Meeting with Investors. IR Braskem November 2016

Transcription

1 Meeting with Investors IR Braskem November

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 September 30, 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 (PE): MM ton PE 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 = 345,010,622 Total class B preferred shares = 578,330 Total Shares = 797,257,604 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 09/30/2016 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 ~80% 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 Totally dollarpegged Braskem Financial Policy Considering that operating cash flow is strongly correlated to the U.S. dollar: 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, Braskem s cost-cutting program delivered an effective gain of R$104 million in 3Q16. To date, the program has delivered an effective gain of R$252 million and a recurring gain of R$328 million, after completion of 61% of the initiatives. The gains were captured mainly from the reduction of fixed and variable costs and the optimization of investments. The expectation is for the program to achieve a recurring gain of approximately R$350 million by year-end. 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. On June the startup of the third and last low-density polyethylene plant occurred. On the 3Q16, the focus remained on ramping up the operations, especially the PE plants. The team also worked to develop sales channels in the local and international markets and to improve the local and export logistics operations. UTEC : Braskem began commissioning its new line of ultra-high molecular weight polyethylene (UTEC ) in La Porte, Texas, which is slated to start up by year-end. The project includes investments in excess of US$40 million for the production of the resin UTEC in La Porte, Texas. The plant in the United States will complement the capacity of the existing UTEC line in Brazil at the complex in Camaçari. Developed using 100% Brazilian technology, UTEC resin has applications across a wide range of industries, such as oil drilling and construction. Clients have already been prospected and the Company expects to export the resin to destinations such as Europe, India and China. 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 3Q16 Results 12

13 3Q16 HIGHLIGHTS Brazil: Demand for resins (PE, PP and PVC) was 1.3 million tons in 3Q16, growing 8% from 2Q16 and 6% from 3Q15. Braskem s crackers in Brazil set a new record for average capacity utilization rate of 96%, higher 2% from 2Q16 and 4% from the 3Q15. To meet the stronger demand in the Brazilian market, Braskem reduced its resin exports by 7% compared to 2Q16 and 3Q15. Exports of basic petrochemicals was 11% higher than in 2Q16. The units in Brazil, posted EBITDA of R$2,206 million to account for 75% of the Company s consolidated EBITDA. United States and Europe: The PP plants operated at an average capacity utilization rate of 101% in 3Q16, reflecting the good operating efficiency. Production amounted to 512 kton, growing 4% from 3Q15. Sales amounted 516 thousand tons representing a 3% expansion compared to 3Q15. The units in the United States and Europe posted EBITDA of US$161 million (R$524 million) in 3Q16, accounting for 18% of consolidated EBITDA. Mexico: Still in the ramp-up phase, the polyethylene plants operated at an average capacity utilization rate of 63% in 3Q16, increasing 31 p.p. from 2Q16. The segment posted EBITDA of US$66 million (R$214 million) to account for 7% of the Company s consolidated EBITDA. Braskem - Consolidated: Braskem s consolidated EBITDA was US$924 million, increasing 8% compared to 2Q16 and 6% compared to 3Q15. Corporate leverage, as measured by the ratio of Net Debt to EBITDA in U.S. dollar, stood at 1.63 times, which is the lowest level in 12 years. In September 2016, the Board of Directors of the Company approved the distribution of interim dividends for fiscal year 2015, in the amount of R$ 1 billion, which were paid in October

14 BRAZIL Brazilian Market of Resins (kton) Total Sales (kton) 3Q15 1,219 2Q16 1,204 6% 8% 1, , % 1% 1,195 1,300 1, Q16 1, M15 3,846-5% 3Q15 4Q15 1Q16 2Q16 3Q16 9M16 3,667 Exports Brazilian Market EBITDA Margin EBITDA (R$ million) 20% 16% 18% 18% 20% Resins Spread (US$/t)* 1,119 1, ,057 1,108 2,658 1,934 2,165 2,293 2, % 10% Q15 4Q15 1Q16 2Q16 3Q16 3Q15 4Q15 Average Resin Price 1Q16 2Q16 Resins Spread 3Q16 Average Feedstock Price 30% ethylene and propylene, 45% BTX, 15% butadiene and 10% cumene, according to the weighting of the sales volume of basic petrochemicals to third parties

