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Conference call presentation 1 q10 results

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Braskem_RI
Braskem_RI

Braskem reported financial results for the first quarter of 2010 with an EBITDA of R$729 million, up 19% from the fourth quarter of 2009. Net revenue was R$4.466 billion, up 5% from the previous quarter. Domestic resin sales were stable compared to the fourth quarter. Braskem also announced the approval of its PVC project in Alagoas with an NPV of US$450 million and changes to its Venezuela project that reduce investments to US$500 million. Total planned investments for 2010 amount to R$1.6 billion, focusing on the PVC expansion project in Alagoas and other growth and maintenance projects.

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1Q10 Results Conference Call May 14, 2010
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. The forward-looking statements in this presentation are valid only on the date they are made (March 31, 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. 2
Global Scenario Resin and basic petrochemical prices maintained the upward trend in 1Q10 Higher raw material prices Strong demand from Asia Unscheduled stoppages Lower demand for gasoline limited operations at U.S. refineries Scheduled stoppages, operational problems and continuous use of light feedstock (crackers) help to balance the market, which should benefit petrochemical companies in 2Q10 Key factors for second-half 2010 New capacity in Asia and Middle East could pressure industry profitability after midyear World economy excessively dependent on government stimulus Feedstock prices impacted by volatility in capital markets Labor market still recovering In Brazil, demand should post double-digit growth, accompanying GDP, while prices should follow the trend in the international market Thermoplastic resin market in line with 4Q09, at 1,165(a) kton, with growth expected in 2Q10 (a) Company estimates, since Abiquim did not disclose apparent consumption figures of the Brazilian market 3 Source: Braskem / CMAI
1Q10 Highlights EBITDA 1Q10 of R$ 729 million, up 19% from 4Q09 and margin of 16.3% Approved by U.S. anti-trust agencies the acquisition of the PP assets of Sunoco Chemicals Capital increase of R$ 3.74 billion Conclusion of Quattor Participações acquisition Funding of some US$ 1 billion, of which US$ 400 million through 10-year bonds at 7% and the pre- payment of US$ 530 million due in 5 years Approval of PVC Project by the Board of Directors, with NPV of US$ 450 million Change in scope of the Venezuela Project Investment reduction in Propilsur from US$ 1.2 billion to US$ 500 million, using the propylene available from the Paraguaná complex Source: Braskem 4
Domestic market performance Domestic Sales 1Q10 vs. 4Q09 % Domestic Sales 1Q10 vs. 1Q09 % 60% 35% 32% 28% 20% 2% 0% -1% PE PVC Total Brazilian -2% PP Resins Market* -3% Total Brazilian PE PP PVC Resins Market* 1Q10 Sales practically unchanged from Stronger sales reflect recovery from 4Q09 global crisis as of 2Q09 * Braskem estimates: Domestic sales + Imports Source: Braskem 5
