Meeting with Investors        May 08
Forward-looking Statements This presentation contains forward-looking statements. These statements do not represent histor...
Agenda     Overview     Key Differentiators     Key Financial & Operational Figures     Upside Drivers                    ...
Agenda     Overview     Key Differentiators     Key Financial & Operational Figures     Upside Drivers                    ...
Braskem  # 1 Petrochemical Company in Latin America                                                                •   #1 ...
Strong and consistent growth via Organic and Acquisitions Routes •    Revenues ► CAGR (’94-’07) – 16.3% •    Production ca...
Large Scale combined with superior     profitability•         # 3 Resins Producer in Americas - petrochemical “pure-play”(...
Agenda     Overview     Key Differentiators     Key Financial & operational Figures     Upside Drivers                    ...
Braskem has most of its operations in theleading economy in LATAM… • Brazil: 1/3 of LATAM GDP                    •   LATAM...
…and is exposed to a dynamic market    with strong growth rates…                                                          ...
…with high level of consolidation    • High Demand Growth and Elasticity         01-07 CAGR Resin Growth                  ...
Braskem has unmatched regional capacity share in core products…                                   % Capacity Share      Re...
…with Growing & SustainedLeadership in Brazil…          • PP Market Share                                         • PVC Ma...
…and Diversified customer basis in the  fast-growing Brazilian market  % of Resin Sales                                   ...
Innovation and Technology as keyvalue drivers• Over US$ 160 million  in R&D assets• 200 researchers• 8 pilot plants• 187 p...
Strong pricing power        Over 30% spread on international prices            PE: Braskem Premium over International     ...
Agenda     Overview     Key Differentiators     Key Financial & Operational Figures     Upside Drivers                    ...
Production growth with higheroperating reliability      Capacity Utilization                          %            ETHYLEN...
Leadership position in robustdomestic market: Demand +10%  Domestic Sales 1Q08 vs. 1Q07                  %           Resin...
Evolution of EBITDACommercial strategy and reduction in fixed costs minimizeimpacts from higher Naphtha prices R$ million ...
Key Financial Figures                                                                     Change %      Change %     R$ mi...
Lengthening of debt profile  is a priority                                                                          TJLP  ...
Agenda     Overview     Braskem Key Differentiators     Key Financial Figures     Upside Drivers                          ...
NPV of US$ 1.1 billion in total synergies from Ipiranga acquisition        R$ 200 million on annual and recurring basis in...
Accelerated Synergies in 1Q08:R$ 136 million in annual and recurring gains      Actual      Goal                          ...
Additional gains of R$ 100 million withFixed Costs Reduction Program     R$ 100 million estimated annual & recurring gains...
Strategic alignment with Petrobras   Superior Industry Structure in Brazil: Consolidation around 2 large   competitors (Br...
Ethylene global supply & demand balance High capacity utilization rate in 2008 MM ton                                     ...
Global supply & demandHigh Ethylene Utilization Rate in South America          Ethylene          MM tons                  ...
Significant resins productioncapacity increase…                  Braskem Capacity Additions (2008-12)Product              ...
…Resulting in even larger scaleand increased competitiveness       Larger scale                             Increased Comp...
PP Paulínia: Proven capacity inproject management                                  Start up in April 2008                 ...
Braskem:High upside potential   Dominance in the domestic market with superior profitability   Exposure to the fast-growin...
