BTG BTG PactualPactual XII CEO XII CEO ConferenceConferenceConferenceConference
São Paulo São Paulo –– Feb 2011Feb 2011
Carlos Carlos FadigasFadigas
CEOCEO
Forward-looking Statements
This presentation contains forward-looking statements. These statements are not
historical facts and are based on management’s objectives and estimates. The
words "anticipate", "believe", "expect", "estimate", "intend", "plan", "project",
"aim" and similar words indicate forward-looking statements. Although we believe
they are based on reasonable assumptions, these statements are based on the
information currently available to management and are subject to a number of
risks and uncertainties.
2
risks and uncertainties.
The forward-looking statements in this presentation are valid only on the date
they are made (September 30, 2010) and the Company does not assume any
obligation to update them in light of new information or future developments.
Braskem is not responsible for any transaction or investment decision taken based
on the information in this presentation.
Agenda
� Braskem
� A global player
� Acquisitions: opportunities and challenges
� Project pipeline: growth with value creation
� Braskem consolidated
3
� The petrochemical industry
� Final considerations
Agenda
� Braskem
� A global player
� Acquisitions: opportunities and challenges
� Project pipeline: growth with value creation
� Braskem consolidated
4
� The petrochemical industry
� Final considerations
Overview
� Braskem has become the leading thermoplastic company in the Americas with Quattor acquisition in January 2010
� Foothold in the USA with Sunoco PP assets acquisition in February 2010
� Attractive project pipeline in Latin America
� Listed in 3 stock exchanges: BM&FBovespa, NYSE and Latibex - 100% tag along
�Market Cap (02/11/2011) – US$ 9,6 billion
� EV – Net debt at Sep 2010 – US$ 15,5 billion � 3 PP
�Diversified portfolio of petrochemical products, with focus on PE, PP and PVC
� Annual capacity of 6,460 kton
� 31 facilities in Brazil and USA
� Naphtha and gas based crackers
� Petrobras as the main supplier in Brazil
Financial Highlights
5
Industrial Assets
� 1 gas cracker� 1 PP� 1 PE
� 1 naphtha cracker� 2 PP� 3 PE
� 1 naphtha cracker� 1 ethanol cracker� 5 PE� 2 PP
� 1 PVC� 1 Chlorine-soda
�1 naphtha cracker� 4 PE� 1 PP� 1 PVC�1 Chlorine-soda
2009 LTM Sep/10
∆R$ billion
BraskemStand alone
Consolidated
Net Revenue 15.2 26.3 + 73%
EBITDA 2.5 3.8 + 52%
Net Debt/EBITDA 2.67x 2.63x - 1%
Financial Highlights
Potential Upside
� Synergies:
- Additional EBITDA – R$ 400 million on a recurring basis
� Expectation of cycle recovery as of 2012
1.626
1.337
1.642
2.132
Consistent growth
CAGR: 21%
EBITDA 1 (US$ million)
10,21210,412
CAGR: 17%
Nominal Capacity (kton)
Resins
Ethylene
19.1%19.3%
23.1%
18.0%
14.1%
16.9%
13.5%
14.4%15.5%
2002 2003 2004 2005 2006 2007 2008 2009 LTM
2010
457 581
871 851 764
2002 2003 2004 2005 2006 2007 2008 2009 2010
EV/
EBITDA
EV
(US$ bi)
6Source: Braskem 1 Pro-forma figures for 2009 and 9M10: Braskem + Quattor + Braskem America
2.4 3.9 5.8 4.2 4.7 7.6 5.1 7.5 15.7
5.2x 6.7x 6.6x 5.0x 6.2x 4.6x 3.8x 4.8x 6.9x
2,965 3,045 3,145 3,1903,621
5,551
6
5,921
Politeno
Ipiranga, Copesul and Paulínia
Petroquímica Triunfo
Acquisitions Quattor + Sunoco
Ownership Structure Leveraging relationship with Petrobras
50.1% / 38.2%
MinorityShareholders
47.1% / 35.8%
Voting Shares / Total Shares
0.0% / 5.9% 2.8% / 20.1%
- World leader in E&P in deep waters;
- Present in the industry as investor, supplier and client;
- Investment Grade by all 3 Rating Agencies.
- Conglomerate;
- More than 30-years in the petrochemical industry;
- Investment Grade by Moody’s and Fitch.
