Presentation targeting roadshow

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Presentation targeting roadshow

  1. 1. Meeting with Investors May 2007
  2. 2. Forward-looking StatementsThis presentation contains forward-looking statements. Such statements are notstatements of historical facts, and reflect the beliefs and expectations of Braskem’smanagement. The words “anticipates”, “wishes”, “expects”, “estimates”, “intends”,“forecasts”, “plans”, “predicts”, “projects”, “targets” and similar words are intendedto identify these statements. Although Braskem believes that expectations andassumptions reflected in the forward-looking statements are reasonable based oninformation currently available to Braskem’s management, Braskem cannot guaranteefuture results or events.Forward-looking statements included in this presentation speak only as of the date theyare made (March 31, 2007), and the Company does not undertake any obligation toupdate them in light of new information or future developments.Braskem shall not be responsible for any transaction or investment decisions that aretaken based on information included in this presentation. 2
  3. 3. Our Vision Ipiranga / Copesul 2007 Politeno 2012 2006 Turnaround 2002 To rank amongst the TOP 10 global To become petrochemical Latin America’s leader companies in market in thermoplastic resins capitalization 3
  4. 4. Strategic Drivers Opportunities for Growth with Value Creation• Start-up of overseas • Politeno acquisition commercial • Acquisition of the operations and Petrochemical assets of distribution network Internationalization Organic Growth the Ipiranga Group• Investment (Ipiranga and Copesul) opportunities in the • Debottleneckings in PE Americas and PVC • New PP plant in Value Creation Camaçari Enhancement of the Brazilian Production Selective Growth Chains• Capacity increases in • Petroquímica Paulínia isoprene and paraxylene • Projects in Venezuela:• Conversion of MTBE to ETBE •PP plant• Hydrocarbon resins •Jose Olefins Complex –• Green polymers 1st and 2nd generation 4
  5. 5. A Unique Investment Opportunity Upcoming Compelling Opportunities Market Outlook for Value Creation Ipiranga Solid Acquisition Business Model 5
  6. 6. A Unique Investment Opportunity Compelling Market Outlook 6
  7. 7. Brazil: a growing and dynamic market for thermoplastic resins With high historical growth rates… Overall Market Consumption for Polyethylene, Polypropylene and PVC 3,741 3,440 Thousands of tons 3,064 3,014 9% 2,829 2,529 2,135 1,596 7% CAGR * 1993 1995 1997 1999 2001 2003 2005 2006* Compound Annual Growth RateSource: Brazilian Chemical Industry Association - Abiquim 7
  8. 8. Brazil: a growing and dynamic market for thermoplastic resins …and strong elasticity to the GDP growth Annual Growth Rates – Brazil (1994 through 2006) % Elasticity: 2.4x GDP growth 9.1 6.8 6.1 5.7 Polypropylene Polypropylene 2.9 Resins Polyethylene Polyethylene PVC PVC GDPSource: Braskem and Abiquim 8
  9. 9. Brazil: a growing and dynamic market for thermoplastic resinsBraskem: Solid and consistent growth Gross Revenue US$ million Exports US$ million 6,893 1,382 6,252 4,900 959 3,688 710 3,013 617 23% 415 CAGR 35% CAGR 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006Source: Braskem. Figures do not consider the effects of the acquisition of Ipiranga. 9
  10. 10. Braskem: consumption-driven player with a strong customer basis Differentiated position to benefit from the growth of the Brazilian market Market segmentation for Braskem’s resins in 2006 % of Revenue Outlook for 2007: OTHERS * PACKAGING FOR FOOD – Sustained global economic growth 20% 24% AUTOMOTIVE 3% – In Brazil: COSMETICS AND 3% • Gradual reduction in interestPHARMACEUTICALS 8% rates 17% RETAIL CONSUMER GOODS • Increase in investments in (NON-DURABLE) infrastructure 8% 17% AGRICULTURE • Growth in domestic demand coupled with higher expected CONSTRUCTION GDP growth • Increase in available income * Includes personal hygiene, infrastructure, electronics and others Source: Braskem 10
