1. BOVESPA Presentation
February 13, 2003
A World Class Brazilian Petrochemical Company
A World Class Brazilian Petrochemical Company
José Carlos Grubisich
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2. Disclaimer – forward looking statements
This presentation includes forward looking statements. Such information is
not merely based on historical fact but also reflects management’s
objectives and expectations. The words "anticipate", “wish", "expect",
“foresee", “intend", "plan", "predict", “forecast", “aim" and similar words,
written and/or spoken, are intended to identify affirmations which,
necessarily, involve known and unknown risks.
Known risks include uncertainties which include, but are not limited to price
and product competition, market acceptance of products, the actions of
competitors, regulatory approval, currency type and fluctuations, regularity
in the sourcing of raw materials and in operations, among others. This
presentation is based on events up to February 13, 2003 and Braskem is not
liable to update the contents in the light of new information and/or future
events.
Braskem takes no responsibility for transactions or investment decisions
made on the basis of information contained in this presentation.
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3. Braskem: Overview
- Overview of the Braskem Project;
- Thermoplastics in Brazil;
- Petrochemical Industry Situation;
- Cash Flow and Debt Reduction.
José Carlos Grubisich - CEO
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4. Braskem’s Commitment with the Market:
! Corporate Governance
! New Bylaws
! 100% tag-along for all shareholders
! New Conduct Code
! Level 1 - Bovespa
! Disclosure Policy directed to the Market
! Stock Trading Policy
! Timetable of 2003 Events has already been set up
! Tender Offer - Nitrocarbono
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5. Braskem: 181 days later ...
29.5% 29.5% 35.0% 30.9%
!
! Braskem: fully integrated operations;
Braskem: fully integrated operations;
% voting capital - % total capital !
! Nitrocarbono’s tender offer of common
Nitrocarbono’s tender offer of common
stocks;
stocks;
Note: Apart from the assets shown above,
Note: Apart from the assets shown above,
Braskem holds the assets formerly ! Merger of OPP expected to take place by
! Merger of OPP expected to take place by
Braskem holds the assets formerly
belonging to Copene
belonging to Copene the end of the first quarter;
the end of the first quarter;
! Trikem/Polialden: studies are in course.
! Trikem/Polialden: studies are in course.
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6. Braskem – The leading petrochemical company in
Latin America:
13 modern and competitive plants:
Alagoas PVC
PVC
Camaçari
Chlorine Soda
Chlorine Soda
São Paulo HDPE
HDPE
LLDPE
LLDPE
Petrochemical Aratu
Aratu
Petrochemical
Caprolactam
Caprolactam Port
Port
Triunfo Complex
Complex
Terminal
Terminal
Assets with a replacement LDPE
LDPE
value of ~ US$ 4.5 billion,
excluding investments in Petrochemical
Petrochemical
Copesul and Politeno Complex
Complex HDPE
HDPE PP
PP
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7. Braskem – A “Catalyst” in the Petrochemical Sector:
A World Class Brazilian Petrochemical Company
! The creation of Braskem reiterates the advantages to the Brazilian
petrochemical sector of an integrated business model, with competitive
scale;
! Braskem established a new strategic dynamics in the sector, intensifying
competition in the domestic market, which will benefit customers in the
petrochemical chain;
! The Braskem project has brought forth the need for greater investments in
output expansion, quality and productivity, which will also contribute to
boost competitiveness of Brazilian petrochemical products both
domestically and abroad.
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8. Braskem – An attractive market for its core business:
Thermoplastics
3,500
(PE,PP e PVC) 6%
3,200
CAGR*= 8% 3,102
3,014
3,000 2,829
2,653
2,529
2,500
2,276
2,135
Thousands of tons
2,000 1,811
1,596
1,500 1,313 1,419
1,274
1,000
500
0
‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02
* CAGR - Compound Annual Growth Rate
Source: Abiquim, 2002
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9. Thermoplastics in Brazil – Elasticity has remained high:
Annual growth rate – Brazil
% (1990 through 2002)
15
Thermoplastics’ CAGR*is
3.7 greater than GDP 11.7
10
7.7
6.5 6.1
PP
PP
5
TP
TP
(thermoplastics) PE’s
PE’s PVC
2.1 PVC
GDP
GDP
0
1990 - 2002
Source: Abiquim, 2002 CAGR * - Compound annual growth rate
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10. Thermoplastics in Brazil - Potential growth:
Per Capita Consumption of Thermoplastics
60
Intensification in the use of plastics:
replacement of traditional products USA
47
Korea
45
Eastern
Europe
Consumption (kg/inhabitant)
Brazil
33 31
30 Mexico
China
22 23
16 20 20
15
15
8 9
4.5
2.7
4 3.7 5 5
2.8
0
PVC Polypropylene Polyethylene
10 Source: ABIQUIM / CMAI 2001

11. Braskem – Net Debt Reduction (2001/2002):
US$ MM Initial Net Debt
2,500
REDUCTION FACTORS
Final Net Debt
2,250 2,216 ! Strong Cash Generation in 2002;
2,000
! Efficiency in the working capital
1,773
1,750 management efficiency;
1,500 ∆ = US$ 443 MM ! Synergies stemming from the
1,250 integration process.
1,000
Dec/01* Dec/02*
Net Debt/GOC** = 4.50 Net Debt/GOC** = 2.40
* Unaudited
** Average FX rate in the period
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12. Braskem – Short-term Debt Reduction (Set – Dec/02):
Short-term maturities
In R$ MM
Cash Flow in 2002 (estimated)
> R$ 2 billion
Base Sep - 02 Base Dec - 02
3,361
2,583
∆ = 778 Braskem’s Net Debt
30/Sep/2002 31/Dec/2002
R$ 7,698 MM R$ 6,913 MM (*)
Sep/02-Sep/03
- Dec/02-Dec/03*
R$ USD
* Unaudited
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13. Braskem : An excellent investment opportunity !
! Leading thermoplastics producer in Latin America
! Integrated operations enable synergies to be captured
! Consolidated businesses and superior margins, with
adjustment of capital structure already under way;
! Bovespa’s Level 1 corporate governance classification; will
qualify for Level 2 in 2 years
! Adoption of 100% “tag along” rights for all shareholders
! High potential for creation of shareholder value
A world class Brazilian Petrochemical Company
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14. BOVESPA Presentation
February 13, 2003
A World Class Brazilian Petrochemical Company
A World Class Brazilian Petrochemical Company
José Carlos Grubisich
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