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Non deal roadshow


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Non deal roadshow

  1. 1. Meeting with Investors March, 2010
  2. 2. Forward-looking StatementsThis presentation contains forward-looking statements. These statements are statements that are nothistorical facts, and are based on management’s current view and estimates of future economiccircumstances, industry conditions, company performance and financial results. The words "anticipates","believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, areintended to identify forward-looking statements. Statements regarding the declaration or payment ofdividends, the implementation of principal operating and financing strategies and capital expenditureplans, the direction of future operations and the factors or trends affecting financial condition, liquidityor results of operations are examples of forward-looking statements. Such statements reflect the currentviews of management and are subject to a number of risks and uncertainties. There is no guarantee thatthe expected events, trends or results will actually occur. The statements are based on manyassumptions and factors, including general economic and market conditions, industry conditions, andoperating factors. Any changes in such assumptions or factors could cause actual results to differmaterially from current expectations.The forward-looking statements in this presentation are valid only on the date they are made (December31, 2009) and the Company does not assume any obligation to update them in light of new informationor future developmentsBraskem is not responsible for any transaction or investment decision taken based on the information inthis presentation. 2
  3. 3. Agenda Braskem overview and roadmap strategy Acquisitions Braskem post transactions Projects in the pipeline The global petrochemical industry Key differentiators 2009 Figures
  4. 4. Braskem overview (before transactions) Leading petrochemical company in Latin America Diversified portfolio of petrochemical 1 PVC products, with focus on PE, PP and PVC 1 Chlorine - Soda Annual capacity of 3,595 kty 17 facilities in Brazil Maceió 1st and 2nd generations integrated: states of BA, Camaçari RS, AL, SP. Naphtha based crackers. Petrobras is main supplier with 60/65% of feedstock supply 1 Naphtha cracker Listed in 3 stock exchanges: BM&FBovespa, 3 PE Paulínia NYSE and Latibex 1 PVC 1 Chlorine – Soda 100% tag along Triunfo 1 PP Key Financials 2009 Net Revenue: R$ 15.2 billion 1 Naphtha cracker EBITDA: R$ 2.5 billion 5 PE 2 PPSource: Braskem 4
  5. 5. Enhanced competitiveness through value chain integration Industrial integration Oil/Gas-refineries Basic petchem Resins Converters Naphtha / Gas PE/ PP/ PVC HYGIENE AND CLEANING 2009 Braskem’s COSMETICS AND PHARMACEUTICAL CONSUMER GOODS Domestic Sales 13% 6% 2% AUTOMOTIVE Breakdown 5% RETAIL 5% 17% CONSTRUCTION 3% ELECTRIC AND ELECTRONIC FOOD PACKAGING 30% 6% INDUSTRIAL 4% 4% INFRASTRUCTURE 4% 1% AGRIBUSINESS OTHERSSource: Braskem / Abiquim 5 CHEMICAL AND AGROCHEMICALS
  6. 6. Track record of strong and consistentgrowth aligned to its strategic direction Vision 2020 Top 5 Global Petrochemical Paulínia Petroquímica Ipiranga / Triunfo Copesul Politeno 2020 Polialden 2009 2007 2006 2002 Trikem Be a Top 5 Global Petrochemical Become leader in thermoplastic resins 2005 2008 in Latin America Formulation of Formulation of 2020 2012 Vision VisionSource: Braskem 6
  7. 7. Strategic direction Vision 2020 Braskem Leader in the Americas, rank among the 5 largest petrochemical companies worldwide and to be positioned as the preferred partner for global alliancesSource: Braskem 7
  8. 8. Agenda Braskem overview and roadmap strategy Acquisitions Braskem post transactions Projects in the pipeline The global petrochemical industry Key differentiators 2009 Figures
