

3100

2005 2006 2007 2008 2009 2010

World World Ethylene Ethylene

Capacity in Capacity in 20052005

117 million 117 million ton/yearton/year

? = Capacity additions in Iran have been systematically postponed

0 0300

38503600

1000

2005 2006 2007 2008 2009 2010

Saudi ArabiaSaudi Arabia

Total 2005-2007 = 300 thousand tons

Total 2005-2007 = 3,970 thousand tons (?)

Region total = ZERO

Others Others –– Middle EastMiddle East

Asia Asia –– India, China* and Taiwan India, China* and Taiwan

Total 2005 - 2007 = 3,600 thousand tons

Iran ?Iran ?

0 0 0

850

2500

1000

2005 2006 2007 2008 2009 2010

* Not including potential projects in ChinaSource: Deutsche Bank and CMAI – information updated until June/05 (in 000 ton/year)

1616

Global Supply and Demand Balance

Relevant Ethylene capacity growth should be concentrated in Asia and in the Middle East from 2008 to 2010;

Delays in the addition of new Ethylene capacities should make the cycle last longer;

Global capacity utilization rates above 90%.

SupplySupply

Global GDP growth at approximately 4% per year, from 2005 to 2008;

Increase in global demand for main thermoplastic products (PE/PP/PVC);

Gradual inventory reduction expected by 2007;

China should remain as a net petrochemical importer until the end of the decade

DemandDemand

Expectation of higher margins for petrochemicals through 2007;

Raw material prices (oil and naphtha) continue to have the highest impact on margins;

Margins should maintain their high levels.

Prices and MarginsPrices and Margins

M2

Source: CMAI / Braskem

M2 Not sureMZ-Consult; 9/8/2005

1717

Strategic drivers for the future

Organic Organic GrowthGrowth

Selective Selective GrowthGrowth

Enhancement of the Enhancement of the Aromatics Chain Aromatics Chain

InternationalizationInternationalization

Value creation

1818

Organic Growth

Brazil: a growing and dynamic market for thermoplastic resins…

Overall Market Consumption(Polyethylene, Polypropylene and PVC)

1,601

1993

2,293

1996

3,107

2000

3,419

2004

8.0% CAGR*

Ton (000)Elasticity: 3.0x

GDP growth

* Compounded Annual Growth Rate

SourceSource: : TheThe BrazilianBrazilian AssociationAssociation of of ChemicalChemical andand DerivativeDerivative ProductsProducts (ABIQUIM) (ABIQUIM) andand BraskemBraskem

1919

Organic Growth

Per-Capita Thermoplastics Consumption – 2004

Polypropylene PolyethylenePVC

kg / person

SourceSource: : ChemicalChemical MarketMarket AssociatesAssociates, Inc. (CMAI) , Inc. (CMAI) andand Braskem / 2004Braskem / 2004

14.2

3.7

21.3

5.47.5

32.0

45.2

9.8

22.820.4

5.9

…and strong potential for growth

USA

Europe

Brazil

China

5.6

2020

Shareholder Structure *

Free-FloatPETROSPREVI PETROQUISA NORQUISA

2.5% 2.6% 10.0% 8.4% 2.4% 1.5% 11.0%48.6% 31.7%25.4% 9.1%

ODEBRECHT

29.5% 29.5% 35.0% 33.9%100% 63.7%

POLIALDEN

% Voting Capital - % Total Capital

46.5%

* June 30, 2005.

2121

Organic Growth

Recent amendment establishes new terms and conditions

– Option to increase Petroquisa’s voting capital in Braskem from 10% to 30%, through capitalization of petrochemical assets

– List of assets to be disclosed by Petroquisa no later than September 29, 2005

– All assets will be valued based upon respective discounted cash flow (DCF method)

– Option deadline: December 31, 2005

Industry Consolidation: Petroquisa OptionPotential for important synergies and impact on Braskem’s future cash flow

2222

Selective Growth

Paulínia Project: becoming the #1 Polypropylene player in the region

PaulíniaPaulínia

Joint Venture with Joint Venture with PetroquisaPetroquisa::–– 60% Braskem60% Braskem–– 40% 40% PetrobrasPetrobras

350Kt PP annual production capacity350Kt PP annual production capacityUS$ 240 mm investmentUS$ 240 mm investmentPolymer Polymer –– Grade Propylene supplied by Grade Propylene supplied by PetrobrasPetrobrasStart up Start up –– end 2007 / beginning 2008end 2007 / beginning 2008

Brazil /BoliviaBrazil /Bolivia

Venezuela

New greenfield capacities based on competitive raw materials with high rates of return

PP: Venezuela: 400 PP: Venezuela: 400 ktkt in partnership with in partnership with PequivenPequiven**

PE: BrazilPE: Brazil--Bolivia complex: 600 Bolivia complex: 600 ktkt (2009) *(2009) *

* To be presented to Braskem´s Board of Directors

2323

Enhancement of the Aromatics Chain

Opportunities for Value Creation from aromatics, fuels and by-products

Paraxylene capacity increase, combined with a potential downstream integration to produce PTA

Start ETBE production - as an alternative to MTBE

Isoprene debottlenecking

Butadiene profitability enhancement

2424

Internationalization

Product and Process Technology

Agreement with Basell for the development of processes and products related to the spherilene(PE) technology

Technology licensing for Petroquímica Paulínia

Development of new products and– 10% of 2004 revenues from sales

products developed in the previous

A pioneer in nanocomposite research inAmerica:– Focus on cost reduction and performance

servicesof new 2 years

Latin

improvement for thermoplastic resins

2525

Internationalization

Evolution of exports Destination of exports – 1H05

North America41%

Europe25%

SouthAmerica

18%

Row

2%

Strategic presence in international markets

US$ million

2002 2003 2004 2005

301

617710

~1 Bi *

509

* Annualizing 1H05 exports

1H05

Asia14%

2626

Strategy to grow with value creation

Strengthen market leadership in Brazil through consolidation in the local market, capturing synergies

Expand production and sales outside of South America, capturing value and creating a growth platform for the future

Organic Organic GrowthGrowth

Selective Selective GrowthGrowth

Enhancement of the Enhancement of the Aromatics Chain Aromatics Chain

InternationalizationInternationalization

Value creation

Consolidate market position in key products in Latin America and guarantee competitive sources of raw material

Leverage aromatics production chain by broadening its portfolio of products and services in the local market

2727

A unique investment opportunity

Market leadership in the region

Consistent operational performance

Solid financial structure

Ongoing competitive improvements: and ERP

Structural market growth opportunities in the region

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

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

Technology autonomy to pursue internationalization

HighHigh Standards of Corporate Standards of Corporate GovernanceGovernance

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