Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — Q4 2022 Earnings Presentation
64 slides from Braskem's earnings presentation, Mar 23, 2023
Slide 1: Earnings Release 4Q22
Earnings Release 4 222 on 1d 2022, Braskem ~
Slide 2: Fourth quarter 2022 highlights and Recurring EBITDA
§ During the fourth quarter of 2022, petrochemical and chemical products spreads in the international market continued to be impacted by the dynamics between global supply and demand. Several factors contributed to the lower demand in the period, including (i) the “zero-COVID” policy measures impact
Slide 3: Transform for Value Program
b. Transform for Value Program The Transform for Value Program (TFV) ended 2022 on pace of capture around US$353 million/year 8 in initiatives that have reached more advanced stages of maturity, which exceeded the target of US$302 million/year. The program’s estimated cumulative capture as of the fo
Slide 4: Digital Transformation initiatives within the US$353 million/year
In addition, one-third of the US$353 million/year can be associated with Digital Transformation initiatives, which make relevant use of digital technologies in their scopes, such as: automation and instrumentation, new software and systems, advanced analytics, machine learning, cloud services, etc.
Slide 5: Marginal Abatement Cost Curve
10 Marginal Abatement Cost Curve
Slide 6: Joint licensing of green ethylene technology and Sojitz joint venture
c. Joint licensing of green ethylene technology (partnership with Lummus Technology) Partnership to develop and license Braskem's technology to produce green ethylene. The partnership (i) brings complementary expertise to accelerate Braskem's commitment to reach 1.0 million tons of Green products pr
Slide 7: Monoethylene Glycol, Monopropylene Glycol
11 Monoethylene Glycol 12 Monopropylene Glycol
Slide 8: International references: prices and spreads
4922, 3022) 4021 0. Chg. 2022 2021 Chg. International References* (US$/ton) (A) (B) (c) (a)/(B) __(A)/(C) (D) (E) (D)/(E) Prices Brent (US$/bbl) 88 101 80 “12% 11% 101 na 43% Naphtha 645 684 734 -6% -12% 770 635 21% Ethane 288 406 290 -29% -1% 356 29 56% Propane 414 563 650 -26% -36% 576 545, 6% Res
Slide 9: Average utilization rate of petrochemical complexes
c) Average utilization rate of petrochemical complexes: decreased compared to 3Q22 (-7 p.p.) and compared to 4Q21 (-13 p.p) due to the need to adapt the production volume to the lower spreads in the international market in the period due to the lower global demand.
Slide 10: Resin sales volume
d) Resin sales volume: in the Brazilian market, resin sales decreased compared to 3Q22 (-3%), due to the lower PP and PVC demand in the period as a consequence of the reduction in consumption of durable goods and civil construction materials impacted by higher interest rate to control inflation in B
Slide 11: Main chemicals sales volume
e) Main chemicals sales volume: in the Brazilian market, sales volume decreased in relation to 3Q22 (-5%), mainly explained by the lower gasoline and benzene sales volume due to lower product availability for sales. Compared to 4Q21, the decrease of 18% is mainly explained by the lower sales volume
Slide 12: Geological event in Alagoas: provisions
4.1.2 GEOLOGICAL EVENT IN ALAGOAS a) Provisions As assessed by the Company and its external advisors, considering the measures recommended on technical studies in the short and long-term and the existing information and refined estimates of expenses for implementing several measures connected with t
Slide 13: Provision action fronts
The current provision can be segregated into the following action fronts: a. Support for relocating and compensating for the residents, business and real state owners of properties located in the Civil Defense Map (version 4) updated in December 2020, including establishments that requires special m
Slide 14: Brazil segment financial overview
GRE 4922 3022 421 Chg. 2022 2021 Cha. (a) (O} (@) (A)/(B) (Adi (c (0) (©) (D)/(E) Net Revenue 2,652 3,439 “25% 13,418 12,879 cogs 2,731) (3,131) “13% 2% (12,269) (9,131) H% Gross Profit 79 309 na. na. 1,148 3,748 69% Gross Margin 3% 9% A2pp. — -24pp. 9% 29% — -21pp. SGA (96) (89) 8% 14% (359) (298)
Slide 15: Sales by economic activity, Brazil
