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José Carlos GrubisichPaul Altit
Third Quarter 2002 Earnings
A World Class Brazilian Petrochemical CompanyA World Class Brazilian Petrochemical Company
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This presentation includes forward looking statements. Suchinformation is not merely based on historical fact but also reflectsmanagement’s objectives and expectations. The words "anticipate",“wish", "expect", “foresee", “intend", "plan", "predict", “forecast",“aim" and similar words, written and/or spoken, are intended to identifyaffirmations which, necessarily, involve known and unknown risks.
Known risks include uncertainties which include, but are not limited toprice and product competition, market acceptance of products, theactions of competitors, regulatory approval, currency type andfluctuations, regularity in the sourcing of raw materials and inoperations, among others. This presentation is based on events up toNovember 22, 2002 and Braskem is not liable to update the contents inthe light of new information and/or future events.
Braskem takes no responsibility for transactions or investmentdecisions made on the basis of information contained in thispresentation.
Disclaimer – forward looking statements
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Nine-month results through September 30, 2002:Criteria Adopted in the Pro-Forma results:
• The financial information for the companies comprising the Braskemgroup is considered as if these companies had been part of thecorporate structure since the beginning of 2002.
• The companies that comprise Braskem and are 100% consolidated inthe result are: Braskem pp dita; OPP; Trikem; Polialden andNitrocarbono;
• The effects of the proportional consolidation of Braskem’s investmentsin Politeno and Copesul pursuant to CVM 247 are excluded. Theseinvestments are recognized in the Equity Income account.
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Basic Petrochemical
Complex
Basic Petrochemical
Complex
Braskem – The largest Latin American petrochemical company:
13 Plants in the main industrial centers:
Clorine SodaClorine Soda
HDPEHDPEBasicPetrochemica
Complex
BasicPetrochemica
Complex
LDPELDPE
Camaçari
Triunfo
São Paulo
AratuPort
Terminal
AratuPort
Terminal
PPPP
PVCPVC
CaprolactamCaprolactam
HDPELLDPEHDPELLDPE
Alagoas
Assets with a replacementvalue of ~ US$ 4.5 Bi,
excluding investments inCopesul and Politeno
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! Low sector margins inhibited investment in new capacity;
! Gradual transition to world economic recovery;
! Gradual stabilization of oil prices (from US$18.0/bl to US$ 22.0/bl);
! Naphtha : reduction in prices to between US$ 190/t and US$ 210/t;
! Capacity utilization levels and prices: gradual recovery reaching maximum profitability(“fly-up”) in 2005;
! Brazil – gradual recovery in economic growth (approx. 3% annually) and in the domesticthermoplastics market. New opportunities for consolidation.
Positive Petrochemical Scenario – 2003 / 2007:
Source: international consulting firms
The next cycle could be one of the best periods for the sector
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Braskem - Market – Sales Volume (kton):
ETHYLENE
PE
PVC
482,181494,217 + 2%
292,338297,691 + 2%
PP 281,825307,489 + 9%
800,981708,833 - 12%(*)
PET 39,62644,206 + 12%
1,095,9691,143,603 + 4%TOTAL THERMOPLASTICS
9M 019M 02 Var. (%)PRINCIPAL PRODUCTS
(*) Maintenance and modernization stoppage at the Pyrolysis Plant #1 at the Basic PetrochemicalsComplex, Camaçari (Ba)
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Braskem - Market – Net Revenues (R$ million):
Business Units 2001 2002 Variation(%)Domestic Market 3,484 3,768 8%
Basic Raw Material 1,353 1,505 11%Polyolefins 1,184 1,303 10%Vinyls 707 701 -1%Bus. Development 240 259 8%
Export Market 783 1.126 44%
Total Net Sales 4,266 4,894 15%
Net Revenues per BN(Domestic Market)
40%
35%
19%7% Basic raw material
PolyolefinsVinyls
Bus. Development
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Braskem – Industrial Performance - Production (kton):
ETHYLENE
PE
PVC
497,782484,459 - 3% (*)
265,345273,919 + 3%
9M 019M 02 Var. (%)
PP 290,915301,501 + 4%
805,183703,840 - 13% (*)
PET 51,38440,085 - 22% (*)
1,105,4261,099,964 0%TOTAL TERMOPLASTICS
(*) Maintenance and modernization stoppage at the Pyrolysis Plant #1 at the Basic PetrochemicalsPlant, Camaçari (Ba)
PRINCIPAL PRODUCTS
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Braskem – Industrial Performance – Average Utilization Rates:
(*) Maintenance and Modernization Stoppage at the Pyrolysis Plant #1 at the Basic PetrochemicalsComplex, Camaçari (Ba)
ETHYLENE
PE
PVC
79%80% (*)
79%82%
9M 019M 02
PP 86%89%
90%
81%83%TOTAL THERMOPLASTICS
PRODUCTS
79% (*)
91%
95%
Oct/02
98%
102%
95%
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Braskem – Operating Results - COGS (9M02):
64%
24%
6% 4%2%
Others
Depreciation Personnel
Electric Energy
Naphtha
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Braskem – Operating Results - EBITDA (9M02):
EBITDA – 2002(Quaterly)
367315
238
100
200
300
400
1Q 2Q 3Q
R$ million
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109
(14)
9M01 9M02
540
307
461
(23)(30)
(63)
(470)
816
Participation inControled/AssociatedCompanies
AveragePrice
Other Oper.Rev./Exp.
