Santander Latin America  Energy & MaterialsOctober 2009 - London
Forward-looking StatementsThis presentation contains forward-looking statements. Such statements are notstatements of hist...
Agenda         The Company & 2Q09 Financials         Petrochemical Industry         Key Differentiators                   ...
Braskem in a snapshot  Leading petrochemical company in Latin America  Third largest resins producer in the Americas  Dive...
Ownership Structure – Leveraging relationshipwith Petrobras                                               % Voting Capital...
Enhanced competitiveness through value chainintegration                                     Industrial integration  Oil/Ga...
Track record of strong and consistent organicgrowth and acquisitions                                                      ...
Applied Innovation and technology to strengthenvalue chain competitiveness Structured resource base to support client need...
Growth combined with  improved competitiveness    Green PE:        − Cornerstone laid for its green ethylene plant in Apri...
Global and Regional Scenario   Global Scenario       Oil price trend is still uncertain           −    Economy recovery wo...
500                                                                                         900                           ...
40                                                                                            60                          ...
Brazilian market showing significant evolution     Domestic Sales 1Q09 x 2Q09                                   %   Resins...
March performance shows trends for the upcoming quarter    Resins Sales Volume in the Domestic                            ...
EBITDA Higher basic petrochemicals prices and sales volume overcome exchange appreciation and raw material cost increase  ...
Comfortable cash position, coveringover 2 years of debt amortization         R$ Million (06/30/09)      Gross Debt:       ...
Agenda         The Company & 1Q09 Financials         Petrochemical Industry         Key Differentiators                   ...
Petrochemical Cycle:   Good naphtha x resins spreads even with lower ethylene   utilization rate  Global ethylene supply-d...
9% of the world ethylene capacity shutdown or idle   in USA and West Europe  Kton       Expected utilization rate 2009(1):...
Agenda         The Company & 2008 Financials         Petrochemical Industry         Key Differentiators                   ...
Brazil: A stable economy Structural changes have prepared the country to the current environment   Economic policy based o...
Brazil: dynamic market with still low per capita  consumption• PE, PP and PVC per capita consumption (Kg per person)      ...
In Brazil, companies are exposed to a dynamic    market with resilient growth…•    Domestic demand for resins             ...
… and a high level of consolidation    • Number of Producers                                     • 2 Top producers share  ...
Braskem is prepared to seize the opportunities    offered by this environment                                             ...
Focus    Continuous strengthening of long-term relationship with Clients    Priority over financial health and liquidity  ...
Santander Latin America  Energy & MaterialsOctober 2009 - London
Appendix I             28
PE Innovation: Cases of Success                   Internally developed                                                    ...
PE Innovation: Cases of Success                                                              Developments for truck liners...
PP Innovation: Cases of Success                   BOPP sealant layer               High clarity PP grades                 ...
PP Developments: Customer Partnership        Replacing steel in washing machine     Partnership in new                  de...
Resins Capacity in the Americas                             Capacity of resins in Latin America, kton                    3...
World indicative ethylene cash costsSource: CMAI                             34
Financial highlights                                                  Change     Change                     Change   Main ...
Revenues breakdown – 2Q09                                       Net Revenue by Product 1                                  ...
COGS breakdown – 2Q09                                                       1                                        COGS ...
Capacity utilization rates at normal levels          Utilization Rate                          %            ETHYLENE      ...
Outstanding Bonds & Outstanding Ratings                                                        Coupon           Yield *Out...
Covenants                          RATIO                                              Net Debt / Ebitda (x)               ...
Focus on priority investment projects    R$ million           2,279                       Investments in Equity Stake     ...