15 UNITED STATES AND EUROPE United States and Europe Sales (kton): Spread PP USA (US$/t) ,341 1,418 1,543 1,462 1, % Q15 4Q15 1Q16 2Q16 3Q16 3Q15 4Q15 1Q16 2Q16 3Q16 Europe USA PP USA Propylene USG Spread PP-Propylene EBITDA (R$ milhões) Spread PP Europe (US$/t) EBITDA Margin 12% 21% 34% 32% 25% ,454 1,022 1, , , , % Q15 4Q15 1Q16 2Q16 3Q16 3Q15 4Q15 1Q16 2Q16 3Q16 PP Europe Propylene Europe Spread PP-Propylene 15 15

16 MEXICO Mexico PE Production (kton) Mexico PE Sales (kton) Exports Mexican Market Q16 3Q16 2Q16 3Q16 EBITDA (US$ MM) Mexico PE Spread (US$/t) EBITDA Margin 3% 40% 1,220 1,118 1,048 1,156 1, % 1, ,006 1, Q16 3Q16 3Q15 4Q15 1Q16 2Q16 3Q16 PE US Ethane USGC Spread PE-Ethane 16 16

17 EBITDA 3Q16 vs. 2Q16 US$ million EBITDA of US$ 924 million, 8% up to 2Q16: Higher sales volume of resins in the Brazilian market; Better resins spread in the international market; Result of the complex of Mexico EBITDA 2Q16 FX Spread Volume Contribution Margin Fixed Costs, SG&A and Other EBITDA 3Q16 Avg. FX 2Q16: 3.51 R$/US$ Avg. FX 3Q16: 3.25 R$/US$ 17 17

18 EBITDA 9M16 vs. 9M15 US$ million 9M16 EBITDA amounted to US$ 2,562 million, 15% up to 9M15: Better spread for PP in USA and Europe; Higher exports volume and sales volume in the International Units; The Mexico unit beginning to generate results; Offset by the higher fixed costs and SG&A expenses due to the increases in wages and benefits, logistics expenses, legal fees and advertising expenses ,562 2, EBITDA 9M15 FX Spread Volume Contribuition Fixed Costs, EBITDA 9M16 Margin SG&A and Other Avg. FX 9M15: 3.16 R$/US$ Avg. FX 9M16: 3.55 R$/US$ 18 18

19 AMORTIZATION SCHEDULE AND DEBT PROFILE Debt Profile (1) (R$ million) 09/30/2016 Gross Debt: R$ 24,183 million Net Debt: R$ 16,415 million Avg. Debt Term: 15 years Debt Coverage: 38 months Avg. Cost of Debt: 6.14% (US$) and 10.19% (R$) 2,935 30% 10,702 7,767 2,548 5, /3 0/16 Cash 25% 16% 5,198 7,142 10% 9% 2,306 3% 7% 665 1, ,399 1,652 1, / / onwards Stand by of US$ million and R$ 500 million Invested in US$ Invested in R$ Foreign Currency Local Currency (1) Does not consider discounts from transaction costs Net Debt/ EBITDA (US$) Corporate Credit Rating US$ million 3T15 2T16 3T16 Net Debt ( ª ) 5,706 5,553 5,057 EBITDA (LTM) 2,788 3,109 3,097 Net Debt/EBITDA 2.05x 1.79x 1.63x (a) It does not include the financial structure of the Mexico project Agência Rating Perspectiva Data Escala Global Moody s Ba1 Negative 02/25/2016 Fitch BBB- Stable 09/30/2016 S&P BBB- Negative 02/17/