Meeting with Investors              May 08Visit our website: www.braskem.com.br/ri
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Presentation hsbc u.s. road show

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Presentation hsbc u.s. road show

  1. 1. Meeting with Investors May 08
  2. 2. Forward-looking Statements This presentation contains forward-looking statements. These statements do not represent historical fact, but rather reflect the beliefs and expectations of Braskem’s management. The words “anticipate”, “wish”, “expect”, “estimate”, “intend”, “forecast”, “plan”, “predict”, “project”, “target” and similar words are intended to identify these statements. Although Braskem believes that the expectations and assumptions reflected in these forward- looking statements are reasonable and based on information currently available to management, Braskem cannot guarantee future results or events. The forward-looking statements included in this presentation are valid only on the date on which they are made (March 31, 2008), and the Company does not undertake any obligation to update them in light of new information or future developments. Braskem is not responsible for any transaction or investment decision taken based on the information in this presentation. 2
  3. 3. Agenda Overview Key Differentiators Key Financial & Operational Figures Upside Drivers 3 3
  4. 4. Agenda Overview Key Differentiators Key Financial & Operational Figures Upside Drivers 4 4
  5. 5. Braskem # 1 Petrochemical Company in Latin America • #1 Petrochemical Company in LATAM Resins Production Capacity (kton) 3,500 3,440 1Q08 LTM FINANCIALS 3,000 2,000 1,515 1,000 692 • Net Revenue: US$ 10.2 bi 682 521 438 0 • EBITDA: US$ 1.6 Bi Braskem CPS* Dow Mexichem Solvay Ecopetrol • #2 Ebitda Margin in the Americas (1Q08 LTM) • Assets: US$ 12.1 bi 20% Braskem • EV: US$ 8.0 bi 15% 15% Median 10% 5% 0% Mexichem Unipar Nova DOW Westlake Ultrapar Chemical 5Source: Braskem/ CMAI *CPS: Companhia Petroquímica do Sudeste – 60% of Unipar and 40% of Petrobras 5
  6. 6. Strong and consistent growth via Organic and Acquisitions Routes • Revenues ► CAGR (’94-’07) – 16.3% • Production capacity ► CAGR (’94-’07) – 12.3% US$ 9,712 MM Politeno Copesul / IPQ Acquisition Acquisition Revenues Creation of PP DBN PVC DBN Braskem Ethylene DBN Acquisitions Kton 5,551 Organic New PE Plant 5,000 New PP start-up Plant start-up 3,621 4,000 US$ 2,375 MM 3,045 3,145 3,225 3,000 US$ 1,357 MM 1,528 1,734 2,000 1,234 1,228 1,000 1994 1996 1998 2000 2002 2004 2005 2006 2007 6Source: Braskem 6
  7. 7. Large Scale combined with superior profitability• # 3 Resins Producer in Americas - petrochemical “pure-play”(kton) 5,774 64 615 PVC 4,646 PP 3,440 PE 1,833 515 2,949 5,095 1,110 2,161 2,813 1,210 2,040 1,515 761 1,235 1,815 785 978 926 730 Dow LyondellBasell Braskem Formosa Ineos Shintech CPS 3rd 7th• #2 Global Ebitda Margin - petrochemical “pure-play” (03-07 average) Braskem 20% 18% 15% Median 10% 5% 0% Mexichem Solvay Unipar Westlake Dow LG Ultrapar Nova Chemical 7Source:Braskem / CMAI March 2008 7
  8. 8. Agenda Overview Key Differentiators Key Financial & operational Figures Upside Drivers 8 8
