Meeting with Investors. IR Braskem July 2016

Transcription

1 Meeting with Investors IR Braskem July

2 Disclaimer on forward-looking statements This presentation includes forward-looking statements. These forward-looking statements are not solely historical data, but rather reflect the targets and expectations of Braskem s management. The terms anticipate, believe, expect, foresee, intend, plan, estimate, project, aim and similar terms are used to indicate forward-looking statements. Although we believe these forward-looking statements are based on reasonable assumptions, they are subject to various risks and uncertainties and are prepared using the information currently available to Braskem. This presentation was up-to-date as of March 31, 2016, and Braskem does not assume any obligation to update it in light of new information or future developments. Braskem assumes no liability for transactions or investment decisions taken based on the information in this presentation. 2

3 Braskem Overview Strategy 3

4 Braskem Leading presence in the Brazilian market: only integrated petrochemical company in 1st and 2nd generation Key player of thermoplastic resins (PE+PP+PVC) in the Americas (PE+PP+PVC) Largest PP producer in USA Activities divided into 6 segments: 1) UNIB (1 st generation): 3.9 MM ton Ethylene / 1.5 MM ton propylene 2) UNPOL (PE and PP): 3.0 MM ton PE / 1.8 MM ton PP 3) Vinyls (PVC and chlor-alkali): 710 kt PVC / 539 kt Soda 4) quantiq (chemicals distribution): more than 1,500 products 5) USA and Europe (PP): 2.0 MM ton PP 6) Mexico Summary 2015: Net revenue: R$47.3 billion / US$14.3 billion EBITDA: R$9.4 billion / US$2.8 billion EBITDA margin: 19.8% Gross debt: R$28.4 billion / US$7.3 billion Cash: R$7.4 billion / US$1.8 billion Net debt: R$21.1 bi / US$5.4 bilion Leverage (net debt/ebitda): 2.23x (R$) / 1.91x (US$) 29 units in Brasil, 5 in EUA, 2 in Germany and 4 in Mexico: 3 PP Texas Naphtha, gas and hybrid crackers Petrobras is the only supplier in Brazil (~70% naphtha and 100% gas) Listed in 3 stock exchanges: BM&FBovespa, NYSE and Latibex - 100% tag along Investment Grade by S&P e Fitch 1 naphtha cracker 4 PE 1 PP 1 PVC 1 chlor-alkali 1 naphtha cracker 1 ethanol cracker 5 PE 2 PP 1 PP W.Virginia 1 PP Pennsylvania 1 gas cracker 3 PE 2 PVC 1 chlor-alkali 1 gas cracker 1 PP 1 PE 1 hybrid cracker 2 PP 3 PE Industrial assets 2 PP (Wesseling and Schkopau) 4

5 Braskem Consistent trajectory of organic growth, acquisitions and delivery of results Leadership in Brazil Leadership in the Americas Going Global Capacity (kton/year) Braskem (Aug, 2002) New Paulinia Plant Shutdown PVC SP Sunoco PP Plants Dow PP Plants New PVC Plant DBNs Bahia and Seadrift Mexico Project Green Ethylene DBNs PP/PVC Ethylene Resins Ethylene EBITDA¹ (US$ million) 1 Pro-forma figures for 2009: Quattor+Braskem America CAGR: 15% Market Cap (US$ bi) Source: Abiquim, Braskem 5

6 Ownership Structure Odebrecht and Petrobras are Braskem s main shareholders ¹Include shares held in treasury Total common shares = 451,668,652 Total class A preferred shares = 345,002,978 Total class B preferred shares = 593,618 Total Shares = 797,265,248 Odebrecht and Petrobras corporate relations regarding Braskem are regulated by a Shareholders Agreement Odebrecht appoints Braskem s Chairman of the Board, while Petrobras appoints its Vice Chairman The name to be considered by the Board for the position of Braskem s CEO is submitted by Odebrecht Braskem s CFO shall be chosen by the CEO from among the members of a list presented by Odebrecht Braskem s Board of Directors is composed of 11 members, 6 of which are considered Independent Directors For the current Board, 7 of the members were appointed by Odebrecht, while Petrobras nominated 4 Directors Source: Shareholders Agreement of Braskem S.A., BM&FBOVESPA Data retrieved in 03/31/2016 6