7Source: Braskem
• Odebrecht as the controlling shareholder reinforces Braskem’s condition as a listed privately-owned
company
• Sole vehicle for petrochemical investments of both shareholders, Braskem has the right:
- to lead all petrochemical investments identified by Petrobras;
- if not of its interest, has the right to commercialize such products.
Go
ve
rna
nce
Braskem:Consolidated position in main regional market of thermoplastic resins*
North America# 32 players
M.East# 38 players
W.Europe# 29 players
N.Asia~# 150 players
Capacity (000 Metric
Braskem: strong potential for outperform
Source: Analysts reports, CMAI capacity list
South America# 12 players
* PE, PP and PVC
# 38 playersS.Asia
~# 40 playersBraskem: 5,510
Ecopetrol: 548
Mexichem: 416
PBB Polisur: 650
Pequiven: 185
Petro Dow: 42
Petroken: 180
PETROQUIM: 120
Petroquímica Cuyo: 130
Polinter: 495
Propilven: 115
Solvay Indupa: 541
Capacity (000 Metric
Tons)
8
19.1%19.3%
23.1%
18.0%
14.1%
16.9%
13.5%
14.4%15.5%
2002 2003 2004 2005 2006 2007 2008 2009 LTM
2010M
arg
inIn 2008, Braskem
managed to
maintain its
profitability
throughout the
financial crisis
despite the
Stability throughout the cycles
despite the
observed
volatility, while
other players
such as Nova
Chemicals and
Westlake posted
negative
margins during
that same period
9
Agenda
� Braskem
� A global player
� Acquisitions: opportunities and challenges
� Project pipeline: growth with value creation
� Braskem consolidated
10
� The petrochemical industry
� Final considerations
Quattor - key indicators
Operating rate (%) 1Q10 2Q10 3Q10
Ethylene 71%(1) 83%(1) 89%(1)
PE 61% 76% 84%
Operational Indicators
Financial Indicators
Acquisition opportunities
� Asset concentration in Southeast (~70% Brazilian consumption);
� Diversified RM matrix;
� Joint administration of raw
11
R$ million 1Q10 2Q10 3Q10
Net Revenue 1,220 1,425 1,663
EBITDA 107 214 302
EBITDA Margin 8.8% 15.0% 18.2%
Financial Indicators
(1) Considering the 200 kty expansion
� Joint administration of raw material agreements;
� Integrated industrial planning;
� Reduction of working capital costs;
� Tax and logistical synergies.
+99% +41%
Quattor synergies of R$ 400 million in EBITDA* as of 2012
279
400
79
43R$ million
173
235
49
13R$ million
Synergies 2012 Synergies 2011
* Annual and recurringSource: Braskem 12
279
Industrial Logistics Supply EBITDA Synergies
Industrial Logistics Supply EBITDA Synergies
� Production mix
� Seizing the cracker streams
� Optimization of inventories
� Maximization of gains from product distribution (domestic and export markets)
� Optimization of channels
� Joint management of feedstock purchases
� Renegotiation of third-party agreements
Efficient and rapid implementation of actions to capture synergies: additional of R$ 235 million in
EBITDA* as of 2011
Braskem America (former Sunoco Chemicals)
Marcus Hook, PA� 1 PP
R&T Center
Pittsburgh, PA
Neal, WV� 1 PP
Acquisition opportunities
� Global-scale, state-of-the-art assets – technology and age similar to Brazil’s polypropylene (PP) assets;
� Development of a global production base;
� Consolidation of industrial assets;
� Competitive costs for some 70% of raw materials;
13
La Porte, TX� 1 PP
Challenges
� Knowledge of North American distribution market;
� Add value to supplier ⇔ client chain (substitute distributor);
� Highly disperse market.
Million 9M09 9M10
Net Revenue (R$) 1,252 1,737
EBITDA (R$) 112 162
EBITDA (USD) 53 91
raw materials;
� Platform for greenfield projects in Latin America.
Disbursement: US$350 million
Financial Indicators
+72%
Agenda
� Braskem
� A global player
� Acquisitions: opportunities and challenges
� Project pipeline: growth with value creation
� Braskem consolidated
14
� The petrochemical industry
� Final considerations
“BECOME THE GLOBAL
SUSTAINABLE CHEMICAL
LEADER, INNOVATING FOR
Strategic direction
LEADER, INNOVATING FOR
BETTER SERVE THE
PEOPLE”.