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Santander latin america energy & materials london, october 2009

  1. 1. Santander Latin America Energy & MaterialsOctober 2009 - London
  2. 2. Forward-looking StatementsThis presentation contains forward-looking statements. Such statements are notstatements of historical facts, and reflect the beliefs and expectations ofBraskem’s management. The words “anticipates”, “wishes”, “expects”,“estimates”, “intends”, “forecasts”, “plans”, “predicts”, “projects”, “targets”and similar words are intended to identify these statements. Although Braskembelieves that expectations and assumptions reflected in the forward-lookingstatements are reasonable based on information currently available to Braskem’smanagement, Braskem cannot guarantee future results or events.Forward-looking statements included in this presentation speak only as of thedate they were made (June 30, 2009), and the Company does not undertake anyobligation to update them in light of new information or future developments.Braskem shall not be responsible for any transaction or investment decisions thatare taken based on information included in this presentation. 2
  3. 3. Agenda The Company & 2Q09 Financials Petrochemical Industry Key Differentiators 3 3
  4. 4. Braskem in a snapshot Leading petrochemical company in Latin America Third largest resins producer in the Americas Diversified portfolio of petrochemical products, with focus on PE, PP and PVC 18 facilities plants in Brazil and annual production capacity of 11 million tons of chemical and petrochemical products Key financials, 2008 Gross revenue = US$ 12.8 billion Net revenue = US$ 10.0 billion (78% in Brazil) EBITDA = US$ 1.3 billion Assets = US$ 9.7 billion Listed at BM&F Bovespa, NYSE and LATIBEX 100% tag along 4
  5. 5. Ownership Structure – Leveraging relationshipwith Petrobras % Voting Capital % Total Capital ODEBRECHT GROUP PETROBRAS BNDESPAR OTHERS 62.3% 38.3% 31.0% 25.3% 0.0% 5.1% 6.7% 31.3% Leveraging relationship with Petrobras: NOC alliance • Potential for operational synergies with refineries and partnership with Petrobras R&D Center • Alliance to strengthen Brazil’s petrochemical value chain – Consolidation around 2 large competitors (Braskem & Quattor) – Access to competitive raw materials – Improved value chain competitiveness • Corporate governance standards: Shareholders’ agreement 5
  6. 6. Enhanced competitiveness through value chainintegration Industrial integration Oil/Gas-refineries Basic petchem Resins Converters Naphtha/Gas PE/PP/PVC Resins Market Share 51% 2008 Source: Braskem / Abiquim 6
  7. 7. Track record of strong and consistent organicgrowth and acquisitions Rank amongst the 10 Become the largest largest petrochemical thermoplastic resins companies in the world producer in Latin measured by EV* America Triunfo Paulinia IPQ / CPS Politeno 2009 2012 Polialden 2007 2008 2006 Trikem 2002 6,113 5,901 5,551Braskem’s Ethylene andresins capacity (kt) 23% CAGR 3,621 3,045 3,145 3,2251,734 Acquisitions Organic growth2000 2002 2004 2005 2006 2007 2008 2009 * Enterprise Value 7
  8. 8. Applied Innovation and technology to strengthenvalue chain competitiveness Structured resource base to support client needs Focus on product and application development Over US$ 190 million in R&D assets – 18% of resin sales derive from > 170 researchers products developed in the last three years 8 pilot plants – Focus on clients’ end users > 240 patents filed worldwide Targeted initiatives for breakthrough technology Partnership with universities and R&D centers in – Intelligent Brazil and abroad packaging – Renewables 8Source: Braskem 8