7 Brazil International Expansion Strategy Growth Drivers Potential of Value Creation: Americas axis Main Drivers Access to competitive feedstock; Supply the regional market; Geographical Diversification; Growth opportunities in PP in the US. Add value to the existing streams; Promote the plastic chain development; Expansion with future feedstock availability; Export the surplus of the Company s production, supported by its global presence; Feedstock diversification. 7

8 Natural Hedge: US dollar linked cash flow leads to a net debt ~75% dollar-pegged Braskem prices follow the international market: 100% of Revenues is linked to dollar as well as approximately 80% of Costs¹ 100 Basis: 1Q08 Partially dollarpegged Braskem Financial Policy Considering that operating cash flow is strongly correlated to the U.S. dollar: Totally dollarpegged Short Term: The maintenance of minimum cash or hedge in U.S. dollar should be sufficient to cover (i) the operating exposure (operating cash flow) in U.S. dollar estimated for at least the next 6 months, and (ii) debt (principal and interest) in U.S. dollar maturing within the next 12 months. Long Term: Braskem must maintain a percentage of at least 50% of its net debt denominated in U.S. dollar. 8

9 Braskem s feedstock profile Diversification through competitive raw material Cracker Raw Material Profile Feedstock flexibility projects: The Company is investing R$380 million to enable the cracker in Bahia to use ethane for up to 15% of its feedstock; The project is scheduled to start operating in the second half of 2017; Braskem also signed a 10-year contract with an affiliate of Enterprise Products for the supply of ethane imported from the United States. Source: Braskem *considers 60% of Propylene for US Plants, 22% of Propylene for Europe Plants and 18% acquired from 3rd parties for Brazil Plants 9

10 Value Drivers Feedstock flexibility project in Bahia: The project includes investments of R$380 million to enable the cracker in Bahia to use ethane for up to 15% of its feedstock. The project also includes the retrofitting of the plant and adaptation of the port infrastructure, and is scheduled to start operating in the second half of Braskem also signed a 10-year contract with an affiliate of Enterprise Products for the supply of ethane imported from the United States at a price based on the Mont Belvieu international reference price. Cost-cutting program: Braskem launched a cost-cutting program in 2015, with 11 work fronts and over 200 Braskem Team Members engaged in identifying opportunities. These opportunities include improving processes and optimizing the scope and structure. With potential savings of R$400 million on a recurring basis, the cost-cutting program delivered an effective gain of R$67 million in the quarter. Since its implementation, the program has delivered an effective gain of R$176 million and a recurring gain of R$248 million. The expectation is for the program to attain a recurring gain of approximately R$315 million by yearend. 10

11 Value Drivers Mexico: As part of the gradual ramp-up of the petrochemical complex in Mexico that began in December with the utilities area, Braskem Idesa successfully completed the startup of the cracker on March 18 and the specification of ethylene on March 26. On April 6, the petrochemical complex reached another important milestone with the production of its first lot of PE after the startup of the first high-density polyethylene plant. On April 28, the second high-density polyethylene in the complex came online. The next step will be the startup of the third and last low-density polyethylene plant and the stabilization of operations. UTEC: The project includes investments of approximately US$35 million for the production of the ultra-high molecular weight polyethylene resin UTEC in La Porte, Texas. The plant in the United States will complement the production capacity of the existing UTEC line in Brazil at the petrochemical complex in Camaçari. Developed using 100% Brazilian technology, UTEC resin has applications across a wide range of industries, such as oil drilling and construction. The plant s startup is slated for the second half of Long-term propylene supply agreement with enterprise: Braskem signed a propylene supply agreement with Enterprise Products, which is building a propane dehydrogenation plant (PDH) in Texas with annual production capacity of 750 kton that is slated for startup in Under the 15-year agreement, Enterprise Products will supply sufficient propylene to meet approximately 16% of the needs of the United States and Europe unit, at a propylene price based on the international reference for propane. 11

