CS LatAm EquityConference 2010
Forward-looking StatementsThis presentation contains forward-looking statements. These statements do notrepresent historic...
Agenda         Strategic direction         Quattor acquisition         Braskem post transaction         Key differentiator...
Strategic direction Vision 2020 Braskem                       Leader in the Americas, rank                          among ...
Strategic drivers                        Quattor acquisition strongly aligned to                        the strategic driv...
Agenda         Strategic direction         Quattor acquisition         Braskem post transaction         Key differentiator...
Braskem overview    Key Financials 2009 LTM*:    Net Revenue        R$ 15.3 billion          Ethylene and resins capacity ...
Quattor overview    Key Financials 2009 LTM*:    Net Revenue                   R$ 4.1 billion                             ...
Geographic Complementarities                                                                     Complementation and      ...
Benefits and strategic drivers    Creation of a world scale player    Diversification of feedstock supply    Scale increas...
Transaction stages (1/2) 1. Creation of BRK Investimentos Petroquímicos SA (BRK) holding Braskem’s common    shares from O...
Transaction stages (2/2) 4. Braskem merges Quattor shares, consolidating Petrobras/Petroquisa 40% interest in    Braskem: ...
Assets to be acquired                                                               40.0%       Direct Subsidiaries       ...
Agenda         Strategic direction         Quattor acquisition         Braskem post transaction         Key differentiator...
Braskem post transaction    Key Financials (2009 LTM* ProForma):    Gross Revenue                 R$ 25.8 billion   Resins...
Assets location overview                                                                  PVC                             ...
Quattor acquisition places Braskem as #1 resins producer in the Americas...                           Production capacity ...
... and in the global ranking, one of the  Top 10 in resins                           Production capacity of resins (PE, P...
Diversity and competitiveness offeedstock to compete globally   Feedstock profile (2009*)                                 ...
Concerns with Corporate Governance   Braskem as a public company - Odebrecht as the controlling shareholder of the   compa...
Capital structure post transaction   High liquidity, with availability around R$9 billion   Capital structure with leverag...
Braskem debt profile post transaction         Short term cash balance of Braskem post transaction, without any capital inj...
Partnership in new projects                  700 kton/y PTA                 Suape: integration of the                  450...
Growth combined with improved competitiveness• Green PE:     - 200 kton/y of green PE     - Ethylene made from 100% renewa...
Growth combined with improved competitiveness • Mexico:     • Project Ethylene XXI     - Partnership with the Mexican grou...
Agenda         Strategic direction         Quattor acquisition         Braskem post transaction         Key differentiator...
Brazil: dynamic market with stilllow per capita consumption  • PE, PP and PVC per capita consumption    (Kg per person)   ...
In Brazil, companies are exposed to adynamic market with resilient growth  • Domestic demand for resins (Kton/y)          ...
Applied Innovation and technology tostrengthen value chain competitiveness Structured resource base to support client need...
Agenda         Strategic direction         Quattor acquisition         Braskem post transaction         Key differentiator...
Petrochemical Cycle  Good naphtha x resins spreads even with lower ethylene  utilization rate Global ethylene supply-deman...
12 million tons of ethylene capacity lostin USA and Europe 2009 expected utilization rate: Kton45,000                     ...
Major ethylene capacity additions in 2009:  9.5 Mtons of nameplate capacity in Asia and Middle  East, of which 4.5 Mtons e...
World indicative ethylene cash costsSource: CMAI                            34
Management’s main priorities   Implementation of the Quattor Transaction   Analysis of the Transaction by CADE   Continued...