15
Growth strategyOn the path to leadership in sustainable chemicals
Green PE
2010
Green PP
2013
�Successful track record for
�Innovation in bioplasticmarket
�Production integrated with
Innovation
Pipeline
�Meet global demand for sustainable products
�Guarantee CO2 sequestration
�Partnerships for the development of competitive �Successful track record for
implementing projects: term and costs – 200kton for R$ 488 million operational since Sep 10
�Capture of 2.5t CO2/t PE
�Partnership with Clients
�Production integrated with green propylene
�Capture of 2.3t CO2/t PP
development of competitive technologies
�Cooperation agreement with Cenpes (Petrobras Research Center)
�Development of other cracks streams
Braskem becomes a global leader in
biopolymers
16
Expansion with increased competitiveness
BRAZIL
PVC Expansion
Operational start-up : 1st half 2012
• Expansion of 200 kton/y in PVC capacity in Alagoas
• Investments of US$470 million
• Expected NPV ~US$450 million
• Disbursements already in 2Q10
2006 2007 2008 2009 2010 LTM
Imports
Domestic Sales
748
950982857
1,113
17%
31%26%34%19%
17Source: Braskem
Industrial Assets
New Projects
• Support for Brazil’s infrastructure projects
• Brazil currently imports 30% of its needs
PVC Domestic Demand (kton)
Growth strategyProjects with competitive materials
Ethylene XXI Project
Characteristics
� Startup: 2015
� JV Braskem (65%) and IDESA (35%)
� Integrated project: 1 Mton ethylene and 1Mton PEs
� Investment: US$ 2.5 billion
� Financial advisor: Sumitomo
PEMEX Gás (Basic Petrochemicals)
Cracker Ethane
Ethane
66,000 bpd 1,000 kton/y
Gas
Polyethylene
Ethylene
MEXICO
Focus 2010/2011
� Selection of technology
� Definition of EPC agreement and project’s FEED
� Structuring of Project Finance: already received US$ 3 billion in letters of interest
Proj. EXXI in 2014
Attractiveness
� Today Mexico imports around 70% of its demand (1.8 million ton/year of PE)
� 1st quartile in cost curve
� Fragmented market: 3,500 converters
1,000 kton/y
PEMEX Exploration and Production
Manufacturing Industry
18
Unique pipeline of growth in the Americas
� Green PE(+ 200 ktony ethylene)
� Ethylene XXI - Mexico(+ 1,000 ktony ethylene and + 1,000 ktony PE)
� Green PP
� Brownfield/Greenfield expansion projects in Brazil: RioPol, PP, LDPE
� New Biopolymers Plants in Brazil –integrated project (1st and 2nd
generation)
� Comperj
Consolidated Project Pipeline
� Resin Capacity CAGR for 2010-2015: +4.3% p.y.
� Diversification of raw materials and world-class assets
� Fiscal discipline
� Excellent track record of projects execution
2010 - 2012 2013 - 2015 Projects under evaluation
(+ 200 ktony ethylene)
� PVC Expansion (+ 200 ktony)
� Green PP(+ 30 ktony ethylene)
� Comperj
� PeruProj. (+ 600 to 1,000 ktony ethylene/PE)
� Projects in Venezuela(+300 ktony PP) (integrated ethylene/PE)
Source: Braskem
Consolidated Project Pipeline
Agenda
� Braskem
� A global player
� Acquisitions: opportunities and challenges
� Project pipeline: growth with value creation
� Braskem consolidated
20
� The petrochemical industry
� Final considerations
Value added products and potential market growth are key differentiators of value creation
Brazilian Market - Consumer driven (9M10)
Agribusiness
Electric & Electronic
Industrial Infrastructure
Others
Chemicals & Agrochemicals
5%
6%
3%4% 2%
37%CONSUMER GOODS
Braskem Sales by Sector9M10 X 9M09
21Source: Braskem
Food Packaging
Retail
Consumer Goods
Hygiene and Cleaning
Cosmetics & Pharmaceutical
Automotive
Construction33%
7%
11%
8%
3%
6%
11%
3%
6%
31%
43%
11%
4%
DURABLE GOODS
AGRIBUSINESS
CONSTRUCTION
OTHERS
Innovation pipeline: new developments to aggregate further value
PE Rotomolded Manhole
PE Largewatertanks
Structured resource base to support client needs
� Over R$ 330 million in R&D assets
� More than 190 researchers
� 8 pilot plants