12 Braskem 1Q16 Results 12

13 1Q16 Highlights Brazil: Demand for resins (PE, PP and PVC) amounted to 1.2 million tons in 1Q16, a growth of 8% from 4Q15. Compared to 1Q15, demand contracted 18%, reflecting the restocking trend in the plastics converters chain in that quarter. Braskem s crackers operated at an average capacity utilization rate of 89% in 1Q16, in line with 1Q15 and 6 p.p. higher than in 4Q15, reflecting the good operating performance in the Southern Complex and the normalization of operations at the São Paulo Complex. Braskem posted resins exports in the quarter of 415 kton, increasing 62% from 1Q15 and offsetting the contraction in the domestic market. Exports of key basic petrochemicals came to 262 kton, down 12% from 1Q15. EBITDA from the segments in Brazil reached R$ 2,165 million, accounting for 72% of consolidated EBITDA. USA, Europe and Mexico: In the United States and Europe unit, the PP plants operated at an average capacity utilization rate of 100%. Production at the units in the United States and Europe amounted to 499 kton in 1Q16, growing 8% from 1Q15. Sales amounted to 500 kton, growing 9% from 1Q15. EBITDA from international units reached R$855 million (US$219 million), accounting for 28% of consolidated EBITDA. Braskem Consolidated: Consolidated EBITDA in 1Q16 amounted to R$3,058 million, a growth of R$1,573 million or 106% in relation to 1Q15. Consolidated net income in the quarter came to R$747 million, with R$775 million attributed to shareholders, which corresponds to the net income of the Parent Company. Braskem s cash generation in the period enabled it to reduce its corporate leverage, as measured by the ratio of Net Debt to EBITDA in U.S. dollar, to 1.72 times, which is the lowest level of the last 10 years and 33% lower than in 1Q15. 13

14 Brazilian market of resins and Braskem Sales Brazilian Market of Thermoplastic Resins (kton) Braskem Sales of Thermoplastic Resins (kton) +8.1% -17.9% +3.9% -18.2% Demand for resins (PE, PP and PVC) amounted to 1.2 million tons in 1Q16, a growth of 8% from 4Q15. Compared to the same quarter in the last year, a period that was impacted by the restocking trend in the plastics converters chain, there was a decrease of 17.9%. In 1Q16, sales came to 780 kton, down 18% from 1Q15, in line with the contraction in the domestic market in the period. 14

15 Braskem s Operation Overseas Braskem Resins Exports (kton): + 62% 1Q16 = 415 kton 1Q15 = 256 kton Exports of PE, PP and PVC amounted 415 kton in the quarter, an increase of 62% compared to 1Q15, offsetting the decline of the domestic market. Sales USA and Europe (kton): 1Q15 = 460 kton + 9% 1Q16 = 500 kton International Units continue to bring significant results due to operational performance, high petrochemical margins and increase in PP demand driven by economic growth. International Units had sales in the quarter of 500 kton, representing an increase of 9% over the same period last year. 15

16 Braskem s Revenue Breakdown Greater exposure to international market *Exports of products made in Brazil 16

17 EBITDA 1Q16 vs 1Q15 R$ million Consolidated EBITDA in 1Q16 amounted to R$3,058 million, growing 106% over 1Q15. Main factors: Better spreads for basic petrochemicals and PP in the U.S. and Europe; Higher export volume for resins, minimizing lower volumes in the domestic market; Performance of the United States and Europe operations; and Average Brazilian real depreciation of 37%. In U.S. dollar, EBITDA amounted to US$780 million, increasing 54% compared to 1Q15. Avg. FX 1Q15: 2.86 R$/US$ Avg. FX 1Q16: 3.91 R$/US$ 17

