apresentação conferência latin energy 2005 (inglês)

Latin Energy 2005 Latin Energy 2005

December 2005 December 2005

Forwardlooking statements

This presentation contains forwardlooking statements. Such statements are not statements of historical facts, and reflect the beliefs and expectations of Braskem’s management. The words “anticipates”, “wishes”, “expects”, “estimates”, “intends”, “forecasts”, “plans”, “predicts”, “projects”, “targets” and similar words are intended to identify these statements. Although Braskem believes that expectations and assumptions reflected in the forwardlooking statements are reasonable based on information currently available to Braskem’s management, Braskem cannot guarantee future results or events.

Forwardlooking statements included in this presentation speak only as of the date on which they are made (September 30, 2005), and the Company does not undertake any obligation to update them in light of new information or future developments.

Braskem shall not be responsible for any transaction or investment decisions that are taken based on information included in this presentation.

A more ambitious strategic goal

To rank amongst the TOP 10 global petrochemical

companies To become Latin America’s leader in thermoplastic resins

R$ 350 million per year in recurring synergies already captured

R$ million

240

Jun/03

260

Sep/03

285

Dec/03

208

Mar/03

310

Mar/04

330 (2004)

Target

350

Dec/04

Strong platform for growth

1. Braskem’s affiliates: a) Braskem jointly controls Copesul with the Ipiranga Group b) Braskem owns 33.9% of Politeno´s total capital

2. Jointly owned by Suzano, Unipar, Petroquisa e BNDES

Source: CMAI and Braskem Source: CMAI and Braskem – – 2005 (year 2005 (year end confirmed capacities) end confirmed capacities)

Largest production scale in the region: cost competitiveness 5.8 million tons in total annual capacity of petrochemical and chemical products

Thousand tons / year

Ethylene

PVC

PE

PP

828

610

1,438

Dow

1,135

Copesul 1

520

540

1,060

Rio Polímeros 2

520 150

670

Ipiranga

500

130 630

Unipar

85

476

561

Solvay

350

Politeno 1

1,280

870

580

525

3,255

Braskem

625

Suzano


19% 38%

19% 24%

7%

55%

38%

20%

32%

48%

30%

36%

34%

BRASKEM IMPORTS OTHERS

COPESUL POLITENO

Leading market shares in Brazil 2004 Polyethylene (PE)

Polypropylene (PP)

PVC

Ethylene*

Source: Braskem and Source: Braskem and ABIQUIM ABIQUIM 2004 2004

( * ) Based on production capacity


High capacity utilization rates Reflecting sound operational performance

Source: Braskem

PP

PE PVC

3Q05 3Q04

96% 95%

3Q05 3Q04 3Q05 3Q04

97% 95%

95% 96%

Improvements over 9M04

Thermoplastic Resins Thermoplastic Resins Production Production (ton) (ton)

+ 4.2%

Thermoplastic Resins Thermoplastic Resins Sales Sales (ton) (ton)

+10.4%

Capacity utilization rate Improvements over 3Q04

Thermoplastic Resins Thermoplastic Resins Production Production (ton) (ton)

+ 10.2%

Thermoplastic Resins Thermoplastic Resins Sales Sales (ton) (ton)

+8.3%

4 An 18% increase in sales of thermoplastic resins compared to 2Q05, and an 8% rise in 9M05

Source: Braskem

(1) Consolidates sales in the domestic and export markets, including the Southern Cone.

Sales – Main Products (1)

5%

2Q05 (B)

3Q04 (C)

9M05 (D)

9M04 (E)

Chg (A)/ (C)

Chg (D)/ (E)

Ethylene

Thermoplastic Resins

PP

PE

PVC

10%

14%

8%

10%

305 297

Thousand Tons

130 117

195 180

116 115

441 412

804 879

354 396

539 594

332 337

1,226 1,327

9%

8%

12%

10%

2%

3Q05 (A)

291

149

210

127

486

2%

Chg (A)/ (B)

18%

27%

17%

11%

Sales: Good performance amidst a challenging scenario Reflecting Braskem’s strategic flexibility

P&L SummaryResults reflect strength of Braskem’s business model

Source: Braskem

3Q05 (A)

3Q04 (B)

Net Revenue R$ MM 2,798 3,362

EBITDA 353 744

EBITDA Margin 12.6 22.1

Net Financial Result (116) (35)

Equity Income

Net Income 48 496

9M05 (C)

9M04 (D)

8,759 8,246

1,610 1,888

18.4% 22.9%

(223) (1,121)

681 204

Income Statement

R$ MM

%

R$ MM

R$ MM

R$ MM

Chg. %

(A)/ (B)

17%

Chg. %

(C)/ (D)

6%

53%

9.5p.p.