� More than 260 patents filed worldwide
� Partnership with universities and R&D centers in Brazil and abroad
Applied Innovation and technology to strengthen value chain competitiveness
22
PE
BiopolymersInnovation pipeline
NPV: ~US$ 500 million PP
PVC
PVC Roof Tiles PVCWindows
PP auto grade PPBuckets
� Partnership with universities and R&D centers in Brazil and abroad
Raw material matrixDiversification to compete globally
Raw Material Profile* (2010) Braskem Post-Acquisitions** Braskem Post-Projects***
Implementation of Project Pipeline
46%
14%
92%17%
56%
8%
37% 30% 13%
17%
67%
3%
24%
15%58%
3%
�More balanced and diversified supply of raw materials
�Competitive natural gas price vs. international reference prices
(1) Ethane, Propane and HLR(2) Naphtha and condensate
*Based on resin-production capacity. Sunoco buys propane directly** Considering Green Ethylene capacity *** Considering the Mexico Project
Propane
�USG reference to competitive prices
Natural Gas
� 100% Petrobras supply with competitive prices versus international prices
Ethanol
Naphtha / Condensate
� ~70% of naphtha supplied by Petrobras with competitive price formula
� 30% direct imports from various international suppliers
Quattor Sunoco Braskem
Liquid (2) Refinery propylene Gas (1)
Ethanol
23
Lower leverage and longer average debt term
* Including the perpetual bond issue in October and the call in
December 2010 of US$ 150 million in perpetual bonds. Average term
increases to 11.9 years
762
13%
10%
16%14% 14%
13%17%
3,505
2,781*
501
3.46x
2.63x
-24%
Net Debt/ EBITDA
(R$ million)
24
2,743
386
1,747
1,375
2,155 1,9461,889
1,6832,281
2010 2011 2012 2013 2014 2015/
2016
2017/
20182019
onwards09/30/10
Cash
3%
10%13%
Does not include transaction costs
Invested in US$
Invested in R$
Debt P
rofile More balanced source
of fundsBank 37%
Capital
Market 37%
Gov. Entities
26%
Foreign
Entities 0%
Bank 52%
Capital
Market 21%
Gov. Entities
22%
Foreign
Entities 5%
Dec 09 Sep 10
-
BB+
BB
BB-
stable
RATING
Ba1
Ba2
Ba3
-
+BBB-Baa3
Jan/09 +May/09
Jan&Jul/10
Post-Acquisitions
Investment Grade
Upgrade Conditions:
Maintenance of high liquidity (cash or equivalents -stand-by) above R$3 billion. Cash above R$3 billionsince Dec/2008.
Capitalization of Braskem as pre-condition foracquisition. Shareholder movements;
Successful integration with capture of synergies andincrease in cash generation (EBITDA increase R$ 3,1bi to R$3.8 bi);
�
�
�
Braskem:Reaffirmed post-acquisition ratings
On January 11, 2011, Fitch changed from BB+ with stable outlook to BB+ with positive outlook and placed the Company on review for a potential upgrade
Source: Braskem
BB-
B+
Ba3
B1
2009 2010
Post-Acquisitions
The acquisitions:
Strengthened strategic positioning;
Increased # of plants, sites and geographic diversification;
Diversification of raw material mix;
More disciplined and less volatile domestic market ;
High governance standards;
Petrobras participation.
Decrease in Net Debt/EBITDA ratio expected to2.5x. In first post-acquisition quarter we alreadyreduced this ratio from 3.46x to 3.12x. In 2Q10 wereduced to 2.84x, and to 2,63x in 3Q10.
Braskem Ratings (Global Scale)
BB+ / Stable Outlook
Ba1 / Stable Outlook
BB+ / Positive Outlook
25
254
7210
191
360
35
12
56
1,011
1,617
Quattor
Quantiq
VenezuelaBraskem America
Mexico
Green PE
Investments in 2010 amount to R$1.6 billion The same amount is estimated for 2011
InvestmentsR$ million 1,644
440
20
380
36
234 Quattor
Braskem America
PVC Alagoas
Green PP
Operational
66
20831
61175
317
18
52
116
192
311
47
191
9M10 2010e
Equipment Replacement
Capacity Increse/PVC Alagoas
Maintenance
Others
Productivity
26Source: Braskem
* For 2011, capex is estimated at R$ 1.6 billion, which
approximately 30% destined to projects of capacity
expansion, 20% to scheduled maintenance shutdowns,
and the remaining to operational investments and spare
parts.
