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Presentation braskem day - nyse


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Presentation braskem day - nyse

  1. 1. New YorkOctober 23rd, 2006José Carlos Grubisich
  2. 2. Disclaimer Forward looking statements This presentation contains forward-looking statements. Such statements are not statements of historical 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. Although Braskem believes that expectations and assumptions reflected in the forward-looking statements 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 which they are made (June 30, 2006), and the Company does not undertake any obligation to update them in light of new information or future developments. Braskem shall not be responsible for any transaction or investment decisions that are taken based on information included in this presentation.2
  3. 3. Competitive PositioningBusiness StrategySustainabilityGrowth with Value Creation
  4. 4. Competitive PositioningBusiness StrategySustainabilityGrowth with Value Creation
  5. 5. Braskem’s key figures Largest petrochemical company in Latin America Gross Revenue* Ebitda* Total Assets US$ 6.5 bi US$ 660 mi US$ 7 bi Net Debt / Ebitda* Debt / Equity 2.97 x 57 / 43* Last twelve months (LTM) as of June 30, 20065
  6. 6. Braskem’s key figures Significant and consistent improvement Gross Revenue US$ million EBITDA US$ million 6,252 871 851 4,900 3,688 581 3,013 457 28% 23% CAGR CAGR 2002 2003 2004 2005 2002 2003 2004 2005Source: Braskem6
  7. 7. Braskem’s key strategic drivers Solid business model based on competitive integration in the value chain COMPETITIVE INTEGRATION Extraction 1st generation 1st generation 2nd generation 2nd generation 3rd generation 3rd generation Value Added Naphtha Condensate Competitiveness Raw materials Basic petrochemicals Thermoplastic resins Plastic Converters Market Cost Technological Leadership Competitiveness Autonomy #1 Petrochemical Integration Know-How Company in Latin with Scale America7
  8. 8. Market leadership in the region as a key driver for Value Creation Strengthened with the acquisition of Politeno Market-Share in Brazil – 1H06 PVC % PE After the acquisition % 39% 54% 39% 44% BRASKEM 17% 7% IMPORTS PP % OTHERS PE Before the acquisition % 30% 42% 51% 52% 18% 7%Source: Braskem 1H068
  9. 9. Cost Competitiveness as a key driver for value creation Largest Producer in the region 6.1 MM tons in total annual capacity of petrochemical and chemical products Production Capacity 000 tons / year 3,605 PVC 515 PP 580 PE Ethylene 1,230 1,400 1,135 1,060 700 700 685 630 561 1,280 540 150 130 85 160 700 520 550 476 500 Braskem Dow Copesul1 Rio Polímeros Ipiranga Suzano Unipar / PQU Solvay Triunfo 1. Braskem jointly controls Copesul with the Ipiranga GroupSource: CMAI and Braskem 20069
  10. 10. Cost Competitiveness as a key driver for value creation Increased Efficiency and productivity with Braskem + R$ MM / year 420 297 29% Operational reliability R$ 359 million gains already Variable Cost 28% captured by Sept’06. 19% Utilities Production Remaining initiatives under Raw Material Yield 12% implementation could lead to the 7% Fixed Cost conclusion of the project one year 5% Others ahead of schedule. Captured by Target June, 2006Note: Annualized and recurring basis10
  11. 11. Cost Competitiveness as a key driver for Value Creation More streamlined operations with Fórmula Braskem A new integrated management system encompassing all business processes R$ 130 million invested in the project Successfully implemented in October 2006 Expected NPV of R$ 260 million Expected Savings 28% 23% 19% 16% 8% 6% Commercial Supply Maintenance Financial Operations Projects Chain11
  12. 12. Technology as a key driver for value creation Know-how and competencies leveraging Braskem’s differentiation in the value chain US$ 158 million in assets 171 researchers 141 patent registrations filed 7 pilot plants Global technology agreement with BASELL US$ 25 million of value created with technology supplied to Petroquímica Paulínia 11% of the resins sold in 2005 were launched in the last two years12
  13. 13. Technology as a key driver for value creation New markets and products developed in partnership with Clients Plastic is increasingly Recently developed Higher Value Added Plastic replacing other materials special resins Substitution of glass by Asbestos substitution in Thermoplastics liners polyethylene in the cream cheese concrete reinforcement (UHMWHDPE) for trucks bowls for roof tiles Replacement of polystyrene by polypropylene in small cups for coffee13
  14. 14. Technology as a key driver for value creation New frontiers of development Nanotechnology – 1st Brazilian Petrochemical company to file a patent – 3 patents already filed – 1st product to be launched in November 2006: new PP grade Green Polymer – Manufacturing of resins based on renewable sources of raw material (sugar cane) – Technology to convert Ethanol into Ethylene and propylene already in place – Biopolymer: biodegradable green polymer14
  15. 15. Competitive PositioningBusiness StrategySustainabilityGrowth with Value Creation
  16. 16. Our Strategic Intent Growth with value creation 2012 2002 To rank amongst the TOP 10 global petrochemical companies in market To become capitalization Latin America’s leader in thermoplastic resins16
  17. 17. Growth with value creationExpand production and Strengthen marketsales outside of South leadership in BrazilAmerica, capturing through consolidation invalue and creating a Internationalization Organic Growth the local market,growth platform for the capturing synergiesfuture Value Creation Enhancement of the Selective Growth Aromatics Chain Consolidate marketLeverage aromatics position in keyproduction chain by products in Latinbroadening its portfolio America andof products and guarantee competitiveservices in the local sources of rawmarket material17
  18. 18. Organic Growth Dynamic and fast growing domestic market Consumption growth in Brazil Strong increase in domestic Polyethylene, Polypropylene and PVC consumption in 2006 Ton (000) 3,436 8M06 Compared to 8M05 +18% 3,156 +12% +13% 2,834 2,293 +7% 1,601 7% CAGR 1993 1996 1999 2002 2005 PE PVC PP ResinsSource: Abiquim18