CS LatAm EquityConference 2010
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Cs equity conference

  1. 1. CS LatAm EquityConference 2010
  2. 2. Forward-looking StatementsThis presentation contains forward-looking statements. These statements do notrepresent historical fact, but rather reflect the beliefs and expectations ofBraskem’s management. The words “anticipate”, “wish”, “expect”, “estimate”,“intend”, “forecast”, “plan”, “predict”, “project”, “target” and similar wordsare intended to identify these statements. Although Braskem believes that theexpectations and assumptions reflected by these forward-looking statements arereasonable and based on information currently available to management,Braskem cannot guarantee future results or events.The forward-looking statements in this presentation are valid only on the datethey are made (September 30, 2009) and the Company does not assume anyobligation to update them in light of new information or future developmentsBraskem is not responsible for any transaction or investment decision takenbased on the information in this presentation. 2
  3. 3. Agenda Strategic direction Quattor acquisition Braskem post transaction Key differentiators The petrochemical industry
  4. 4. Strategic direction Vision 2020 Braskem Leader in the Americas, rank among the 5 largest petrochemical companies worldwide measures by EV* and to be positioned as the preferred partner for global alliancesSource: Braskem * Enterprise Value 4
  5. 5. Strategic drivers Quattor acquisition strongly aligned to the strategic drivers of the Company Feedstock and energy availability at competitive costs Defense of business in Business differentiation Latin America International expansion Diversification of in attractive markets products and businessSource: Braskem 5
  6. 6. Agenda Strategic direction Quattor acquisition Braskem post transaction Key differentiators The petrochemical industry
  7. 7. Braskem overview Key Financials 2009 LTM*: Net Revenue R$ 15.3 billion Ethylene and resins capacity (kton/y) EBITDA R$ 2.4 billion 6,127 Net Result R$ (328) million 510 * Last 12 months 1,090 Profile: PVC 1,995 17 petrochemical plants with 1st and 2nd PP generations integrated: states of BA, RS, AL, SP (non integrated) PE Ethylene Listed in 3 stock exchanges: BM&FBovespa, NYSE and Latibex 2,532Source: Braskem 7
  8. 8. Quattor overview Key Financials 2009 LTM*: Net Revenue R$ 4.1 billion Ethylene and resins capacity (kton/y) EBITDA R$ 462 million 3,155 Net Result R$ (256) million * Last 12 months 875 Profile: PP 1,040 PE 9 petrochemical plants with 1st and 2nd generations partially integrated: states of Ethylene SP, RJ Private company 1,240Source: Braskem / Company estimates / Quattor 8
  9. 9. Geographic Complementarities Complementation and geographic diversification Country region with the highest availability of feedstock Quattor assets are located in Maceió the SE region; Marechal Deodoro The southeast region has the Camaçari largest thermoplastic resins domestic consumption; The privileged location of Quattor assets represents low logistics costs on the transport Mauá Duque de Caxias of products to the final resin Paulínia consumers. Triunfo Industrial Footprint Greenfields
  10. 10. Benefits and strategic drivers Creation of a world scale player Diversification of feedstock supply Scale increase and geographic complementarities Strengthening of the production chain – petrochemicals and plastics Balanced capital structure Value creation for all shareholders Consolidation of Odebrecht and Petrobras shares in their activities in the petrochemical sector, strengthening Braskem and the Brazilian production chain to compete in the international market and ensuring the basis for global growth, consolidating the leadership in the Americas 10
  11. 11. Transaction stages (1/2) 1. Creation of BRK Investimentos Petroquímicos SA (BRK) holding Braskem’s common shares from Odebrecht (ODB) and Petroquisa (PTB), followed by a capital increase of R$ 3,5 billion, R$ 1 billion from ODB and R$ 2.5 billion from PTB ODB PTB Aportes ODB PTB ODB/PTB 66,8% 33,2% 53.8% 46.2% BRK BRK 2. Braskem capital increase through Private Offer between R$ 4.5 billion and R$ 5 billion, with a minimum subscription of R$ 3.5 billion assured by BRK. The Offer share price will be R$ 14.40 per share 3. Braskem acquires Unipar 60% stake of Quattor Participações for R$ 647.3 million in addition to suceed Unipar in a liability with BNDESPAR 11