20 CAPEX Braskem invested* R$665 million in 3Q16. In the first nine months of 2016, investments came to R$2,218 million, as follows: o Braskem contributions to the Mexico Project: R$1,195 million (54%); o Investments to maintain the operating reliability of plants: R$828 million (37%); o Other strategic projects: R$194 million (9%). Of the R$2,218 million invested in 9M16, R$1,363 million (61%) is related to investments linked to US dollars: (i) operating and strategic investments of the international businesses and (ii) Braskem s equity contributions to the Braskem Idesa. Investments Million 2Q16 3Q16 9M e Operational (R$) % % % 1,797 49% Brazil (R$) ,601 United States and Europe (US$) Mexico (R$) % % 1,195 54% 1,327 36% Mexico (US$) Strategic Projects (R$) 79 10% 73 11% 194 9% % Brazil (R$) United States and Europe (US$) Total (R$) % % 2, % 3, % Brazil (R$) ,855 Mexico, United States and Europe (US$) (*) Considers operational investments, maintenance stoppages and spare parts of Braskem and its subsidiaries and contributions for the Mexico project

21 Braskem Brazil 21

22 Braskem Solid business model based on the competitive integration of the value chain Raw material Basic Petrochemicals Unit Clients Naphtha Condensed Ethane Propane Ethene Propylene Benzene Toluene Paraxylene Butadiene Cumene Ethene and Propylene Polyolefins and Vinyls Unit Polyethylene Polypropylene PVC Soda Integrated Petrochemical 22 22

23 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 23

24 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 24

25 Operational highlights Production Volume (1) and Ethylene Capacity Utilization Rate (2) 83% 89% 90% 86% 89% 93% 7,950 8,150 8,360 8,190 8,450 3,119 4,831 3,330 4,820 3,373 4,987 3,238 4,952 3,357 5,093 6,376 2,615 3,761 9M16: average cracker utilization rate of 93% Highlight to the 3Q16 utilization rate of 96%, record due to better quality of the naphtha M16 Ethylene Utilization Rate Ethylene Main Basic Petrochemicals (1) In thousand tons (2) Does not consider Green Ethylene 25

26 Exports Volume Main Basic Petrochemicals Exports (thousand tons) , % 1, , , M16 In 9M16, exports of basic petrochemicals amounted to 973 kton down 14% from 9M15, basically explained by the redirecting of propylene previously allocated to the export market to Brazil s domestic market following the startup of the acrylics complex in Bahia and the production of PP for export. 26

27 Basic Petrochemicals Unit Financials: Triunfo, RS 27

28 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 28

29 Production Volume and Utilization Rates Polyethylene Polypropylene 1 PVC Total Resins 80% 2,415 87% 2,649 89% 2,041 81% 1,592 76% 1,510 87% 1,199 89% 76% 81% 4,642 4,701 3, M M M M16 In 9M16, polyolefins production increased 3% from 9M15 supported mainly by the higher production at the units in Bahia and the better performance of the Rio de Janeiro cracker; PVC production volume increased 9% from 9M15. (1) Only the production in Brazil 29

30 Brazilian resins market and Braskem s sales Brazilian Resins Demand (thousand tons) Braskem s Sales Profile in 3Q16 5,385 5, % 4,926 3, M16 Braskem s Sales (thousand tons) 3,671 3, % 3,362 2,516 Market Share % % % 9M16 69% The slowdown of important sectors of the Brazilian economy negatively impacted the sixmonth period and the estimated market for PE and PP contracted 4% compared to 9M15 In 9M16, the market share increased 3 p.p. compared to 9M15 30

31 International Market Dynamics Polyolefins Exports (thousand tons) PVC Exports (thousand tons) +22% 1, , , , , M M16 PP PE PVC Braskem s presence in the United States and Europe, coupled with its other commercial offices overseas, have strengthened its relationship with international clients and support stronger export flows from Brazil, leading to the capture of opportunities in the international market. Braskem exported 1,214 kton of resins, an increase of 18% from 9M15. 31