  9. 9. Growth combined with improved competitiveness Green PE: − Cornerstone laid for its green ethylene plant in April/09 − Investments of R$488 million and startup expected for the end of 2010 − Financing package with BNDES approved in May/09 Venezuela: Polipropileno del Sur (Propilsur) - Basic engineering and front end engineering design (FEED) concluded - Program timetable altered: startup in 2013 and investments estimated at US$ 1.2 billion Polietilenos de America (Polimerica) - Technology license agreements signed for the PE plants - Program timetable altered: startup in 2014 and investments estimated at US$ 3.25 billion Peru: − Braskem, Petrobras and PetroPerú concluded studies for the technical and economic pre- feasibility phase of an integrated project to produce 700 kton to 1,200 kton of polyethylene using the natural gas available in Peru as feedstock.Source: Braskem 9
  10. 10. Global and Regional Scenario Global Scenario Oil price trend is still uncertain − Economy recovery worldwide versus high inventory level Naphtha prices reflect the volatility of crude Petrochemical prices in the international market improved during 3Q09 but are expected to decrease for the 4Q09 − Commissioning of new plants − Lower demand from converters − Resin’s spread expected to be attractive − Higher operating rates compared to 1H09 Downturn cycle can last until 2011 Regional Scenario Braskem plants operating at full capacity Strong domestic demand during 3Q09 and favorable global scenario pressured prices upward Real appreciation and operational problems with Quattor lead imports to pick up again Inventory levels in the chain are still low Sales volume recovery for Mercosur, Bolivia and Andean countries − Low consumer confidence and reduced liquidity still hurting Argentina’s economySource: Braskem / CMAI / Quimax 10
  11. 11. 500 900 1,300 1,700 500 900 1,300 1,700 2,100 PE PVC Jan-08 Jan-08 Feb-08 Feb-08 Mar-08 Mar-08 Apr-08 Apr-08 May-08 May-08 Jun-08 Jun-08 Jul-08 Jul-08 Aug-08 Aug-08 prices till 3Q09 Sep-08 Sep-08 Oct-08 Oct-08 Nov-08 Nov-08 Dec-08 Dec-08 Jan-09 Jan-09 Feb-09 Feb-09 Mar-09 Mar-09 Apr-09 Apr-09 May-09 May-09 Jun-09 Jun-09 Jul-09 Jul-09 Aug-09 Aug-09 Sep-09 US$/ton Sep-09 US$/ton -35% -31% +38% +55% 100 500 900 1,300 1,700 500 900 1,300 1,700 2,100 PP Jan-08 Jan-08 Feb-08 Feb-08 Mar-08 Mar-08 Benzene Apr-08 Apr-08 Recovery in resins and aromatics international May-08 May-08 Jun-08 Jun-08 Jul-08 Jul-08 Aug-08 Aug-08 Sep-08 Sep-08 Oct-08 Oct-08 Nov-08 Nov-08 Dec-08 Dec-08 Jan-09 Jan-09 Feb-09 Feb-09 Mar-09 Mar-09 Apr-09 Apr-09 May-09 May-09 Jun-09 Jun-09 Jul-09 Jul-09 Aug-09 Aug-09 Sep-09 Sep-09 US$/ton US$/tonSource: CMAI (References PP, PE, PVC: Asia and Benzene: USA) -36% -44% +48% 11 +213%
  12. 12. 40 60 80 100 120 140 160 40 60 80 100 120 140 160 PE PVC Dec-07 Dec-07 Jan-08 Jan-08 Feb-08 Feb-08 Mar-08 Mar-08 Apr-08 Apr-08 May-08 May-08 Jun-08 Jun-08 Jul-08 Jul-08 Aug-08 Aug-08 Sep-08 Sep-08 Oct-08 Oct-08 Nov-08 Nov-08 Dec-08 Dec-08 Jan-09 Jan-09 Feb-09 Feb-09 Mar-09 Mar-09 Apr-09 Apr-09 May-09 May-09 Jun-09 Jun-09 Jul-09 FX impact on domestic prices Jul-09 Aug-09 Dec07 = 100 basis Aug-09 Dec07 = 100 basis -30% -31% +37% +41% 40 60 80 100 120 140 160 PP Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Dec07 = 100 basisSource: Quimax -31% +36%12
  13. 13. Brazilian market showing significant evolution Domestic Sales 1Q09 x 2Q09 % Resins Market Share 2Q09 55% Imports 19% 29% 27% 53% 16% 18% 28% Others PE PP PVC Total Brazilian Resins Market * * Braskem estimates: Domestic sales + importsSource: Braskem 13
