MEETING WITH INVESTORS MAY 2018

Transcription

1 MEETING WITH INVESTORS MAY 2018

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 is up-to-date as of March 31, 2018, 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 AGENDA 09:30 Overview 09:40 Strategy 10:00 Petrochemical Scenario 10:20 Brazil 10:40 US and Europe 11:00 Mexico 11:20 Compliance 11:50 Final Remarks 3

4 OVERVIEW

5 GLOBAL CHEMICAL COMPANY Braskem has 1 st & 2 nd generation operations Upstream/Midstream (Exploration Production and Refining Fractionators) 1 st Generation (Basic and Specialty Chemicals) Braskem 2 nd Generation (Thermoplastic Resins) 3 rd Generation (Plastic Converters) NAPHTHA ETHYLENE PE NGLs ETHANOL PROPYLENE CHLOR-ALKALI PP SALT OTHER CHEMICALS PVC

6 SOLID AND SUCCESSFUL GLOBAL GROWTH STRATEGY Creation of Acquisition of Ipiranga Group assets Leadership in Brazil Acquisition of Quattor in Brazil and Sunoco Chemicals PP assets in U.S Beginning of Braskem s internationalization strategy Acquisition of Dow Chemical s PP assets in Europe and in U.S Largest PP producer in U.S Ranked top 10 PP producer in Europe Start-up of Braskem Idesa petrochemical complex in Mexico 6 th largest producer of thermoplastic resins in the world Largest PE producer in Mexico Construction of a new PP facility in U.S UTEC plant start-up Start up of the cracker flexibility project in Camaçari/BA Construction of the new PP plant in the United States reached 16% completion in 1Q18 6

7 SHAREHOLDER STUCTURE % Voting Capital Odebrecht Petrobras Others¹ 50.1% 38.3% 47.0% 36.1% 2.9% 25.5% % Total Capital ¹Includes shares held in treasury Odebrecht and Petrobras corporate relations regarding Braskem are regulated by a Shareholders Agreement 01/19/2018: Braskem announces that it was informed by the signatories to its shareholders agreement of the evolution of the ongoing discussions towards its corporate restructuring involving the unification of its different share types and the enhancement of its corporate governance. The discussions are in an initial stage and no decisions on the matter have been made Braskem s Board of Directors is composed of 11 members, 6 of which are considered Independent Source: B3 Data retrieved in 03/31/2018 7

8 GLOBAL PRESENCE WITH LOCAL EFFICIENCY EUROPE (KT/ Year) PP: 625 USA (KT/ Year) 5 PP plants: 1,570 1 UTEC Plant 1 PP (new - under construction) Industrial Units Headquarters Tecnology Centers Commercial Offices MEXICO (KT/ Year) PE: BRAZIL (KT/ Year) Basic Chemicals: 9,668 PE: 3,055 PP: 1,850 PVC: 710 Sales Team 8

9 RELEVANT GLOBAL PLAYER BY SIZE 7 th LARGEST PE PRODUCER Position Company Capacity (%) EBITDA Margin 2017 (%) 1º ExxonMobil 9, % 2º Dow/ DuPont 8, % 3º Sinopec 6, % 4º SABIC 6, ,% 5º Lyondellbasell 5, % 6º Chevron Phillips 5, % 7º 4, % 8º CNPC 4,073 n.a. 9º NPC 3, % 10º INEOS 2, % Source: IHS, BRK and Bloomberg Figures as of Dec/ rd LARGEST PP PRODUCER Position Company Capacity (%) EBITDA Margin 2017 (%) 1º Sinopec 6, % 2º Lyondellbasell 5, % 3º 4, % 4º CNPC 3, % 5º SABIC 2, % 6º Reliance 2, % 7º Total 2, % 8º Borealis 2, % 9º ExxonMobil 2, % 10º Formosa Plastics 2, % 9

10 RISKS MANAGEMENT COUNTRY RISK GEOGRAPHIC DIVERSIFICATION Units in Brazil, Mexico, United States and Europe About 50% of total net revenue and EBITDA outside Brazil Current growth investments outside Brazil Relevant player in the regions that Braskem has industrial/ commercial presence MITIGATORS/ PROTECTIONS PETROCHEMICAL CYCLE DIVERSIFIED PRODUCT PORTFOLIO WITH REGIONAL DYNAMICS PP: new capacities will be absorbed by demand spreads positive PVC: no new relevant capacity announced: spreads positive PE: new capacities mainly in US negative impact on spreads in 2018 Basic petrochemicals: strong correlation with oil prices FEEDSTOCK FEEDSTOCK DIVERSIFICATION Naphtha-based units in Brazil, gas-based units in Mexico and in Rio de Janeiro and propylene-based units in U.S. and Europe Focus on crackers flexibilization investments (naphtha and gas) in Brazil Long term agreements with suppliers in all the regions 10

