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Presentation to ini   individual investors Presentation to ini individual investors Presentation Transcript

  • Individual Investor Meeting José Marcos Treiger Head of Investor Relations May, 2006
  • Forward-looking StatementsThis presentation contains forward-looking statements. Such statements are not statements ofhistorical facts, and reflect the beliefs and expectations of Braskem’s management. The words“anticipates”, “wishes”, “expects”, “estimates”, “intends”, “forecasts”, “plans”, “predicts”,“projects”, “targets” and similar words are intended to identify these statements. AlthoughBraskem believes that expectations and assumptions reflected in the forward-lookingstatements are reasonable based on information currently available to Braskem’s management,Braskem cannot guarantee future results or events.Forward-looking statements included in this presentation speak only as of the date on whichthey are made (March 31, 2006), and the Company does not undertake any obligation to updatethem in light of new information or future developments.Braskem shall not be responsible for any transaction or investment decisions that are takenbased on information included in this presentation. 2
  • Agenda Plastic and the Petrochemical industry in Brazil Braskem: World class Brazilian petrochemical Value Creation to Shareholders 3
  • The History of Plastic1839 Charles Goodyear discovers the vulcanization of rubber from latex1862 Parkes presents its first products made of Parkesine – a compound made of pulp nitrate, naphthalene and camphor. (eg. pool ball)1872 The discovery of PVC through the polimerization of vinyl cloride catalized by sun light1909 L. H. Baekeland announces the discoverty of a phenol resin and registers the patent as Baquelite: first synthetic polymer. 4
  • The History of Plastic1920 In the USA, Ford uses compounds made of phenolic resins with fabric to produce car parts.1937 Low density polyethylene was discovered, as a powder, in England.1954 G. Natta prepares isostatic polypropylene to be produced by Montecatini in Ferrara (Italy) in 1957.1954 High density polyethylene was created by Professor Ziegler at Philips Petroleum.1964 The copolymers of ethyl-acetate of vinyl (EVA) were developped for sale. 5
  • The market for plastics Pharmaceutical Food and Beverage Hygiene and Cleaning Textiles Agribusiness Consumption Goods Automotive White Goods 6
  • Petrochemical industry in South America Braskem – Consolidated as the largest producer in the region Regional Capacity 000 tons / year 6.1 million tons in total annual capacity of chemical and petrochemical products 3,615 515 PVC PP 580 PE Eteno 1,230 1,400 1,135 700 1,060 670 630 625 561 1,280 540 150 130 700 520 520 500 476 85 Braskem Dow Copesul1 Rio Polímeros2 Ipiranga PQU / Unipar Suzano Solvay 1. Braskem controls Copesul together with the Ipiranga Group 2. Jointly controlled by Suzano, Unipar, Petroquisa and BNDESSource: CMAI and Braskem 7
  • Agenda Plastic and the Petrochemical industry in Brazil Braskem: World class Brazilian petrochemical Value Creation to Shareholders 8
  • Current Ownership (*) Free-Float above 50% ODEBRECHT NORQUISA PETROQUISA FREE FLOAT 48.6% 30.5% 25.4% 9.1% 10.0% 8.4% 16.0% 51.9% 29.5% 29.5% 100.0% 63.7% 100.0% 96.1% POLIALDEN % Voting Capital % Total Capital Investments in affiliated companies Controlling Shareholder * On April 31, 2006Source: Braskem 9
  • Strong platform for growth A new approach to the Brazilian petrochemical sectorOil exploration 1st Generation 2nd Generation 3rd Generation Naphtha and Condensate Competitiveness INTEGRATION New dynamics in the value chain 10
  • Sales Diversification at Braskem Market segmentation for Braskem’s resins in 2005 % of Revenues Perspectives for 2006: OTHERS* 16% Lingering of global economic growth, led by China and India COSMETICS AND FOOD AND BEVERAGES PHARMACEUTICALS 33% 5% In Brazil: AGRICULTURE 7% Gradual reduction in interest rates Increase in public investments in RETAIL infrastructure 9% Probable domestic demand boost coupled with higher expected GDP CONSUMER GOODS growth CIVIL CONSTRUCTION 15% Increase in disposable income 15%* Includes personal hygiene, infrastructure, electronics, auto parts and others Source: Braskem and FIERGS/CEPAL 11
  • Braskem is the Market Leader Strengthened with the acquisition of Politeno Market-Share (Brazil) 2005 PVC PE (After the acquisition) 28% 36% 46% 55% 17% 18% Braskem Imports PP Others PE (Before the acquisition) 30% 42% 49% 52% 18% 9%Source: Braskem 12
