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Presentation to investors itaú -

  1. 1. Presentation to Investors Bernardo Gradin Presidente
  2. 2. DisclaimerThis presentation contains forward-looking statements. These forward-lookingstatements are not historical data, but rather reflect the targets andexpectations of Braskem’s management. The terms “anticipate,” “believe,”“expect,” “foresee” “intend,” “plan,” “estimate,” “project,” “aim” and similarterms are used to indicate forward-looking statements. Although we believethese forward-looking statements are based on reasonable assumptions, they aresubject to various risks and uncertainties and were prepared using theinformation currently available to Braskem.This presentation was updated on March 31, 2010, and Braskem does not assumeany responsibility for updating it in light of new information and/or events.Braskem is not liable for any investment decisions taken based on theinformation contained in this presentation. 2
  3. 3. Agenda Braskem A global player Acquisitions: opportunities and challenges Project pipeline: growth with value accretion Braskem consolidated The petrochemical industry Final considerations 3
  4. 4. Agenda Braskem A global player Acquisitions: opportunities and challenges Project pipeline: growth with value accretion Braskem consolidated The petrochemical industry Final considerations 4
  5. 5. A leading Brazilian company going global 2010 – a milestone in Braskem’s history: becoming a world-class player and advancing its strategy to become one of the world’s five largest global petrochemical companies in terms of enterprise value Acquisition of Quattor and Sunoco Solid ownership structure Creation of a global player; Firmly committed shareholders; Diversification of raw materials; Injection of R$3.5 billion by Odebrecht and Foothold in the U.S. market: one of the largest Petrobras as an acquisition pre-condition; consumer markets for thermoplastic resins; BNDES maintained its interest by contributing Value accretion through synergies. R$240 million in capital; Braskem is the priority vehicle for petrochemical investments in Brazil; Competitive projects Professional management; Leader in all new sources of competitive raw Maintenance of Governance standards. materials in Latin America, comparable to the conditions in Middle East; Financial solidity Geographic and raw material diversification; Protection of the Brazilian market; Solid operating results; Development of high value added products Strategic debt profile; (green polyethylene). Prepared for opportunities arising from a potential downcycle of the petrochemical industry. 5
  6. 6. Track record of success with clear objectives 6,460 Resins Capacity (kton/y) 3,595 Acquisitions 2,341 4,275 1,410 Organic Growth 520 1,821 2,185 2,185 Leader in the 54% capacity 80% capacity increase Americas increase Leader in Latin America Acquisitions Petroquímica Quattor + 2020 Ipiranga, Copesul Triunfo Sunoco and Paulínia Politeno Polialden 2010 Trikem 2009 OPP 2008 2006 2007 2005 2004 2003 2002 2006 To be one of the world’s top 5 petrochemical capital increase After R$3.74 bi companies in terms of enterprise value Become leader in thermoplastic resins FX devaluation in Latin America 2008 Crisis 2.72x 3.73x 2.67x 3.46x 3.12x 1Q10Source: Braskem Net Debt/EBITDA (R$) 6
  7. 7. Consistent growthEBITDA (R$ million) 23.1% 18.0% 16.9% Nominal Capacity (kton) 19.3% 14.7% 19.1% 14.4% Resins 14.1% 13.5% Ethylene CAGR: 13% CAGR: 19% 3,496 10,212 3,177 3,150 2,549 2,418 2,090 5,921 1,777 5,551 1,661 1,335 2,965 3,045 3,145 3,190 3,621 2002 2003 2004 2005 2006 2007 2008 2009 LTM 2002 2003 2004 2005 2006 2007 2008 2009 2010EV 8.4 11.2 15.3 9.9 10.1 13.4 11.9 13.1 19.7(R$ bi)EV/ 6.3x 6.3x 6.0x 4.7x 6.1x 4.2x 4.9x 4.2x 5.6xEBITDA Supported by higher production, market leadership, successful sales policies and industry consolidationSource: Braskem 1 Pro-forma figures for 2009: Braskem + Quattor + Sunoco 7