11 VALUE CREATION TO SHAREHOLDERS +17.2% Focus in the strategy EBITDA (in US$ million) % 3,304 3,872 3, % 2,308 2,246 2,003 2,217 2,359 2,797 1,626 1,385 1, LTM 1Q18 11

12 STRATEGY

13 STRATEGIC OBJECTIVES SURVIVAL: GROWTH: PERPETUITY: Maximize cash generation from current operations and diversify feedstock profile Grow global footprint, enhancing leadership in the Americas, with focus in PE and PP Develop and improve in image, reputation, management model, corporate governance, corporate security, sustainability, technology and people PRODUCTIVITY AND COMPETITIVENESS FEEDSTOCK DIVERSIFICATION GEOGRAPHIC DIVERSIFICATION REPUTATION AND GOVERNANCE 13

14 PRODUCTIVITY AND COMPETITIVENESS Braskem as a 1 st Quartile Operator Seek advances in productivity and competitiveness in the current operation, focusing on operational efficiency and cost-leadership 2st Quartile rd Quartile 450 1st Quartile 4th Quartile 25% R µ 75% 14

15 FEEDSTOCK DIVERSIFICATION Reach balance between liquid base and gas base, creating flexibility of + or - 10% Feedstock diversification, increasing the share of gas in the feedstock profile and maintaining asset flexibility 20% 80% 3% 11% 38% 3% 3% 3% 3% 5% 22% 22% 22% 33% 35% 35% 48% 42% 37% 35% Ethanol Propylene Gas Naphtha Flex* Goal *Flex: Naphtha/Gas 15

16 GEOGRAPHIC DIVERSIFICATION Increase the global footprint, with operations outside Brazil representing more than 50% of EBITDA Expand the global footprint outside Brazil with gains in scale in PE and PP, reinforcing our leadership in the Americas Outside Brazil Brazil 12% 26% 33% 50% 100% 88% 74% 67% 50% Goal 16

17 REPUTATION AND GOVERNANCE Recognition as a global, innovative and humane company Strengthen Braskem's image and reputation, among team members, society and investors, through advancements in compliance, sustainability, innovation and people management Governance and Compliance Sustainability People and Organization Image and Reputation Implement improvements in the governance system resulting from the corporate governance restructuring process Continue to strengthen the compliance system Adopt a proactive posture in relation to post-consumption plastic residue in Brazil Strengthen our influence on local and international agendas in sustainable development, especially in climate change Implement initiatives that ensure the recognition of Braskem as an attractive company in all regions, stimulating the globalization, flexibility, diversity and innovative thinking and being appreciated and preferred by talented young people Strengthen the image and reputation among stakeholders, leveraging brand attributes of a global and human centric company, aligned with our belief and purpose 17

18 STRATEGIC OBJECTIVES CONCENTRATIONS 1 Braskem Productivity and Competitiveness Seek advances in productivity and competitiveness in the current operation, focusing on operational efficiency and cost-leadership G O A L S as a 1 st Quartile Operator 2 Feedstock Diversification Feedstock diversification, increasing the share of gas in the feedstock profile and maintaining asset flexibility Achieve balance between liquid base and gas base, creating flexibility of + or - 10% 3 Geographic Diversification Expand the global footprint outside Brazil with gains in scale in PE and PP, reinforcing our leadership in the Americas Results of international operations above 50% of consolidated results 4 Reputation and Governance Strengthen Braskem's image and reputation towards members, society and investors through advances in compliance, sustainability, innovation and people management Recognition as a global, innovative and humane company 18

19 PETROCHEMICAL SCENARIO

20 SCENARIO ETHYLENE Ethylene Capacity Additions* Global Ethylene Utilization Rate* Global Demand Growth: 3.8% 7, ,592 1,617 3, * Source: IHS 7, ,157 4, North America China 6, ,790 3,265 1, Asia (Ex-China) Middle East 7,780 1, , Europe 8, ,572 1, % new ethylene plants in the North America region have started-up until now (5,470 kton/y) 83.6% 83.5% Ethane-based ethylene producers in the U.S. remain more competitive than naphtha-based crackers 85.1% 88.0% 87.0% 85.6% 87.2% 87.4% 85.9% 20