EBITDA Better contribution margin and FX gains more than offset lower sales volume R$ million FX impact on revenue 152 FX impact (99) on costs 53 729 76 614 (12) (2) EBITDA Contribution FX Volume Fixed Costs EBITDA 4Q09 Margin SG&A 1Q10 Others 6 Source: Braskem
Main Economic Indicators R$ million 1Q10 4Q09 1Q09 Change Change Key Indicators (A) (B) (C) (A)/(B) (A)/(C) Net Revenue 4,466 4,253 3,260 5% 37% EBITDA 729 614 457 19% 59% EBITDA Margin 16.3% 14.4% 14.0% 1.89 p.p. 2.29 p.p. 1Q10 4Q09 1Q09 Change Change Financial Result (A) (B) (C) (A)/(B) (A)/(C) Net Financial Result (645) (655) (208) -2% 210% Foreign Exchange Variation (FX) and Monetary Variation (MV) (205) 103 34 -299% -706% Financial Result excluding FX and MV (440) (758) (242) -42% 82% Interest Expenses (105) (118) (124) -11% -15% Tax Liability (262) (577) (18) -55% - Others (74) (63) (100) 16% -26% Source: Braskem 7
Main Economic Indicators - Consolidated R$ million Key Financial Numbers - 1Q10 Braskem EBITDA LTM: Principais Números Braskem Quattor Consolidado America R$3,496MM Net Revenue 4,466 1,233 547 6,245 (US$1,871MM) EBITDA 729 109 * 65 903 - Braskem: EBITDA Margin 16.3% 8.8% 11.9% 14.5% R$2,746MM Financial Result (645) (233) - (878) - Quattor: R$607MM Net Profit / Loss (123) (767) 38 (852) - Sunoco: R$143MM Source: Braskem * Non-recurring of R$18 million 8
Comfortable cash position covers 2 years of debt amortization In R$ million (3/31/10) Dívida Líq. / EBITDA (x) R$ Net Debt / EBITDA (x) US$ Net Debt/ EBITDA (x) US$ Gross Debt: 9,810 Debt: Net Debt: 6,500 -12% 2.98 -18% 2.67 2.47 Avg. Term: 9.7 years 2.37 65% of debt pegged to USD 3,311 Dec 09 Mar 10 Dec 09 Mar 10 1,577 17% 16% 15% 13% 13% 11% 1,734 9% 312 * 1,684 1,466 1,296 1,548 6% 1,252 786 891 611 03/31/10 2010 2011 2012 2013 2014/ 2016/ 2018/ 2020 Cash 2015 2017 2019 onwards (1) Does not include transaction costs Invested in R$ * Debentures of 13th issue due June, 2010 Invested in US$ Source: Braskem 9
Comfortable level of leverage Better operational performance reduces leverage ratio to 3.12x in 1Q10 Liquidity still high, with cash around R$ 6 billion R$3.74bi Capital Increase R$3.74bi Capital increase + Quattor + Sunoco + Quattor + Sunoco EBITDA in 2009 EBITDA in LTM at 1Q10 Gross Debt 17,131 17,176 Cash & Cash Equiv. 6,231 6,267 Net Debt 10,900 10,909 EBITDA 3,150 3,495 Net Debt / EBITDA 3.46x - 10% 3.12x Source: Braskem, Unipar and Sunoco Inc 10
Investments in 2010 amount to R$1.6 bi 2010 Estimated Investments PVC Alagoas Expansion In millions of R$ Startup: 1st semester 2012 Capacity addition of 200 kton/y of PVC in Alagoas: 1 MVC plant and 1 PVC plant 1,617 Investments of US$470 million Green PE NPV Expected ~US$ 450 million 254 Support to infrastructure projects in Brazil Mexico 72 Venezuela 35 52 PVC Alagoas BRASKEM 462 Operational Maintenance 317 BRASKEM AMERICA 56 QUATTOR 360 QUANTIQ / VARIENT 10 11
1Q10 Results Conference Call May 14, 2010