18 Amortization schedule and debt profile Net Debt / EBITDA (US$) Diversified debts sources US$ million 1Q15 4Q15 1Q16 Net Debt ( ª ) 5,681 5,411 5,334 EBITDA (LTM) 2,210 2,808 3,080 Net Debt/EBITDA 2.55x 1.91x 1.72x (a) It does not include the financial structure of the Mexico project 18

19 Rating Corporate Credit Risk Agency Rating Perspective Date Global Scale S&P BBB- Negative 12/04/2015 Fitch BBB- Negative 05/10/2016 Moody s Ba1 Negative 02/25/2016 Braskem is investment grade by S&P and Fitch. In Feb/2016, Moody s downgraded Brazil s risk in 2 notches, which resulted in the revision of Braskem s rating and its downgrade in 1 notch. Despite of Brazil s downgraded by Fitch in May/16, Braskem was reaffirmed BBB-. The Company is classified above sovereign risk by the 3 rating agencies, due to its: Strong liquidity position; Solid cash generation; and Geographic diversification. 19

20 Capex 1Q16: most of the investments intended for the Mexico project and for operational investments. * In 2016, the Company plans to invest R$3,661 million, as follows: 49% (R$1,797 million) in operational investments, as follows: R$1.6 billion in Brazil (including disbursements for the scheduled maintenance shutdown of one of the lines at the cracker in Camaçari, Bahia in 4Q16); and US$48 million in the United States and Europe. 32% (US$329 million) in contributions to the Mexico project; and 15% (R$ 537 million) for other strategic projects, including: R$255 million in Brazil, of which R$144 million is for the feedstock flexibility project. US$69 million in the United States and Europe, including: (1) UTEC production in the United States; and (2) improving industrial productivity at the PP plants in the United States and Germany. Investments Million 1Q e Operational (R$) % 1,797 49% Brazil (R$) 186 1,595 United States and Europe (US$) 1 48 Mexico (R$) % 1,327 36% Mexico (US$) Strategic Projects (R$) 42 6% % Brazil (R$) United States and Europe (US$) Total (R$) % 3, % Brazil (R$) 191 1,850 Mexico, United States and Europe (US$) (*) Considers operational investments, maintenance shutdowns and spare parts of Braskem and its subsidiaries and contributions for the Mexico project. 20

21 Mexico Construction activities completed. * Power generation system online: 80 MW generated (100% of the capacity). Startup of the Cracker on March 18th with specified ethylene on March 26th. Startup of the operations of the HDPE I plant on April 6th with the production of the first batch of polyethylene. Startup of the operations of the HDPE II plant on April 28th. Pre Marketing activities finalized more than 200 kton sold with more than 350 local clients and marketing channels developed in Mexico. Braskem Idesa production already marketed in the Mexican market. 1 st export performed in April. Braskem s international commercial network in Latin America, U.S. and Europe will facilitate the exports of products from Mexico. 21

22 Braskem Brazil 22

23 Braskem Solid business model based on the competitive integration of the value chain 23 23

24 Basic Petrochemicals Unit 4 Petrochemical Complexes: Bahia, Rio Grande do Sul, Rio de Janeiro and São Paulo Total petrochemical production capacity of approx. 9.5 million 1 ton/year Triunfo, RS Total Net Revenue in 2015: R$14.5 billion, 31% of Braskem s Consolidated Net Revenue Direct Team Members: Camaçari, BA (1) Does not consider Green Ethylene production capacity 24

25 Commercial Profile - Value Chain % of Basic Petrochemicals Unit Revenue 50% Ethylene Propylene 2nd Generation (PE, PP, PVC) Basic Petrochemicals Ethylene Propylene MEG/EO/Styrene Cumene 45% Butadiene Isoprene PBR/SBR/EPDM SIS/IR Benzene Cumene/Styrene/LAB Paraxylene PTA/PET ETBE/MTBE Fuels Specialties 5% Tol./Xil./AB9 Specialties Solvents/Boosters PIB/RHC/Nonene/DCPD 25