  14. 14. March performance shows trends for the upcoming quarter Resins Sales Volume in the Domestic 3Q09 Trend in the Domestic Market Market Volume Price Revenue Cost PP PE PVC BTX Dec-08Oct-08 Jan-09 Feb-09 Jul-09 Nov-08 Apr-09 Jun-09 Aug-09 Sep-09 Mar-09 May-09Source: Braskem 14
  15. 15. EBITDA Higher basic petrochemicals prices and sales volume overcome exchange appreciation and raw material cost increase R$ million FX Impact 247 on Costs FX Impact on Revenue (334) 539 65 ( 232 ) ( 96 ) 566 457 ( 87 ) ( 57 ) ( 24 ) EBITDA Price Volume Raw Others FX Other Costs + EBITDA 1Q09 Material PIS/ Variable SG&A 2Q09 COFINS CostsSource: Braskem 15
  16. 16. Comfortable cash position, coveringover 2 years of debt amortization R$ Million (06/30/09) Gross Debt: Debt: 10,583 Net Debt / Ebitda (x) R$ Net Debt / Ebitda (x) US$ Net Debt: Debt: 7,347 Average Term: 10.1 years Term:67% of the debt are pegged to the USD 3,236 1,468 PFICO 15% 13% 13% 12% 11% 11% 10% 9% 1,768 610 1,617 6% 1,326 1,288 1,209 1,372 1,091 976 526 615 06/30/09 2009 2010 2011 2012 2013 2014/ 2016/ 2018/ 2020 onwards 2015 2017 2019 In US$ Value related to the loan granted by a Petrobras subsidiary for the In R$ delisting of Copesul, due in October 2009. Source: Braskem 16
  17. 17. Agenda The Company & 1Q09 Financials Petrochemical Industry Key Differentiators 17 17
  18. 18. Petrochemical Cycle: Good naphtha x resins spreads even with lower ethylene utilization rate Global ethylene supply-demand and operating rate, Points of concern Mton/y. % 146 143 • US/EU slowdown 140 127 134 • Incentives to sustain supply buildup 130 120 115 – China: import substitution 111 112 – Middle East own agenda • Credit availability 87% • Change on petrochemical ownership 86% 84% 83% 82% Supply & Demand Balance Potential positive factors 2008 2009 2010 2011 2012 • Frequent delays in new capacities CMAI Utilization Rate May/09 1 2 3 Supply Demand 5 • Supply-demand geographical imbalance Spread HDPE/Naphtha X Ethylene Utilization Rate leads to logistics barriers 91 91 • Increased economic importance of 702 717 emerging countries with relevant 751 750 688 694 84 domestic consumption 638 562 626 624 • China: raw materials less competitive 77 528 79 77 77 • Opportunities from assets on sale 474 • 12MMton of capacities temporarilyJan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 shutdown in USA and Europe Spread HDPE/Naphtha US$/t Utilization Rate % Estimated Utilization Rate 3Q09 % Source: CMAI / Platts 18
  19. 19. 9% of the world ethylene capacity shutdown or idle in USA and West Europe Kton Expected utilization rate 2009(1): 45.000 87% 40.000 82% 76% 78% 35.000 30.000 • 12 MM tons of capacity lost 25.000 in USA and West Europe 20.000 15.000 (9% of world capacity) due 10.000 to idling, permanent 5.000 0 closures and maintenance W.Europe N. America M. East Asia stoppages, trigged by Production Capacity Lost Operating RateCapacity lost = maintenance, technical or market losses economics and poor demand. New capacity 3.890 addition (kton): • New capacities additions are 1.145 2.158 expected to come on stream 452 during 2009 and 2010 4.040 4.033 2009 2010 (1)1H09 real data Middle East Asia ex-China China Source: HSBC / CMAI 19
  20. 20. Agenda The Company & 2008 Financials Petrochemical Industry Key Differentiators 20 20