231%

15%

4.5p.p.

80%

234%

49 61 84 37% 5 90%

90%

4 An 18% increase in naphtha costs and a 5.5% appreciation in the Brazilian real, compared to 2Q05, have impacted Braskem’s operational performance

570

(49)

(79)

(96) 23

(16) 353

Analysis of Operational Performance Main factors impacting Ebitda – 3Q05 x 2Q05

EBITDA

2Q05 Prices Raw

Materials Exchange Rate

Volume Others EBITDA

3Q05

R$ Million

Braskem in Numbers 9M05 key indicators

+8%

Gross Revenue (R$ million)

11,464 10,595

9M04 9M05

612 739

Exports (US$ million)

9M04 9M05

+21%

EBITDA (R$ million)

15% 1,888 1,610

9M04 9M05

Net Debt/EBITDA (LTM*)

1.52

Sep 2005

1.37

10%

*LTM – last twelve months

Dec 2004

Net Income (R$ million)

681

9M04

204

9M05

+234%

3,512 +27%

2,770

9M04 9M05

Gross Profit (US$ million)

714

+9%

656

9M04 9M05

EBITDA (US$ million)

639

+1%

633

9M04 9M05

Net Profit (US$ million)

273

+297%

69

9M04 9M05

Braskem in Numbers (in US$) 9M05 key indicators

Net Revenue (US$ million)

Debt Profile Average maturity of ~ 10 years and a reduction in foreign exchange exposure

Amortization Agenda

11%

2006

25%

16% 8%

2007 2009 2010 to 2014

20%

Oct to Dec/ 2005

7%

Sep/05 Cash and

Cash Equivalents

817 817 556 556 321 321 433 433 1,008 1,008

2008

550 (R$) 550 (R$)

1,424 (US$) 1,424 (US$)

Average Maturity: 9.8 years

Subordinated debentures with payment of interest and principal scheduled for July 2007, fully subscribed by the controlling shareholder.

285 (US$) 285 (US$)

2016 onwards

7%

337 337

931

1,974

61 (R$) 61 (R$)

341 341

2015

7%

Trade Finance

44%

TJLP 25%

CDI 18%

Fixed 1%

US$ 56%

44%

12%

Structured Operations

12%

Government 14%

Debentures 19%

Working Capital

1%

Capital Markets 54%

4 Debt Profile (Base: 09/30/2005)

R$ million

Gross Gross Debt Debt: : 5,090 5,090

Cash Cash Balance: Balance: 1,974 1,974

Net Net Debt Debt: : 3,115 3,115

High Standards of Corporate Governance

4 A Level 1 Company in BOVESPA since February 13th, 2003

4 Commitment to move up to BOVESPA’s Level 2, in 2005

4 100% tagalong rights in case of transfer of control for all shareholders and all classes of shares

4 Code of Conduct: sets values, principles and practices governing corporate behavior

4 Preestablished corporate policies: – Trading of securities – Financial management – Insurance and Guarantees – Health, Safety and Environment

4 Compliance with SOx by Dec 2005

Strong Platform for Growth

Strong Platform for Growth

5 5

R$ 350 million per year in recurring synergies, already captured


R$ million

240

Jun/03

260

Sep/03

285

Dec/03

208

Mar/03

310

Mar/04

330

(2 004 )

Target

350

Dec/04

Braskem Business System Braskem Business System

New steps in the value creation process

Synergies

A WorldClass Company

New Level of Competitiveness

+ Simplification +Standardization + Integration + Control / Compliance: SOX

New Integrated Management System

Technology and Innovation

Business Competitiveness Significant Acceleration in Capturing Productivity Gains

On annualized and recurring basis

Results achieved by 9M05 (R$ million/year)

Achieved 3Q05

Target 3Q05

235

159

R$ 235 million in productivity gains reached by 9M05

+ 48%

Target 2005

170

360

420

Target 2006

Target 2007

4 110 employees allocated to the project

4 Investment of R$ 130 million

4 Implementation by October 2006

4 NPV of R$ 260 million

Project : a new integrated management system encompassing all

business processes

New steps in the value creation process

Outlook for the Petrochemical Industry

4 Increasing prices for thermoplastic resins;

4 The global economy is less sensitive to oil prices and

the recent price hike is more mild than in the late

70’s – a new “Oil Crisis” is not the most likely

scenario;

4 World supply and demand balance for thermoplastic

resins favors high capacity utilization rates.