Sales by Economic Activity PE | Brazil =” =” = o o% agai 3922 4922, I Food Ml Various Sectors WE industrial Ml Cosmetic and Pharmaceutical etal Business Infrastructure others Hi Construction Sales by Economic Activity PE | Brazil 6% 2021 2022 i Food Ml Various Sectors Wi industrial Ml Cosmeticand Ph
Slide 16: Cost of goods sold
B) COST OF GOODS SOLD (COGS): decreased in U.S. dollar (-13%) and Brazilian real (-13%) in relation to 3Q22, explained by the lower sales volume of resins and main chemicals and lower prices considering the moving average for main petrochemical feedstocks (naphtha, ethane and propane) in the interna
Slide 17: SG&A expenses and Recurring EBITDA; renewables
C) SG&A EXPENSES: in U.S. dollar, the increase in relation to 3Q22 (+8%) is explained by higher expenses with third parties. Compared to 4Q21, the increase (+14%) is mainly explained by higher expenses with third parties and storage and tankage services. D) RECURRING EBITDA: Recurring EBITDA in the
Slide 18: Green PE sales volume
b) Green PE sales volume : quarterly record for Green PE sales volume in 4Q22 due to the resilient demand for this product, which even in a scenario of lower demand for resins globally, remained at healthy levels. Green PE sales volume was higher in relation to 3Q22 (+42%), explained by higher deman
Slide 19: Green PE sales and volume per region
Braskem Sales (kton) of Green PE Braskem Sales (kton) of Green PE i es = it 165 38 agai 3922 4Q22 2024 2022 Il Green PE MM Green PE Green PE Sales Volume per Region (%) Green PE Sales Volume per Region (%) 39% 45% aqzi 3022 aqzz 2021 2022 Mi europe (ll Brazil i south America Mi Europe [ll Brezil I S
Slide 20: Net sales revenue Green PE + ETBE
A) NET SALES REVENUE GREEN PE + ETBE 25 : increased compared to 3Q22 (+7%), explained by the higher sales volume of Green PE due to higher demand in the period. Compared to 4Q21, decreased (-2%) due to the lower sales volume and lower price of ETBE. Product that uses a renewable feedstock, ethanol,
Slide 21: Average utilization of PP plants
b) Average utilization rate of PP plants: in the United States, the utilization rate remained in line with 3Q22, due to the adjustment of the production volume to the inventory levels of the converters in the chain because of the softer PP demand in the region. In comparison with 4Q21, the utilizati
Slide 22: PP sales volume
c) PP sales volume: in the United States, increased in relation to 3Q22 (+3%) and 4Q21 (+5%). The region's demand reduced in the period, however, the Company used its dedicated hub in Charleston, South Carolina, to execute its export strategy, which resulted in an increase in sales volume in 4Q22. I
Slide 23: Sales volume US & Europe
Sales Volume (kton) | US & Europe Sales Volume (kton) | US & Europe 3Q22 PP USA Ml PP Europe
Slide 24: USA and Europe financial overview
2022 2021 ‘Che USA and EUROPE © ve) @Ko ) © (OG) 1,330 -28% 4,550 6,033 (4,028) 26% (3875) (4,337) 302 ~44% 1,696 221% -2pp. (45) 18% (167) (Other Operating Income (Expenses) 2 na. (5) na. Recurring EBITDA 281 “16% 1,608 ~62% 2% -13 pp. ‘Financial Overview (R$ million) Net Revenue 4,022 5,547 7A17 2
Slide 25: SG&A, Recurring EBITDA and Mexico overview
C) SG&A EXPENSES: increased in U.S. dollar (+18%) in relation to 3Q22, due to higher expenses with industrial maintenance and third parties’ services. Compared to 4Q21, in U.S. dollar these expenses remained stable. D) RECURRING EBITDA: Recurring EBITDA in the United States and Europe segment was US
Slide 26: Average utilization of PE plants, Mexico
c) Average utilization rate of PE plants: decreased in relation to 3Q22 (-7 p.p.) and 4Q21 (-13 p.p.), mainly due to the adequacy of production in order to maximize the sales with higher margins in the period, through the reduction of volumes in the imported ethane operation, the Fast Track solution
Slide 27: PE sales volume
d) PE sales volume: in 4Q22, despite the seasonality of the period, sales volume remained in line with 3Q22, impacted by higher sales volume in December given the resilient demand. Compared to 4Q21, the decline (-6%) is explained by the lower product availability for sale due to the lower utilizatio
Slide 28: Sales volume, Mexico
Sales Volume (kton) | Mexico Sales Volume (kton) | Mexico 2 767 330. 180 178 638 4Q21 3Q22 4Q22 2021 2022 mre mre
Slide 29: Net revenue, Mexico