  11. 11. Brazil: a growing and dynamic market for thermoplastic resins Solid demand growth for thermoplastic resins Demand growth approximately 1.2 million tons for the next 4 years Market growth (k ton) Growth 2007-2010 (k ton) 315 282 303 300 264 200 100 243 0 530 2007 2008 2009 2010 391 mn ton 4.8 5 4.5 4.2 4.0 4 3.7 +8% 3 PVC 7.2% CAGR 2 PP 1 PE 2006 2007 2008 2009 2010Domestic sales + importsSource: Braskem and LCA consultancy 11
  12. 12. A Unique Investment Opportunity Solid Business Model 12
  13. 13. Braskem: Solid business model based on competitiveintegration in the Value Chain Level of integration reaches 80% for ethylene and 85% for propylene 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 America 13
  14. 14. Braskem: Cost Competitiveness Leading producer in the region with scale surpassing all other players More than 10 million tons of petrochemical and chemical products in 2007, 5.6 million of which ethylene and resins 000 t / ano Production Capacity 000 tons / year 5,570 515 PVC 760 PP PE 1,815 Ethylene 1,400 2,480 1,060 700 700 685 620 561 540 120 160 700 520 476 500 85 Braskem Dow Rio Polímeros Suzano Unipar / PQU Solvay TriunfoSource: CMAI and Braskem 2007 14
  15. 15. Braskem: Market leadership in Brazil Number 1 petrochemical company in the region PE % PP % 16% 8% 51% 47% 37% 41% OTHERS IMPORTS PVC % PE + PP + PVC % 7% 12% 40% 53% 46% 42%Source: Braskem / Brazilian Chemical Industry Association – Mar 07; Braskem´s market share before acquisition of Ipiranga 15
  16. 16. ja n/ ja 05 n/ fe 05 v/ fe 0 v/ 0 m 5 100% m 5 ar 126% ar /0 100% 152% /0 ab 5 ab 5 r/ r/ 0 0 m 5 m 5 ai /0 ai /0 ju 5 ju 5 n/ n/ 05 05 ju ju l/0 l/0 ag 5 ag 5 o/ o/ 05 05 se se t/ t/ 0 0Source: CMAI / Braskem ou 5 ou 5 t/0 t/ 05 no 5 no v/ v/ 0 0 de 5 de 5 z/ z/ 05 05 ja ja n/ n/ 06 06 fe fe v/ v/ 0 0 m 6 m 6 ar ar /0 /0 ab 6 ab 6 r/ 0 r/ 0 m 6 m 6 ai ai /0 /0 ju 6 ju 6 n/ n/ 06 06 ju ju PVC - Ásia (CMAI) Base 100 l/0 l/0 PVC - Braskem (MI) Base 100 ag 6 o/ ag 6 PE: International and Braskem 06 o/ se 06 t/ PVC: International and Braskem 0 se t/ ou 6 0 t/0 ou 6 no 6 t/ 06 v/ no 0 v/ de 6 z/ 0 06 de 6 ja z/ n/ 06 07 ja fe n/ v/ 07 0 fe m 7 PEAD - Ásia (CMAI) Base 100 v/ ar 0 PEAD - Braskem (MI) Base 100 /0 m 7 7 ar /0 101% 140% 7 Base 100 Base 100 167% 127% Braskem: Strong pricing power ja n/ 05 fe v/ 05 m ar 142% /0 100% ab 5 r/ 0 m 5 Spreads over international prices above 30% ai /0 ju 5 n/ 05 ju l/0 ag 5 o/ 05 se t/ PP 05 PE ou t/ 0 PVC no 5 v/ 05 de z/ 05 ja n/ 06 fe v/ 06 m ar /0 ab 6 r/ 0 m 6 Spreads over Asian prices ai /0 ju 6 n/ 06 ju l/0 PP: International and Braskem ag 6 + 38% o/ + 32% + 33% 06 se t/ 0 ou 6 t/ 0 no 6 v/ 06 de z/ 0 ja 6 n/ 07 % fe v/ 07 m PP - Ásia (CMAI) Base 100 ar Base 100 /0 PP - Braskem (MI) Base 100 7 March 2007 126% 168%16
  17. 17. Braskem: Innovation and Technology as key drivers forValue Creation Over US$ 160 million in R&D assets 171 researchers 8 pilot plants 151 patent registrations filed Extended knowledge network with Universities 20% of sales come from new products launched over the last 3 years 17
  18. 18. Braskem: Innovation and TechnologyNew frontiers of development Nanotechnology – 1st Brazilian petrochemical company to file a patent – 4 patents already filed – 1st product launched in November 2006: new PP grade Green Polymer – Manufacture of resins based on renewable sources of raw material (sugar cane) – Technology to convert ethanol into ethylene already in place – Biopolymer: biodegradable green polymer 18