  8. 8. Consistent growthEBITDA (US$ million) 23.1% 18.0% 16.9% Nominal Capacity (kton) 19.3% 14.7% 19.1% 14.4% Resins 14.1% 13.5% Ethylene CAGR: 19% CAGR: 19% 1,846 10,212 1,626 1,580 1,337 5,921 5,551 871 851 764 581 2,965 3,045 3,145 3,190 3,621 457 2002 2003 2004 2005 2006 2007 2008 2009 LTM 2002 2003 2004 2005 2006 2007 2008 2009 2010EV 2.4 3.9 5.8 4.2 4.7 7.6 5.1 7.5 11.0(US$ bi)EV/ 5.2x 6.7x 6.6x 5.0x 6.2x 4.6x 3.8x 4.8x 5.9xEBITDA Supported by higher production, market leadership, successful sales policies and industry consolidationSource: Braskem 1 Pro-forma figures for 2009: Braskem + Quattor + Sunoco 8
  9. 9. Strong cash generation and competitive margins Key Financial 1Q10 4Q09 1Q09 % % Indicators (R$ ‘000)* (A) (B) (C) (A)/(B) (A)/(C) Braskem positions itself as a Sales Revenue 6,245 5,960 4,307 5 45 consolidator of the global petrochemical industry EBITDA 903 751 545 20 66 Opportunistic acquisitions during 1.9 1.8 the economic crisis EBITDA Margin 14.5% 12.6% 12.6% p.p. p.p. Strong cash flow Disciplined in reducing fixed costs EBITDA COMPANY Renegotiation of raw material Margin 1Q10 agreements since March 2009 SABIC 34,9% Growing productivity gains and MEXICHEM 21,5% Potential for margin gains through good operational excellence – already in RELIANCE 15,2% operating practices. the 1st quartile worldwide Braskem pre- BRASKEM 14,5% Notable improvement in HSE acquisitions:16.3% FORMOSA 13,9% results since 2002 WESTLAKE 10,3% Green polyethylene helping to DOW 10,1% reduce effects from GHGs GEORGIA GULF 6,6%Source: Braskem, Bloomberg Pro-forma figures for 2009: Braskem + Quattor + Sunoco 9
  10. 10. Quattor acquisition Opportunities Bahia PP HOMO/COPO (1979) Capacity: 115 kty Asset concentration in Southeast Technology: Slurry Shell (~70% Brazilian resin consumption); Optimization of logistics distribution related to reduction in external storage; Camaçari Cracker (2005) Diversified RM matrix – balance Capacity: 520 kty ethylene between naphtha-natural gas; Rio de Janeiro Technology: ABB Lummus – ethane/propane Joint administration of raw material Mauá Duque de HDPE/LLDPE (2005) agreements; Paulínia Caxias Capacity: 540 kty Technology: Gas phase - Unipol Renegotiation of service and insurance PP HOMO/COPO (1992) contracts; Triunfo Cracker (1972) Capacity: 310 kty Unification of production and Technology: Bulk – Lipp Capacity: 700 kty ethylene* maintenance practices; Technology: ABB Lummus (naphtha) Unification of Technology and LDPE/ EVA (1972) Innovation centers; Capacity: 120 kty Reduction of working capital costs;Sao Paulo Technology: HP Autoclave HDPE/ LDPE (2008) Tax and logistical synergies; Capacity: 240 kty Technology: Slurry – Chevron Phillips Organizational restructuring. LDPE (1965) Capacity: 140 kty Technology: Tubular Challenges PP HOMO/COPO (2003) Stability of raw material supplies; Capacity: 450 kty Technology: Spheripol Integration of cultures. *200 kta expansion effectively coming online in 2010 10
  11. 11. Quattor - key indicators Operational Indicators Operating rate (%) 2009 1Q10 Ethylene 68%(1) 74%(1) SIMULATION 1Q10* PE 61% 67% Utilization rate: 90% Financial Indicators R$ million 2009 1Q10 Net Revenue 4,772 1,233 SIMULATION 1Q10* EBITDA 534 109 EBITDA: R$193 Outlook as of 2Q10 Main impact on operational profit in 1Q10 Supply from Mauá complex Limited operating rate normalized in May 2010; Petrobras’ commitment to*Assumptions normalize supply to enable Higher production = higher sales Riopol to operate at full Average price 1Q10 capacity by August 2010. Excludes synergies (1) Considering the 200 kty expansion 11
  12. 12. Corporate Governance post acquisition Odebrecht as the controlling shareholder, with all results fully consolidated, reinforcing Braskem’s condition as a publicly traded private company; Braskem executives entrusted with the Company’s management and business plan, approved by a simple majority of the Board of Directors; Sharing of strategic decisions, with consensus approval by Board of Directors, including for: – divestments greater than 10% of long-term assets – acquisitions greater than 30% of long-term assets Investment decisions based on objective criteria for returns and profitability, such as project IRR and NPV. Clear financial policy that stipulates the strict conditions, with derivatives used solely for hedging; Being the sole vehicle for petrochemicals investments gives Braskem the right to: - Act as the leader for all investments identified by Petrobras that are of interest to Braskem; - If not interested, the right to sell the products. 12