  9. 9. Braskem has most of its operations in theleading economy in LATAM… • Brazil: 1/3 of LATAM GDP • LATAM GDP (US$ billion) * Brazil: 1,838 Others México: 1,353 20% Argentina: 524 Brazil 33% Venezuela: 335 Colombia 6% Venezuela 6% Colombia: 320 Argentina Others: 1,070 Mexico 10% 25% Total: 5,440 (*) PPP – Purchasing Power Parity 9Source: The Economist (Mar2008) 9
  10. 10. …and is exposed to a dynamic market with strong growth rates… (Kton)• Domestic demand for resins • USA Demand for resins 0.7% 6.0% CAGR CAGR 10% 4,048 3,694 1% -3% 9% 25,904 25,020 3,435 3,377 856 24,749 24,306 2,880 749 23,276 692 5,907 1,228 6,081 5,563 1,114 990 6,287 6,350 6,142 1,964 1,833 1,695 12,826 12,318 12,601 2001 2004 2005 2006 2007 2001 2004 2005 2006 2007 PVC PP PESource: Abiquim – domestic sales + imports Source: NAD - CMAI 10
  11. 11. …with high level of consolidation • High Demand Growth and Elasticity 01-07 CAGR Resin Growth 01-07 GDP Elasticity Brazil: 6.0% Brazil: 2x USA: 0.7% • Number of Producers • 2 Top producers share 100% 100% 12 93% 12 9 42% 51% 4 30% 2 2 PP PE PVC PP PE PVC BRAZIL USA 11Source: Braskem / CMAI 11
  12. 12. Braskem has unmatched regional capacity share in core products… % Capacity Share Region Company PE PP PVC South America Braskem 46% 44% 32% Unipar 23% 31% 0% North America DOW 22% 4% 1% NOVA 7% 0% 0% Mexichem 0% 0% 4% Westlake 6% 0% 8% Northeast Asia LG Chemical 5% 2% 6% Western Europe Solvay 0% 0% 15% 12Source: Braskem / CMAI 12
  13. 13. …with Growing & SustainedLeadership in Brazil… • PP Market Share • PVC Market Share100% 100% 10% 9% 7% 9% 14% 14% 20% 20% 17% 19%80% 80% 37% 29% 30% 27% 48% 51% 55% 50% 28% 32%60% 60%40% 40% 49% 52% 57% 53% 54%20% 42% 40% 20% 48% 38% 41% 0% 0% 2001 2003 2005 2006 2007 2001 2003 2005 2006 2007 BRASKEM PEER IMPORTS BRASKEM PEER IMPORTS 100% • PE Market 80% 15% Share 19% 17% 16% 16% 32% 60% 53% 46% 55% 50% 40% 52% 20% 37% 33% 29% 31% 0% 2001 2003 2005 2006 2007 13 Source: Braskem/Abiquim Dec 07 BRASKEM PEER IMPORTS 13
  14. 14. …and Diversified customer basis in the fast-growing Brazilian market % of Resin Sales Growth by Sector in 2007 OTHERS INDUSTRIAL + 6% AUTOMOTIVE FOOD PACKAGING ELECTRIC AND 10% ELECTRONIC 3% PLASTIC PACKAGING + 4% INFRASTRUCTURE 2% 23% 4% CLEANING MATERIAL 5% CONSUMER GOODS + 5%COSMETICS ANDPHARMACEUTICALS 3% CONSTRUCTION + 5% 8% 17% AGRICULTURE CONSUMER FERTILIZERS + 5% 8% GOODS RETAIL 17% AUTOMOBILES + 15% CIVIL CONSTRUCTION HOME APPLIANCES +6% 14 Source: Braskem / IBGE 14
  15. 15. Innovation and Technology as keyvalue drivers• Over US$ 160 million in R&D assets• 200 researchers• 8 pilot plants• 187 patents filed• Focus on nanotechnology and intelligent packaging• 18% of resins sales derive from products launched in the last three years• Partnership with universities and R&D centers in Brazil and abroad 15Source: Braskem 15
  16. 16. Strong pricing power Over 30% spread on international prices PE: Braskem Premium over International % PP: Braskem Premium over International % 42% 34% 33% 27% Spread PEAD Braskem / International US$ Spread PP Braskem / International US$ Average 27% Average 30% 5 5 5 5 5 05 6 6 6 6 6 06 7 7 7 7 7 07 8 8 5 5 5 5 06 6 6 6 07 7 7 07 08 8 5 05 6 06 7 07 /0 /0 /0 l/0 /0 /0 /0 /0 l/0 /0 /0 /0 /0 l/0 /0 /0 /0 0 /0 /0 l/0 t/0 /0 /0 l/0 t/0 /0 /0 l/0 /0 v/ v/ v/ v/ v/ t/ v/ n/ n/ n/ n/ n n n n t t t ar ar ar ar ai ai ai ju ju ju ar ar ar ar ai ai ai se se se ju ju ju no no no ja ja ja ja se se se m m m no no no ja ja ja ja m m m m m m m m m m m PVC: Braskem premium over international % Spreads on Asian prices %52% PE + 34% 42% PP + 33% Spread PVC Braskem / International US$ Average 42% PVC + 42% 05 05 5 5 05 05 06 6 6 6 06 06 07 7 7 7 07 07 08 8 l/0 /0 l/0 /0 l/0 /0 /0 /0 /0 t/ t/ t/n/ / v/ n/ v/ n/ v/ n/ ai ai ai ar ar ar ar ju ju ju se se se no no noja ja ja ja m m m m m m m 16 Source: CMAI / Braskem 16
