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1st Annual Citi Brazil Equity Conference      June 2008
Forward-looking Statements This presentation contains forward-looking statements. These statements do not represent histor...
Agenda     Overview     Key Differentiators     Key Financial & Operational Figures     Upside Drivers                    ...
Agenda     Overview     Key Differentiators     Key Financial & Operational Figures     Upside Drivers                    ...
Braskem  # 1 Petrochemical Company in Latin America                              •       #1 Petrochemical Company in LATAM...
Strong and consistent growth viaOrganic and Acquisitions Routes•    Production capacity (1) ► CAGR (94-08) = 12%          ...
Large Scale combined with superior     profitability•         # 3 Resins Producer in Americas -                           ...
Agenda     Overview     Key Differentiators     Key Financial & operational Figures     Upside Drivers                    ...
Regional strength better than that of global peers Unmatched capacity share in its respective home region                 ...
Braskem has most of its operations in theleading economy in LATAM… • Brazil: 1/3 of LATAM GDP                    •   LATAM...
…and is exposed to a dynamic market    with strong growth rates…                                        01-07 GDP Elastici...
…with high level of consolidation…    • Number of Producers                             • 2 Top producers share           ...
…Growing & Sustained Leadership inBrazil…         • PP Market Share                                          • PVC Market ...
…and Diversified customer basis in the  fast-growing Brazilian market  % of Resin Sales                                   ...
Braskem has differentiatedtechnologyInnovation is a key value driver for Braskem• Over US$ 160 million  in R&D assets• 200...
Green Polymer:A global pioneer achievement                    • Ethylene plant from ethanol – 200,000 tons                ...
Strong and consistent spread over        international prices            PE: Braskem Premium over International           ...
Agenda     Overview     Key Differentiators     Key Financial & Operational Figures     Upside Drivers                    ...
Production growth with higheroperating reliability      Capacity Utilization                          %            ETHYLEN...
Continued leadership position ingrowing domestic market  Domestic Sales 1Q08 vs. 1Q07                    %   Resin Market ...
Resilience performance in achallenging scenario        R$ million                    1Q08    4Q07     Change %        Sale...
Evolution of EBITDACommercial strategy and reduction in fixed costs minimizeimpacts from higher Naphtha prices R$ million ...
Lengthening of debt profile  is a priority and is in course                                                               ...
Agenda     Overview     Braskem Key Differentiators     Key Financial Figures     Upside Drivers                          ...
NPV of US$ 1.1 billion in total synergies from Ipiranga acquisition        R$ 200 million on annual and recurring basis in...
Accelerated Synergies in 1Q08:R$ 136 million in annual and recurring gains      Actual      Goal                          ...
Additional gains of R$ 100 million withFixed Costs Reduction Program     R$ 100 million estimated annual & recurring gains...
Strategic alignment with Petrobras   Superior Industry Structure in Brazil: Consolidation around 2 large   competitors (Br...
Ethylene global supply & demand balance High capacity utilization rate in 2008                                            ...
Global supply & demandHigh Ethylene Utilization Rate in South America          Ethylene          MM tons                  ...
Meaningful organic growth …Reinvestment spread prudently      • (1) over time, (2) across geographies and (3) with diversi...
…resulting in further improvement in costcompetitiveness via scale and efficiency       Larger scale                      ...
Proven capacity in projectmanagement: PP Paulínia                             Start up in April 2008                      ...
Braskem: High Upside Potential# 1 in Domestic Market Share, #2 in Profitability and # 3 in Growth:               not yet t...
Braskem:High Upside Potential   Dominance in the domestic market with superior profitability   Exposure to the fast-growin...