  9. 9. Benefits and strategic drivers of Quattoracquisition Creation of a world scale player Diversification of feedstock supply Scale increase and geographic complementarities Operational synergies Strategic alignment with Petrobras: Comperj and Suape participation 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 AmericasSource: Braskem 9
  10. 10. Quattor overview Key Financials (2009 LTM*): Net Revenue R$ 4.1 billion EBITDA R$ 462 million Resins capacity (kton/y) * LTM: Oct/08 to Sep/09 1,915 875 Profile: PP 9 petrochemical plants with 1st and 2nd PE generations partially integrated: states of SP, RJ Private company 1,040Source: Braskem / Company estimates / Quattor 10
  11. 11. Transaction stages 1. Creation of BRK Investimentos Petroquímicos SA (BRK) that will hold Braskem’s common shares owned by Odebrecht (ODB) and Petrobras(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 Capital ODB PTB ODB/PTB 66,8% 33,2% 53.8% 46.2% BRK BRK 2. Braskem capital increase through Private Offer of R$ 4.5 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 from Unipar 4. Braskem merges Quattor shares, consolidating Petrobras/Petroquisa 40% interest in the Company 5. Braskem acquires 33.3% of Polibutenos and 100% of Unipar Comercial for R$ 52.7 million Transaction is expected to be concluded by JuneSource: Braskem 11
  12. 12. Benefits and strategic drivers of Sunocoacquisition Internationalization through the acquisition of an important player in the north American market World scale player, technologically upgraded and with access to competitive feedstock Development of global production base in a market with further industry consolidation opportunities Foothold in the U.S. enhancing market for greenfield projects in Latin America Adding Sunoco Chemicals to the Braskem group furthers our objective of being among the top 5 global petrochemical companies in the world.Source: Braskem 12
  13. 13. Sunoco Chemicals Key Financials (2009*): Net Revenue R$ 1.9 billion EBITDA R$ 140 million * Company estimates R&T Center Profile: Pittsburgh, PA 3 PP plants and 1 R&T Center: Texas, Marcus Hook, PA Philadelphia and West Virginia Neal, WV 1 PP 1 PP - Capacity: 950 kty Public company La Porte, Tx Favorable cost position and flexible 1 PP product mix Transaction: On February 1, 2010 Braskem acquired 100% of the shares of Sunoco Chemicals1, made up of the Sunoco Polypropylene Business Braskem America, a wholly owned subsidiary of Braskem, S.A. acquired the business for $350 million in cash, to be paid within 60 days1 The Phenol Business does not form part of this transaction Source: Sunoco / UBS 13
  14. 14. Agenda Braskem overview and roadmap strategy Acquisitions Braskem post transactions Projects in the pipeline The global petrochemical Industry Key differentiators 2009 Figures
  15. 15. Braskem - # 1 Resin Producer in the Americas, now with plants in the USA Key Financials (2009*): Gross Revenue R$ 27.5 billion Resins capacity (kton/y) Net Revenue R$ 21.2 billion 6,460 EBITDA R$ 3.1 billion 510 2,915 PVC Profile: PP 29 petrochemical plants : 26 in Brazil and PE 3 in the USA Listed on 3 stock exchanges: 3,035 BM&FBovespa, NYSE and Latibex* Braskem 2009; Quattor LTM: Oct/08 to Sep/09; Sunoco: 2009 (Company estimates) Source: Braskem 15
  16. 16. Leader in the Americas and a top 8 global player in resins capacity 1thCapacity in the Americas (kt/y) 6,460 510 5,307 4,827 4,256 4th 1,230 627 2,915 3,595 3,082 1,731 510 2,340 2,311 4,077 1,090 1,210 1,915 4,200 PVC 3,035 822 875 950 2,525 2,340 2,311 PP 1,995 1,050 1,040 950 PE Braskem Exxon Dow Lyondell Braskem Formosa Shintech Chevron Quattor Sunoco post Mobil Basell Philips transactions operationsWorld Capacity (kt/y) 10,914 9,311 8,668 7,749 8th 7,284 7,109 6,541 6,460 4,681 4,564 12th 4,303 4,079 3,595 Lyondell Exxon SINOPEC Dow Formosa SABIC Ineos Braskem Total IPIC Reliance PetroChina Braskem Basell Mobil post transactions operations 16