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Conference call presentation 1 q10 results

  • 2. 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. The forward-looking statements in this presentation are valid only on the date they are made (March 31, 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. 2
  • 3. Global Scenario Resin and basic petrochemical prices maintained the upward trend in 1Q10 Higher raw material prices Strong demand from Asia Unscheduled stoppages Lower demand for gasoline limited operations at U.S. refineries Scheduled stoppages, operational problems and continuous use of light feedstock (crackers) help to balance the market, which should benefit petrochemical companies in 2Q10 Key factors for second-half 2010 New capacity in Asia and Middle East could pressure industry profitability after midyear World economy excessively dependent on government stimulus Feedstock prices impacted by volatility in capital markets Labor market still recovering In Brazil, demand should post double-digit growth, accompanying GDP, while prices should follow the trend in the international market Thermoplastic resin market in line with 4Q09, at 1,165(a) kton, with growth expected in 2Q10 (a) Company estimates, since Abiquim did not disclose apparent consumption figures of the Brazilian market 3 Source: Braskem / CMAI
  • 4. 1Q10 Highlights EBITDA 1Q10 of R$ 729 million, up 19% from 4Q09 and margin of 16.3% Approved by U.S. anti-trust agencies the acquisition of the PP assets of Sunoco Chemicals Capital increase of R$ 3.74 billion Conclusion of Quattor Participações acquisition Funding of some US$ 1 billion, of which US$ 400 million through 10-year bonds at 7% and the pre- payment of US$ 530 million due in 5 years Approval of PVC Project by the Board of Directors, with NPV of US$ 450 million Change in scope of the Venezuela Project Investment reduction in Propilsur from US$ 1.2 billion to US$ 500 million, using the propylene available from the Paraguaná complex Source: Braskem 4
  • 5. Domestic market performance Domestic Sales 1Q10 vs. 4Q09 % Domestic Sales 1Q10 vs. 1Q09 % 60% 35% 32% 28% 20% 2% 0% -1% PE PVC Total Brazilian -2% PP Resins Market* -3% Total Brazilian PE PP PVC Resins Market* 1Q10 Sales practically unchanged from Stronger sales reflect recovery from 4Q09 global crisis as of 2Q09 * Braskem estimates: Domestic sales + Imports Source: Braskem 5
  • 6. EBITDA Better contribution margin and FX gains more than offset lower sales volume R$ million FX impact on revenue 152 FX impact (99) on costs 53 729 76 614 (12) (2) EBITDA Contribution FX Volume Fixed Costs EBITDA 4Q09 Margin SG&A 1Q10 Others 6 Source: Braskem
  • 7. Main Economic Indicators R$ million 1Q10 4Q09 1Q09 Change Change Key Indicators (A) (B) (C) (A)/(B) (A)/(C) Net Revenue 4,466 4,253 3,260 5% 37% EBITDA 729 614 457 19% 59% EBITDA Margin 16.3% 14.4% 14.0% 1.89 p.p. 2.29 p.p. 1Q10 4Q09 1Q09 Change Change Financial Result (A) (B) (C) (A)/(B) (A)/(C) Net Financial Result (645) (655) (208) -2% 210% Foreign Exchange Variation (FX) and Monetary Variation (MV) (205) 103 34 -299% -706% Financial Result excluding FX and MV (440) (758) (242) -42% 82% Interest Expenses (105) (118) (124) -11% -15% Tax Liability (262) (577) (18) -55% - Others (74) (63) (100) 16% -26% Source: Braskem 7
  • 8. Main Economic Indicators - Consolidated R$ million Key Financial Numbers - 1Q10 Braskem EBITDA LTM: Principais Números Braskem Quattor Consolidado America R$3,496MM Net Revenue 4,466 1,233 547 6,245 (US$1,871MM) EBITDA 729 109 * 65 903 - Braskem: EBITDA Margin 16.3% 8.8% 11.9% 14.5% R$2,746MM Financial Result (645) (233) - (878) - Quattor: R$607MM Net Profit / Loss (123) (767) 38 (852) - Sunoco: R$143MM Source: Braskem * Non-recurring of R$18 million 8
  • 9. Comfortable cash position covers 2 years of debt amortization In R$ million (3/31/10) Dívida Líq. / EBITDA (x) R$ Net Debt / EBITDA (x) US$ Net Debt/ EBITDA (x) US$ Gross Debt: 9,810 Debt: Net Debt: 6,500 -12% 2.98 -18% 2.67 2.47 Avg. Term: 9.7 years 2.37 65% of debt pegged to USD 3,311 Dec 09 Mar 10 Dec 09 Mar 10 1,577 17% 16% 15% 13% 13% 11% 1,734 9% 312 * 1,684 1,466 1,296 1,548 6% 1,252 786 891 611 03/31/10 2010 2011 2012 2013 2014/ 2016/ 2018/ 2020 Cash 2015 2017 2019 onwards (1) Does not include transaction costs Invested in R$ * Debentures of 13th issue due June, 2010 Invested in US$ Source: Braskem 9
  • 10. Comfortable level of leverage Better operational performance reduces leverage ratio to 3.12x in 1Q10 Liquidity still high, with cash around R$ 6 billion R$3.74bi Capital Increase R$3.74bi Capital increase + Quattor + Sunoco + Quattor + Sunoco EBITDA in 2009 EBITDA in LTM at 1Q10 Gross Debt 17,131 17,176 Cash & Cash Equiv. 6,231 6,267 Net Debt 10,900 10,909 EBITDA 3,150 3,495 Net Debt / EBITDA 3.46x - 10% 3.12x Source: Braskem, Unipar and Sunoco Inc 10
  • 11. Investments in 2010 amount to R$1.6 bi 2010 Estimated Investments PVC Alagoas Expansion In millions of R$ Startup: 1st semester 2012 Capacity addition of 200 kton/y of PVC in Alagoas: 1 MVC plant and 1 PVC plant 1,617 Investments of US$470 million Green PE NPV Expected ~US$ 450 million 254 Support to infrastructure projects in Brazil Mexico 72 Venezuela 35 52 PVC Alagoas BRASKEM 462 Operational Maintenance 317 BRASKEM AMERICA 56 QUATTOR 360 QUANTIQ / VARIENT 10 11