A) NET REVENUE: decreased in U.S. dollar (-22%) and Brazilian real (-22%) compared to 3Q22 due to the lower PE price in the international market. Compared to 4Q21, the decline in U.S. dollar (-40%) and Brazilian real (-44%) is due to the lower PE price in the international market and the lower sales
Slide 30: Sales by economic activity, Mexico
Sales by Economic Activity] Mexico Sales by Economic Activity| Mexico 4Q24 2021 2022 Hl bags & Films Wi industrial Hl Bags & Films. I industrial I Packaging Wi others Wl Construction & Infrastructure [lj Others Il Hygiene and Cleaning Wl chemicals ll Packaging Ml Chemicals Il Construction & Infrastr
Slide 31: Cost of goods sold, Mexico
B) COST OF GOODS SOLD (COGS): decreased in U.S. dollar (-3%) and Brazilian real (-3%) in relation to 3Q22, basically explained by the lower ethane price considering the moving average in the international market. Compared to 4Q21, the increase in U.S. dollar (+33%) and Brazilian real (+25%) is expla
Slide 32: SG&A, Recurring EBITDA and ethane import terminal
C) SG&A EXPENSES: in U.S. dollar, the increase (+21%) in relation to 3Q22 is mainly explained by higher expenses with third parties. Compared to 4Q21, the decrease (-3%) is mainly explained by lower expenses with third parties and with logistics and storage. D) RECURRING EBITDA: recurring EBITDA in
Slide 33: Amounts disbursed by Braskem Idesa
26 The amounts disbursed by Braskem Idesa include Value Added Tax (VAT).
Slide 34: Consolidated net revenue
Net Revenue (R$ million) | Consolidated! 28,212 25,387 18,990 4Q2a 3Q22 4922 Mi crazil_ MI USA and Europe Hi Exports? [ll Mexico oes not consider feedstock resale and others 2Considers erly exports from Braz Net Revenue (R$ million) | Consolidated* 105,625 2021, 2022 MM Brazil J USA and Europe Il Ex
Slide 35: Other revenue (expense), net
5.3 OTHER REVENUE (EXPENSE), NET The Company recorded in 4Q22 a net expense of R$302 million, mainly due to: (i) the seasonal update of several provisions in the amount of R$127 million; (ii) the accounting provision for the geological event in Alagoas of R$106 million, related to updates for the na
Slide 36: Recurring EBITDA
5.4 RECURRING EBITDA 27 During the fourth quarter of 2022, petrochemical and chemical products spreads in the international market continued to be impacted by the dynamics between global supply and demand. Several factors contributed to the lower demand in the period, including (i) the “zero-COVID”
Slide 37: Consolidated financial overview by segment
Financ Overviow (R$ milion) CONSOLIDATED 4@22. Net Revenue COGS Gros Profit ScRA TUTE nevemuee | OUR? Near? aod epee Brat 13839 (14353) (ais) (608) : 7) (4.082) (350) US. and Europe 02.041) Bn (235) : ® on 79 Mico 1075 (4322) (56) cs) : feo (409) fey “Segments Total 49,036 (19,496) (460) (858) = (21
Slide 38: Financial result
Financial expenses: increase compared to 3Q22 (+24%), due to higher expenses (i) with derivatives; (ii) with adjustment to present value of operations with third parties; and (iii) with interest on tax liabilities. Compared to 4Q21, financial expenses decreased (-3%) mainly due to (i) lower amortiza
Slide 39: Net income and investments
5.6 NET INCOME In the quarter, the Company recorded a net loss 29 of R$1.7 billion, and in the year, the Company recorded a net loss attributable to shareholders of R$336 million. 5.7 INVESTMENTS At the end of 2022, the Company made corporate investments in the approximate amount of US$929 million,
Slide 40: Investments in sustainable development macro-objectives
In 2022, the main investments related to Braskem’s Sustainable Development Macro-Objectives were (i) the project to expand green ethylene production capacity at the Triunfo Petrochemical Complex in Rio Grande do Sul; (ii) the projects associated with reducing CO2 emissions and energy efficiency of t
Slide 41: Investments in 2023
Investments in 2023 The investments planned by Braskem to be made during 2023 amount to R$4.0 billion (US$724 million), which can be classified as follows: § Operating investments in the amount of R$3.6 billion (US$650 million), mainly explained by (i) the scheduled maintenance shutdown at the Bahia
Slide 42: Total projected investment for 2023
The total projected investment of R$4.0 billion (US$724 million) includes R$1.1 billion (US$194 million), 27% of the total investments planned for the year, for investments aligned to Braskem’s Sustainable Development Macro-Objectives.