  17. 17. Quattor AcquisitionCorporate Governance Principles Maintenance of Braskem as a Private Company Sharing of the strategic decisions (consensus approval) Principles for the nomination of the CEO and Executive Management - Odebrecht nominates Chairman of the Board, CEO and CFO; - Petrobras nominates Vice Chairman of the Board, the Chief Investments and Portfolio Officers; - Other Executive Officers will be selected by the CEO and submitted to the Board of Directors for approval; - For all the positions, members from among the best professionals in the market will be selected , renowned for their competence in exercising their functions. Braskem Executive Management in charge of operational issues, including the approval of Company’s Business Plan Preferred partner for investments in the Brazilian petrochemical industry – COMPERJ, Suape - COMPERJ: petrochemical complex in Rio de Janeiro state (1st and 2nd generations) - Suape: textile complex in Pernambuco state 17
  18. 18. Acquisitions don’t significantly change leverage Strong liquidity with cash and cash equivalents of approximately R$8 billion (US$4.3 billion) Capital structure with significant leverage (Net Debt/EBITDA) of approximately 3x Estimated Capital Estimated Capital Increase R$4.5bi – Increase R$4.5bi – Sunoco Chemicals Quattor Acquisition Acquisition Cash & Cash Equiv. 8,065 7,435 Gross Debt 17,386 17,386 Net Debt 9,322 9,952 Net Debt / EBITDA 3.17x 3.23x Considering capital increase of only R$3.5 billion, leverage level is still comfortable: 3.51 to 3.56xQuattor data LTM Sep/09Source: Braskem, Unipar and Sunoco 18
  19. 19. Agenda Braskem overview and roadmap strategy Acquisitions Braskem post transactions Projects in the pipeline The global petrochemical Industry Key differentiators 2009 Figures
  20. 20. Growth with improved Competitiveness(1/2)Mexico - Project Ethylene XXI: startup 2015 Partnership with the Mexican group IDESA (65% Braskem, 35% IDESA) for the acquisition of ethane from PEMEX to be used as feedstock for an integrated petrochemical project : 1 Mtons/y of ethylene and 1 Mtons/y of PE Investment estimated in up to US$ 2.5 billion over the course of 5 years, planned to be financed by a project finance model with 70% debt and 30% equityVenezuela: JV’s with Pequiven through Project Financeswith only 30% equity (under review) Polipropileno del Sur – Propilsur: startup 2013 ~350kton/y of PP and investments estimated at US$ 450 million (Paraguaná complex) or 450 kton/y of PP and investments estimated at US$1.2 Industrial assets billion (Jose complex) Polietilenos de America – Polimerica: delayed Greenfield projects 1.3 Mton of ethylene and 1.1 Mton/y of PE Projects with PetrobrasPeru Braskem, Petrobras and PetroPerú concluded studies for the technical and economic pre-feasibility phase of an integrated project to produce 600 kton to 1,000 kton/y using the natural gas available in Peru as feedstock 20 Source: Braskem
  21. 21. Growth with improved Competitiveness(2/2)Brazil Green Polyethylene: Commitment to Sustainability 200 kton/y of green PE Ethylene made from 100% renewable raw material, with sugarcane ethanol used as feedstock Investments of R$ 488 million and startup expected for 3Q10 70% of the ethanol volume required on final contract negotiation Partnerships with national and multinational customers: food, auto parts and cosmetic sectors PVC Alagoas 210 kton/y of PVC capacity expansion in Alagoas Investments around US$500 million and startup expected for the 2H2012 Industrial assets Partnership with Petrobras in new projects (under evaluation) Greenfield projects Suape: textile complex in the northeast region Projects with Petrobras Comperj: production and marketing of resins and basic petrochemicals to be developed in RJ state Source: Braskem 21
  22. 22. Agenda Braskem overview and roadmap strategy Acquisitions Braskem post transactions Projects in the pipeline The global petrochemical Industry Key differentiators 2009 Figures