  19. 19. Organic Growth Consolidation as an opportunity for value creation Merger of Polialden into Braskem – Approved on May 31, 2006, it completed the integration process that was originally designed when Braskem was created Politeno’s Acquisition – Over US$ 100 million in estimated synergies – Main advantages for Braskem • 80% ethylene integration in the Camaçari complex • 360 K tons additional production capacity for PE • A complementary portfolio of products and customer base Braskem is prepared to play an active role in the consolidation of the petrochemical sector in Brazil19
  20. 20. Organic Growth Increasing PP capacity using competitive raw material Petroquímica Paulínia – JV with Petrobras – Total investment of U$ 310 million Paulínia – Additional Capacity • +350 k ton / year – Location • Paulínia, State of São Paulo – Provisional environmental license recently obtained – Start-up in 1Q08Source: Braskem (2006)20
  21. 21. Organic Growth 700 k ton of potential capacity additions Projects being considered for future implementation: Alagoas Bahia – DBN PVC +150 k ton / year PE +100 k ton / year Ethylene +150 k ton / year – Greenfield PP Bahia +300 k ton / yearSource: Braskem (2006)21
  22. 22. Selective Growth Ensuring access to competitive feedstock Venezuela Jose Olefins Complex* – MOU signed with Pequiven (April, 2006); – 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 – Mobilization of a working group for the project with the start up of a branch office in Venezuela PP Plant in El Tablazo* – JV with Pequiven – Production capacity of 400 kton / year – Investments of US$ 370 million* To be presented to the Board22
  23. 23. Selective Growth A new competitive integrated Petrochemical Complex in Venezuela Our project will leverage on infrastructure already available in the Jose Industrial Complex23
  24. 24. Enhancement of aromatic chain Adding value through existing production streams Isoprene debottlenecking (November 2006) – Investment: US$ 29 Million Bahia – Additional Capacity: + 9 k ton / year (+50%) – Rate of Return: 49% – Location: Camaçari, State of Bahia Paraxylene capacity increase, combined with a potential downstream project to produce PTA ETBE production as an alternative to MTBESource: Braskem (2006)24
  25. 25. Internationalization Strengthening our presence in key international markets Europe Rotterdam Exports surpass US$ US$ 1 billion million ~1,200 USA Delaware Asia* 959 Shanghai Venezuela Caracas 710 617 30% 415 CAGR 1H Argentina 613 Buenos Aires Closer relationship with international customers 2002 2003 2004 2005 2006e 23% 25% 19% 20% 24% Direct sales through local distribution 1H06 % of net revenue Export margins increase* Future25
  26. 26. Competitive PositioningBusiness StrategySustainabilityGrowth with Value Creation
  27. 27. High levels of Corporate Governance Level 1 Company in BOVESPA with commitment to migrate to Level 2 100% tag-along rights SOx Early Adopter - June 2006 Code of Conduct: sets values, principles and practices governing corporate behavior Pre-established corporate policies: – Trading of securities – Financial management – Insurance and Guarantees – Health, Safety and Environment Four independent members at the Board Existing committees – Enhanced Fiscal Council – Finance & Investment – People & Organization – Strategy & Communication27
  28. 28. Braskem’s Human Capital Over 3,000 employees proud of their workplace Strong Culture values – Transparent communication – Self-development – Entrepreneurship – Results driven approach – Profit Sharing Talent atraction & retention – Trainee Program: 26 trainees in 2006 and 24 in 2005. Latest selection included over 18,000 candidates – Internship Program: 94 interns in 2006 and 100 in 2005. Latest selection included over 12,000 people MBA Braskem: 70 leaders post graduated in a program developed in partnership with Fundação Getúlio Vargas (SP) focused on the petrochemical business One of the best places to work in Brazil (Exame – Brazilian magazine)28
  29. 29. Social responsibility Strong commitment with surrounding communities Corporate Responsibility – Braskem is committed to the well being of its surrounding communities through a number of programs directed towards • Environmental education • Social inclusion • Cultural promotion Braskem follows the guidelines from: – ILO (International Labor Organization) – OECD (Organization for Economic Co-Operation and Development) – UN’s Global Compact and the UN Millennium Development Goals Investments of R$ 10 million in social projects in 200529
  30. 30. Environmental Responsibility 1st Brazilian company to sign the “International Statement of Cleaner Production” Safety performance in line with the best petrochemical companies worldwide – 0.3 accident with lost workday per million man hour – 1.1 accident with/without lost workday per million man hour All industrial plants are ISO 14001 certified Continuous improvement in environmental performance – 2% reduction in water consumption (~ to the consumption of 12,000 people per year) – 11% reduction in liquid effluents (~ to the sewage of 33,000 people per year) – 13% reduction in industrial waste (~ to the garbage of 21,000 people per year)30
  31. 31. Competitive PositioningBusiness StrategySustainabilityGrowth with Value Creation
  32. 32. Commitment to Grow with Value Creation Market leadership in the region for PE, PP and PVC: Organic Growth and Consolidation Strong growth potential over the next 5 years: from 6 to 9 million tons production capacity, which includes doubling resins from 2.3 to 4.7 million tons Greenfield projects in the region aimed at securing access to competitive feedstock: Selective Growth Solid financial structure coupled with Capital Discipline: Capital Expenditures in line with depreciation and amortization Additional cash generation through competitiveness improvement programs: Innovation and technology as a key value driver 100% tag along to all shareholders and high standards of corporate governance Social and environmental responsibility32
  33. 33. New YorkOctober 23rd, 2006José Carlos Grubisich