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Braskem nondeal roadshowmar09_v3 Braskem nondeal roadshowmar09_v3 Presentation Transcript

  • Non-deal Roadshow March 2009
  • Forward-looking StatementsThis presentation contains forward-looking statements. Such statements are notstatements of historical facts, and reflect the beliefs and expectations ofBraskem’s management. The words “anticipates”, “wishes”, “expects”,“estimates”, “intends”, “forecasts”, “plans”, “predicts”, “projects”, “targets”and similar words are intended to identify these statements. Although Braskembelieves that expectations and assumptions reflected in the forward-lookingstatements are reasonable based on information currently available to Braskem’smanagement, Braskem cannot guarantee future results or events.Forward-looking statements included in this presentation speak only as of thedate they were made (December 31, 2008), and the Company does not undertakeany obligation to update them in light of new information or futuredevelopments.Braskem shall not be responsible for any transaction or investment decisions thatare taken based on information included in this presentation. 2
  • Agenda The Company & 2008 Financials Petrochemical Industry Key Differentiators 3 3
  • Braskem in a snapshot Leading petrochemical company in Latin America Third largest resins producer in the Americas Diversified portfolio of petrochemical products, with focus on PE, PP and PVC 18 manufacturing plants in Brazil and annual production capacity of 11 million tons of chemical and petrochemical products Key financials, 2008 Gross revenue = US$ 12.8 billion Net revenue = US$ 10.0 billion (78% in Brazil) Ebitda = US$ 1.3 billion Assets = US$ 9.7 billion Listed at Bovespa, NYSE and LATIBEX 4
  • Ownership Structure – Leveragingrelationship with Petrobras % Voting Capital % Total Capital ODEBRECHT GROUP PETROBRAS BNDESPAR OTHERS 62.3% 39.3% 31.0% 23.8% 0.0% 5.2% 6.7% 31.7%Leveraging relationship with Petrobras: NOC alliance • Potential for operational synergies with refineries and partnership with Petrobras R&D Center • Alliance to strengthen Brazil’s petrochemical value chain – Consolidation around 2 large competitors (Braskem & Quattor) – Access to competitive raw materials – Improved value chain competitiveness • Corporate governance standards: Shareholders’ agreement 5
  • Enhanced competitiveness through value chain integration Industrial integration Oil/Gas-refineries Basic petchem Resins Converters Competitive Innovation & raw material technology Operational Service and log synergies barriers % PE Sales % PP Sales % PVC Sales CHEMICALS AND CLEANING MATERIAL RETAIL CLEANING MATERIAL AGROCHEMICALS OTHERS CONSTRUCTION 15% 10% AUTOMOTIVE CLEANING 2% 13% 12% MATERIAL 2% AGRICULTURE CONSUMER 9% 58% INFRASTRUCTUREOTHERS 8% GOODS ELECTRIC AND 17% 6% 12% ELECTRONIC 18% 7% CONSUMER ELECTRIC AND 1% GOODS 6% ELECTRONIC 4%CONSTRUCTION INDUSTRIAL 1%4% AUTOMOTIVE 4% 31% 5% FOOD 20% CHEMICALS AND 4% AGRICULTURE 24% 4% AGROCHEMICALS PACKAGING 3% AUTOMOTIVE COSMETICS AND COSMETICS AND FOOD PACKAGING FOOD PACKAGING PHARMACEUTICALS PHARMACEUTICALS CONSUMER GOODSMarketShare 50% 53% 51% 6 Source: Braskem / Abiquim
  • Track record of strong and consistentorganic growth and acquisitions Rank amongst the 10 Become the largest largest petrochemical thermoplastic resins companies in the world producer in Latin measured by EV* America IPQ / CPS Paulinia Politeno 2012 Polialden 2007 2008 2006 Trikem 2002 5,901 5,551Braskem’s Ethylene andresins capacity (kt) 22% CAGR 3,621 Acquisitions 3,045 3,145 3,2251,200 Organic growth2000 2002 2004 2005 2006 2007 2008 * Enterprise Value 7