21 SCENARIO PE PE Capacity Additions* Global PE Utilization Rate* Global Demand Growth: 4.4% 6, ,861 1,325 3, , , ,938 2,828 2,187 1,073 6,916 1,400 6, ,117 2,962 1,219 1, % 83.6% 83.5% 85.1% 88.0% 87.4% 87.0% 85.6% 87.2% 85.9% New capacities in the U.S. have started up and are increasing production Next wave of investments only after 2022 (not confirmed yet) China has been announcing naphtha-based crackers to start only after 2020 North America China Asia (Ex-China) Middle East Europe Others * Source: IHS 21

22 SCENARIO PP PP Capacity Additions* Global PP Utilization Rate* Global Demand Growth: 4.8% 4, ,105 3, , ,324 3, , % 91.8% 90.7% 89.4% 87.8% 87.7% 85.5% 84.3% 83.6% 83.1% ,375 2,300 2,258 1, * Source: IHS 1, North America China Asia (Ex-China) Middle East Europe 2022 As China continues to seek self sufficiency in polypropylene production, new capacities of propylene (PDH based) will start up on that region in the future However, the market still balanced with demand growing more than supply 22

23 SCENARIO PVC PVC Capacity Additions* Global PVC Utilization Rate* Global Demand Growth: 3.4% 1, , * Source: IHS 2, , , North America China Asia (Ex-China) Middle East Europe Others 81,2% 78,3% 82,3% 83,3% 85,5% 75,7% 73,3% 72,2% 72,7% 73,4% No new relevant capacity announced, PVC spreads tend to be higher Environmental concerns regarding the carbide PVC producing process Producers who utilize the other process, based on ethylene, will benefit from the environmental restrictions and keep utilization rates increasing in the future 23

24 SCENARIO SPREADS* BRAZIL US and Europe Mexico -3% 9% 9% ,001 1, PE US - Naphtha ARA PE US - Ethane/Propane PP Asia - Naphtha ARA PVC Asia - Naphtha ARA Av. Resins Spread PP - Propylene EUR PP - Propylene US Av. PP PE US - Ethane US * Source: IHS 24

25 BRAZIL

26 BRAZIL AT A GLANCE LOCATION BUSINESS MODEL Alagoas 1 PVC 1 Chlor-alkali Suppliers Chemicals Business Polyolefins and Vinyls Businesses Bahia Naphtha/Gas Ethylene Propylene 15% 5% São Paulo Naphtha Cracker 3 PE 2 PP Duque de Caxias, RJ 1 Flex Cracker 4 PE 1 PP 1 PVC 1 Chlor-alkali 1 Gas Cracker 1 PE 1 PP Third-parties Basic and Performance Chemicals Caustic Soda Plastic Converters PE, PP and PVC Triunfo 1 Naphtha/Condensate Cracker 5 PE 2 PP 26

27 BRAZIL AT A GLANCE SIZE Production (kton/y) Global Ranking (1) Ranking in the Americas (1) Ethylene 3,952 9 th 4 th Propylene 1, th 5 th PE 3,055 7 th 3 rd PP 1,850 3 rd 1 st PVC th 6 th Caustic Soda th 7 th RAW MATERIAL PROFILE 5% 15% 15% 5% 80% (1) As of 2017 source IHS (2) Braskem Total Capacity STRATEGIC DIFFERENTIALS Only producer in Brazil and largest in the Americas Fully integrated with the second generation Long term agreement for the supply of energy Own salt mines Broad product portfolio, serving almost entire market necessities Close and differentiated customer relationship Global offices that reduce significantly the dependency on traders and distributors 80% Naphtha Gas Naphtha: Naphtha ARA Ethane/Propane: Mont Belvieu Flex Naphtha/Gas 27

28 1Q18 HIGHLIGHTS - CHEMICALS Production Volume (Kton) and Ethylene Utilization Rate (%) 95% 93% 92% 93% 90% 2,175 2,118 2,186 2,177 1, Utilization Rate Ethylene Propylene Others Q17 2Q17 3Q17 4Q17 1Q18 Sales Volume in Brazil (Kton) Exports Volume (Kton) Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Sales Volume (Kton) Exports Volume (Kton) 28

29 1Q18 HIGHLIGHTS POLYOLEFINS AND VINYLS Brazilian Market for Resins (Kton) Production Volume (Kton) and Average Utilization Rate (%) 92% 89% 89% 91% 89% 1, , , ,269 1, , , , , , Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Utilization Rate PE PP PVC Mkt Share (%) Sales Volume in Brazil (Kton) 69% 67% 69% 70% 68% Exports Volume (Kton) PE PP PVC Q17 2Q17 3Q17 4Q17 1Q18 PE PP PVC 1Q17 2Q17 3Q17 4Q17 1Q18 29