  17. 17. Agenda Overview Key Differentiators Key Financial & Operational Figures Upside Drivers 17 17
  18. 18. Production growth with higheroperating reliability Capacity Utilization % ETHYLENE PE PP PVC 104% 96% 95% 96% 96% 96% 93% 94% 92% 91% 89% 86% 88% 1Q07 4Q07 1Q08 1Q07 4Q07 1Q08 1Q07 4Q07 1Q08 1Q07 4Q07 1Q08 Resin Production Kton ALL-TIME RECORDS 2,827 2,786 Production in the last 12 700 702 704 months of 2,827 Kton +1% Quarterly PVC production of 130 Kton in 1Q08 LTM LTM 1Q07 4Q07 1Q08 1Q07 1Q08 18Source: Braskem
  19. 19. Leadership position in robustdomestic market: Demand +10% Domestic Sales 1Q08 vs. 1Q07 % Resin Market Share 1Q08 +13% +10% Other +7% 29% + 6% +5% 49% 22% Imports Resin Brazilian PE PP PVC Braskem market* *Domestic sales + ImportsSource: Braskem / Abiquim 19
  20. 20. Evolution of EBITDACommercial strategy and reduction in fixed costs minimizeimpacts from higher Naphtha prices R$ million FX impact 83 on costs 19 112 FX impact (115) 188 on revenue 648 (263) (136) 583 (89) (32) 4Q07 Fixed Raw 1Q08 Prices Other Volume Foreign Costs/ Materials Exchange SG&ASource: Braskem 20
  21. 21. Key Financial Figures Change % Change % R$ million 1Q08 (A) 4Q07 (B) 1Q07*(C) (A)/(B) (A)/(C) Sales 4,410 4,809 4,424 (8) (0) EBITDA 583 648 853 (10) (32) Margin 13.2% 13.5% 19.3% -0.3 p.p. -6.1 p.p. Net Income before Minority 120 25 275 379 (56) Minority Interest (37) 2 (148) - (75) Net Income 83 27 127 204 (35) ST+LT Debt 9,363 8,382 8,948 12 5 Cash (1,932) (2,259) (2,090) (14) (8) Net Debt 7,431 6,123 6,859 21 8 Net Debt/EBITDA 2.56 1.93 2.28 33 12Source: Braskem 21* Pro Forma Figures 21
  22. 22. Lengthening of debt profile is a priority TJLP CDI in R$ million (3/31/08) Pré-fixado 8% 17% 2% Gross Debt: 9,363 Net Debt / EBITDA (x) Net Debt: 7,431 2.56 US$ 1.93 Bridge Average Term:10 years 23% Trade Loan Finance 23% +33% 27% 31% Dec-07 Mar-08 US$ 73% Cash and equivalents 1,932 1,668 13% 1,143 10% 9% 9% 441 8% 7% 7% 6% 1,241 894 789 974 827 786 767 534 617 614 3/31/08 2008 2009 2010 2011 2012 / 2014 / 2016 / 2018 / Perpetual In R$ 2013 2015 2017 2020 In US$ * Includes R$2.1 billion from bridge loan to acquire Ipiranga Group’s petrochemical assetsSource: Braskem 22
  23. 23. Agenda Overview Braskem Key Differentiators Key Financial Figures Upside Drivers 23 23
  24. 24. NPV of US$ 1.1 billion in total synergies from Ipiranga acquisition R$ 200 million on annual and recurring basis in the EBITDA R$ million Total Synergies Synergies in 2008 (R$ 108 million) 9 200 10 14 25 69 73 Total Industrial Commercial Logistics Supply Others Financial SynergiesSource: Braskem 24 24
  25. 25. Accelerated Synergies in 1Q08:R$ 136 million in annual and recurring gains Actual Goal R$ million Annualized Synergies 1Q08 2008 Industrial 16 39 Commercial 42 29 Logistics 7 16 Supply 10 13 Financial 2 7 Others 1 4 Impact on EBITDA 77 108 Financial ex-Ebitda 59 80Source: Braskem 25