  • Applied Innovation and technology tostrengthen value chain competitiveness Structured resource base to support client needs • Focus on product and application development Over US$ 160 million in R&D assets – 18% of resin sales derive from products 200 researchers developed in the last three years – Focus on clients’ end 8 pilot plants users • Targeted initiatives for 219 patents filed breakthrough technology Partnership with universities and R&D centers in – Nanotechnology and intelligent packaging Brazil and abroad – Renewables 8Source: Braskem 8
  • Green Polymer:Pioneering renewables • Proven higher value added: green label earns price premium • Demand potential > 500 Kton/y • Price premium for pioneering • Competitive production cost compared to standard technology • Extended R&D network with universities and bio genetic companies focused on developing new products platforms on renewable feedstock • Pilot plant producing @ 12 ton/year – samples under client tests • Industrial plant under construction • Ethylene plant from ethanol – 200 Kton/y • Startup in 2011 in Triunfo, RS • Investment of US$ 200 million (R$ 488 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 Food, automotive and analysis cosmetic industries 9 9
  • Growth combined withimproved competitiveness Venezuela (JVs with Pequiven – equal ownership): Venezuela Polipropileno del Sur (Propilsur) - 450 kton/y of PP - Approximately US$1 billion investment - Start up in 2011 Peru - Equipment acquisition opportunity - Project progressing on schedule Bolivia - Project Finance expected for 2H09 - Investment final approval expected for 2H09 Polietilenos de America (Polimerica) − 1.1 Mton/y of PE − Approximately US$3 billion investment − Start up in 2013 − Technology to be adopted already chosen Peru: MOU signed with Petrobras and PetroPeru Bolivia: MOU under negotiation with YPFB 10
  • EBITDAImpact from raw materials costs, FX and lower sales volumesovercome gains with price increaseR$ million FX impact 1,095 on costs 269 3,320 FX impact (1,434) on revenue 3,250 (3,368) (673) 2,418 (339) (43) 2007 Price Fixed Costs/ Raw Volume Exchange Others 2008 SGAE Materials RateSource: Braskem 11
  • Good debt profile with an average term of 11 years R$ million (12/31/08) Gross Debt: 11,986 Net Debt / Ebitda (x) US$ Net Debt: 9,028 Average Term: 10.9 years 3.06 2.89 74% of the debt are pegged to the USD - 6% Cash and Equivalents 2,960 Sep08 Dec08 18% 1,901 738 13% 12% 11% 11% 11% 10% 1,408 8% 6% 1,642 1,368 1,259 1,402 1,345 1,059 942 1,169 713 12/31/08 2009 2010 2011 2012 2013 2014 / 2016 / 2018 / 2020 onwards 2015 2017 2019 In R$ In US$ Value related to the loan granted by a Petrobras subsidiary for the delisting of Copesul, due in October 2009Source: Braskem 12
  • Focus on priority investment projects R$ million 2,279 Investments in Equity Stake 885 (Ipiranga Group/Politeno) Capacity increases / 195 Petroquímica Paulínia 909 238 Equipment Replacement Health, Safety and Environment 172 Capacity increases / Green PE 161 91 Technology Equipment Replacement 213 202 Productivity Health, Safety and Environment 203 14 Technology 407 Maintenance 74 Productivity 55 Information System 233 Maintenance / Others 45 Quality / Others 2008 2009eSource: Braskem 13
  • Agenda The Company & 2008 Financials Petrochemical Industry Key Differentiators 14 14