  • 1Q06 HighlightsAccumulated results for the last twelve months R$ million Net Revenues Net Income EBITDA -7% -33% -33% 11,978 887 2,708 11,169 593 1,803 1Q05 1Q06 1Q05 1Q06 1Q05 1Q06Impacts on EBITDA and CoGS – 1Q05 x 1Q06 R$ million EBITDA CoGS 68 277 319 1,256 (70) 1,242 688 (457) 400 (221) (111) (107) 1Q O thers Raw FX Volu 1Q 1Q05 Price Volu 1Q06 FX 05 Price materials me 06 13
  • Revenue in constant growthChallenging current scenario due to strong R$ Gross Revenue R$ million Gross Revenue US$ million 14,342 15,193 6,252 11,284 4,900 8,858 3,688 3,013 20% CAGR 28% CAGR 2002 2003 2004 2005 2002 2003 2004 2005 Net Revenue R$ million Net Revenue US$ million 11,607 11,044 4,775 9,191 3,771 6,991 3,008 2,375 18% CAGR 26% CAGR 2002 2003 2004 2005 2002 2003 2004 2005Source: Braskem 14
  • Debt Profile 16 years of average debt maturity (April) and reduction in FX exposureNet Debt (US$ MM) Net Debt / Ebitda* Types of Financing TJLP +12% +21% 24% CDI 28% 1,454 1,628 1.97 Pré 240 1.63 243 1% 40% Trade 1,211 1,388 1.67 1.36 Finance US$ 47% 7% Dec 2005 Mar 2006 Dec 2005 Mar 2006 CVM 408 *LTM – last twelve monthsAmortization Schedule R$ million 2,109 31% 810 Gross Debt 23% R$ 5,646 million (em R$) 1,033* 19% 1,299 12% Average Maturity 8% 1,293 (em US$) 7% 9.3 years 1,103 666 726 444 381 03/31/2006 2006 2007 2008 2009 2010 2011... Cash and cash 9 months *Subordinated debentures, with payment of interest and principal scheduled for July 2007, fully equivalents subscribed by the controlling shareholderSource: Braskem 15
  • High levels of Corporate GovernanceA Level 1 Company in BOVESPA since February 13th, 2003Intention to move up to BOVESPA’s Level 2, in 2005100% tag-along rights - in case of transfer of control - for all shareholders andall classes of sharesCode of Conduct: sets values, principles and practices governing corporatebehaviorPre-established corporate policies: Trading of securities Financial management Insurance and Guarantees Health, Safety and EnvironmentCompliance with SOx by Dec 2005Qualified, motivated and experiencedmanagement 16
  • Braskem Aiming at Sustainable DevelopmentECONOMICSTo ensure operational excellency and to develop Sustainable Products, using minimum naturalresources and competitive raw materials. To properly divulge to the interested parties and todevelop strategic alliances.SOCIALTo be recognized as a transformation agent in environmental awareness, in the development ofself-sustainable communities and in the creation of social responsible products. To promote qualityof life inside and outside of the company.ENVIRONMENTALTo be a reference in sustainable development through eco-efficiency, in the use of clean tecnologiesand in the use of renewable raw materials, by promoting environmental education andinfluencing the production chain as a whole. 17
  • Social responsibility Corporate Responsibility Braskem is committed to the well being of its surrounding communities through a number of programs directed towards Environmental education Recycling of plastic waste Social and cultural inclusion First Brazilian company to sign the “International Statement of Cleaner Production”, a United Nations initiative in Environmental Protection 18
  • Safety and Environmental Concern Safety performance in line with the best petrochemical companies worldwide All industrial plants are ISO 14001 certified Continuous improvement in environmental performance 6% reduction in water consumption (~ to the consumption of 12,000 people per year) 27% reduction in liquid effluents (~ to the sewage of 33,000 people per year) 39% reduction in industrial waste (~ to the garbage of 21,000 people per year) 19
  • Agenda Plastic and the Petrochemical industry in Brazil Braskem: World class Brazilian petrochemical Value Creation to Shareholders 20
  • Hight returns in the long-term and Liquidity Performance above the main indexes and high liquidity Braskem (BRKM5) confirmed its position as the 9th most liquid share in the Ibovespa index, with a 3% share in the theoretical portfolio from May to August 2006. 1400 1200 1000 800 60% above iBovespa 600 572 426 400 401 358 200 0 jun-05 jun-04 jun-03 aug-04 aug-05 aug-03 apr-04 dec-04 apr-05 dec-03 dec-05 oct-04 oct-05 apr-03 apr-06 dec-02 oct-03 feb-04 feb-05 feb-03 feb-06 Braskem Ibovespa IGC Petrochemical industrySource: Braskem - Dec 2002 = 100 21
