1 q11 conference call presentation

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  • 1. Conference Call 1Q11Investor RelationsSão Paulo, May 13, 2011
  • 2. Forward-looking StatementsThis presentation contains forward-looking statements. These statements are nothistorical facts and are based on management’s objectives and estimates. The words"anticipate", "believe", "expect", "estimate", "intend", "plan", "project", "aim" and similarwords indicate forward-looking statements. Although we believe they are based onreasonable assumptions, these statements are based on the information currentlyavailable 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 aremade (March 31, 2011) and the Company does not assume any obligation to update themin light of new information or future developments.Braskem is not responsible for any transaction or investment decision taken based on theinformation in this presentation. 2
  • 3. Highlights 1Q11 net revenue reached US$4.4 billion or R$7.4 billion, a growth of 8% and 6%, respectively, over 4Q10 and a growth of 22% in dollar, over 1Q10. EBITDA stood at R$919 million mainly due to the limited availability of products. Power blackout in the northeast of Brazil negatively impacted Braskem’s EBITDA around R$230 million. Braskem is committed to its financial solidity: At the end of March, S&P and Moody’s upgraded Braskem to Investment grade Net debt/EBITDA ratio trended downward to 2.37x Issue of US$750 million bonds with maturity in April 2021, with the lowest coupon of Company’s history, 5.75% p.a. and with a yield of 6.00% p.a. Synergies from Quattor acquisition totalized R$75 million in 1Q11. Expansion projects: Approved the expansion of 100,000 tons of butadiene in the South complex Braskem announced partnership with Technip for the cracker technology of Project Ethylene XXI – Mexico 3
  • 4. Segment performance – 1Q11 x 1Q10 POLYOLEFINS • Total sales volume up 2% due to better PP availability • Strong growth presented by agriculture, food packaging and infrastructure sectors • Net revenue: up 17% in dollar and 8% in Brazilian real VINYLS • PVC and caustic soda sales volume down around 10% (negatively impacted by the blackout) • Higher prices partially offset the volume decrease • Net revenue: an increase of 2% in dollar and decrease of 6% in Brazilian real BASIC PETROCHEMICALS • Prices growth above 20% • Higher raw material cost and price improvement of cracker co-products • Net revenue: up 20% in dollar and 11% in Brazilian real INTERNATIONAL BUSINESS • Production growth of 9% • Net revenue: up 24%, reaching US$392 million 4
  • 5. Domestic market performance Domestic Resins Performance – 1Q11 Vs. 1Q10 Origin of Imports in 1Q11 (PE, PP and PVC) 0% Brazilian Market -5% Braskems Sales Others 11% Europe Braskem’s Sales Profile – 1Q11 12% North America Asia 27% OTHERS 10% 11% Mexico RETAIL Colombia 1% FOOD PACKAGING 14% Argentina 5% AGRIBUSINESS 32% 25% 5% AUTOMOTIVE 7% 13% Americas account for 67% of imports 9% CONSTRUCTION 9% 9% CONSUMER GOODS Imports represented 27% of the HYGIENE AND domestic market INDUSTRIAL CLEANINGSource: Abiquim, Braskem 5
  • 6. EBITDA performance: 1Q11 vs. 4Q10 R$ million Higher resins and basic petrochemical prices didn’t offset the increase in raw material cost and Brazilian FX impact real appreciation. Sales volume, seasonally lower, were on costs 62 negatively impacted by the unscheduled maintenance FX impact shutdown in the northeast plants. (87) on revenue 71 1,074 ( 81 ) 919 ( 78) ( 35 ) ( 25) ( 7) EBITDA Fixed Costs Contribution Power Volume FX Others EBITDA 4Q10 SG&A Margin Blackout Cost 1Q11Source: Braskem 6
  • 7. EBITDA performance: 1Q11 vs. 1Q10 R$ million Brazilian real appreciation and the increase in raw material price were offset by higher prices of resins and basic petrochemicals. FX impact on costs 284 FX impact on revenue (401) 4 244 910 (117) 919 ( 78 ) ( 29 ) ( 15 ) EBITDA Contribution Others Power Volume FX Fixed Costs EBITDA 1Q10 Margin Blackout Cost SG&A 1Q11Source: Braskem 7
  • 8. Leverage decrease and Braskem’s ratings raised toinvestment grade Amortization Schedule(1) (R$ million) 03/31/2011 570* 21% 501 15% 15% 11% 10% 10% 2,598 2,890 10% 1,847 1,891 8% 2,389 1,381 1,314 Gross debt pegged to dollar: 64% 1,202 1,300 1,054 Net debt pegged to dollar: 79% 2013 2014 2015 2016/ 2018/ 2020 Corporate Credit Rating 03/31/11 2011 2012 Cash 2017 2019 onwards Agency Rating Outlook Date (1) Does not include transaction costs Invested in R$ Global Scale Invested in US$ * Stand by of US$ 350 million Moodys Baa3 Stable 3/31/2011 S&P BBB- Stable 3/30/2011 Fitch BB+ Positive 1/11/2011 Call of US$200 million in perpetual bonds issued in 2006, with National Scale coupon of 9% p.a.. Issue of US$750 million in bonds with maturity Moodys Aa2.br Stable 3/31/2011 in 2021 destined for short and medium term debt pre-payment, S&P brAAA Stable 3/30/2011 with less attractive costs.. Fitch AA (bra) Positive 1/11/2011 8
  • 9. Synergies from Quattor acquisition totaling R$75 million in 1Q11 EBITDA 1Q11*: R$75 million EBITDA 2011*: R$377 million R$ million R$ million 61 82 19 377 24 75 234 32 Industrial Logistics Supply EBITDA Synergies Industrial Logistics Supply EBITDA Synergies 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 Fiscal gains and lower cost of debtSource: Braskem * Annual and Recurring 9
  • 10. Outlook and PrioritiesPetrochemical market: Naphtha price impacted by the oil price volatility Global petrochemical scenario marked by recovery, but oversupply is still expected for 2011, improving from 2Q11. Mitigating factors: Operational instability, delays on the startup of new plants, scheduled shutdowns in Europe and Asia and trade sanctions imposed on Iran; Higher prices of resins and basic petrochemicals; Strong demand from emerging countries like China, India and Brazil.Braskem’s priorities: Strengthening of the Brazilian petrochemical and plastics production chain To follow the domestic resins’ market growth: 9-10% in 2011 and regain the market share Ensure capture of identified synergies Adding value through the acquired assets Quattor: continue improvement in its operational efficiency Braskem America: return above capital employed Maintaining liquidity and financial health Growth Project – PVC Alagoas expansion – Project Ethylene XXI in Mexico, which is based in competitive raw material – To define Comperj’s configuration with Petrobras – Expand the use of renewable feedstock Maintain the leadership in sustainable chemicals 10
  • 11. Conference Call 1Q11Investor RelationsSão Paulo, May 13, 2011