  21. 21. Brazil: A stable economy Structural changes have prepared the country to the current environment Economic policy based on inflation target, fiscal responsibility and floating exchange rate GDP growth and inflation % % GDP interest Competitive, diversified and open economy 7 7 6 6 Liquid financial system 5 5 Mature democracy 4 4 3 3 Broad and consumerist domestic market 2 2 1 1 Greater competitiveness of Brazilian multinationals 0 0 2007 2008 2009 2010 Focus on improving social conditions (health, education, -1 -1 income distribution) GDP Inflation Sovereign debt in a record low, rated investment grade (S&P, Fitch)Source: Tendências Consulting - Bradesco and Santander Perspectives (Sep/09) 21
  22. 22. Brazil: dynamic market with still low per capita consumption• PE, PP and PVC per capita consumption (Kg per person) 76 68 57 Brazil 5.2% CAGR* 21.9 22.7 18.7 20.2 15.4 16.6 16.1 17.8 17.5 18.0 14.5 16.2 13.611.1 12.51994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 USA Europe Japan PE PP PVC 22Source: CMAI *Compound annual growth rate 22
  23. 23. In Brazil, companies are exposed to a dynamic market with resilient growth…• Domestic demand for resins • USA demand for resins (Kton) 5.4% CAGR -1.2% 3% CAGR 10% 4,172 9% 4,048 3,694 1% 3,435 3,377 25,904 25,020 -3% 856 982 24,749 2,880 24,212 -12% 749 749 23,276 692 21,341 6,081 5,907 1,228 1,218 5,421 5,563 1,114 1,114 990 4,328 6,350 6,287 6,153 5,922 1,964 1,972 1,833 1,695 1,833 12,318 12,826 12,638 11,091 2001 2004 2005 2006 2007 2008 2001 2004 2005 2006 2007 2008 PVC PP PESource: Abiquim – domestic sales + imports Source: NAD - CMAI 23
  24. 24. … and a high level of consolidation • Number of Producers • 2 Top producers share 13 100% 100% 93% 11 9 52% 42% 30% 2 2 2 PE PP PVC PE PP PVC BRAZIL USA 24Source: Braskem / CMAI 24
  25. 25. Braskem is prepared to seize the opportunities offered by this environment n re atio e c C h valu w wit Expand access to G ro attractive markets BStrengthen current position Assure regional low-cost raw A material and energy supplies • Expansion of Green-PE Increase and and renewable protect core Latin • M&As American business • Global Alliances • Gas crackers in Latin America• Operational and commercial excellence • Brazilian sugar cane ethanol• Relationship with Petrobras• Value-chain virtual integration – Refineries and raw materials – Logistics and services – Innovation and technology• Enhancement of aromatics and crackers’ products• Regional leadership Source: Braskem 25
  26. 26. Focus Continuous strengthening of long-term relationship with Clients Priority over financial health and liquidity Productivity Program: cost reduction Support the sustainability of the Brazilian petrochemical chain Construction of the Green PE plant Projects in Venezuela Analysis of opportunities arising from crisis: selective acquisitions in North America Operational renewal: over 500 employees by 2011 Greater operational and financial strength 26
  27. 27. Santander Latin America Energy & MaterialsOctober 2009 - London
  28. 28. Appendix I 28
  29. 29. PE Innovation: Cases of Success Internally developed Pioneer on the production of technology for the metallocene PE in Brazil production of UHMWPE Ideal product for kitchen cutting boards Shrink Films and playground toysReplacing paperboard boxes Cisterns PE replacing concrete Bags for Bread Replacing paper bags 29
  30. 30. PE Innovation: Cases of Success Developments for truck liners: High performance for Developments for anti-stick properties and high abrasion the frigorific market agricultural silo structure resistance 30
  31. 31. PP Innovation: Cases of Success BOPP sealant layer High clarity PP grades for rigid packaging Disposable glassesBraskem product approved in replacing PS glasses PP Replacing PShigh speed BOPP production lines. 31
