Earnings Conference Call Investor Relations São Paulo, May 15th, 2017
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 December 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
BRAZIL HIGHLIGHTS Brazil: Crackers operated at an average capacity utilization rate of 95%, up 6 p.p. from and 5 p.p. from, reflecting the: o good operating performance of all crackers, o normalization of operations at the cracker in Bahia following the scheduled shutdown in, o o higher supply of local feedstock in the Rio de Janeiro cracker; and delivery of imported ethane from the United States at the Rio de Janeiro cracker. Brazilian demand for resins (PE, PP and PVC) came to 1.2 million tons in, growing 5% from ; The Company s market share expanded 2 p.p., with total sales of 844 kton, representing increases of 8% and 2% from and Exports o Resin exports amounted to 418 kton, increasing 1% in relation to both and ; o Exports of basic petrochemicals came to 334 kton, advancing 27% and 23% from and, respectively. New record for the Company in the quarter EBITDA of R$2,391 million (US$761 million) to account for 68% of the Company s consolidated EBITDA from all segments. 3
BRAZIL Brazilian Market of Resins (kton) Total Sales (kton) 6% 2% 1,168 5% 1,194 415 1,300 1,314 454 424 1,239 1,262 415 418 1,218 1,223 0% 780 846 890 824 844 Exports Brazilian Market Sales EBITDA (R$ million) Resins Spread (US$/t)* EBITDA Margin 16% 18% 18% 18% 25% 2,293 2,391 2,165 2,206 1,821 948 306 1,057 382 1,108 365 1,071 422 1,124 467 2% 1% 642 675 743 649 657 Average Resin Price Resins Spread (*) Source IHS - 55% PE, 32% PP Asia and 13% PVC Ásia Average Feedstock Price 4
U.S., EUROPE AND MEXICO HIGHLIGHTS () United States and Europe Capacity utilization rate of PP plants of 101%, increasing 1 p.p. from and 6 p.p. from, with the latter increase due to the scheduled shutdown of the Marcus Hook unit in that period; Sales: 534 kton, increasing 7% and 6% from and, respectively. New record for the quarter; EBITDA: US$188 million (R$592 million), representing 17% of the Company s consolidated EBITDA from all segments; In January, the new plant in La Porte, Texas to produce ultra-high molecular weight polyethylene (UHMWPE) started operating, which will enable Braskem to better serve its clients in North America as well as Europe through exports Mexico: PE plants operated at an average capacity utilization rate of 97%, 24 p.p. higher than in ; PE production amounted to 250 kton, growing 29% compared to, in line with the Company s plans; PE sales: 264 kton, 47% sold in the Mexican market; EBITDA: US$171 million (R$536 million), representing 15% of the Company s consolidated segments. 5
UNITED STATES AND EUROPE United States and Europe Sales (kton): 7% Spread PP USA (US$/t) 499 504 503 501 147 156 144 149 534 154 1,543 683 1,462 720 1,451 834 1,385 797 1,613 1,040 352 348 359 352 380-3% 860 742 617 588 573 Europe USA PP USA Propylene USG Spread PP-Propylene EBITDA (US$ million) Spread PP Europe (US$/t) EBITDA Margin 21% 34% 32% 25% 24% 219 212 188 161 1,130 639 1,231 718 1,219 756 1,231 1,323 793 869 +3% 103 491 513 463 438 453 PP Europe Propylene Europe Spread PP-Propylene 6
MEXICO Production (kton) and Utilization Rate (%) Mexico PE Sales (kton) 72% 64 72% 62 44% 39 78% 67 97% 87 99% 89 94% 76 96% 85 54 20 33 153 93 60 199 117 82 264 140 124 AUG SET OCT NOV DEC JAN FEB MAR Production Utilization Rate Exports Mexican Market Sales EBITDA (US$ million) Spread PE Mexico (US$/t) 995 1,132 1,216 1,118 1,191 EBITDA Margin 3% 40% 48% 57% 171 117 151 140 177 173 104 8% 66 878 981 1,077 941 1,018 2 PE US Ethane USGC Spread PE-Ethane 7
HIGHLIGHTS Braskem - Consolidated: EBITDA: amounted to US$1,144 million (R$3,607 million), advancing 44% from the year-ago period, due to: o the increases of 2% in the average international spread for the thermoplastic resins produced by Braskem in Brazil and of 64% in the spreads for basic petrochemicals in the international market; o o sales volume growth in all segments; and the good performance of the Mexico complex, which in the same period last year was still in the ramp-up phase. Consolidated net income of R$1,905 million and Parent Company net income of R$1,799 million o representing quarterly earnings per share (excluding treasury shares) of R$2.26 per common share or class A preferred share, and of R$0.61 per class B preferred share. Financial leverage measured by the ratio of net debt to EBITDA in U.S. dollar ended the first quarter of 2017 at 1.57. In Brazilian real, the leverage ratio stood at 1.52. In March the Company paid US$94.8 million referring to the portion of the U.S. Department of Justice (DoJ) under the Global Settlement. 8