  12. 12. Transaction stages (2/2) 4. Braskem merges Quattor shares, consolidating Petrobras/Petroquisa 40% interest in Braskem: Braskem 100% Quattor Participações 94,11% 65,98% 99,3% QQuímica RioPol QPetroquímica 25,00% RioPol 5,89% 9,02% permanecem com BNDESPar 5. Braskem acquires 33.3% of Polibutenos and 100% of Unipar Comercial for R$ 52.7 million These steps of the transaction are expected to be concluded in 120 days 12
  13. 13. Assets to be acquired 40.0% Direct Subsidiaries 50.0% 33.3% 60.0% 100.0% Participações Divisão Qu 94.11% 65.98% 99.30% Química Petroquímica ímica 5.89% 9.02%25.00% of RioPolremains withBNDESPar Source: Quattor 13
  14. 14. Agenda Strategic direction Quattor acquisition Braskem post transaction Key differentiators The petrochemical industry
  15. 15. Braskem post transaction Key Financials (2009 LTM* ProForma): Gross Revenue R$ 25.8 billion Resins capacity (kton/y) Net Revenue R$ 19.4 billion 5,510 EBITDA R$ 2.9 billion Total Assets R$ 33.5 billion 510 *LTM: oct/08 to sep/09 1,965 PVC Profile: PP 26 petrochemical plants with 1st and 2nd generations integration: States of BA, RS, PE AL, SP, RJ Listed in 3 stock exchanges: 3,035 BM&FBovespa, NYSE and LatibexSource: Braskem / Company estimates 15
  16. 16. Assets location overview PVC Chlorine - Soda Naphtha cracker PE PVC 26 Plants in 5 states Chlorine – Soda - 17 Braskem plants PP - 9 Quattor plants AL Gas (ethane and propane) cracker BA PE PP QUATTOR ASSETS PROXIMITY OF THE CONSUMER MARKET Naphtha and LRH cracker PE RJ PP SP PVC Naphtha cracker Green Ethylene PE RS PP 16
  17. 17. Quattor acquisition places Braskem as #1 resins producer in the Americas... Production capacity of resins in the Americas, kton/y 2009 basis 1st 5,510 5,307 4,827 510 1,230 4,256 4th 627 3,595 1,965 3,082 1,731 510 2,340 2,311 1,090 1,210 1,915 4,077 4,200 PVC 3,035 822 875 2,525 2,340 2,311 PP 1,995 1,050 1,040 PE Braskem Exxon Dow Lyondell Braskem Formosa Shintech Chevron Quattor post Mobil Basell Philips transactionSource: Braskem / CMAI / Barclays / Parpinelli Tecnon 17
  18. 18. ... and in the global ranking, one of the Top 10 in resins Production capacity of resins (PE, PP, PVC) worldwide, kton/y 2009 basis 10,914 9,311 8,668 7,749 7,284 7,109 6,541 12th 4,681 4,564 4,303 4,079 3,595 19th 1,915 Lyondell Exxon SINOPEC Dow Formosa SABIC Ineos Total IPIC Reliance PetroChina Braskem Quattor Basell Mobil 10,914 9,311 8,668 7,749 7,284 7,109 8th Braskem 6,541 5,510 post transaction Lyondell Exxon SINOPEC Dow Formosa SABIC Ineos Braskem Basell Mobil post transactionSource: Braskem / CMAI / Barclays / Parpinelli Tecnon 18
  19. 19. Diversity and competitiveness offeedstock to compete globally Feedstock profile (2009*) Refinery Propylene USGC international reference with competitive prices 8% 11% Petrobras as main supplier 37% 13% Naphtha/Condensate 17% 72% of Petrobras naphtha supplied at 92% competitive pricing formula 76% 46% 28% of purchases via imports Gas 100% of Petrobras gas supplied with Quattor Braskem Braskem competitive prices in relation to international post transaction references Liquid (2) Propylene Gas (1)(1) Ethane, Propane and LRH(2) Includes naphtha and condensate Ethanol Matrix with a greater balance and diversification Competitive gas pricing in relation to the international reference 19
  20. 20. Concerns with Corporate Governance Braskem as a public company - Odebrecht as the controlling shareholder of the company Operational issues to be addressed by Braskem Executive Officers Sharing of strategic decisions (Board consensus), such as: Assets sales, acquisitions, investments etc Professional management - CEO chosen by Odebrecht and executive officers chosen by CEO, with Petrobras nominating 2 out of 8 Preferred partner for investments in the industry, exclusive choice in Latin America – Peru, COMPERJ, Suape, etc. Board of Directors with 11 members, out of which 1 is not nominated by the controlling shareholders 20