  26. 26. Additional gains of R$ 100 million withFixed Costs Reduction Program R$ 100 million estimated annual & recurring gains: R$ 30 million in production costs R$ 70 million in general and administrative expenses R$ 67 million already captured in 1Q08 on annualized and recurring basis Renegotiation of contracts: insurance, IT and telecom Supply chain integration: reduction in inventory levels of maintenance and production items Optimization of the organizational structure 26 26
  27. 27. Strategic alignment with Petrobras Superior Industry Structure in Brazil: Consolidation around 2 large competitors (Braskem & CPS). New Geographic growth opportunities: linked to Petrobras’ extensive footprint in Brazil and abroad Synergies: potential for operational integration with Petrobras refineries Innovation & Technology: partnership with Petrobras Research Center High corporate governance standards: New shareholders agreement 27 27
  28. 28. Ethylene global supply & demand balance High capacity utilization rate in 2008 MM ton Utilization Rate %180 100 100 160160 149 154 140 142 95 136 95140 131 131 124 91% 119120 90 89% 89% 90 88% 88%100 80 85 85 60 80 40 80 20 75 0 1 2 3 4 5 75 2008 2009 2010 2011 2012 Supply Demand Utilization Rate 28 Source: CMAI, March of 2008 28
  29. 29. Global supply & demandHigh Ethylene Utilization Rate in South America Ethylene MM tons 159 9 3 4 8 9 126 EHYTLENE UTILIZATION RATE (’07-’12) (’ 07- WORLD ≥ 88% SOUTH AMERICA ≥ 92% NORTH AMERICA ≥ 85% Supply Supply Saudi Arabia China Iran Qatar Others 2007 2012 29Source: CMAI 29
  30. 30. Significant resins productioncapacity increase… Braskem Capacity Additions (2008-12)Product Capacity Investment Advantage Start-up (K ton) (US$ MM)PP Paulínia 350 350 Diversification - Refinery Gas 2008Green PE 200 NA Ethanol – 100% Renewable 2010PP Venezuela* 450 900 Propane at competitive cost 2010PVC Alagoas 200 350 Leadership and innovation 2010PE Venezuela* 1,100 2,600 Ethane at competitive cost 2012PP Bahia 300 NA Strengthen Market leadership 2012Total 2,600 30Source: Braskem * JV with Pequiven (49%) and Sojitz (2%) NA: Not Available 30
  31. 31. …Resulting in even larger scaleand increased competitiveness Larger scale Increased Competitiveness Venezuela 4.9 +43% million Camaçari - BA 715 Paulínia - SP 3.4 million 1,635 4% Triunfo - RS 9% 515 515 34% 32% 57% 55% 1,110 9% 2,565 1,815 2008 2012 FYE Feedstock from Refinery Naphtha Polyethylene Polypropylene PVC Ethanol Natural Gas 31 31Source: Braskem
  32. 32. PP Paulínia: Proven capacity inproject management Start up in April 2008 Spheripol technology Global scale: 350 Kton/year Located in the largest consumer market in Latin America Feedstock: Propylene from refinery Investments of R$ 700 million 32
  33. 33. Braskem:High upside potential Dominance in the domestic market with superior profitability Exposure to the fast-growing domestic market NPV of US$ 1.4 billion derived from synergies and reduced fixed costs Growth projects with increased profitability and high ROCE Proven expertise to implement greenfield projects Strategic alignment with Petrobras Innovation and Technology as key value drivers: green polymer Experienced management team focused on value creation Commitment to Sustainability 33 33
  34. 34. Meeting with Investors May 08Visit our website: www.braskem.com.br/ri

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