  32. 32. PP Developments: Customer Partnership Replacing steel in washing machine Partnership in new developments packaging developments 32
  33. 33. Resins Capacity in the Americas Capacity of resins in Latin America, kton 3,561 Brazilian assets 1,895 722 692 521 438 Braskem* Quattor**Mexichem Dow Solvay Ecopetrol Capacity of resins in Americas, kton 5,416 PVC 40 PP 400 PE 4,706 3,561 2.902 2,237 526 1,040 2,895 4,976 1,092 2,469 2,340 815 810 1,995 995 1,085 Dow Lyondell Braskem Formosa Ineos Shintech Basell 3 3 * Includes Petroquimica Triunfo s plant ´ **JV between Unipar (60%) and Petrobras (40%). The production is segregated between 1,020 kt in PE and 875 kt in PP Source: CMAI 33
  34. 34. World indicative ethylene cash costsSource: CMAI 34
  35. 35. Financial highlights Change Change Change Main Economic 2Q09 1Q09 2Q08 1H09 1H08 % % % Indicators (A) (B) ( C) (D) (E) (D)/(E) (A)/(B) (A)/( C) Net Revenue 3,688 3,260 4,628 13 (20) 6,948 9,175 (24) EBITDA 566 457 557 24 2 1,023 1,183 (14) EBITDA Margin 15.3% 14.0% 12.0% 1.3 p.p. 3.3 p.p. 14.7% 12.9% 1.8 p.p. Net Financial Result 1,192 (208) 386 - - 984 167 490 Net Income / Loss 1,156 10 404 - - 1,166 500 133Source: Braskem 35
  36. 36. Revenues breakdown – 2Q09 Net Revenue by Product 1 (2Q09) Others 10% ETBE/MTBE 4% Caustic Soda 3% Solvents 1% Butadiene 2% Fuel 4% Resins 57% BTX * 9% Propylene 5% Ethylene 4% 1 Does not include condensate processing and Ipiranga Quím ica sales 2 BTX - Benzene, Toluene, Ortoxylene and Paraxylene 36
  37. 37. COGS breakdown – 2Q09 1 COGS 2Q09 Fuel 1,6% Others 1,7% Natural Gas 1,3% Services 2,9% Naphtha / Eletric Energy Condensate 6,3% 67,3% Labor 4,6% Deprec / Am ort 6,9% Other Variable Costs 7,3% 1 Does not include condensate processing and costs of Ipiranga Quím ica sales 37
  38. 38. Capacity utilization rates at normal levels Utilization Rate % ETHYLENE PE PP PVC 93% 92% 99% 89% 88% 92% 74% 73% 74% 73% 70% 76% 2Q08 1Q09 2Q09 2Q08 1Q09 2Q09 2Q08 1Q09 2Q09 2Q08 1Q09 2Q09 Resins Production Basic Petrochemicals Kton Production* Kton 1,134 807 870 874 656 636 +30% +27 2Q08 1Q09 2Q09 2Q08 1Q09 2Q09 * Ethylene, Propylene and BTXSource: Braskem 38
  39. 39. Outstanding Bonds & Outstanding Ratings Coupon Yield *Outstanding Bonds Maturity (% p.a.) (% p.a.)US$250 MM Jan/2014 11.750 5.5US$250 MM Jun/2015 9.375 5.9US$275 MM Jan/2017 8.000 6.8US$500 MM Jun/2018 7.250 7.0US$150 MM Perpetual 9.750 9.5US$200 MM Perpetual 9.000 8.8 * As of September, 29th Corporate Credit Rating – Global Scale Agency Rating Outlook Fitch Ratings BB+ Stable S&P BB+ Stable Moody’s Ba1 StableSource: Braskem / Bloomberg 39
  40. 40. Covenants RATIO Net Debt / Ebitda (x) Net Debt / EBITDA US$ R$ 3.25 < 4.5X 3.16 Jun09 Jun09 Facility Amount Currency Type 2010 and 2011 Debentures R$800 MM R$ Incurrence* 2014 Medium Term Notes US$250 MM R$ Incurrence* Nippon Export and US$80 MM US$ Maintenance Investment Insurance EPP (Export Pre-Payment) US$725 MM US$ Maintenance * The company is prevented from issuing any new debt for the period if it overcomes the 4.5x Net debt / Ebitda ratio.Source: Braskem 40
  41. 41. Focus on priority investment projects R$ million 2,279 Investments in Equity Stake 885 (Ipiranga Group/Politeno) Capacity increases / 195 Petroquímica Paulínia 909 238 Equipment Replacement Health, Safety and Environment 172 Capacity increases / Green PE 161 91 Technology Equipment Replacement 213 202 Productivity Health, Safety and Environment 203 14 Technology 407 Maintenance 74 Productivity 55 Information System 233 Maintenance / Others 45 Quality / Others 2008 2009eSource: Braskem 41

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