  • Challenge: maintain competitiveness levelthroughout the petrochemical cycle Points of Attention Global ethylene supply-demand and operating rate, • US/EU slow down Mton/y. % • Incentives to sustain supply buildup 146 – China: import substitution 140 143 130 – Middle East own agenda 134 123130 114 118 • Credit Availability 114 •Petrochemical industry ownership 91% change 89% 89% 88% 88% 86% 87% 84% Supply & Demand 83% 82% Potential positive drivers 5 • Frequent delays in new capacities 2008 2009 2010 2011 2012 • Supply-demand geographical imbalance leads to logistics barriers 1 2 3 4 5 Supply Demand Demand • Increased economic importance of non-OECD countries with material domestic consumption CMAI utilization rate – Feb 09 •Asset acquisition opportunities CMAI utilization rate – Aug 08 •4 Mton of capacity temporarily closedSource: CMAI 15
  • New supply coming on line in Middle East and Asia while US and Europe shutdown capacity Capacities shutdown: New capacity addition (kton): Dow - Feb/09: 102 Kton of LDPE in Free Port, USA 9,561 - Dec/08: 522 Kton cracker in Plaquemine, USA Westlake 4,203 - Dec/08: 544 Kton cracker in Lake Charles, USA 6,487 Lyondell Basell 1,145 - Feb/09: 544 Kton cracker in Chocolate Bayou, USA 452 - Feb/09: 185 Kton of LDPE in Carrington, UK 1,825 - Feb/09: 110 Kton of LDPE in Fos-sur-Mer, France Formosa Plastics 4,890 - Nov/08: 680 Kton cracker in Point Confort, USA 3,533 ExxonMobil - Sep/08: 826 Kton cracker in Beaumont, USA DuPont - Sep/08: 680 Kton cracker in Orange, USA 2009 2010Source: Chemsweek’s Business Daily / HSBC / CMAI Middle East Asia Ex-China China 16
  • Resins demand grows even in economicslowdown periods PE Demand X World GDP6.0% 80,000 70,0005.0% 60,0004.0% 50,0003.0% 40,000 30,0002.0% 20,0001.0% 10,0000.0% 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 World GDP Growth Economic Slowdown PE DemandSource: CMAI / IMF 17
  • Agenda The Company & 2008 Financials Petrochemical Industry Key Differentiators 18 18
  • Brazil: A stable economy Structural changes have prepared the country to the current environment Economic policy based on inflation target, fiscal responsibility and floating exchange rate GDP growth and inflation % interest % GDP Competitive, diversified and open economy 7 6 6 5 Liquid financial system 5 4 Mature democracy 4 3 3 Broad and consumerist domestic market 2 2 1 1 Greater competitiveness of Brazilian multinationals 0 0 2007 2008 2009 2010 Focus on improving social conditions (health, education, GDP Inflation income distribution) Sovereign debt in a record low, rated investment grade (S&P, Fitch)Source: Tendências Consulting - Bradesco and Santander Perspectives 19
  • Favorable business environment in BrazilBrazilian financial scenario Moderate domestic demand growth Net Debt / GDP (%) Higher availability of credit - credit/GDP, % 55 50 34.9 35 45 40 35.8 30 26.7 35 30 25 2004 2005 2006 2007 2008 20 50% Reserves (Liquidity) / Total Debt (%) 38.0 40% 15 30% 2001 2002 2003 2004 2005 2006 2007 2008 20% 10% Larger middle class, driving up consumption 0% 2004 2005 2006 2007 2008 Foreign Resources (Accumulated, in US$ billion) 49% 50 45.1 46% 2002 40 2006 32% 30 26% 25% 22% 20 10 0 dez-95 dez-96 dez-97 dez-98 dez-99 dez-00 dez-01 dez-02 dez-03 dez-04 dez-05 dez-06 dez-07 dez-08 E&D C B&ASource: Central Bank of Brasil, FAO, USDA, Datafolha Institute, Ipedata, Bradesco 20
  • Brazil: dynamic market with still low per capita consumption• PE, PP and PVC per capita consumption (Kg per person) 81 71 55 Brazil 5.2% CAGR* 21.9 22.7 18.7 20.2 15.4 16.6 16.1 17.8 17.5 18.0 14.5 16.2 13.611.1 12.51994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 USA Europe Japan PE PP PVC 21Source: CMAI *Compound annual growth rate 21