  21. 21. Capital structure post transaction High liquidity, with availability around R$9 billion Capital structure with leverage (net debt/EBITDA) around 3x Opportunity to extend maturities and reduce the cost of debt through renegotiation Estimated Capital Estimated Capital ProForma Increase R$4.5bi - Increase R$5bi - Sep 09 Acquisitions Acquisitions Availabilities 4,274 8,074 8,574 Gross Debt 17,470 17,470 17,470 Net Debt 13,197 9,397 8,897 Net Debt / EBITDA 4.55x 3.24x 3.07x Shareholders’ 7,270 11,770 12,270 equity 21
  22. 22. Braskem debt profile post transaction Short term cash balance of Braskem post transaction, without any capital injection, is enough to amortize debts maturing in 2009 and 2010 Consolidated Debt Profile (R$ million) Consolidated Debt No injection R$4.5 bi injection US$ R$In R$ million Cash 4,274 8,774 47% 53% 8,774 Gross Debt 17,470 17,470 Net Debt 13,197 8,697 R$4.5 bi R$3.5bi injection injection Average Term: 7.1 years 3,200 2,518 4,274 > 3,828 2,288 1,556 1,896 1,932 1,264 1,086 1,416 728 1,144 1,140 620 934 900 1,644 516 617 1,204 1,254 1,202 601 123 752 796 156 447 494 333 69 Cash and 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 + Perp. Equivalents Braskem Debt (sep/09) Quattor Debt (sep/09)** Braskem Estimates 22
  23. 23. Partnership in new projects 700 kton/y PTA Suape: integration of the 450 kton/y PET petrochemical ComplexAll corporate 240 kton/y textiles polymers businesses into the Companyand contractual assetsinstrumentsshall be signed Comperj: production and 860 kton/y PEwithin 120 marketing of resins and basic 850 kton/y PPdays. petrochemicals 500 kton/y PTA 600 kton/y PET Maintaining financial solidity 700 kton/y PTX 608 kton/y Benzene 157 kton/y Butadiene 23
  24. 24. Growth combined with improved competitiveness• Green PE: - 200 kton/y of green PE - Ethylene made from 100% renewable raw material, with sugarcane ethanol used as feedstock - Investments of R$ 488 million and startup expected for the end of 2010 - Financing package with BNDES approved in May/09 - 70% of the ethanol volume required on final contract negotiation• Venezuela (JVs with Pequiven with equal ownership) – Under Review: • Polipropileno del Sur (Propilsur) - 450 kton/y of PP - Startup in 2013 and investments estimated at US$1.2 billion - Front end engineering design (FEED) at its final stage, EPC contract negotiation and financing structure with the ECA´s and multilaterals in progress • Polietilenos de America (Polimerica) - 1.3 Mton of ethylene and 1.1 Mton/y of PE - Integrated project using the natural gas available in Venezuela as feedstock - Startup in 2014 and investments estimated at US$3.25 billion - Technology license agreements signed for the PE plants and 79% of the PE Project Design Packages (PDPs) concludedSource: Braskem 24
  25. 25. Growth combined with improved competitiveness • Mexico: • Project Ethylene XXI - Partnership with the Mexican group IDESA for the acquisition of ethane from PEMEX to be used as feedstock for an integrated petrochemical project - 1 Mtons/y of ethylene and 1 Mtons/y of PE - Investment initially estimated in up to US$ 2.5 billion over the course of 5 years, planned to be financed by a project finance model with 70% debt and 30% equity • PVC Alagoas: - 210 kton/y of PVC capacity expansion in Alagoas, Brazil - Investments around US$500 million and startup expected for the second half of 2012 • Peru: - Braskem, Petrobras and PetroPerú concluded studies for the technical and economic pre- feasibility phase of an integrated project to produce 600 kton to 1.000 kton/y using the natural gas available in Peru as feedstockSource: Braskem 25
  26. 26. Agenda Strategic direction Quattor acquisition Braskem post transaction Key differentiators The petrochemical industry
  27. 27. Brazil: dynamic market with stilllow per capita consumption • PE, PP and PVC per capita consumption (Kg per person) 76 68 Brazil: 57 5.2% CAGR* 22.7 21.9 20.2 17.8 18.7 18.0 16.2 16.6 17.5 15.4 16.1 14.5 12.5 13.611.11994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 USA Europe Japan PE PP PVC 27 * Compound annual growth rate 27Source: CMAI