  13. 13. Braskem America (former Sunoco) Opportunities Global-scale, state-of-the-art assets – technology and age similar to Brazil’s R&T Center polypropylene (PP) assets; Pittsburgh, Development of a global production PA base; Consolidation of industrial assets; Competitive costs for some 70% of raw materials; Neal, WV Marcus Hook, PA 1 PP 1 PP Platform for greenfield projects in Latin America. Challenges La Porte, TX 1 PP Knowledge of North American distribution market; Financial Indicators Add value to supplier ⇔ client chain R$ million 2009 1Q10 (substitute distributor); Highly disperse market; Net Revenue 1,866 547 Resumption in demand vs. EBITDA 140 65* uncertainty of economic recovery.* R$18 million non-recurring positive impact from inventory adjustments. 13
  14. 14. Agenda Braskem A global player Acquisitions: opportunities and challenges Project pipeline: growth with value accretion Braskem consolidated The petrochemical industry Final considerations 14
  15. 15. Expansion with increased competitiveness BRAZIL Green Ethylene Operational start-up: 3Q10 Physical progress – 75% Costs in line with budget Expected NPV ~US$180 million PVC Expansion Operational start-up : 1st half 2012 Expansion of 200 kty in PVC capacity New Projects Investments of US$470 million Industrial Assets Expected NPV ~US$450 million Projects with Petrobras Support for Brazil’s infrastructure projectsSource: Braskem 15
  16. 16. Expansion with increased competitiveness LATIN AMERICA Mexico: Ethylene XXI Project Operational start-up: early 2015 Partnership between Braskem (65%) and the Mexican group IDESA (35%) for the purchase of ethane from PEMEX Integrated project: 1 Mty of ethane and 1 Mty of PE Investment estimated at up to US$2.5 billion over 5 years Venezuela: JV’s with Pequiven with Project Finance structure New Projects Propilsur Industrial Assets Operational start-up: 2013 Projects with Petrobras 300 kty PP in Paranaguá complex Investment estimated at US$500 millionSource: Braskem 16
  17. 17. Consolidated project pipeline PeruProj. (+ 600 to 1,000 kty ethylene/PE) Ethylene XXI - Mexico Polimerica – Venezuela (+ 1,000 kty ethylene (+ 1,300 kty ethylene and and + 1,000 kta PE) + 1,000 kty PE) Green PE Propilsur – Venezuela Suape (+ 200 kty ethylene) (+ 300 kty PP) Comperj PVC Expansion (+ 200 kty) 2010 - 2012 2013 - 2015 Projects under evaluation Resin Capacity CAGR for 2010-2015: +4.3% Diversification of raw materials and world-class assets Fiscal discipline Excellent track record of projects executionSource: Braskem 17
  18. 18. Investments in 2010 total R$1.6 bi 2010 Estimated Investments In millions of R$ 1,617 Green PE 254 Mexico 72 Venezuela 35 52 PVC Alagoas BRASKEM 462 Operational Maintenance New Projects 317 Industrial Assets BRASKEM AMERICA 56 QUATTOR Projects with Petrobras 360 QUANTIQ / VARIENT 10Source: Braskem 18
  19. 19. Agenda Braskem A global player Acquisitions: opportunities and challenges Project pipeline: growth with value accretion Braskem consolidated The petrochemical industry Final considerations 19
  20. 20. Braskem consolidated Financial Indicators: 2009 LTM Mar/10 R$ billion Braskem B + Q + S Braskem B + Q + S Potential for margin gains Stabilization in raw material Net Revenue 15.2 21.9 16.5 23.8 supplies; EBITDA 2.5 3.1 2.7 3.5 Margin equalization Braskem (16%) vs. Quattor (9%); Net Debt/EBITDA 2.67x 3.46x 2.37x 3.12x Substitution of 1Q09 by 1Q10 # Plants: 17 29 17 29 80% Capacity 6,460 Increase 510 3,595 1,965 510 PVC Industrial Assets PP 1,090 PE 3,035 1,995Listed on three stock exchanges: BM&FBovespa, NYSE and LatibexSource: Braskem 20