26 Operational highlights Production Volume (1) and Ethylene Capacity Utilization Rate (2) 83% 89% 90% 86% 89% 7,950 3,119 8,150 3,330 8,360 3,373 8,190 3,238 8,450 3,357 Average cracker utilization rate of 89%, 3 p.p. higher than last year, with record production of basic petrochemicals; 4,831 4,820 4,987 4,952 5,093 The good operating performance is explained, mainly, by process improvements and investments made in recent years Ethylene Utilization Rate Ethylene Main Basic Petrochemicals (1) In thousand tons (2) Does not consider Green Ethylene 26

27 Exports Volume Main Basic Petrochemicals Exports (thousand tons) 964 1, % 1,370 1,441 1,477 The company presented record of main basic petrochemical exports, with the exports as alternative to the domestic market s retraction; Braskem s commercial structure overseas, developed in the last few years, has allowed fast repositioning

28 Basic Petrochemicals Unit Financials: Triunfo, RS 28

29 Polyolefins and Vinyls Unit Industrial Plants : Alagoas, Bahia, Rio Grande do Sul, Rio de Janeiro and São Paulo 2 PVC 1 Chlor-Vinyl Total production capacity of 5.7 million tons of resins per year 3 PE 2 PP 1 PE 1 PP 3 PE 1 PP 1 PVC 1 Chlor-Vinyl 3 PE 2 PP Total net revenue in 2015: R$22.8 billion, 48% of Braskem s Consolidated Net Revenue Direct Team Members: 2,833 Technology and Innovation Center - RS 29

30 Production Volume and Utilization Rates Polyethylene Polypropylene 1 PVC Total Resins 80% 2,415 87% 2,649 81% 76% 89% 76% 4,642 4,701 1,592 1, In 2015, Polyolefins production volume reached 4.2 million tons, up 4% from 2014, supported by high utilization rates throughout the year and the Company s capacity to export volumes not absorbed by the domestic market; PVC production volume in the year was 542 kton, decreasing 15% from 2014, due to sectors as construction. (1) Only the production in Brazil 30

31 Brazilian resins market and Braskem s sales Brazilian Resins Demand (thousand tons) Braskem s Sales Profile in ,385 5, % 4, Braskem s Sales (thousand tons) 3,671 3, % 3,362 The slowdown of important sectors of the Brazilian economy negatively impacted resins consumption in 2015; In 2015, the market share gain by 1 p.p. led the sales volume to 3.4 million tons. Market Share % % % 31

32 International Market Dynamics Polyolefins Exports (thousand tons) PVC Exports (thousand tons) +22% 1,304 1,277 1, , , PP PE PVC In 2015, the Company showed its capacity to export volumes not absorbed by the domestic market; Polyolefins (PE + PP) exports summed up to 1,307 thousand tons, increasing 22% compared to 2014; Taking advantage of more competitive opportunities overseas, Braskem began exporting PVC. Total PVC export volume in the period was 65 kton. 32

33 Polyolefins Unit Financials: 33

34 Vinyls Unit Financials: 34

35 Braskem USA & Europe 35

36 USA assets overview 36 36

37 Europe assets overview Wesseling Sites: Wesseling and Schkopau (Germany) Schkopau Total production capacity of 545 thousand tons of PP per year Team Members Direct: 165 Camaçari, BA 37

38 PP Demand in USA and Europe PP Demand USA (1) (thousand tons) PP Demand Western Europe (2) (thousand tons) 7,050 CAGR 7, % 7,206 7,175 7,627 8,603 CAGR 8, % 8,445 8,863 9, In 2015, economic growth in USA and Europe, together with high petrochemical margins, boosted Braskem industrial units results; In the year, PP Propylene spreads grew 163%, and the outlook is positive for 2016 with an oversupply of propylene in the market; No new greenfield PP project announced in both regions, in the period of 2015 to 2018; USA: Potential opportunities due to higher supply of propylene in the market Source: 1 - American Chemistry Council, Plastics Industry Producers' Statistics Group, compilated by Veris Consulting, LLC 2 - AC-Fiduciaire AS 38