  • In Brazil, companies are exposed to a dynamic market with resilient growth…• Domestic demand for resins • USA Demand for resins (Kton) 5.4% CAGR -1.2% 3% CAGR 10% 4,172 9% 4,048 3,694 1% 3,435 3,377 25,904 25,020 -3% 856 982 24,749 2,880 24,212 -12% 749 749 23,276 692 21,341 6,081 5,907 1,228 1,218 5,421 5,563 1,114 1,114 990 4,328 6,350 6,287 6,153 5,922 1,964 1,972 1,833 1,695 1,833 12,318 12,826 12,638 11,091 2001 2004 2005 2006 2007 2008 2001 2004 2005 2006 2007 2008 PVC PP PESource: Abiquim – domestic sales + imports Source: NAD - CMAI 22
  • … and a 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 23Source: Braskem / CMAI 23
  • … allows the Company to seize the opportunities offered by this environment o n eati C lu e cr with va Expand access to w attractive markets Gr o BStrengthen current position Assure regional low-cost raw A material and energy supplies • Green-PE and renewables Improve and • M&As protect core Latin American business • Global Associations • Gas crackers in Latin America• Leveraging relationship with • Brazilian sugar cane ethanol Petrobras• Value-chain virtual integration – Refineries, raw materials – Service and logistics barriers – Innovation and technology• Operational, commercial excellence• Regional Leadership 24
  • Braskem:High Upside Potential Dominance in the domestic market with superior profitability Exposure to the Brazilian market Synergies and focus on reducing costs to increase competitiveness 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 liquidity, efficiency and value creation Commitment to Sustainability 25 25
  • Non-deal Roadshow March 2009
  • Appendix I 27
  • Outstanding Bonds & Outstanding Ratings Coupon Yield Outstanding Bonds Maturity (% p.a.) (% p.a.) US$250 MM Jan/2014 11.750 10.1 US$250 MM Jun/2015 9.375 10.4 US$275 MM Jan/2017 8.000 11.0 US$500 MM Jun/2018 7.250 12.4 US$150 MM Perpetual 9.750 11.9 US$200 MM Perpetual 9.000 12.7 Corporate Credit Rating – Global Scale Agency Rating Outlook Fitch Ratings BB+ Stable S&P BB+ Stable Moody’s Ba1 StableSource: Braskem / Bloomberg 28
  • Covenants RATIO Net Debt / Ebitda (x) Net Debt / EBITDA US$ R$ 3.73 < 4.5X 2.89 Dec08 Dec08 Facility Amount Currency Type 2010 and 2011 Debentures R$800 MM R$ Incurrence* 2014 Medium Term Notes US$250 MM R$ Incurrence* Nippon Export and US$80 MM US$ Maintenance Investment Insurance EPP (Export Pre-Payment) US$725 MM US$ Maintenance * The company is prevented from issuing any new debt for the period if it overcomes the 4.5x Net debt / Ebitda ratio.Source: Braskem 29
  • Operating Cash Flow R$ Million 2008 2007 Adjusted profit before cash financial 1,966 2,119 effects Working Capital 1,665 1,380 Operating Cash Flow 3,631 3,499 Interest Paid (572) (541) Income Tax and Social Contribution (121) (377) Investments Activities (2,214) (3,792) Free Cash Flow 725 (1,212)Source: Braskem 30
  • Net debt increases by US$500 million on investments of US$1.3 billion US$ million 175 355 337 3,864 3,350 1,297 (1,325) 2,230 (271) (54) Working PPSA Net Debt Interest Dividends Ebitda FX / MV Net Debt Investments Net Debt Capital Consolidation Dec07 Dec08 Dec08Source: Braskem 31
  • Appendix II 32
  • Braskem High Upside Potential EV/EBITDA 2009 Comparable 8.0 companies average: 5.18 6.5 5.2 3.7 4.7 2.5 10% discount Nova Braskem Dow Westlake LG Chemicals Mexichem Chemicals 2009e 47% share upsideSource: Braskem, Citigroup, Bank of America e Credit Suisse 33