  21. 21. Braskem’s consolidated debt profile after debt restructuring Funding R$ million (03/31/2010) Quattor + Sunoco R$ million (03/31/10) R$ million (03/31/10) operations in Acquisition April and May Gross Debt: 9,810 Gross Debt: 17,176 and Gross Debt: 14,066 Net Debt: 6,500 Net Debt: 10,909 scheduled Net Debt: 10,909 payments Average Term: 9.7 years R$3.74 bi Average Term: 6.6 years Average Term: 8.2 years Net Debt/EBITDA: 2.37x capital Net Debt/EBITDA: 3.12x Net Debt/EBITDA: 3.12x increase 65% of debt pegged to USD 44% of debt pegged to USD 59% of debt pegged to USD Braskem Cash: + 3,311 Quattor Cash: + 542 Capital Increase: + 3,742 (-) UNIPAR Payment - (700) (-) SUNOCO Payment - (630) Bond Issuance (US$400 mi) + 712 SUNOCO, EPP and NCA fin. + 694 3,157 Debt Prepayment: - (4,514) 2,371 Cash = 3,157 2,078 1,674 1,735 1,178 622 804 1,222 3,157 1,142 989 614 478 478 607 623 1,456 1,416 389 289 1,118 157 700 1,060 1,057 491 511 267 623 101 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 onwards Braskem Quattor New debt Cash Net capital increaseSource: Braskem 21
  22. 22. Braskem: Ratings confirmed after acquisition RATING Post-Acquisitions Upgrade Conditions: ‣ Maintenance of high liquidity (cash or equivalents - + stand-by) above R$3 billion. Cash above R$3 billion since Ba3 BBB- Dec/2008. - Investment Grade Jan/09 May/09 + ‣ Capitalization of Braskem as pre-condition for Ba1 BB+ acquisition. Shareholder movements; stable Mar/09 - Jan&Feb/10 ‣ Successful integration with capture of synergies and increase in cash generation; Ba2 BB The acquisitions: ‣ Decrease in Net Debt/EBITDA ratio to 2.5x. In first post- ‣ Strengthened strategic positioning; acquisition quarter we already reduced this ratio from 3.46x to 3.12x Ba3 BB- ‣ Increased # of plants, sites and geographic diversification; ‣ Diversification of raw material mix; More disciplined and less volatile domestic market ; B1 B+ ‣ ‣ High governance standards; ‣ Petrobras participation. 2009 2010 Braskem Ratings (National Scale) Braskem Ratings (Global Scale) Moody’s Aa2.br / Stable Outlook Moody’s Ba1 / Stable Outlook Fitch AA / Stable Outlook Fitch BB+ / Stable Outlook S&P AA+ / Stable Outlook S&P BB+ / Stable OutlookSource: Braskem 22
  23. 23. Raw material matrix Diversification to compete globally Raw Material Profile* (2009) Braskem Post-Acquisitions* Braskem Post-Projects* 8% 3% 37% 30% 13% Implementation of Project Pipeline** 24% 17% 18% 92% 56% 58% 15% 69% 46% 14% Quattor Sunoco Braskem More balanced and diversified supply of raw materials Liquid (2) Refinery propylene Gas (1) Competitive natural gas price vs. international reference prices Propane Naphtha / Condensate USGC reference to competitive prices ~70% of naphtha supplied by Petrobras with competitive price formula Natural Gas 30% direct imports from various international suppliers 100% Petrobras supply with competitive prices versus international prices Ethanol *Based on resin-production capacity. Sunoco buys propane directly(1) Ethane, Propane and HLR; (2) Naphtha and condensate ** Considering the Mexico Project and Green PE 23
  24. 24. Agenda Braskem A global player Acquisitions: opportunities and challenges Project pipeline: growth with value accretion Braskem consolidated The petrochemical industry Final considerations 24
  25. 25. Overview of the world petrochemical cycle Ethylene: projected utilization in 2010 What did we learn in 2009? Plants with high operating costs were closed60,000 90 89 during the crisis 85 84 86 *50,000 84 83 80 79 80 Demand driven by emerging countries,40,000 75 74 primarily China30,000 Effective new capacity 50% below projections:20,000 delays, learning curve, lack of skilled labor,10,000 problems with raw material supply 0 Europe N. America Asia M. East World Braskem 2010-2014 Outlook Capacidade Operating rate 2010 (%) Uncompetitive assets shall be permanently * Braskem:1Q10 2009 operating rate (%) shuttled down Restrictions on gas extraction linked to oil Kt Additional capacity and closures announced production (OPEC)12,000 Estimated delay ~3 million tons expected for 2010 should be10,000 postponed: Iran (Morvarid and Illam) and Saudi 8,000 Arabia (Sharq and Saudi – Al Jubail) 6,000 Demand growth over 6 million ton/year should 4,000 exceed additional supply in 2011 2,000 Higher domestic consumption in emerging 0 countries like Brazil, China and India-2,000 2009 2010 2011 2012 2013 2014 Industry consolidation increasing players’-4,000 competitiveness MIDDLE EAST ASIA OTHERS NORTH AMERICA W. EUROPE May2009 Forecast 25Source: CMAI