39 PP in the USA Industry data shows the utilization rate of naphtha-based PP getting closer to the limit Naphtha-based PP Supply & Demand and Utilization Rate 30,000 25,000 20,000 79% 21,196 81% 20,597 86% 20,005 84% 19,487 84% 19,496 88% 18,594 88% 18,592 91% 18, , , , In billion of pounds Utilization Rate Nominal Capacity Source: ACC ( ) 39

40 PP in USA Competitive Environment Spreads Largest PP producers in the United States Ranking by capacity (kty) PP Prices, Propylene and Spreads in US$ 1,700 1,763 1,465 1,417 1,507 1,515 1,563 1,382 1,150 1,120 1, % Braskem LyondellBasell Total PC ExxonMobil FPC USA Ineos PP Propylene Spread Source: IHS 40

41 Operational highlights Production Volume (thousand tons) and Utilization Rate (%) 89% 1,757 91% 1,786 92% 1,856 98% 1,967 All-time high volume of PP production in Actions to improve industrial productivity: Find out which product is most suitable to each plant; Optimization of production parameters for each product; and Initiatives to reduce logistic bottlenecks in the receiving of feedstock Utilization Rate Production Volume PP Sales Volume (thousand tons) All-time high volume of PP sales in Net Revenue of US$2.5 billion or R$8.2 billion in 2015: 17% of Braskem s consolidated net revenue 41

42 Investments and Projects USA & Europe Exploring the shale gas opportunities Investments (US$ million) 2016 CAPEX to strategic projects estimated in US$69 million: Around 50% destined to UTEC production in La Porte, USA The remaining will be to other projects as the Marcus Hook s plant expansion, Project Delta (US PP New Build) and Gulf Coast Connectivity. Propane Dehydrogenation Plant (PDH): Start-up in 1Q17 Enterprise will supply around 750 thousand tons of propylene per year for Braskem s three PP plants in the U.S. Gulf Coast region; Contract of approx. 15 years is based on the cost of propane. Raw Materials Profile (Propylene) 42

43 USA & Europe Unit Financials: 43

44 Braskem Mexico 44

45 Mexico Project Ethylene XXI First greenfield project to start-up in North America Differentials Highlights Long-term contract with PEMEX for feedstock supply; Competitive feedstock, with price reference to Mont Belvieu gas. Construction activities completed in 1Q16. 75% 25% ETHANE CRACKER Startup of the Cracker on March 18th Startup of the operations of the HDPE I plant on April 6th Startup of the operations of the HDPE II plant on April 28th. Pre Marketing activities finalized more than 200 kton sold with more than 350 local clients. Production already marketed in the Mexican market, while 1 st export was performed in April HDPE 350 kt HDPE 400 kt Ethylene 3 1,050 kt POLYETHYLENE SITES LDPE 300 kt CAPEX (ongoing) Total investment US$5.2 billion, of which: US$3.2 billion structured under a project finance model; and US$2.0 billion shareholders contribution. LATEST TECHNOLOGY 45

46 Mexico Project Ethylene XXI Priority is supplying the Mexican PE market, which has a deficit of around 70% its demand The surplus can be exported very competitively taking advantage of Braskem s comercial presence around the world. PE Demand (millions of tons/year) North America Europe Asia Central America South America Demand Braskem Idesa Current Capacity Source: IHS 46

47 Project s Competitiveness Ethylene Cash Cost Global Curve Cash Margin Naphtha-based PE vs. Ethane-based PE Ethylene XXI Ethylene XXI The project is among America s most competitive ones... Ethane-based PE producer has a higher margin than Naphtha-based PE producer... 47