5489
391
2011e
Operational
Maintenance Shutdown
Mexico
Others
Agenda
� Braskem
� A global player
� Acquisitions: opportunities and challenges
� Project pipeline: growth with value creation
� Braskem consolidated
27
� Final considerations
� The petrochemical industry
Outlook on the global petrochemical industry
Ethylene: Operating rate 9M10
Industry at 9M2010
� Operating rates increased from 2Q10 supported by better demand
� Competitive cost base allows the US to operate at higher rates than other regions
� Braskem continuously improving its operations reached 91% in 3Q10
000 ton
84
94
8278
86
91
79
86 83
77
81
89
50
60
70
80
90
0
5,000
10,000
15,000
20,000
Europe N. America Asia M. East World Braskem
Current global 2010 operating rate is estimated at 85%
28Source: CMAI , Parpinelli Tecnon
Global Scenario
� New capacity additions can lead to the closing down of non competitive assets on a permanent basis, especially in Europe and US
� Global economic outlook volatility versus petrochemicals demand
� Lower operating rates indicate 2010 as the trough of the cycle
� Expectation of improvement in the industry profitability as of 2H11
Ethylene: Supply and Demand Balance
000 ton
83.880.4
83.1
87.0 88.490.5
0
50,000
100,000
150,000
200,000
2009 2010e 2011e 2012e 2013e 2014e
Capacity Demand Operating Rate 2010e (%)
Europe N. America Asia M. East World Braskem
Capacity 3Q Operating rate 3Q10 (%) Operating rate 2Q10 (%)
Leadership in Brazil – strong potential growth
Industrial Assets Brazilian’s thermoplastic demand – Million tonsPotential Growth
3,7
4,04,2 4,3
4,9
29
Per-capita consumption of PE, PP and PVC (kg/person)
Brazil USAEurope
JapanChina
22,2
6357
41
28
69%25%
6%
Others
BraskemImports
Market Share9M10
2006 2007 2008 2009 2010E
Agenda
� Braskem
� A global player
� Acquisitions: opportunities and challenges
� Project pipeline: growth with value creation
� Braskem consolidated
30
� Final considerations
� The petrochemical industry
Priorities
Existing assets
To strengthen the Brazilian Petrochemical Sector, ensuring the supply of local competitive rawmaterial
Maintaining growth in domestic sales in relation to 2009, aligned with the better performance of theBrazilian market (thermoplastic demand growth of 15%. GDP should exceed 7%)
Strengthening the relationship with our Clients, adding value and differentiation to our products andservices and consolidating the market share to prevent imports
Ensure capture of the identified synergies
Adding value through the acquired assets
31
Adding value through the acquired assets
� Quattor: continue improvement in its operational efficiency
� Braskem America: return above capital employed
Financial
To balance the investments and dividends equation
Growth
Expand the use of renewable feedstock maintaining the leadership in bioplastics
Implementing Projects in Latin America, which are based on competitive raw materials
Green Chemicals
Pr/share BRKM5 Performance
+
Why Braskem?
Consolidated (R$ billion) 3Q10 Multiple
EBITDA LTM 3.8
Synergies to 2012 4.2
Market Capitalization 16.1 22.9
EV 26.0 32.8
EV/EBITDA 6.9x 7.8x**
Price per share 20.20* 28.60
Proj. NPV to 2012 > R$1.12 bi
Value added by projects to
share price1.40
0
5
10
15
20
25
30
35
40
� Largest thermoplastic resin producer in the Americas
� Leader of important projects in Latin America with
competitive raw materials
� Emerging consumer market with potential per-capita growth
as additional driver
� Above-peer profitability
� Access to one of the world’s largest consumer markets
following the U.S. acquisition
� Successful trajectory of organic growth and acquisitions
� Shareholders hold long-term view with strategic synergies
for growth and value creation
� Leader in green chemicals
� Huge potential for value creation
� EBITDA increase
� EV/EBITDA multiple below
peers’ multiple (7-9x)
32
*BRKM5 as of 12/21/10 ** Peer Multiple Dec/2010
Source: Bloomberg.
Price per share after projects 30.00R$ USD
BTG BTG PactualPactual XII CEO XII CEO ConferenceConferenceConferenceConference
São Paulo São Paulo –– Feb 2011Feb 2011
Carlos Carlos FadigasFadigas
CEOCEO