32 Polyolefins Unit Financials: 32

33 Vinyls Unit Financials: 33

34 Braskem USA & Europe 34

35 USA & Europe Flowchart Diversified sources of raw materials: Refineries PDH Crackers Propylene Clients Polypropylene 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 the 3Q16, spreads in U.S. grew 1% in comparison with 3Q15, due to a lower oil price, higher refinery activity and higher propylene production In the 3Q16, spreads in Europe grew 7% in comparison with 3Q15, due to a lower oil price and preference of the European producers to crack naphtha, resulting in a higher propylene production No new greenfield PP project announced in both regions, in the period of 2016 to 2018 However, some DBN s are ongoing, and capacity shall increase by 468 kton in this period 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 (%) 98% 101% 91% 92% 1,967 1,786 1,856 1,525 Utilization rate was 101% in the 3Q16 increases of 4 p.p. and decrease of 2 p.p. compared to 3Q15 and 2Q16, respectively. The higher rate was due to the good operating performance of the plants in the U.S.. In Germany, the plants are undergoing a process to optimize the production mix M16 Utilization Rate Production Volume PP Sales Volume (thousand tons) 1,791 1,863 1,973 1,506 PP sales volume in the quarter was 503 kton, in line with the 3Q15. Despite the higher sales volume, prices in the U.S. were affected by the higher volume of PP imports into the region M16 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 69 The remaining will go to other projects such as the Marcus Hook s plant expansion, Project Delta (US PP New Build) and Gulf Coast Connectivity. Raw Materials Profile (Propylene) 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. 42

43 USA & Europe Unit Financials: 43

44 Braskem Mexico 44

45 Braskem Idesa Flowchart Clients Gás Ethane HDPE Ethylene HDPE LDPE 45

46 Braskem Idesa 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. Startup of the Cracker on March; Startup of the operations of the two HDPE plants on April; Startup of the operations of the LDPE plant on June. 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. 46

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

48 Braskem Idesa - Financials 48

49 Global Scenario Petrochemical industry 49

50 PETROCHEMICAL SCENARIO - ETHYLENE New Capacity: Quarterly Vision Greenfield projects postponed U.S.: American players new capacity startup postponed China/Asia: (i) High cost of investment; (ii) Infrastructure issues; (iii) Attractiveness of coal-based projects relative to lower naphtha prices. Latest IHS forecast shows reduction of 8.9% in the total capacity addition in the period -8.9% In Thousand tons +9.0% -19.6% 31,517 29,267 28, % 6,180 5,407 4,264 8,713 7,997 8,028 8,623 6,811 6, % 4,812 4,553 4, % 4,164 4,209 4, Q16 2Q16 3Q16 Source: IHS 50 50

51 PETROCHEMICAL SCENARIO - RESINS 1,057 1,108 1,091 1,033 1,054 Avg. Resins Price Brazilian Market Resins Spread (PP, PE and PVC): Avg. Feedstock Price Resins Spread Lower spreads due to (i) oil recovery and naphtha price rise; and (ii) resins price fall due to new capacity being added from 2017 onwards Despite this fall, spreads are expected to stay above historical levels. 2Q16 3Q16 4Q16e 1Q17e 2Q17e 1, , , , , PP U.S./Europe Propylene USG/Europe PP-Propylene Spread PP-Propylene U.S./Europe Spread Still in healthy levels, spreads may show volatility due to: (i) Higher PP imports; (ii) DBN s in U.S. units and; (iii) Lower propylene supply in Europe explained by 2Q16 3Q16 4Q16e 1Q17e 2Q17e more imported ethane being used in the crackers. 1, , , , , PE U.S. Ethane USG PE-Ethane Spread PE-Ethane Mexico Spread: Gas-based producers are still the most competitive although fall on spreads due to: (i) Lower PE prices after new capacities startup and (ii) Higher ethane 981 1,077 1, price due to higher demand of the product. 2Q16 Source: IHS 3Q16 4Q16e 1Q17e 2Q17e 51 51

