2Q11

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2Q11

  1. 1. Conference Call 2Q11 Investor RelationsSão Paulo, August 15, 2011
  2. 2. Forward-looking StatementsThis presentation contains forward-looking statements. These statements are not historicalfacts and are based on management’s objectives and estimates. The words "anticipate","believe", "expect", "estimate", "intend", "plan", "project", "aim" and similar words indicateforward-looking statements. Although we believe they are based on reasonable assumptions,these statements are based on the information currently available to management and aresubject to a number of risks and uncertainties.The forward-looking statements in this presentation are valid only on the date they are made(June 30, 2011) and the Company does not assume any obligation to update them in light ofnew information or future developments.Braskem is not responsible for any transaction or investment decision taken based on theinformation in this presentation. 2
  3. 3. Highlights Net revenue in 2Q11 was US$5.2 billion, or R$8.3 billion, growing 18% and 13%, respectively, from 1Q11. In relation to 2Q10, growth in USD was 39%. In 1H11, net revenue was US$ 9.7 billion, up 31% from 1H10. Record EBITDA of R$ 1.2 billion in 2Q11, up 25% when compared to prior quarter, supported by the higher contribution margin in the period. Record LTM EBITDA of US$2.5 billion or R$4.2 billion. Braskem remains committed to maintaining its financial solidity:  Net Debt/EBITDA ratio maintained its downward trend to reach 2.30 times  New markets tapped: US$ 500 million, 30-year bond issue due in July 2041, with coupon of 7.125% p.a. and yield of 7.25% p.a. Synergies from Quattor acquisition totaled R$163 million in 1H11. Acquisition of Dow’s Polypropylene business for US$323 million  Leader in the U.S. PP market.  Global expansion of industrial operations  Total capacity of 1,050 ktons/year: 2 plants in U.S. and 2 in Europe  Net Debt/EBITDA ratio of 2.40 x (pro forma) 3
  4. 4. Performance by Segment – 2Q11 vs. 1Q11  POLYOLEFINS • Total sales remain stable • Revenue: growth of 8% in USD and 4% in BRL  VINYLS • PVC and soda sales grow 12% and 7%, respectively • Recovery in production and increase of 12% in PVC apparent consumption • Revenue: growth of 19% in USD and 14% in BRL  BASIC PETROCHEMICALS • Total ethylene and propylene sales increase 8% • Higher feedstock costs and higher cracker co-product prices • Revenue: growth of 28% in USD and 22% in BRL  INTERNATIONAL BUSINESSES • Higher PP prices, driven by the increase in propylene prices • Revenue: growth of 18%, to US$460 million 4
  5. 5. Domestic Market Performance  Resins Domestic Market grew 2% in 2Q11, compared to  Origin of Imports in 2Q11 2Q10 PE + PP PVC Europe Others  Braskem’s Sales Profile – 2Q11 2Q11 3% 4% Others OTHERS 16% Asia 16% RETAIL Europe North America 10% 12% North America 27% AGRIBUSINESS 5% FOOD PACKAGING 31% 35% 5% AUTOMOTIVE Asia Colombia Argentina 6% 17% 38% 12% Argentina 16% 14% CONSTRUCTION 10% Colombia CONSUMER 4% 10% 9% GOODS INDUSTRIAL HYGIENE AND CLEANING  Polyolefins (PE and PP) and PVC imports accounted for 29% and 37% of the domestic market, respectively  Stronger performance on Consumer Goods and Construction segments  Americas accounted for 61% of importsSource: Abiquim, Braskem 5
  6. 6. EBITDA Performance: 2Q11 vs. 1Q11 Combination of sales volume growth and higher resin R$ million and basic petrochemical prices partially offset the increase in raw material prices and BRL appreciation. FX impact on costs 292 FX impact on (376) revenue 263 9 1,152 ( 84 ) (5 ) 50 919 EBITDA Volume Contribution Others FX Fixed Costs EBITDA 1Q11 Margin SG&A 2Q11Source: Braskem 6
  7. 7. EBITDA Performance: 2Q11 vs. 2Q10 Higher resin and basic petrochemical prices offset the R$ million lower sales volume, the BRL appreciation and higher raw material prices. FX impact on costs 800 FX impact on (1,031) revenue 381 3 ( 48 ) 10 1,152 1,036 ( 231) EBITDA Contribution Others Volume FX Fixed Costs EBITDA 2Q10 Margin SG&A 2Q11Source: Braskem 7