1st Annual Citi Brazil Equity Conference      June 2008
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Apresentação 1a conferência anual citi brasil (em inglês)

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  1. 1. 1st Annual Citi Brazil Equity Conference June 2008
  2. 2. Forward-looking Statements This presentation contains forward-looking statements. These statements do not represent historical fact, but rather reflect the beliefs and expectations of Braskem’s management. The words “anticipate”, “wish”, “expect”, “estimate”, “intend”, “forecast”, “plan”, “predict”, “project”, “target” and similar words are intended to identify these statements. Although Braskem believes that the expectations and assumptions reflected in these forward- looking statements are reasonable and based on information currently available to management, Braskem cannot guarantee future results or events. The forward-looking statements included in this presentation are valid only on the date on which they are made (March 31, 2008), and the Company does not undertake 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
  3. 3. Agenda Overview Key Differentiators Key Financial & Operational Figures Upside Drivers 3 3
  4. 4. Agenda Overview Key Differentiators Key Financial & Operational Figures Upside Drivers 4 4
  5. 5. Braskem # 1 Petrochemical Company in Latin America • #1 Petrochemical Company in LATAM 1Q08 LTM FINANCIALS Resins Production Capacity (kton) 3,500 3,440 • Net Revenue: US$ 10.2 bi 3,000 • EBITDA: US$ 1.6 Bi 2,000 1,515 • Assets: US$ 12.1 bi 1,000 692 682 521 438 • EV: US$ 8.0 bi 0 Braskem Quattor Dow Mexichem Solvay Ecopetrol 5Source: Braskem/ CMAI 5
  6. 6. Strong and consistent growth viaOrganic and Acquisitions Routes• Production capacity (1) ► CAGR (94-08) = 12% Copesul / IPQ• Total Revenues ► CAGR (94-08) = 15.5% Acquisition Politeno US$ 10,153MM (2) PP DBN Acquisition Revenues Creation of Ethylene DBN PVC DBN US$ 9,712 MM Braskem Acquisitions 5,901 Kton 5,551 Organic New PE Plant 5,000 New PP start-up Plant start-up 3,621 4,000 US$ 2,375 MM 3,045 3,145 3,225 3,000US$ 1,357 MM 1,528 1,734 2,000 1,228 1,234 1,000 1994 1996 1998 2000 2002 2004 2005 2006 2007 2008Source: Braskem 6(1) Ethylene and Resins(2) LTM 1Q08 Net Revenue 6
  7. 7. Large Scale combined with superior profitability• # 3 Resins Producer in Americas - • #2 Ebitda Margin in the Americas (1Q08 petrochemical “pure-play”(kton) LTM) 5,774 PVC 64 PP 615 PE 20% Braskem 4,646 3,440 15% 2,949 15% Median 1,833 515 1,110 2,161 10% 5,095 1,210 2,813 2,040 761 1,235 1,815 5% 978 926 0% Dow LyondellBasellBraskem Formosa Ineos Shintech Mexichem Unipar Nova DOW Westlake Ultrapar 3rd Chemical • #2 Global Ebitda Margin - petrochemical “pure-play” (03-07 average) Braskem 20% 18% 15% Median 10% 5% 0% Mexichem Solvay Unipar Westlake Dow LG Ultrapar Nova Chemical 7Source:Braskem / CMAI March 2008 7
  8. 8. Agenda Overview Key Differentiators Key Financial & operational Figures Upside Drivers 8 8
  9. 9. Regional strength better than that of global peers Unmatched capacity share in its respective home region % Capacity Share Region Company PE PP PVC South America Braskem 46% 44% 32% Quattor 23% 31% 0% North America DOW 22% 4% 1% NOVA 7% 0% 0% Mexichem 0% 0% 4% Westlake 6% 0% 8% Northeast Asia LG Chemical 5% 2% 6% Western Europe Solvay 0% 0% 15% 9Source: Braskem / CMAI 9
  10. 10. Braskem has most of its operations in theleading economy in LATAM… • Brazil: 1/3 of LATAM GDP • LATAM GDP (US$ billion) * Brazil: 1,838 Others México: 1,353 20% Argentina: 524 Brazil 33% Venezuela: 335 Colombia 6% Venezuela 6% Colombia: 320 Argentina Others: 1,070 Mexico 10% 25% Total: 5,440 (*) PPP – Purchasing Power Parity 10Source: The Economist (Mar2008) 10