  19. 19. A Unique Investment Opportunity Ipiranga Acquisition 19
  20. 20. A new step in the restructuring of the BrazilianPetrochemical Industry March 19th, 2007 5 plants Production 730 kt of resins 1.2 mn tons of Ethylene Leadership in HDPE 2nd largest cracker 40% Market Share in Latam 20
  21. 21. Braskem: Acquisition of Ipiranga Group´s Petrochemical Business Largest petrochemical player in Latin America Gross Revenue Net Revenue EBITDA US$ 9.9 bn US$ 7.8 bn US$ 1.4 bn US$ 6.9 bn US$ 5.4 bn US$ 760 mn Net Debt / Ebitda Debt / Equity Assets 2.6 x 53 / 47 US$ 10.3 bn 2.7 x 59 / 41 US$ 7.5 bnNote: 2006 Figures consolidating Ipiranga and Copesul are unaudited and proforma 21
  22. 22. Braskem: Acquisition of Ipiranga Group´s Petrochemical Business Financial leverage practically intact after the acquisition Transaction multiple of 6.2 x before synergies Acquired Assets US$ Acquisition US$ EBITDA (Ipiranga + Debt 2,415 mn + 55% of Copesul) 390 mn EV/EBITDA Comparable 6.5 Companies Average: 6.0 6.0 6.0 5.75 5.0 4.9 15% Discount Dow Nova Lyondell Huntsman Georgia Gulf Braskem Chemicals Chemical 2007** Analysts’ average for 2007Source: Citigroup, JP Morgan and Bear Stearns 22
  23. 23. Braskem: Acquisition of Ipiranga Group´s Petrochemical BusinessStrengthening of our competitive advantages unlockspotential synergies Improved profitability and EBITDA with potential increase in cash flow Expansion of product portfolio, consolidating our leading position in all respective segments, mainly HDPE Client base expansion and supply of value- added services based on Innovation & Technology structure Full integration between 1st and 2nd generation, leading to improved competitiveness Increased operational flexibility Improvement of supply chain management – Increased flexibility with naphtha supply Strengthening of the partnership with Petrobras 23
  24. 24. Braskem: Acquisition of Ipiranga Group´s Petrochemical Business Strengthened market leadership More than 50% of market share in all resins PE % PP % 30% 39% 53% 52% 37% 17% 41% 9% OTHERS IMPORTS PVC % PE + PP + PVC % 30% 33% 53% 52% 53% 17% 42% 15%Source: Braskem/Abiquim 2006 24
  25. 25. Braskem: Acquisition of Ipiranga Group´s Petrochemical BusinessSynergies: Experienced management team with provenimplementation capacity Commercial – Complementary product portfolio, especially HDPE – Integration of client base – Optimization of export contracts Industrial – Operational flexibility – Shared maintenance services Fiscal and tax optimization Supply chain – Scale gains in procurement – Optimization of logistics Competitive management model with potential to improve quality and productivity through the exchange of best practices Possibility of new DBN’s in the Southern Complex 25
  26. 26. Braskem: Solid Financial StructureAdequate indebtedness profile with financial leverage practicallyintact after the acquisition AMORTIZATION SCHEDULE Net Debt / EBITDA (LTM) 03/31/2007 - (R$ million) 2.72 “BB+” 2.51 2.63 Ratings of Braskem Gross debt: 5,800 -8% Outlook from Stable to Positive Net debt: 4,205 “Fitch expects the company to be able to increase significantly free cash flow generation, which would allow a significant improvement in credit Dec 06 Mar 07 Pro- metrics needed for Braskem´s rating to migrate to Braskem´ 1,596 an Investment Grade category.” category.” forma** 26% 812 Average term: 17 years 13% 12% 1,162* 12% 9% 8% 8% 6% 6% 724 718 784 675 462 543 372 449 366 331 03/31/07 2007 2008 2009 2010 2011/ 2013/ 2015/ 2017/ Perpetuals Cash and cash 2012 2014 2016 2018 equivalents *Subordinated debentures fully subscribed by the controlling shareholder with payment of interest and principal in July 2007. Invested in R$ **Unaudited pro-forma figure for 2006 considering the acquisition of Ipiranga Invested in US$Source: Braskem 26