Slide 43: Braskem Idesa 2023 investments
Braskem Idesa The investment estimated to 2023 by Braskem Idesa is of R$618 million (US$112 million). The operating investments are mainly allocated to projects related to operating efficiency, such as maintenance, productivity and HES. Meanwhile, strategic investments refer to the continuing strate
Slide 44: Cash flow
5.8 CASH FLOW During the period, the Company maintained its commitment to the discipline in the capital allocation with recurring cash generation of R$922 million explained by (i) optimizing working capital management; (ii) prioritizing high-value investments; and (iii) optimizing IR/CSLL payments m
Slide 45: Debt maturity profile and rating: Braskem
5.9 DEBT MATURITY PROFILE AND RATING 5.9.1 BRASKEM (ex-BRASKEM IDESA) On December 31, 2022, the corporate gross debt balance stood at R$6.8 billion, composed of 96% long-term maturities and 4% short-term maturities. The corporate foreign denominated liabilities corresponded to 87% of the Company's t
Slide 46: Liquidity position
The liquidity position of US$2.4 billion, in December 2022, is sufficient to cover the payment of all liabilities coming due in the next 60 months, not considering the international stand-by credit facility of US$1.0 billion available through 2026.
Slide 47: Debt profile
Debt Profile (US$ million) 12/31/2022) 4,000 28% 1,093 23% 20% 1,288 80% 6% 7% 4% ae merit) ail ways m2 2024 2025 2025 2027 2028 2029 2030/2031 2032 onwards ca Mi Invested in R$ Ml Invested in USS [fll Local Currency [lll Foreign Currency [Mlj Sustainability linked loan? Ml Standby * Does not consid
Slide 48: Rating
Rating In December 2022 and January 2023, S&P Global Ratings and Fitch Ratings, respectively, reaffirmed Braskem's rating at 'BBB-'/'brAAA', with a stable outlook. Thus, at the end of 2022, the Company remained as an investment grade company by S&P Global Ratings and Fitch Ratings and above the sove
Slide 49: Braskem Idesa debt and liquidity
5.9.2 BRASKEM IDESA On December 31, 2022, the average debt term was around 7.8 years, with 92% of maturities concentrated after 2029. Braskem Idesa’s average weighted cost of debt was exchange variation +7.3% p.a. The liquidity position of US$419 million is sufficient to cover the payment of all lia
Slide 50: Braskem Idesa debt
Braskem Idesa Debt Dec/22 Sep/22 Dec/21 Cha. US$ millio (A, B) (C) Oe Gross Debt 2,180 2,219 2,206 1% in R$ = - = na. in uss 2,180 2,219 2,206 1% (2) Cash and Cash Equivalents 419 400 318 32% in R$ * = % na. in uss 419 400 318 52% Net Debt 1,761 1,819 1,888 7% in R$ = = x na. in ss 1,761 1,819 1,888
Slide 51: Braskem Idesa rating
Rating On November 29, 2022, S&P Global Ratings revised the outlook for Braskem Idesa S.A.P.I. from stable to negative and confirmed its credit rating at 'B+'.