  28. 28. In Brazil, companies are exposed to adynamic market with resilient growth • Domestic demand for resins (Kton/y) 5.4% CAGR 3% 10% 4,172 9% 4,048 3,696 856 982 3,435 3,377 749 2,880 692 1,228 1,218 1,114 990 1,833 1,964 1,972 1,695 2001 2004 2005 2006 2007 2008 PE PP PVCSource: Abiquim – domestic sales + imports Source: NAD - CMAI 28
  29. 29. Applied Innovation and technology tostrengthen value chain competitiveness Structured resource base to support client needs Focus on product and application Over US$ 190 million in R&D assets development – 18% of resin sales > 170 researchers derive from products developed in the last three 8 pilot plants years – Focus on clients’ > 240 patents filed end users worldwide Targeted initiatives for breakthrough Partnership with universities and R&D centers in technology Brazil and abroad – Intelligent packaging – Renewables 29 29Source: Braskem
  30. 30. Agenda Strategic direction Quattor acquisition Braskem post transaction Key differentiators The petrochemical industry
  31. 31. Petrochemical Cycle Good naphtha x resins spreads even with lower ethylene utilization rate Global ethylene supply-demand and operating rate (Mton/y, %) Points of concern 143 146 148 • Uncertainty regarding the extent of the 140 global economic recovery 134 134 130 127 120 • Incentives to sustain supply buildup 111 112 115 91 – China: import substitution – Middle East own agenda 87 • Stronger activity of capital investors in 86 the commodity market 84 83 83 Supply & Demand Balance Potential positive factors 2008 2009 2010 2011 2012 2013 • Frequent delays in new capacities Supply Demand Utilization Rate CMAI - May/09 • Operational and logistics problems Spread HDPE/Naphtha X Ethylene utilization rate (US$/ton, %) • Increased economic importance of emerging countries with relevant 91 91 domestic consumption, as Brazil and 702 717 751 750 688 694 China 84 609 • Supply-demand geographical imbalance 638 562 626 77 528 leads to logistics barriers 79 77 77 • Opportunities from assets on sale 474 • Limited utilization rates helps to balanceJan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 the market Spread HDPE/Naphtha Utilization rate 3Q09 Estimated utilization rate Source: CMAI 31
  32. 32. 12 million tons of ethylene capacity lostin USA and Europe 2009 expected utilization rate: Kton45,000 88% 82%40,000 77%35,000 67% • Lower global demand30,00025,000 growth and new20,00015,000 capacity additions10,000 5,000 expected to come on 0 stream limiting the North Europe Middle Asia America East utilization rates of the Nameplate Capacity Effective Production actual players New ethylene capacity additions globally (Mton): • New capacity additions 12 10 could be delayed 8 6 4 Delayed 2 Go ahead 0 2009 2010 2011 2012 2013 Source: Parpinelli Tecnon / CMAI / SRI 32
  33. 33. Major ethylene capacity additions in 2009: 9.5 Mtons of nameplate capacity in Asia and Middle East, of which 4.5 Mtons effectively operating Effective capacity Nameplate Country Company Startup in 2009 (Kton) Capacity (Kton) Kuwait TKOC 1Q09 850 850 Saudi Arabia Petro-Rabigh 2Q09 975 1,300 Saudi Arabia Yansab 3Q09 867 1,300 Qatar RLOC 3Q09 325 1,300 China Fujian Ref & Chem 3Q09 400 800 China Secco 3Q09 150 300 Saudi Arabia SHARQ 4Q09 100 1,200 China Dushanzi PC 4Q09 417 1,000 Thailand PTT Polyethylene 4Q09 250 1,000 China Panjin Ethylene 4Q09 113 450 4,447 9,500 10,340 3,832 Total ethylene 5,773 5,130 capacity 888 2,475 1,240 additions (kton) 202 1,450 4,040 4,033 China 3,083 Asia ex-China Middle EastSource: CMAI / updated in Oct 30th. 2009 2010 2011 33
  34. 34. World indicative ethylene cash costsSource: CMAI 34
  35. 35. Management’s main priorities Implementation of the Quattor Transaction Analysis of the Transaction by CADE Continued strengthening of long-term relationship with Clients Prioritizing financial health and liquidity Construction of Green PE plant Projects in Latin America: competitive feedstock Selective acquisitions in North America Financial strength and respect for minority shareholders Opportunities for internationalization 35
  36. 36. CS LatAm EquityConference 2010
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