EBITDA vs Braskem s consolidated EBITDA advancing 44% on : in was US$1,144 million, Spreads for basic petrochemicals Good performance of the Mexico complex; All segments sales volume growth US$ million 19 1,144 227 791 84 55 283 Avg. FX : 3.91 R$/US$ Avg. FX : 3.14 R$/US$ EBITDA FX Spreads Volume Contribution Margin Fixed Costs, SG&A and Other EBITDA 9
AMORTIZATION SCHEDULE AND LEVERAGE 3,138 2,230 908 Debt Profile (US$ million) 03/31/20171 (03/31/2017 US$ million) Gross Debt: US$ 7,463 Net Debt*: US$ 5,233 Avg. Debt Term**: 17.1 years Debt Coverage***: 32 months Avg. Cost of Debt****: 5,64% (US$) 1,083 1,147 10% 398 370 11% 301 506 16% 527 699 10% 192 573 23% 132 1,548 10% 17 750 19% 2 1,450 * Does not include the global settlement signed by the Company in December 2016 ** Portion of debt in dollars *** it includes stand bys **** it considers debt in reais swaped to USD 03/31/2017 Cash 2017 2018 2019 2020 2021/2022 2023/2024 (1) Does not consider discounts from transaction costs 2025 onwards Net Debt / EBITDA (US$) US$ million Net Debt (a) 5,334 5,287 5,246 EBITDA (LTM) 3,120 3,152 3,334 Net Debt/EBITDA 1.71x 1.67x 1.57x Fine / Global Settlement (b) 875 813 Net Debt/EBITDA 1.71x 1.95x 1.82x Corporate Credit Rating Agency Rating Outlook Date Global Scale Moody s Ba1 Stable 03/17/2017 Fitch BBB- Stable 09/30/2016 S&P BBB- Negative 04/27/2017 (a) Does not include the financial structure of the Mexico Project (b) Face Value of USD 957 million, with accounting updated of 12/31/2016
INVESTMENT* *Considers operational investments, maintenance shutdowns and spares of Braskem and its subsidiaries and contributions to the Mexico project. 100% R$ million 1,814 BRAZIL USA/ EUROPE MEXICO 1,619 16% 285 238 142 53 2 45 2017e In, Braskem s units in Brazil, the United States and Europe made 16% of the total investments planned for the year. Brasil The investment of R$20 million in strategic projects refers to the project to diversify the feedstock profile of the cracker in Bahia, which already reached 39.2% completion in, with startup slated for the second half of 2017. United States and Europe units, of the US$8.7 million (R$27.2 million) refers to expenses with studies for the project to build a new PP plant in the United States. 11
PE EXPANSIONS AND SPREADS PE Capacity Expansions 2017 PE-Naphtha Spreads Forecasts 2017 Others 7,524 835-9% 6,856 666 +8% 721 664 +6% 704 Middle East 1,360 865 1,280 India 2,049 1,649 forecast real forecast forecast Spreads are forecasted to be higher than what was China 1,551 1,334 expected in the last quarter, due to PE/Ethylene project delays: India s 1,050 kt/y PE plant and petrochemical complex was North America 1,729 1,729 supposed to be commissioned by the, but was postponed to later this year. Source: IHS, Company s reports Forecast Forecast China s 1,000 kt/y naphtha cracker and 700 kt/y PE plant was postponed to the end of the year. 13
OUTLOOK 9M17 VS. Brazil USA/Europe Mexico 9M17e 9M17e 9M17e Sales in the Domestic Market In line with Gradual demand recovery Strong and stable demand Strong and stable demand Net Importer market of PE Net Importer market of PE PP PP Petrochemical Spreads PE PVC PE PVC PP PP PE PE Basic Basic FX Appreciated Brazilian Real Maintenance Neutral Neutral Appreciated Mexican Peso Maintenance EBITDA (US$/ R$) Source: IHS 14
CONCENTRATIONS 1 Productivity and Competitiveness Focus on operational and commercial efficiency seeking competitiveness of the current operation Goals 1 st Quartile Operator 2 Feedstock Diversification Diversification of the raw material matrix, increasing the share of gas in the feedstock profile < 50% of polymer production from Naphtha 3 Geographic Diversification Expand the global presence outside Brazil with gains in scale in PE and PP Results of international operations above 50% of consolidated results Foundation for the Business Conduction 4 Reputation and Governance Strengthen Braskem's image and reputation through advances in compliance, sustainability, innovation and people management Recognition as a world leader and national pride in Brazil 14
Earnings Conference Call Investor Relations São Paulo, May 15th, 2017