Variable Costs
SG&A **
Fixed C./Deprec.
Deprec./Amort.Expenses
Total SalesVolume
** Not including depreciation
* Operating Income = Operating Profit - Net. Fin. Res. + S/h. Equity
Inflation (IGP-M) = 13.3%; Reclassifications(R$ 10 MM) and Integration Process (R$15MM)
Braskem – Variation in Operating Income * (9M02):
Insurance; Depreciation (transf.from fixed assets in progress)
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Braskem – Financial Result and F/X Impact (9M02):(R$ million)
09/30/02
Net F/X variation (2,177)
On F/X liabilties (2,374)
Intercompany Loans 46
Banking Expenses (39)
Others 45
On F/X assets 197
Interest /Monetary Restatement (788)Interest (406)Monetary Restatement (382)
Amortization of 2001 deferred F/X losses (190)
F/X Impact (2,367)
Financial Result without F/X translation effect (736)
FINANCIAL RESULT (2,913)
(A)
(B)
(A) + (B)
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(306)
355 53
403
(2,104)(238) (1,836)
Loss for the Period
9M01 9M02
Operating Result*IT Minority Participation
NetFinancial
Result
OtherN/operatingRev./Exp.
Braskem – Net Profit Variation (9M02):
Loss for the Period
* Operating Result = Operating Profit - Net Fin. Res.+ Shareholders’ Equity
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Braskem’s Net DebtIn R$ at 09/30/02
R$7,698 (*)
(*) Ignoring proportional consolidation of Copesul and Politeno.
Payment Schedule
0%
10%
20%
30%
40%
50%42.1%
Oct 2002 toDec 2003
2004 2005 2006 2007 2008
15.2%
6.0%10.7%
26.0%
0.0%
Average Cost ~ US$ + 8 % pa
Composition by Index
Braskem – Consolidated Debt (Sep/02):
• Short Term includes: R$ 1.35 Bi of pre-exportcontracts; and
• ~ R$ 700 million in working capital forfinancing operating cash flow requirements
14%11%
71%
4%TJLP
CDI
US$
IGP- M
Trade Finance ~ 47%
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Braskem – Operating Cash Generation (9M02):
R$ million
EBITDA 920,544
Principal variations
Working Capital Variation 338,319
Financial Transactions/Trade Fin. Lines (pre-payments) 207,462
Others 46,916
Operating Cash Generation 1,513,242
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Synergies already implemented have achieved an annual recurring gain of R$ 53 millions
Synergies already implemented have achieved an annual recurring gain of R$ 53 millions
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14
3
6
19
IPI
PIS/CofinsProcurement
/Logistics
Optimizationof the labor
force
Total
53
Reduction inoperatingexpenses
Position in September/02
Braskem – Synergies arising from Integration (R$ MM/year):
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Braskem: Next steps in the Integration Process:
! Braskem: operating on an integratedbasis;
! OPP Camaçari to be merged intoBraskem before the year-end;
! Nitrocarbono PSO being examined byCVM (conclusion imminent);
! Trikem/Polialden: studies in progress.
! Braskem: operating on an integratedbasis;
! OPP Camaçari to be merged intoBraskem before the year-end;
! Nitrocarbono PSO being examined byCVM (conclusion imminent);
! Trikem/Polialden: studies in progress.
PolialdenPolialden
TrikemTrikem
NitrocarbonoNitrocarbono
OPPOPP
Note: Besides the above assets, Braskemalso holds the assets of the extinct CopeneNote: Besides the above assets, Braskem
also holds the assets of the extinct Copene
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Braskem : An excellent investment opportunity !
! Leading thermoplastics producer in Latin America
! Integrated operations enable synergies to be captured
! Consolidated businesses and superior margins, with
adjustment of capital structure already under way;
! Qualifies immediately for Bovespa’s Level 1 corporate
governance classification; will qualify for Level 2 in 2 years
! Adoption of 100% “tag along” rights for all shareholders
! High potential for creation of shareholder value
A world class Brazilian Petrochemical Company !
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Abamec PresentationsNovember 22, 2002
José Carlos GrubisichPaul Altit
Third Quarter 2002 Earnings
A World Class Brazilian Petrochemical CompanyA World Class Brazilian Petrochemical Company