  26. 26. Brazil’s macroeconomic outlook Annual real GDP growth • Brazil’s economy is still relatively closed, with exports 7,0% 6,1% 5,8% corresponding to 14% of GDP, distributed among 6,0% 4,7% 4,6% various trade partners. 5,0% 4,5% 4,4% 4,4% 3,5% 4,0% 5,2% 4,4% 4,3% 4,3% • Strong external solvency ratings and floating exchange 3,0% rate system curbed speculation against the BRL during 2,0% 1,3% the crisis. 1,0% -0,2% 0,0% • Brazil’s banking system is well capitalized and highly -1,0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 regulated. Real GDP On April 2010 On December 2009 • Household consumption corresponds to 61% of GDP, while government consumption corresponds to 20%. GDP is highly influenced by consumer behavior, which Average monthly income (March 2002 = base 100) has been driven by growth in average income levels. 180 • Brazil is still an unleveraged economy, but with 160 growing access to credit (the ratio of available credit to GDP is currently 45% and is expected to increase to 140 49% in 2010), which ultimately spurs consumption. 120 100 80 Average Income Rendimento MédioSource: Santander 26
  27. 27. Brazil: Dynamic Market Still-low per-capita consumption Per-capita consumption of PE, PP and PVC (kg/person) 63 63 57 57 Brazil: 41 41 5.4% CAGR 28 28 21,9 22,7 22,2 22,2 20,2 18,7 18,0 16,6 17,8 17,5 15,4 16,2 16,1 14,5 12,5 13,6 11,1 9,6 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 PE PP PVCSource: CMAI, IBGE, Abiquim, Braskem * Compound annual growth rate 27
  28. 28. Consumer driven Braskem’s domestic sales breakdown in 2009 HYGIENE AND CLEANING COSMETICS AND PHARMACEUTICALS CONSUMER GOODS 6% 2% AUTOMOTIVE 13% 5% RETAIL 5% 17% CONSTRUCTION 3% FOOD PACKAGING ELECTRIC AND ELECTRONIC 30% 6% INDUSTRIAL 4% 4% INFRASTRUCTURE 4% 1% AGRIBUSINESS OTHER CHEMCIALS AND AGROCHEMICALSSource: Braskem / Abiquim 28
  29. 29. Market development Construction of light slabs using Parts for tractors, harvesters and polypropylene spheres. tools migrating to PE rotational molding.BUBBLEDECK Agro-machinery Substitutes concrete wells for a Project developed with Unipac and rotation-molded structure. Support from Toyota-Tsusho. Flooring that allows CNO and partners Asperbras, Fortlev and water permeability. Brinquedos BandeiranteCROSSWAVE Manholes Substitution of asbestos by PP Substitution of fiberglass tanks for fibers with fiber-cement volumes greater than 2,000 l. reinforcement.FIBER-CEMENT Large Tanks New washer molds, with PP cabinets Plastic silos for grain storage. (replacing steel) in final validation Partnership with Suzuki. stage. Silo BagsTRAVELING BLOCK 29
  30. 30. Agenda Braskem A global player Acquisitions: opportunities and challenges Project pipeline: growth with value accretion Braskem consolidated The petrochemical industry Final considerations 30
  31. 31. Why Braskem?Pr/share35 BRKM5 Performance30 B+Q+S (R$ billion) 1Q10 Itaú Multiple25 EBITDA LTM 3.5 3.5 3.520 Market Capitalization 8.8 11.9 13.615 + EV 19.7 22.8 24.510 EV/EBITDA 5.6x 6.5x 7.0x* 5 Price per share 11.3 15.3 17.4 0 Proj. NPV to 2012 > R$1 bi jan-02 jan-03 jan-04 jan-05 jan-06 jan-07 jan-08 jan-09 jan-10 Value added by > R$1.3 / R$ US$ projects to share price share * Peer Multiple. Source: Bloomberg. Largest thermoplastic resin producer in the Americas Leader of important projects in Latin America with competitive raw materials Emerging consumer market with potential per-capita growth Huge potential for value creation as additional driver EBITDA increase Above-peer profitability Access to one of the world’s largest consumer markets EV/EBITDA multiple below following the U.S. acquisition peers’ multiple (7-8x) Successful trajectory of organic growth and acquisitions Shareholders hold long-term view with strategic synergies for growth and value creation Leader in green chemicals 31
  32. 32. Presentation to Investors Bernardo Gradin Presidente

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