Slide 52: Recycled sales volume
4Q2 3Q22 4Q21_— Ch 2021 Chg. (A) i) (c)___(A)/(B)_(A)/(C)__) () LOG) Recyded Sales Volume (ton) Recyded 17,363 15,673 8,632 11% 101% 54,149 22,182 144% Brazil 9,896 8,233 5,092 20% 94% 31,485 12,113 160% Resins* 7,536 4,463 4,433. «69% = 70% += 19,713 10,138 94% Chemicals? 2,360 3,770 658 37% 258% «
Slide 53: Safety and social responsibility
6.2 SAFETY AND SOCIAL RESPONSIBILITY HEALTH AND SAFETY § People Safety: in 2022, the consolidated reported and lost time injury-frequency rate was 0.85 event per million hours worked, lower (-1%) than 2021 and below the industry average 32 . This is the lowest rate of the last six years, and the red
Slide 54: Stock Performance
‘Stock Performance 160 o Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec — IBOV — BRKMS —= BRKM3 —= BAK Source: Bloomberg
Slide 55: Corporate debt securities performance
7.2 CORPORATE DEBT SECURITIES PERFORMANCE
Slide 56: Bonds performance
Braskem '24 - yield Braskem '24 - price Braskem '28 - yield Braskem ‘28 - price Braskem '30 - yield Braskem '30 - price Braskem “41 - yield Braskem “41 - price Braskem ‘50 - yield Braskem ‘50 - price Hybrid Bond - yield Hybrid Bond - price US Treasuty 2y US Treasury 10y US Treasury 30y Bonds Perfoma
Slide 57: Annex II: Consolidated Recurring EBITDA Calculation
ANNEX II Consolidated Recurring EBITDA Calculation
Slide 58: Recurring EBITDA statement
Recurring EBITDA Statement (R$ milion) aqez 3@22 4021 Change Change = 2022 2021 Change (CONSOLIDATED a) () OA) AKO 0) (c) (ye) Net Profit (4,883) (1,422) 468 32% na. (820) 13,962 na. ‘Income Tax / Social Contribution 4) 416 780 na. na. 868 3,999 78% Financial Result 384 1698 2,474 77% “85% 4,205 8,0
Slide 59: Indicators and company valuation
Indicator (A)/(B) (A)/ Recurring EBITDA 371 1135 0 na. na. EBITDA Margin? 1% 8% 22% Ipp. 23 pp. SG8A/Net Revenue (%) 8% 5% 5% Ipp. 3 pp. Adjusted Net Debt 4,663 4,639 5,061 1% Adjusted Net Debt/Recuring EBITDA (LTM)? 2.42x 1.55x 0.94x 57% Recurring EBITDA (LTM)/Interest Paid (LTM) 4.95 8.42 13.07 -4
Slide 60: Consolidated balance sheet
ange (a)/(B) Current 34,458 39,293 -12% ‘Cash and Cash Equivalents 12,466 8,681 44% Financial Investments 2,295 3,493, -34% Accounts Receivable 3,232 7,154 55% Inventories 14,030 16,335, “14% Recoverable Taxes 1,156 1,429 -19% Income tax and social contribution 302 1,190 -67% Derivatives 158 4 367%
Slide 61: Consolidated cash flow
3922 4021 20222021 Change R$ million ®) () () (OMEOG) Profit (Loss) Before Income Tax and Social Contribution (2.227) (4,005) 1,248 121% na. 47 17,961 -100% ‘Adjust for Resuit Restatement Depreciation and Amortization 1431 «1176 1,366 22% 5% 4,733 4178 13% Equity Result ©) 02 ©) na 49% (35) ©) 650%
Slide 62: Annex VII: Braskem Idesa Balance Sheet
ANNEX VII Braskem Idesa Balance Sheet
Slide 63: Braskem Idesa balance sheet
desoe ed Dec/22 Dec/21 Change (A) (B) (A)/(B) Current 3,685 4,173 “12% (Cash and Cash Equivalents 2,184 1773 23% Accounts Receivable B 1,225 94% Inventories 1,108 1,010 10% Recoverable Taxes 251 2 843% Other 69 138 350% Non Current 16,108 17,210 -6% ‘Taxes Recoverable 289 268 8% Deferred Income Tax
Slide 64: Forward-looking statements
This report on Form 6-K may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are statements that are not historical facts, and are based on our management’s current view and estimates of future economic and other circumst