  8. 8. Reduction in leverage reaffirms Braskem’s strategy Dívida LíquidaEBITDA (R$) Net Debt/ / EBITDA (US$) Jun 11 2.30x AmortizationSchedule(1) -3% (R$ million) Mar 11 2.37x 06/30/2011 546* Dívida Líquida / EBITDA (US$) Net Debt/ EBITDA (US$) 662 17% 15% 14% Jun 11 2.47x3,192 13% 2,646 11% 12% -2% 10% 2,114 Mar 11 2.52x 8% 1,895 1,363 1,715 1,499 1,984 1,185 1,582 999  Gross debt pegged to USD: 60%  Net debt pegged to USD: 69% 06/30/11 2011 2012 2013 2014 2015/ 2017/ 2019/ 2021 2020 Corporate Credit Rating Cash 2016 2018 onwards Agency Rating Outlook Date (1) Does notinclude transaction costs Invested in R$ Invested in US$ * Stand by of US$ 350 million Global Scale Moodys Baa3 Stable 3/31/2011 S&P BBB- Stable 3/30/2011 Fitch BB+ Positive 1/11/2011 US$500 million bond issue due in July 2041 with yield of National Scale 7.25% p.a. and coupon of 7.125% p.a. marked Braskem’s first 30-year issue, allowing for the access to a new profile of Moodys Aa2.br Stable 3/31/2011 S&P brAAA Stable 3/30/2011 investors. Fitch AA (bra) Positive 1/11/2011 8
  9. 9. Synergies from Quattor acquisition total R$ 163 million in 1H11 1H11 EBITDA*: R$ 163 million 2012 EBITDA*: R$ 495 million R$ million R$ million 59 32 87 45 495 163 350 86 Industrial Logistics Supply EBITDA Synergies Industrial Logistics Supply EBITDA Synergies Identification of new opportunities, efficiency and rapid implementation of initiatives to capture synergies  Integrated planning for industrial units  Centralization of strategy for asset maintenance planning  Optimization of freight activities and distribution and storage gains  Integrated purchasing of raw materials  Tax gains and lower debt carrying costSource: Braskem * Annual and recurring 9
  10. 10. Acquisition of Dow’s Polypropylene BusinessTransaction: On July 27, Braskem acquired Dow’s Polypropylene (PP) business, expanding its PP capacity by 1,050 ktons/years Braskem will pay US$323 million for the business 16% Capacity Increase 1.050 7,480Benefits and strategic drivers: 6,430 PP acquisition Leader in U.S. PP market, one of the world’s largest PP consumers2.885 2.885 1,050 PP Geographic diversification and global expansion of industrial 2,885 2,885 PE operations Kty 3.035 3.035 PVC Portfolio of complementary products 510 3,035 510 3,035 – Focus on higher value-added products (co-polymers) Brk 510 + D Brk 510 Access to U.S. propylene distribution chain Braskem Braskem Value creation through potential synergies with the current business after acquisition – NPV near US$140 million Greater presence in the European market – Proximity to new clients – Support to global leadership in biopolymers PP is one of the world’s faster growing thermoplastic resins Fragmented markets in U.S. and Europe - potential for future consolidation 10
  11. 11. Outlook and PrioritiesPetrochemical Industry: Global industry scenario in 2H11 points to recovery in resin-naphtha spreads over 2Q11  Scheduled stoppages in Asia and recovery in local demand;  Continued instability in Middle East operations;  Lower capacity utilization rates (U.S. and Europe). Risk Factors  Slowdown in demand from emerging countries impacted by the crisis in developed economies;  Volatility in raw material prices, driven by stronger speculation on oil prices.Braskem’s priorities: Support the development of an industrial scenario that strengthens the Brazilian petrochemical and plastics chain Recover market share, combating “subsidized” imports Ensure capture of identified synergies Integrate new PP plants located in U.S. and Germany Maintain liquidity and financial health Expansion Project – Expansion of the new PVC Alagoas plant – Final Investment Decision for the Ethylene XXI Project in Mexico, based on competitive feedstock – Define Comperj configuration with Petrobras – Study projects aimed at the access to competitive feedstock in U.S. (shale gas) – Expand use of renewable feedstock 11
  12. 12. Conference Call 2Q11 Investor RelationsSão Paulo, August 15, 2011

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