48 Greenfield project in Mexico Mexico Project: Construction completed in 1Q16 August 2011 April 2014 Industrial Area Cracker Utilities Logistic HDPE LDPE October 2015 March

49 Global Scenario Overview Petrochemical industry Brazil 49

50 2016 Global Scenario Eurozone USA Expected GDP growth for 2016 of 2.4%; Labor market has proved robust and unemployment is only 5.0%; Possibility of higher interest rates in June. GDP growth of 1.5%; Brexit: Possible exit of United Kingdom from the European Union; Inflation well below ECB goal (2%); Refugee crisis China GDP is expected to grow 6.5%; Industrial activity showing signs of slowdown: China s manufacturing PMI retracted for most of the year; Brazil GDP will stay retracted: down 3.8%; Government attempts to boost the economy. The central bank of China reduced compulsory rate. Impeachment ever closer to happen; Lost its Investment Grade by the 3 rating agencies. 50

51 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Brent ($/bbl) NAFTA ARA - CIF NWE (US$/ton) Petrochemical scenario 150 Naphtha Prices and Brent 1200 Ethylene Capacity Additions (MM ton) Average Annual Demand Growth MM ton 30 0 Brent ($/bbl) Naphtha ($/ton) 2016e 2017e 2018e 2019e April 2015 Forecast April 2016 Forecast Reduction of oil prices; Supply increase mainly by non-opec countries. Iran embargo lifted by USA and Europe. Failure of the agreement to freeze production by Opec countries. Naphtha follows oil price dynamics; Petrochemical spreads remain at favorable levels. Greenfield projects postponed or cancelled; China: High cost/investments to access available feedstock; Infrastructure issues; Reduced attractiveness of coal projects with lower naphtha prices USA: New capacities to come online as of 2017/

52 Spreads Basic Petrochemicals Spreads e Spreads Basic Petrochemicals Naphtha Resins Spreads e Spreads Resins Naphtha (*) Brazil Basket: 53% PE USA, 34% PP Asia, 12% PVC Asia PP USA Spreads (*) e Spreads PP Propylene Naphtha-based Petrochemical Industry Positive outlook for the naphtha-based players competitiveness in 2016, with the raw material being precified at historical low prices, due to oversupplied oil market and the removal of Iran commercial sanctions from USA and Europe. Resins Spreads The expectation for 2016 is for spreads around the world to remain at healthy levels in More chance of volatility in PP spreads, especially in the Asian market, with new capacity coming on stream in China. More challenging scenario for PE starting in 2017, with the new capacities of ethane-based players starting up in the US. PP USA Spreads PP spreads grew 163% in Outlook is positive for 2016, with more Propylene oversupply. New PP capacities in the region should not come before FONTE: IHS 52

53 Braskem

54 Outlook 2016 Global Scenario Global growth shall remain modest in 2016, with 3.2%. Emerging countries will still represent the bulk of the global growth, with GDP expected to grow 4.1% this year, with a smaller growth in China. For the developed countries, the GDP is expected to grow 1.9% in In Brazil, the expectation for 2016 is for the economy to perform as poorly as in 2015, with another year of negative GDP growth, of 3.8%. Recession continues to take its toll on employment and real incomes, while domestic uncertainties continue to constrain the government s ability to formulate and execute policies. Petrochemical Scenario Naphtha-based petrochemical industry: Positive scenario for the competitiveness of the naphtha-based players in 2016, with the feedstock in historically low levels, due to an oversupplied oil market. Resins spreads: In 2016 the forecast is that the global petrochemical spreads will stay in healthy levels. There s a higher chance of volatility in the polypropylene spreads, mainly in the Asian market, with the startup of new capacities in China. Polypropylene spreads in high levels in the U.S. with oversupply of propylene and no new PP capacities until A more challenging scenario for polyethylene starting in the end of 2017 with new ethane-based capacities coming to the market in the U.S.. 54