30 VALUE CREATION INVESTMENTS START UP OF THE CRACKER FLEXIBILITY PROJECT IN CAMAÇARI/BA To permit flexibility in the use of up to 15% of ethane as feedstock for the Bahia cracker Total Investment: R$ 380 million The project included the technological redesign of the Chemicals Unit and changes in the logistics infrastructure in the Port Terminal of Aratu Concluded in 13 months November 2017: arrival of the first vessel loaded with Ethane in the Port of Aratu US Gulf Coast Feedstock Profile in Brazil 15% 20% 15% 5% 15% Brazil 80% 80% 85% 80% Naphta Before Project Start-up Gas After Project Start-up Flex Naphtha/Gas 30

31 UNITED STATES AND EUROPE

32 U.S. AND EUROPE AT A GLANCE SIZE Ranking in LOCATION PRODUCTION STRATEGIC DIFFERENTIALS PP 2,195 3 th 3 rd U.S. 1,570 1 st GERMANY st (1) As of 2018 source IHS (2) Braskem Total Capacity Production (Kt/y) FEEDSTOCK PROFILE US - PGP/RGPs Europe - PGP US - PDH Global Ranking (1) (2) 16% 57% Regional Markets (1) 27% Texas 3 PP 1 UTEC West Virginia 1PP Philadelphia 1PP Wesseling 1PP Schkopau 1PP Supply agreement with Enterprise, ensuring propylene feedstock Office in Netherlands strengthens the Company s position in Europe Strong customer relations in Germany favors exports to the region UTEC plant in the U.S. produces UHMW polyethylene, a specialty BUSINESS MODEL Third-parties Propylene PP Plants (non-integrated) PP (3rd Generation) PVC Plastic Converters Finished products End users 32

33 1Q18 HIGHLIGHTS 1,879 US Market for PP* (Kton) 1,962 1,907 1,898 Largest PP Producer in the US 1,862 Ranked top 10 European Market for PP** (Kton) producer in Europe 2,146 2,077 2,189 2,012 2,005 1Q17 *Source: ACC 2Q17 3Q17 4Q17 1Q18 1Q17 **Source: IHS 2Q17 3Q17 4Q17 1Q18 Production Volume (Kton) and Average Utilization Rate (%) PP Sales Volume (Kton) 101% 95% 94% 99% 92% Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Utilization Rate PP US PP Europe PP US PP Europe 33

34 VALUE CREATION INVESTMENTS Completed: 4Q17 Completed: 4Q16 Completed: 2Q17 Propane Dehydrogenation (PDH) Propylene supply for Braskem s PP plants in the US Golf by Enterprise Startup: October/ years supply agreement based on propane prices Marcus Hook debottleneck DBN to expand Marcus Hook PP capacity (+64 kt/y) Investment: around US$21 million PP Europe Assets debottleneck DBN to expand Europe PP capacity (+ 80 kt/y) Feedstock Profile (Propylene) 27% 16% 27% US - PGP/RGPs Europe - PGP 73% 57% US - PDH Before Project Start-up After Project Start-up 34

35 VALUE CREATION INVESTMENTS Up to US$ 675 million Investments 450 KT/YEAR Capacity 1Q 2020 Start up Approval of a New world class PP facility in the US Braskem's La Porte facilities 35

36 MEXICO

37 BRASKEM IDESA AT A GLANCE SIZE LOCATION 1 cracker and 3 PE plants PRODUCTION STRATEGIC DIFFERENTIALS Production (Kton/y) Global Ranking (1) (2) PE 1,050 7 th 1 st HDPE 750 LDPE 300 (1) As of 2018 source IHS (2) Braskem Total Capacity Ranking in Mexico (1) Nanchital 3PE Gas Cracker The 1st greenfield to capture shale feedstock advantage Largest petrochemical complex in Latin America 20 years ethane contract with PEMEX Integrated production of PE BUSINESS MODEL Suppliers PEMEX Ethylene Braskem Idesa (Petrochemical Complex) Plastic converters Finished products PE End users 37

38 1Q18 HIGHLIGHTS Mexican Market for PE (Kton) Production Volume (Kton) and Average Utilization Rate (%) % 83% 87% 86% 85% Utilization Rate PE 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q Q17 Sales in the Mexican Market (Kton) Q17 3Q17 4Q Q % 15% 14% 11% 1Q17 Exports Volume (Kton) % 25% 18% 58 25% 29% 25% 15% 26% 34% 24% 24% 21% 11% 20% 23% 32% 2Q17 3Q17 4Q17 1Q18 Asia Europe US Central America 38