52 Braskem Priorities

53 BRASKEM PRIORITIES 2016 Brazil: To ensure operating efficiency to supply Brazilian demand To assure the export of the surplus volume not sold in the Brazilian market To implement a maintenance shutdown in one of the cracker lines in Bahia To implement the feedstock flexibility project in Bahia U.S./Europe: To ensure operational and commercial efficiency Seek PP growth opportunities from competitive propylene in the U.S. Commissioning of UTEC's new Texas plant Mexico: To ensure 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 2017 Internal investigation process: Advancing the dialogue with authorities to find a solution

54 Braskem Allegations and Class Action 54

55 Allegations (as Quartely Information 09/30/2016) Braskem and its subsidiaries are subject to a number of anti-corruption laws in the countries where they operate, including Federal Law 12,846/2013, or the Brazilian Anticorruption Law, which came into force on January 28, 2014, and the U.S. Foreign Corrupt Practices Act (FCPA). In March 2015, in connection with the so-called Operation Car Wash, certain allegations made by defendants in judicial proceedings were made public, according to which Braskem was allegedly involved in illegal payments related to feedstock supply agreements entered into with Petrobras. In light of said facts, the Company immediately approved the engagement of law firms with extensive and proven experience in similar cases in the United States and Brazil ( Expert Firms ) to conduct an independent internal investigation into the allegations cited above ("Investigation"), under the supervision of the U.S. Department of Justice (DoJ) and of the U.S. Securities and Exchange Commission (SEC). Since then, the Company has been fully cooperating with the authorities, including in relation to the formal requests made by the SEC (subpoena) in February and July 2016, and by Brazil s Office of the Federal Controller General (CGU), also in July of this year. As the process advanced, the Company became aware of new reports of irregularities, which are being investigated by the Expert Firms, in cooperation with the applicable authorities. In parallel, the Company decided to open negotiations with the DoJ, SEC and authorities in Brazil, through which it hopes to reach an agreement to resolve such allegations and reports of irregularities. During the Investigation, the Expert Firms identified payments for services to third parties without corresponding evidence of the service being rendered. 55

56 Allegations (as Quartely Information 09/30/2016) With the exception of the Tax Adjustments mentioned below, the Company cannot measure at this time the extent of the financial and non-financial impacts potentially arising from the confirmation of the allegations and reports of irregularities, any parallel investigations or the execution of an agreement with the competent authorities, or the resources that would be required to remedy such occurrences. The Company also cannot predict or measure the impacts from any measures that the competent authorities in Brazil and abroad may take, which could include the payment of fines and damages to third parties, the filing of lawsuits against the Company or the appointment of an independent monitor to supervise the Company s compliance with the agreement. Tax adjustments Although above-mentioned payments are still under investigation, the Company recognized errors in the determination of taxes from prior periods and recorded a fiscal contingency of approximately R$285 million, of which R$167 million corresponded to taxes not paid in the last 5 years, R$88 million corresponded to fines and adjustments for inflation (variation in the SELIC rate) and R$30 million corresponded to a reduction in deferred Income and Social Contribution taxes on tax losses and social contribution tax loss carryforwards. 56

57 Class Action (as Quartely Information 09/30/2016) A class action has been filed in the U.S. courts by the Boilermaker-Blacksmith National Pension Trust, as Lead Plaintiff, alleging the Company has made misrepresentations and/or failed to disclose through certain SEC filings the existence of unlawful payments. The Company has engaged an expert U.S. law firm to represent it and filed motion to dismiss on July 6, 2016 which, after response from the plaintiffs, is currently waiting for the judge s decision. The Company cannot foresee the outcome of this process. The Company may be cited as defendant in other legal actions. Furthermore, the Company may be required, observing the legal and regulatory limits, to indemnify directors, officers and employees that are defendants in actions of this nature. Said action has required significant time and dedication of the Management of the Company. The Company may also incur financial obligations that may have a material adverse impact on its business, reputation, financial condition and the results of its operations, as well as liquidity and price of its securities. For further information on this matter, please refer to Note 19 (a) (b) (c) of the Company s Financial Statements for the period ended on September 30,

58 Meeting with Investors IR Braskem November