  11. 11. …and is exposed to a dynamic market with strong growth rates… 01-07 GDP Elasticity in Brazil: 2x• Domestic demand for resins • USA Demand for resins (Kton) 0.7% 6.0% CAGR CAGR 10% 4,048 3,694 1% -3% 9% 25,904 25,020 3,435 3,377 856 24,749 24,306 2,880 749 23,276 692 5,907 1,228 6,081 5,563 1,114 990 6,287 6,350 6,142 1,964 1,833 1,695 12,826 12,318 12,601 2001 2004 2005 2006 2007 2001 2004 2005 2006 2007 PVC PP PESource: Abiquim – domestic sales + imports Source: NAD - CMAI 11
  12. 12. …with high level of consolidation… • Number of Producers • 2 Top producers share 100% 100% 12 93% 12 9 42% 51% 4 30% 2 2 PP PE PVC PP PE PVC BRAZIL USA 12Source: Braskem / CMAI 12
  13. 13. …Growing & Sustained Leadership inBrazil… • PP Market Share • PVC Market Share 100% 100% 10% 9% 7% 9% 14% 14% 20% 20% 17% 19% 80% 80% 29% 48% 51% 55% 50% 37% 28% 32% 30% 27% 60% 60% 40% 40% 57% 54% 20% 42% 40% 38% 41% 49% 20% 52% 48% 53% 0% 0% 2001 2003 2005 2006 2007 2001 2003 2005 2006 2007 BRASKEM PEER IMPORTS BRASKEM PEER IMPORTS • PE Market Share 100% 15% 16% 19% 17% 16% 80% 32% 60% 53% 55% 46% 50% 40% 20% 52% 33% 29% 31% 37% 0% 2001 2003 2005 2006 2007 13 Source: Braskem/Abiquim Dec 07 BRASKEM PEER IMPORTS 13
  14. 14. …and Diversified customer basis in the fast-growing Brazilian market % of Resin Sales Growth by Sector in 2007 OTHERS INDUSTRIAL + 6% AUTOMOTIVE FOOD PACKAGING ELECTRIC AND 10% ELECTRONIC 3% PLASTIC PACKAGING + 4% INFRASTRUCTURE 2% 23% 4% CLEANING MATERIAL 5% CONSUMER GOODS + 5%COSMETICS ANDPHARMACEUTICALS 3% CONSTRUCTION + 5% 8% 17% AGRICULTURE CONSUMER FERTILIZERS + 5% 8% GOODS RETAIL 17% AUTOMOBILES + 15% CIVIL CONSTRUCTION HOME APPLIANCES +6% 14 Source: Braskem / IBGE 14
  15. 15. Braskem has differentiatedtechnologyInnovation is a key value driver for Braskem• Over US$ 160 million in R&D assets• 200 researchers• 8 pilot plants• 187 patents filed• Focus on nanotechnology and intelligent packaging• Partnership with universities and R&D centers in Brazil and abroad• 18% of resins sales derive from products developed in the last three years 15Source: Braskem 15
  16. 16. Green Polymer:A global pioneer achievement • Ethylene plant from ethanol – 200,000 tons • Operation startup in 2010 in Triunfo, RS • Pilot plant producing @ 12 ton/year – samples under tests at potential clients • High demand potential • Estimated investment of ~ R$ 450 million Certified by Beta Association with 100% renewable Analytics USA Brazilian and feedstock multinational Sugar Cane Ethanol Main laboratory in the world companies specialized in carbon analysis Food, automotive and cosmetic industries 16Source: Braskem 16
  17. 17. Strong and consistent spread over international prices PE: Braskem Premium over International % PP: Braskem Premium over International % 42% 34% 33% 27% Spread PEAD Braskem / International US$ Spread PP Braskem / International US$ Average 27% Average 30% 5 5 5 5 5 05 6 6 6 6 6 06 7 7 7 7 7 07 8 8 5 5 5 5 06 6 6 6 07 7 7 07 08 8 5 05 6 06 7 07 /0 /0 /0 l/0 /0 /0 /0 /0 l/0 /0 /0 /0 /0 l/0 /0 /0 /0 0 /0 /0 l/0 t/0 /0 /0 l/0 t/0 /0 /0 l/0 /0 v/ v/ v/ v/ v/ t/ v/ n/ n/ n/ n/ n n n n t t t ar ar ar ar ai ai ai ju ju ju ar ar ar ar ai ai ai se se se ju ju ju no no no ja ja ja ja se se se m m m no no no ja ja ja ja m m m m m m m m m m m Drivers PVC: Braskem premium over international % •High value-added product mix •Development of new products52% •Logistics constraints as a barrier for imports 42% •Import tariffs •Reliability of supply Spread PVC Braskem / International US$ Average 42% •Market knowledge •Technical support for product 05 05 5 5 05 05 06 6 6 6 06 06 07 7 7 7 07 07 08 8 l/0 /0 l/0 /0 l/0 /0 /0 /0 /0 t/ t/ t/n/ / v/ n/ v/ n/ v/ n/ ai ai ai ar ar ar ar ju ju ju se se se no no noja ja ja ja m m m m m m m applications Source: CMAI / Braskem 17