  23. 23. Global scenario Petrochemical prices are expected to keep their bullish trend during the 1Q10 and beginning of 2Q10: Oil volatility and higher monomer cost Production constrains in USA, Europe and Asia due to the cold weather Planned maintenance shutdowns Operational problems in the Middle East However, several factors could push prices down: New monetary policy in China (credit restrictions) versus economic growth Sustainability of the European demand Unemployment rates continuing to discourage US consumers In Argentina, after a seasonal slowdown in industrial activity, market is expected to improve during February Brazilian demand for finished products holding steady with room for price increases in R$ given devaluation of the currency and strong international price environment 23
  24. 24. Petrochemical CycleDowncycle less severe than expected Points of concern Potential positive factors Frequent delays in new capacities Uncertainty regarding the extent of Operational and logistics problems the global economic recovery Increased economic importance of Incentives to sustain supply buildup emerging countries with relevant China: import substitution Supply & Demand domestic consumption, as Brazil and Balance China New ethylene and resins capacities in the Middle East Supply-demand geographical Stronger activity of capital imbalance leads to logistics barriers investors in the commodity market Opportunities from assets on sale Limited capacity utilization helps to balance the marketSource: CMAI 24
  25. 25. Global supply of ethylene 2009 expected utilization rate: Kton45,000 90% 84% 80%40,000 74% Lower global demand35,00030,00025,000 growth and new20,00015,000 capacity additions10,000 5,000 expected to come on 0 North Europe Middle East Asia stream limiting the America utilization rates of the Nameplate Capacity Effective Production actual players New ethylene capacity additions globally (Mton): New capacity additions 12 could be delayed 10 8 6 4 Delayed 2 Go ahead 0 2010 2011 2012 2013 Source: Parpinelli Tecnon / CMAI / SRI 25
  26. 26. Agenda Braskem overview and roadmap strategy Acquisitions Braskem post transactions Projects in the pipeline The global petrochemical Industry Key differentiators 2009 Figures
  27. 27. Brazil: dynamic market with stilllow per capita consumption PE, PP and PVC per capita consumption (Kg per person) 76 68 57 Brazil: 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 13.6 11.11994 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% CAGR 1% 4% 10% 4,226 4,270 4,048 3,696 3,435 3,377 950 856 1,043 2,880 749 692 1,228 1,218 1,306 PVC 1,114 990 PP 3,435 PE 2,880 1,833 1,964 1,966 2,014 1,695 2001 2004 2005 2006 2007 2008 2009Source: Braskem / Abiquim – domestic sales + imports 28
  29. 29. North America will be the naturalmarket for Braskem’s projects PE and PP Capacity (Kton/y) versus Operating rate (%) Resins’ net balance (Kton/y)31.000 3.500 22.818 21.417 21.486 22.127 86% 20.805 21.03230.000 2.50029.000 83% 1.500 Net Exporter28.000 82% 81%27.000 80% 500 79%26.000 -500 2008 2009 2010 2011 2012 201325.000 -1.500 Net Importer24.000 2008 2009 2010 2011 2012 2013 -2.500 Capacity Operating rate PEs PP Domestic Demand Hypothetical and announced capacity shutdowns should lead to an increase in operating rates Even considering a lower demand recovery, North America shall be a net importer of PP as of 2011Source: CMAI 29
  30. 30. Management’s main priorities Continued strengthening of long-term relationship with Customers Support to the Brazilian petrochemical and plastic chain sustainability Implementation of the acquisition stages of Quattor and Sunoco Chemicals Analysis of Braskem’s interest in the Suape (textile center) and Comperj (1st e 2nd generation) projects Conclusion of Green PE plant: on schedule and within planned Capex Projects in Latin America: competitive feedstock Assessment of selective acquisitions in North America Maintain financial health and liquidity Financial strength and respect for minority shareholders Opportunities for internationalization 30
  31. 31. Meeting with Investors March, 2010