International Scenario International Scenario

4 Installed capacity utilization rate should remain

above 90%;

4 Sales volumes in the domestic market are picking up,

as well as prices;

4 Interest rates in a downward trend.

Domestic Scenario Domestic Scenario

4 Raw material prices (oil and naphtha) ought to persist

in high plateaus and with high volatility;

4 PE and PP prices are expected to peak in 2006;

4 Margins should improve in 4Q05 through 2006, both

locally and globally.

Outlook Outlook

Source: CMAI / Braskem

SOURCE: Merrill Lynch (ML), Aug 2005

Total 20062007 = 2 million tons Total 20062009 = 4.4 million tons

ML Estimates

4,400 2,000

55%

Previous Consensus

China China´ ´s s high import needs high import needs continue through 2009 continue through 2009 (12 to 14 million tons) (12 to 14 million tons)

Expected growth in global Expected growth in global capacity below demand capacity below demand

through 2007 through 2007

55% reduction in new 55% reduction in new estimates for estimates for I ran Iran´ ´s s capacity capacity additions in 2006 and 2007 additions in 2006 and 2007

New outlook for capacity New outlook for capacity additions in Iran additions in Iran

New outlook for global supply of Ethylene (2006 – 2009)

900

1100

1400

900

2006 2007 2008 2009

0

1

2

3

4

5

6

7

8

2006 2007 2008 2009 87

88

89

90

91

92

93

94

95

Capacity Growth (%) Utilization (%)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

2006 2007 2008 2009 0 10 20 30 40 50 60 70 80 90 100

Import needs (Mn ton) SelfSufficiency (%)

Growth in global capacity, by region

0

2,000

4,000

6,000

8,000

10,000

12,000

2006 2007 2008 2009

America Europe Middle East & Africa Asia / Pacific


Strength in Prices and Margins (2006 – 2009)

PE PE PRICES ABOVE US$900/ TON PRICES ABOVE US$900/ TON SPREADS ABOVE US$600/ TON SPREADS ABOVE US$600/ TON

PP PP PRICES ABOVE US$900/ TON PRICES ABOVE US$900/ TON SPREADS ABOVE US$600/ TON SPREADS ABOVE US$600/ TON

1,011 1,051

1,104 1,024 992

672 755

675 586

640

2005 2006 2007 2008 2009

PE Pric

es and

Spread

PE (US$/MT)

SPREAD PE (US$/MT)

956 1,064 1,034 1,016 1,033

604 681 667 658 639

2005 2006 2007 2008 2009 PP

Pric

es and

Spread

PP (US$/MT)

SPREAD PP (US$/MT)


PVC PVC PRICES ABOVE US$600/ t PRICES ABOVE US$600/ t SPREADS ABOVE US$300/ t SPREADS ABOVE US$300/ t

COSTS COSTS NAPHTA BELOW US$400/ TON NAPHTA BELOW US$400/ TON OIL ALMOST US$40/ BBL OIL ALMOST US$40/ BBL

Strength in Prices and Margins (2006 – 2009)

685 765

850 840 800

333 375

464 501

413

2005 2006 2007 2008 2009

PVC Pric

es and

Spread

PVC (US$/MT)

SPREAD PVC (US$/MT)

352 352 349 376 425

37 50 42 37 37

2005 2006 2007 2008 2009

Nap

htha and

Oil Pric

e

NAPHTHA (US$/MT)

OIL (US$/bbl)


Jan04

Feb04

Mar04

Apr04

May04

Jun04

Jul0

4

Aug

04

Sep

04

Oct04

Nov

04

Dec04

Jan05

Feb05

Mar05

Apr05

May05

Jun05

Jul0

5

Aug

05

Sep

05

Oct05

Nov

05

Dec05

Norm

alized

HDPE Prices

HDPE CMAI HDPE Braskem (domestic market)

ü Domestic Sales Evolution (Normalized)