  18. 18. Agenda Overview Key Differentiators Key Financial & Operational Figures Upside Drivers 18 18
  19. 19. Production growth with higheroperating reliability Capacity Utilization % ETHYLENE PE PP PVC 104% 96% 95% 96% 96% 96% 93% 94% 92% 91% 89% 86% 88% 1Q07 4Q07 1Q08 1Q07 4Q07 1Q08 1Q07 4Q07 1Q08 1Q07 4Q07 1Q08 Resin Production Kton ALL-TIME RECORDS 2,827 2,786 Production in the last 12 700 702 704 months of 2,827 Kton +1% Quarterly PVC production of 130 Kton in 1Q08 LTM LTM 1Q07 4Q07 1Q08 1Q07 1Q08 19Source: Braskem
  20. 20. Continued leadership position ingrowing domestic market Domestic Sales 1Q08 vs. 1Q07 % Resin Market Share 1Q08 +13% Other +7% 29% + 6% +5% 49% 22% Imports Resin PE PP PVC Braskem *Domestic sales + Imports in ktonSource: Braskem / Abiquim 20
  21. 21. Resilience performance in achallenging scenario R$ million 1Q08 4Q07 Change % Sales 4,410 4,809 (8) EBITDA 583 648 (10) Margin 13.2% 13.5% -0.3 p.p. Net Income before Minority 120 25 379 Minority Interest (37) 2 - Net Income 83 27 204Source: Braskem* Pro Forma Figures 21
  22. 22. Evolution of EBITDACommercial strategy and reduction in fixed costs minimizeimpacts from higher Naphtha prices R$ million Fixed cost reduction and 5% increase in US$/t lower export volumes naphtha prices Higher international prices coupled with FX impact strong pricing power in 83 on costs the domestic market 112 Extraordinary sales FX impact 188 volume in 4Q07 (115) on revenue 648 (263) (136) 19 583 (89) (32) 4Q07 Fixed Raw 1Q08 Prices Volume Foreign Other Costs/ Materials Exchange SG&ASource: Braskem 22
  23. 23. Lengthening of debt profile is a priority and is in course TJLP CDI in R$ million (3/31/08) Pré-fixado 8% 17% 2% Gross Debt: 9,363 Net Debt / EBITDA (x) Net Debt: 7,431 2.56 US$ 1.93 Bridge Average Term:10 years* 23% Trade Loan Finance 23% +33% 27% 22% Dec-07 Mar-08 875 US$ 73% Cash and equivalents US$ 500 million Bond Issuance (~ R$ 875 MM) 1,932 792 16% 13% 1,143 10% 9% 875 9% 441 8% 7% 6% 1,241 894 789 974 827 786 767 534 617 614 3/31/08 2008 2009 2010 2011 2012 / 2014 / 2016 / 2018 / Perpetual In R$ 2013 2015 2017 2020 In US$ * Includes R$2.1 billion from bridge loan to acquire Ipiranga Group’s petrochemical assetsSource: Braskem * Average Term after the US$ 500 million bond issuance is 11 years 23
  24. 24. Agenda Overview Braskem Key Differentiators Key Financial Figures Upside Drivers 24 24
  25. 25. NPV of US$ 1.1 billion in total synergies from Ipiranga acquisition R$ 200 million on annual and recurring basis in the EBITDA R$ million Total Synergies Synergies in 2008 (R$ 108 million) 9 200 10 14 25 69 73 Total Industrial Commercial Logistics Supply Others Financial SynergiesSource: Braskem 25 25
  26. 26. Accelerated Synergies in 1Q08:R$ 136 million in annual and recurring gains Actual Goal R$ million Annualized Synergies 1Q08 2008 Industrial 16 39 Commercial 42 29 Logistics 7 16 Supply 10 13 Financial 2 7 Others 1 4 Benefit on EBITDA 77 108 Financial ex-Ebitda 59 80Source: Braskem 26
  27. 27. Additional gains of R$ 100 million withFixed Costs Reduction Program R$ 100 million estimated annual & recurring gains: R$ 30 million in production costs R$ 70 million in general and administrative expenses R$ 67 million already captured in 1Q08 on annualized and recurring basis Renegotiation of contracts: insurance, IT and telecom Supply chain integration: reduction in inventory levels of maintenance and production items Optimization of the organizational structure 27 27
