Conferência btg pactual – fevereiro 2011

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




4



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




10



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%


(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


+72%

Agenda

� Braskem

� A global player




14



“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




20



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




27



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




30



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

Business

Conferência btg pactual – fevereiro 2011