ü Price Increases 4 October over September => 7%

4 October over 3Q05 => 8%

ü 10% price increase announcement, starting November 15th

Short‐term Evolution and Perspectives for the Resins Market Prices and Volumes in recovery

Source: CMAI (11/03/05)

PE Prices ‐ Asia SPOT US$/Metric ton

PE Prices PE Prices ‐ ‐ Braskem and International Braskem and International – – Normalized Normalized

17%

Spread between Braskem’s and international prices

CMAI Estimates

100%

136%

142%

112%

158%

Braskem Braskem’ ’s Actions for PE s Actions for PE

+ 12%

+ 30%

1T05 2T05 3T05

100 86

112

Jan04

Feb

04

Mar04

Apr04

May04

Jun04

Jul0

4

Aug

04

Sep

04

Oct04

Nov04

Dec04

Jan05

Feb

05

Mar05

Apr05

May05

Jun05

Jul0

5

Aug

05

Sep

05

Oct05

Nov05

Dec05

Normalized

PP Prices

PP CMAI PP Braskem (domestic market)





1T05 2T05 3T05

24%

100%

154%

164%

126%

191% + 4%

+ 14%

100 91

104



PP Prices ‐ Asia SPOT US$/Metric ton

PP Prices PP Prices ‐ ‐ Braskem and International Braskem and International – – Normalized Normalized Braskem Braskem’ ’s Actions for PP s Actions for PP

CMAI Estimates


Jan04

Feb04

Mar04

Apr04

May04

Jun04

Jul04

Aug

04

Sep04

Oct04

Nov04

Dec04

Jan05

Feb05

Mar05

Apr05

May05

Jun05

Jul05

Aug

05

Sep05

Oct05

Nov05

Dec05

Normalized PVC Pric

es

PVC CMAI PVC Braskem (domestic market)





24%

100% 98%

102% 105%

121%

+ 29%

+ 21%

1T05 2T05 3T05

100 106

129



PVC Prices ‐ Asia SPOT US$/Metric ton

PVC Prices PVC Prices ‐ ‐ Braskem and International Braskem and International – – Normalized Normalized Braskem Braskem’ ’s Actions for PVC s Actions for PVC

CMAI Estimates


Braskem: Growth with value creation

Strengthen market leadership in Brazil through consolidation in the local market, capturing synergies

Expand production and sales outside of South America, capturing value and creating a growth platform for the future

Organic Growth Organic Growth

Selective Growth Selective Growth Enhancement of the Enhancement of the Aromatics Chain Aromatics Chain

Internationalization Internationalization

Value Creation

Consolidate market position in key products in Latin America and guarantee competitive sources of raw material

Leverage aromatics production chain by broadening its portfolio of products and services in the local market

1,601

1993

2,293

1996

3,107

2000

3,419

2004

8.0% CAGR*

Tons (000)

Organic Growth

Overall Market Consumption (Polyethylene, Polypropylene and PVC)

* Compounded Annual Growth Rate

Source Source: : The The Brazilian Brazilian Association Association of of Chemical Chemical and and Derivative Derivative Products Products (ABIQUIM) (ABIQUIM) and and Braskem Braskem

Brazil: a growing and dynamic market for thermoplastic resins…

Elasticity: 3.0x GDP growth

Organic Growth

PerCapita Thermoplastics Consumption – 2004

Polypropylene Polyethylene PVC

kg / person

Source Source: : Chemical Chemical Market Market Associates Associates, Inc. (CMAI) , Inc. (CMAI) and and Braskem / 2004 Braskem / 2004

14.2

3.7

21.3

5.4 7.5

32.0

45.2

9.8

5.6

22.8 20.4

5.9

…and strong potential for growth...