  • Payment of R$ 326 million to shareholders in 200560% increase when compared to 2004Dividends and Interest on Equity R$ million Dividend Pay-out % 326 48 204 30 60% 60% 2004 2005 2004 2005 22
  • Strategy to grow with value creationExpand production and sales Strengthen market leadership inoutside of South America, Brazil through consolidation in thecapturing value and creating a local market, capturing synergiesgrowth platform for the future Internationalization Organic Growth Value creation Enhancement of the Selective Aromatics Chain GrowthLeverage aromatics production Consolidate market position inchain by broadening its portfolio key products in Latin Americaof products and services in the and guarantee competitivelocal market sources of raw material 23
  • Growing investments: confidence in the futureR$ 900 million in investments to be made in 2006 Investments R$ million 16% 900 244 Capacity Increases Equipment 202 142 Health, Safety & Environment Capacity Increases 151 23 Equipment Technology 27 134 Health, Safety & Environment 27 Productivity Technology 118 12 Productivity Quality and others 24 51 29 Others Completed 1Q06 2006 24
  • Value creation to shareholders A World-Class CompanyStrong platform for growth • Best PracticesR$ 350 million per year in recurring synergies, already captured • Simplification • Integration R$ million 260 285 310 350 330 (2004) • Compliance to New Levels of 240 to SOx 208 Competitiveness Mar/03 Jun/03 Sep/03 Dec/03 Mar/04 Dec/04 Target 5 Innovation & Technology Synergies Braskem Business System 25
  • Braskem + Significant acceleration in capturing productivity gains R$ 270 million in productivity gains captured by March 2006 Results Achieved by 1Q06 R$ million / year 420 360 270 218 + 24% Target by Achieved by Target by Target by 1Q06 1Q06 2006 2007Annualized and recurring basis 26
  • Politeno’s Acquisition One step forward in the consolidation of the Brazilian petrochemical industry Polyethylene Producer (PE) based in Camaçari – State of Bahia Profile R$ 1 billion in Revenues in 2005 16% market-share in PE 2002 National Quality Award Winner 320 K tons of PE production in 2005Tangible Products with leading quality in numerous segmentsAdvantages Highly skilled staff with excellent operational and technical know- how Recognized competent technical assistance A complementary portfolio of products Solid relationship with the customer base in the Northeast ofIntangible BrazilAdvantages Dynamic business culture, focused on customers, quality and results Excellence in operations and processesSource: Braskem 27
  • Growth and Competitiveness New strategic internationalization opportunities In light of the last developments in Bolivia, the studies for the construction of a petrochemical complex in that country are temporarily on hold The opportunities already announced in Venezuela are still under analysis PP: El Tablazo, Venezuela: 400.000 tons/year, also in partnership with Pequiven* Brazil / Bolivia “Jose” Olefins Complex * MOU signed with Pequiven (April, 2006). Detailing should be concluded in 6 months; Estimated investments between US$ 1.5 and US$ 2.5 billion; 1.2 million tons/year natural gas-based cracker, integrated with the production of polyethylene and other second generation products.* To be presented to the Board of Directors 28
  • Share Buy-Back Program An excellent investment for Braskem Braskem has announced the implementation of a buy-back program to repurchase common and class “A” preferred shares; Repurchased shares are initially to be held in treasury, and may be subsequently resold or cancelled; Deadline for completion of the program is 6 months; Up to 1,400,495 common shares (7.1% of free-float) and up to 13,896,133 class “A” preferred shares (8.25% of free-float) Authorized brokerage firms: Credit Suisse, Itaú, UBS, Hedging-Griffo and Ágora Senior.Source: Braskem 29
  • An Unique Investment OpportunityMarket leadership in the regionConsistent operational performanceSolid financial structureOngoing competitive improvements: andStructural market growth opportunities in the regionGreenfield projects in the region based upon access to competitive rawmaterialsInnovation and technology as value driver100% Tag Along to all shareholders High Standards of Corporate Governance 30
  • Individual Investor Meeting José Marcos Treiger Head of Investor Relations May, 2006