  27. 27. A Unique Investment Opportunity Upcoming Opportunities for Value Creation 27
  28. 28. Braskem: Opportunities for Value Creation Resin production capacity growth in Brazil … Petroquímica Paulínia: PP Plant – JV with Petrobras – Total investment of R$ 734 million – Production capacity • +350 k ton / year Alagoas – Location Bahia • Paulínia, State of São Paulo Paulínia – Start-up in 2Q08 Projects being considered for future implementation: – DBN PVC +150 k ton / year PE +100 k ton / year – Greenfield PP Bahia +300 k ton / yearSource: Braskem (2006) 28
  29. 29. Braskem: Opportunities for Value Creation …combined with investments in the lowest feedstock cost country in the region… Venezuela PDA’s signed Cornerstone laid on 04/16/07 JVs to be created by the end of 07 Two projects in the Jose Complex: – 50/50 Braskem and Pequiven – Capital structure: 30% equity, 70% debt – Project finance non-recourse – multilaterals, ECAs and development banks PP Plant* – Production capacity of 450 kton / year – Investments of US$ 370 million – Start-up in 2009 – Propylene at competitive prices Jose Olefins Complex* – 1.3 million tons of ethylene – 1.1 million tons of PE – Total investment of US$ 2.5 billion – Start-up in 2011 – Natural gas at competitive prices* To be presented to the Board 29
  30. 30. Braskem: Opportunities for Value Creation…will result in an 80% production capacity increase forthermoplastic resins... Camaçari Camaç 300 Venezuela 5.5 1,100 (2) million Camaçari Camaç 150 100 665 Venezuela (2) (1) 450 Paulínia Paulí 3.1 350 million 1,860 515 515 760 3,015 1,815 Braskem Current 2008 2009 2010 2011 2012(1) JV with Petrobras Polyethylene Polypropylene PVC(2) JV with PequivenSource: Braskem 30
  31. 31. Braskem: Opportunities for Value Creation …within a lower production cost structure derived from access to diversified sources of raw materials on a competitive basis 2006 2012 Venezuela Camaçari - BA Camaçari - BA Paulínia - SP Triunfo - RS Triunfo - RS 34% 100% 57% 9% Naphtha Feedstock from Refinery Natural GasSource: Braskem 31
  32. 32. Braskem: Opportunities for Value CreationCommitment to Sustainability and high standardsof Corporate Governance 100% tag-along rights for all shareholders Part of BOVESPA’s Corporate Sustainability Index - ISE BOVESPA Level 1 Company with commitment to migrate to Level 2 SOX early adopter - June 2006 Four of eleven Board members are independent Existing committees – Ethics Committee – Enhanced Fiscal Council – Finance & Investment – People & Organization Braskem environment project in Alagoas / Brazil – Strategy & Communication Code of Conduct: sets values, principles and practices governing corporate behavior Long-term incentive plan tied to stock performance All plants ISO 14000 certified: excellence in HSE 32
  33. 33. Braskem: Growth with Value Creation Regional market leader in the production of PE, PP and PVC: organic growth and consolidation Greenfield projects in the region to guarantee access to competitive raw materials: selective growth Strong growth potential in the next 5 years: – Total production capacity will increase from 6 to 10 million tons – Production of resins will increase from 3.1 to 5.5 million tons Solid financial structure coupled with capital discipline Innovation and technology as key drivers for value creation Access to competitive sources of renewable raw materials Consolidation of the partnership model with Petrobras 100% tag-along for all shareholders and best corporate governance practices Social and environmental responsibility 33
  34. 34. Meeting with Investors May 2007

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