55 Braskem Priorities 2016 Brazil: To ensure operating efficiency to supply domestic demand To assure the export of the surplus volume not sold in the domestic market. To implement a maintenance stoppage in one of the cracker lines in Bahia. To implement the feedstock flexibility project in Bahia To evaluate opportunities for feedstock diversification. U.S. / Europe: Capitalize positive spreads in the U.S. PP market with the increase of the demand and oversupply of propylene in the market. Seek PP growth opportunities from competitive propylene in the US. Mexico Project: To ensure the startup of the third polyethylene plant and the operational stability of the complex. To sell PE in the domestic market, consolidating the relationship with clients in the Mexican market. To export from Mexico, benefiting from synergies with the operations of Braskem in US, Europe and South America. Liquidity / Financial Health: Focus on cash generation. Continue to implement the expense reduction program, generating potential recurring savings of R$400 million per year, which should be fully achieved in

56 Allegations (as per 20-F) We, our subsidiaries and our joint venture partners are subject to a number of anti-corruption laws, including Law No. 12,846/2013, or the Brazilian Anti-Corruption Law, which became effective on January 28, 2014, the U.S. Foreign Corrupt Practices Act, and various other anti-corruption and anti-bribery laws of other jurisdictions. In the context of anti-corruption allegations against certain individuals and entities in Brazil, including Petrobras, we were mentioned in allegations that asserted that improper payments were made in exchange for favorable treatment in connection with certain raw material supply contracts we have with Petrobras. We immediately engaged Brazilian and U.S. legal counsel, which have recognized experience in similar cases, to conduct an independent internal investigation of the allegations, or the Investigation. These law firms are conducting the Investigation and will report their findings directly to an ad hoc committee of the Company's board of directors. Through these law firms, we voluntarily contacted relevant regulatory authorities, including the SEC, DoJ and CVM, to advise them about the Investigation. We have been fully cooperating with these authorities and maintain frequent contact with them through these law firms. Our cooperation with these authorities includes voluntarily producing documents to the DoJ and SEC, and responding to requests for documents, including requests made in an SEC subpoena we received on February 8, The outcome of the Investigation is not presently known and may remain so for a substantial period of time. We cannot currently predict how the Investigation, and any future decisions by authorities, may impact the Company and the resources needed to resolve this matter. It is possible that the scope of the Investigation may be expanded to include additional matters. We cannot predict the actions that the authorities may take, but the range of possibilities includes an enforcement action against the Company or one or more former or current officers, directors and employees. In addition, the SEC, DoJ and CVM, or other authority with jurisdiction over the Company may seek to impose substantial monetary sanctions if the Investigation, or a parallel investigation by these authorities, discovers evidence of misconduct. Our financial exposure also may include certain indemnification obligations, to the extent permitted by law, to current and former officers, directors and employees against losses incurred in connection with their actions on behalf of the Company, including reimbursement of legal fees. Moreover, adverse publicity associated with the Investigation and potential future regulatory actions could have a material adverse effect on our business, including a decrease in demand for our products. As a result, the Investigation and related SEC and DoJ investigations, as well as the securities class action lawsuit described in more detail under Item 8 Legal Proceedings Class Action Claim, could have a material adverse effect on our business, reputation, financial condition, results of operations, liquidity and the trading price of our securities, including our class A preferred shares and the ADS. 56

57 Class Action (as per 20-F) In 2015, a consolidated class action complaint was filed in the U.S. District Court for the Southern District of New York alleging that the Company made false statements and/or failed to disclose improper payments in filings made with the SEC. The plaintiffs are expected to file an amended complaint in May The outcome of the litigation is not possible to predict. It is possible that we will become party to additional lawsuits. In addition, we are generally obligated, to the extent permitted by law, to indemnify our directors and officers who are named defendants in these lawsuits. The action requires significant management time and attention. In addition, we may be required to pay judgments or settlements and incur expenses that could have a material and adverse effect on our financial condition or results of operations. 57

58 Meeting with Investors IR Braskem July