Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — Q1 2019 Earnings Presentation
31 slides from Braskem's earnings presentation, Aug 8, 2019
Slide 1: Braskem – Strategy
Braskem – Strategy: 4 Braskem launched two new products in its Wecycle Platform portfolio, which use post-consumer resin and Green PE as feedstock: (i) in partnership with Embalixo, the first line of trash bags with bug-repellent action, called “Embalixo Repelente;” and (ii) “Zero CO2 Emissions Shri
Slide 2: Operating Performance in 1Q19 by Region: Brazil
OPERATING PERFORMANCE IN 1Q19 BY REGION: BRAZIL
Slide 3: Spread definitions (footnotes)
8 Difference between the U.S. polypropylene price and the U.S. propylene price. 9 Difference between the Europe polypropylene price and the Europe propylene price. 10 Difference between the U.S. polyethylene price and the U.S. ethane price.
Slide 4: COGS: positively influenced by reversal of CDE provisions
COGS: positively influenced by the reversal of provisions for the Energy Development Account (CDE) 11 in the amount of US$54 million (R$200 million) and for REIQ while the injunction was in force in the amount of US$30 million (R$117 million) 12 . Excluding these nonrecurring events, COGS in the qua
Slide 5: ABRACE lawsuits on Energy Development Account charges
11 The Brazilian Association of Large Energy Consumers (ABRACE), of which Braskem is a member, filed lawsuits disputing the charges to fund public policies in the Brazilian electricity industry, known as the Energy Development Account, in 2015 and 2016 (CDE 2015 and CDE 2016), and obtained injunctio
Slide 6: USA and Europe
USA and EUROPE tik) 4Q18 1918 Chg. Chg. (A) iO} (c) (A)/(B)_(A)/(C) Production PP USA. 351,464 361,533 358,277 3% —-2% Utilization Rate* 91% 91% 92% Opp. -Ipp. PP EUR 138,505 107,640 141,169 29% —-2% Utilization Rate* 90%, 68% 92% 22pp._ -2pp. Total 489,969 __469,173__ 499,446 4% __-2% Utilization R
Slide 7: COGS: decline compared to 4Q18 and 1Q18
COGS: decline compared to 4Q18 and 1Q18, explained by the lower propylene price, given: (i) the monomer’s higher supply in the United States from on-purpose producers; (ii) the end of logistics constraints in Europe; and (iii) lower oil prices.
Slide 8: Mexico (Braskem Idesa)
MEXICO (Braskem Idesa) 14 13 The segment’s results are formed by six industrial units in the United States and two in Europe, with aggregate production capacity of 2,195 kta, with 1,570 kta in the United States and 625 kta in Europe. 14 The segment comprises an ethane-based cracker, two high-density
Slide 9: Mexico operating and financial overview
1919 4qis 1918 Chg. Chg. (A) (B) (Cc) (A)/(B)_(A)/(C) Production PE 203,953 193,756 221,293 5% 8% Utilization Rate* 79% 73% 85% bpp. -7pp. sales Mexican Market 118,513 121,191 145,623 2% 19% Exports 90,219 74,879 57,982 20% 56% Total 208,732 ___ 196,070 _203,605 6% 3% Net Revenue 214 239 268 = -10%
Slide 10: Other Income (Expenses), net
Other Income (Expenses), net: the result in 1Q19 includes income of US$31 million related to the delivery-or-pay clause of the ethane supply agreement, which is explained by: (i) lower supply in 1Q19; (ii) the higher provision in 3Q18 related to the volume not offset by 1Q19; (iii) the increase in t
Slide 11: EBITDA (R$ million) and (US$ million)
EBITDA (R$ nillion) EBITDA (US$ nillion) 63% BB brazil ] Overseas 1018 4qis 1Q19
Slide 12: Other Income (Expenses), net
3. OTHER INCOME (EXPENSES), NET In 1Q19, the Company recorded income of R$1,232 million, mainly impacted by the provision in the amount of R$410 million related to the leniency agreement entered into with the Office of the Federal Controller General (CGU) and the Office of the General Counsel for th
Slide 13: Consolidated result by region
15 Braskem’s consolidated result corresponds to the sum of the results in Brazil, United States & Europe and Mexico, less eliminations from the revenues and costs from the transfers of products among these regions.
Slide 14: Financial result
Financial expenses: increase of R$147 million compared to 4Q18, mainly explained by adoption of the accounting standard IFRS 16 and the R$118 million in present value adjustment of the leniency agreement due to the change in the adjustment index of the installments payable to the MPF from the IPCA t
Slide 15: Liquidity position
Braskem’s liquidity position of US$1,746 million is sufficient to cover the payment of all obligations maturing over the next 37 months.
Slide 16: BNDES facility and risk-rating agencies
In December 2018, the Company signed a new BNDES on lending facility worth R$476 million with maturity in January 2031. On January 30, 2019, Braskem withdrew the first installment under this facility, in the amount of R$266 million, which is in aligned with the Company’s capital expenditures in Braz
Slide 17: Investments in 1Q19
Of the total investments in 1Q19, 36% were allocated to the construction of the new PP plant in the United States, which reached 56.2% completion, with investment of US$426 million already made.