39 1Q18 HIGHLIGHTS

40 FINANCIAL HIGHLIGHTS Free Cash Flow Generation* (R$ Million) 2, % 403 1, EBITDA 1Q18 WK** Interest Paid Income Tax Investments FCF 1Q18-43 FCF 4Q17 FCF 1Q17 *Free Cash Flow Generation: (+) Net Cash from Operating Activities (+) Reversal of the impacts affecting the working capital (Leniency Agreement payment and the effects from reclassifications between the lines Financial Investments and Cash and Cash Equivalents) (-) Cash Investment in Investing Activities **Does not consider the payment of the leniency agreement and the effects from reclassifications between the lines Financial Investments and Cash and Cash Equivalents 40

41 DEBT AMORTIZATION SCHEDULE Debt Profile (1) (US$ million) 03/31/ % 1 2, Avg. Debt Term 17 years 1, % 2% 10% 17% 16% 12% ,723 Debt Coverage 36 months 1,042 03/31/2018 Cash ,044 1, / / onwards Avg. Cost of Debt 5,69% (US$) Invested in R$ Invested in U$ Stand by of US$ 750million Local Currency Foreign Currency (1) Does not consider transaction costs 41

42 LEVERAGE AND CREDIT RATING Leverage N e t d e b t / E b i t d a ( U S $ B i ) (1) ( 2 ) Credit Rating x Agency Rating Outlook Date Fitch BBB- Stable 09/28/2017 S&P BBB- Stable 03/14/ Moody's Ba1 Stable 04/10/ LTM 1Q18 Net debt Ex-BI (US$ Bi) Ebitda Ex-BI (US$ Bi) Leverage (x) (1) Does not consider Braskem Idesa net debt and EBITDA (2) Includes d 42

43 COMPLIANCE

44 CORPORATE GOVERNANCE Improved governance structure with a majority of Independent Board Members Board of Directors 6 Independent Board Members (out of 11) Compliance Committee CEO New Compliance Committee of the Board, composed of Independent Members CCO Corporate Structure: Compliance team reporting to a new CCO, who reports directly to the Compliance Committee of the Board Compliance Officers: US Europe Mexico Corporate Structure: Compliance Risk Management Internal Controls Internal Audit Business Units Finance and IT Legal Investments & Portfolio People, Communication, Marketing & Sustainable Development Competitiveness Innovation & Technology and Strategy Planning 24 people on the compliance team, operating in a co-sourcing model with third-party support Creating and updating policies and directives 44

45 FINAL REMARKS

46 CONSOLIDATED BUSINESS OUTLOOK 2018 Consolidated EBITDA (US$ million) 2018e vs Consolidated Cash Flow (US$ million) 2018e vs Utilization Rate Stable and high in all regions Operating cash flow Not relevant working capital consumption is expected ~1x GDP US/EU Regional Demand ~1.5 x GDP Brazil/Mexico Interests Lower interest rates and gross debt Petrochemical Spreads Chemicals Resins Brazil Tax US tax reform US and Europe Mexico CAPEX US$876 million Braskem remains expecting a higher Cash Flow Generation for 2018 as compared with 2017, though a lower EBITDA 46 7

47 MEETING WITH INVESTORS MAY 2018

48 FREE CASH FLOW GENERATION IN 2017 Free Cash Flow Generation* (R$ Million) 12, ,116 2, ,406 2,460 9% 2,247 EBITDA 2017 Capital Gain WK** Interest Paid Income Tax Investments/ FCF 2017 FCF 2016 (quantiq) Divestments *Free Cash Flow Generation: (+) Net Cash from Operating Activities (+) Reversal of the impacts affecting the working capital (Leniency Agreement payment and the effects from reclassifications between the lines Financial Investments and Cash and Cash Equivalents) (-) Cash Investment in Investing Activities **Does not consider the payment of the leniency agreement and the effects from reclassifications between the lines Financial Investments and Cash and Cash Equivalents 48

49 CAPEX 3,332 2, ,191 1, ,042 2, ,098 1,548 2, ,818 2, ,104 1, ,195 1,797 2, ,470 2, ,987 New PP Plant: 2018 disbursement corresponds to 39% of the total expected investment of US$675 million 1Q18: scheduled maintenance shutdown of the cracker in Triunfo, RS e Operational Contribution to Mexico Project Strategic Projects 49