  28. 28. Strategic alignment with Petrobras Superior Industry Structure in Brazil: Consolidation around 2 large competitors (Braskem & CPS). New Geographic growth opportunities: linked to Petrobras’ extensive footprint in Brazil and abroad Synergies: potential for operational integration with Petrobras refineries Innovation & Technology: partnership with Petrobras Research Center High corporate governance standards: New shareholders agreement 28 28
  29. 29. Ethylene global supply & demand balance High capacity utilization rate in 2008 SIPCHEM* shelves plans for 1.3 MM ton MM ton cracker at Utilization Rate % Al-Jubail in180 Saudi Arabia 100 100 160160 149 154 140 142 95 95140 131 131 136 124 91% 119120 90 89% 89% 90 88% 88%100 80 85 85 60 80 40 80 20 75 0 1 2 3 4 5 75 2008 2009 2010 2011 2012 Supply Demand Utilization Rate Source: CMAI, March of 2008 * SIPCHEM - Saudi International Petrochemical 29
  30. 30. Global supply & demandHigh Ethylene Utilization Rate in South America Ethylene MM tons 159 9 3 4 8 9 126 EHYTLENE UTILIZATION RATE (’07-’12) (’ 07- WORLD ≥ 88% SOUTH AMERICA ≥ 92% NORTH AMERICA ≥ 85% Supply Supply Saudi Arabia China Iran Qatar Others 2007 2012 30Source: CMAI 30
  31. 31. Meaningful organic growth …Reinvestment spread prudently • (1) over time, (2) across geographies and (3) with diversified feedstock Braskem Capacity Additions (2008-12)Product Capacity Investment Advantage Start-up (K ton) (US$ MM)PP Paulínia 350 350 Diversification - Refinery Gas 2008Green PE 200 NA Ethanol – 100% Renewable 2010PP Venezuela* 450 900 Propane at competitive cost 2010PVC Alagoas 200 350 Leadership and innovation 2010PP Bahia 300 NA Strengthen Market leadership 2012PE Venezuela* 1,100 2,600 Ethane at competitive cost 2012Total 2,600 31Source: Braskem * JV with Pequiven (49%) and Sojitz (2%) NA: Not Available 31
  32. 32. …resulting in further improvement in costcompetitiveness via scale and efficiency Larger scale Increased Competitiveness Venezuela 4.9 +43% million Camaçari - BA 715 Paulínia - SP 3.4 million 1,635 4% Triunfo - RS 9% 515 515 34% 32% 57% 55% 1,110 9% 2,565 1,815 2008 2012 FYE Feedstock from Refinery Naphtha Polyethylene Polypropylene PVC Ethanol Natural Gas 32 32Source: Braskem
  33. 33. Proven capacity in projectmanagement: PP Paulínia Start up in April 2008 Spheripol technology Global scale: 350 Kton/year Located in the largest consumer market in Latin America Feedstock: Propylene from refinery Investments of R$ 700 million 33
  34. 34. Braskem: High Upside Potential# 1 in Domestic Market Share, #2 in Profitability and # 3 in Growth: not yet translated into the stock price EV/EBITDA (x) 50% upside potential to the 12.1 average peer EV/EBITDA 8.8 multiple 7.0 7.0 Average – 7.1 5.8 5.5 5.5 4.8 Unipar Mexichem Dow Westlake Braskem Solvay NOVA LG Chemicals ChemicalsSource: Avi Nash LLC 34
  35. 35. Braskem:High Upside Potential Dominance in the domestic market with superior profitability Exposure to the fast-growing domestic market NPV of US$ 1.4 billion derived from synergies and reduced fixed costs Growth projects with increased profitability and high ROCE Proven expertise to implement greenfield projects Strategic alignment with Petrobras Innovation and Technology as key value drivers: green polymer Experienced management team focused on value creation Commitment to Sustainability 35 35
  36. 36. 1st Annual Citi Brazil Equity Conference June 2008
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