Slide 18: Sustainable Development – Highlights in 1Q19
SUSTAINABLE DEVELOPMENT 4 Sustainable Development – Highlights in 1Q19 16 Considers operating investment, maintenance shutdowns and acquisitions of spare parts. 17 Note that the cash flow analysis above does not consider the reclassification of “cash and cash equivalents” to “financial investments”
Slide 19: Indicators
Indicators 1Q19 4qQis 1918 Chg. Chg. US$ million (A) (B) (©) (A)/(B)__(A)/(C) EBITDA 864 501 818 72% 6% EBITDA Margin (%) 25% 13% 20% i2pp. -10pp. SG&A/Net Revenue (%) 6.4% 6.9% 5.5% -1pp. Ipp. Net Debt* 5,287 5,129 5,606 3% Net Debt/EBITDA LTM* 2.03x 2.06x 1.98x -1% = EBITDA/Interest Paid LTM 5.65
Slide 20: Appendix II: Calculation of Consolidated EBITDA
APPENDIX II Calculation of Consolidated EBITDA
Slide 21: EBITDA adjustment notes
(i) Represents the accrual and reversal of provisions for the impairment of long-lived assets (investments, property, plant and equipment and intangible assets) that were adjusted to form EBITDA, since there is no expectation of their financial realization and if in fact realized they would be duly
Slide 22: Assets
ASSETS (R$ million) mar/19 dec/18 Change (A) (B) (A)/(B) Current 21,325 21,384 0% Cash and Cash Equivalents 6,104 5,548 10% Marketable Securities/Held for Trading 1,720 2,358 -27% Accounts Receivable 3,096 3,075 1% Inventories 8,134 8,487 -4% Recoverable Taxes 1,381 1,197 15% Dividends and Interest
Slide 23: Liabilities reclassification note
18 On the reporting date of these quarterly financial statements, i.e. march 31, 2019, certain non-financial contractual obligations were still in unremedied breach. As a result, the entire balance of non-current liabilities, in the amount of R$9,348 million, is still reclassified as current liabili
Slide 24: Cash flow
1919 4Qu 1Q18 Change Change (A) (8) © _A/®)_ AMO Profit (Loss) Before Income Tax and Social Contribution and the result of poe eee pose al 1,192 72 1,427 1567% —_ -16% Adjust for Net Income Restatement Depreciation, Amortization and Depletion 862 742 740 16% Equity Result 3 0 (0) 6136 Interest, Mone
Slide 25: Exhibit VI: Braskem Idesa Balance Sheet
EXHIBIT VI Braskem Idesa Balance Sheet 18
Slide 26: Braskem Idesa assets and liabilities
ASSETS (R$ nilion) mar/19 dec/18 Change (A) (B) (Oy) Current 2,636 2,620 Cash and Cash Equivalents 1,030 963 7% ‘Accounts Receivable 454 28 -28% Inventories 598 579 3% Recoverable Taxes 4 10 4% Derivatives operations 16 a -23% Other Assets 423 319 33% ‘Non Gurrent 13,882 13,581 2% Deferred Income Ta
Slide 27: Exhibit VIII: Financial Results Braskem Idesa
EXHIBIT VIII Financial Results Braskem Idesa
Slide 28: Braskem Idesa financial result
1919 418 19018 Chg. Chg. a B) ‘A)/(B) C (290) (284) (245) 2% += 18% (260) (27) (211) 6% = 23% (30) ” (34) 323% = -12% 16 2 3 39% 468% Z 9 3 15% 153% 9 3 0 177% na Foreign Exchange Variation, net 45 (363) 373 -112% —-88% Foreign Exchange Variation (Expense) mn (430) 447 na -84% Foreign Exchange Varia
Slide 29: Brazil production and sales
1Q19 4Q18 Qis Chg. Chg. (A) (B) (©) (A)/(B)_(A)/(C) Production Ethylene 816,555 823,368 832,886 1% 2% Utilization Rate* 88% 87% 90% Ipp. -2pp. Propylene 344,335 330,259 322,313 4% 7% ‘Cumene 54,021 56,959 57,868 “5% T% Butadiene 108,581 100,491 89,087 3% 16% Gasoline 264,167 253,989 241,121 4% 10% B
Slide 30: Brazil polyolefins production and sales
1919 4Qi8 1918 Chg. Chg. consumes 5) (B) © aye) (AO Production PE 636,803 605,520 692,230 5% 8% Utilization Rate* 85% 79% 92% bpp. -7pp. PP 427,283 359,234 411,426 19% 4% Utilization Rate* 94% 77% 90% i7pp. 4pp. Total 1,064,086 964,754 1,103,656 10% 4% Sales - Brazilian Market PE 463,640 418,059 481
Slide 31: Signatures and forward-looking statements
2 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: August 7 , 2019 BRASKEM S.A. By: /s/ Pedro van Langendonck Teixeira de Freitas Name: Pedro va