USA

Europe

Brazil

China

The Petroquisa Option Potential for relevant synergies and future cash flow impact

Braskem has 29.5% of Copesul’s capital and jointly controls it along with the Ipiranga Group

Designated assets & respective ownership interests

From 10% To 30%

Assets Listed Assets Listed 09/ 29/ 2005

Option Deadline Option Deadline 03/ 31/ 2006

Assets Valuation: Discounted Cash Flow Assets Valuation: Discounted Cash Flow

POTENTIAL VOTING CAPITAL INCREASE:

15.6%

85.0%

40.0%

Capacity Expansions Capacity Expansions

4 Polyethylene (already operational)

4 Investment : R$ 7.3 Million;

4 Additional Capacity: + 30 kton / year (+3.5%);

4 IRR : 150%;

4 Location : Camaçari, Bahia

4 Polyethylene (1Q06)

4 Investment : R$ 9.9 Million;

4 Additional Capacity : + 30 kton / year (+3.5%);

4 IRR : 58%;


4 PVC (November 05)

4 Investment : US$ 28 Million;

4 Additional Capacity : + 50 kton / year (+10.5%);

4 IRR : 33%;

4 Location : Marechal Deodoro, Alagoas

4 Isoprene (November 06)

4 Investment : US$ 29 Million;

4 Additional Capacity : + 9 kton / year (+50%);

4 IRR : 49%;


Bahia Bahia

Alagoas Alagoas

Organic Growth: Capacity increases (DBN´s) Investments with high rates of return

Selective Growth Access to raw materials at competitive costs

Paulínia Paulínia

Paulínia Project: becoming the #1 Polypropylene player in the region

4 4 Joint Venture with Joint Venture with Petroquisa Petroquisa: : – – 60% Braskem 60% Braskem – – 40% 40% Petrobras Petrobras

4 4 350Kt PP annual production capacity 350Kt PP annual production capacity 4 4 US$ 240 mm investment US$ 240 mm investment 4 4 Polymer Polymer – – Grade Propylene supplied by Grade Propylene supplied by

Petrobras Petrobras 4 4 Start up Start up – – end 2007 / beginning 2008 end 2007 / beginning 2008

Brazil / Bolivia Brazil / Bolivia

Venezuela

4 4 PP: Venezuela: 400 PP: Venezuela: 400 kt kt in partnership with in partnership with Pequiven Pequiven* *

4 4 PE: Brazil PE: Brazil‐ ‐Bolivia complex: 600 Bolivia complex: 600 kt kt (2009) * (2009) *

New greenfield capacities based on competitive raw materials with high rates of return

* To be presented to Braskem´s Board of Directors

Enhancement of the Aromatics Chain

4 Paraxylene capacity increase, combined with a potential downstream integration to produce PTA

4 Start ETBE production as an alternative to MTBE

4 Isoprene debottlenecking

4 Butadiene profitability enhancement

Opportunities for Value Creation from aromatics, fuels and byproducts

Internationalization

4 Agreement with Basell for the development of processes and products related to the spherilene (PE) technology

4 Technology licensing for Petroquímica Paulínia

4 Development of new products and services – 10% of 2004 revenues from sales of new products developed in the previous 2 years

4 A pioneer in nanocomposite research in Latin America: – Focus on cost reduction and performance improvement for thermoplastic resins

Product and Process Technology

Internationalization

Evolution of Exports

Strategic presence in international markets

US$ million

2002 2003 2004 2005

301

617 710

~1 Bi *

739

* Annualizing 9M05 exports

9M05

Destination of Exports – 9M05

North America 49%

Europe 19%

South America 19%

Row 13%

ü 5.5

ü 5.0

ü 4.5

ü 4.0

Braskem Stocks Potential for future upside, stock heavily discounted

Source: Smith Barney (11/04/2005)

* Assumes the current capital structure as constant

EV/ EBITDA Multiples EV/ EBITDA Multiples – – 2006 2006 Upside Potential Upside Potential

Upside*

+ 53%

+ 39%

+ 25%

+ 11%

EV / EBITDA

Braskem

3.6 3.6 4.4

Lyondell Chemical

4.4

Lyondell Chemical

4.7

Eastman Chemical

4.7

Eastman Chemical

5.1

Nova Chemicals

5.1

Nova Chemicals

5.4

Sasol Ltd.

5.4

Sasol Ltd.

5.6

Dow Chemical

5.6

Dow Chemical

4 Market leadership in the region

4 Consistent operational performance

4 Solid financial structure

4 Ongoing competitive improvements: and

4 Structural market growth opportunities in the region

4 Consolidation in the Brazilian Petrochemical Industry: an opportunity for value creation

4 Greenfield projects in the region based upon access to competitive raw materials

4 Technology autonomy to pursue internationalization

A unique investment opportunity

High High Standards of Corporate Standards of Corporate Governance Governance

Latin Energy 2005 Latin Energy 2005

December 2005 December 2005