Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — 4Q20 & FY2020 Earnings Presentation
53 slides from Braskem's earnings presentation, Mar 11, 2021
Slide 1: 4Q20 & 2020 Earnings Release
Slide 2: Highlights of the quarter and year
§ The Company’s recurring Operating Result was US$833 million, 22% higher than in 3Q20, explained mainly by better spreads for resins and main chemicals in Brazil, for PP in the United States and for PE in Mexico. Compared to 4Q19, recurring Operating Result in U.S. dollar was 246% higher, due to: (
Slide 3: PE, PP and PVC spreads
§ PE Spread [5] : increase compared to 3Q20 (+25%). The price of PE in the United States increased 17% due to: (i) the strong demand, mainly in applications for non-durable goods such as packaging; and (ii) the impacts caused by the hurricane season that restricted PE supply in the region, and outpa
Slide 4: Average utilization rate of petrochemical plants
b) Average utilization rate of petrochemical plants: down from 3Q20 (-2 p.p.), mainly due to operational problems in the petrochemical complex in São Paulo, and increase in relation to 4Q19 (+7 p.p.) due to the resumption of production in the petrochemical complex in Bahia after the scheduled shutdo
Slide 5: Resins sales
c) Resins sales: in the Brazilian market, reduction in relation to 3Q20 (-5%), due to the lower capacity utilization rates of petrochemical complexes in the period. Compared to 4Q19, resin sales volume increased (+22%), due to the stronger demand in the period and the higher supply of the product. D
Slide 6: Braskem sales volume of resins in the Brazilian market
Braskem Sales Volume (kton) of Resins in the ikem Sales Volume (kton) of Resins in the ‘Brazilian Market | Brazil Brazilian Market | Brazil, I Brazilian Market
Slide 7: Main chemicals sales
d) Main chemicals sales: in the Brazilian market, sales were higher than in 3Q20 (+8%), led by butadiene, which has strong exposure to the rubber market, gasoline, reflecting the relaxation of physical distancing in the period, and benzene, which has strong exposure to the textile industry. Compared
Slide 8: Situation in Alagoas
2.1.3 SITUATION IN ALAGOAS a) Operational Average PVC utilization rate: considering Alagoas and Bahia plants, it was 64%, down (-8 p.p.) compared to 3Q20 due to the limited global supply of EDC and operational adjustments in the facilities. In the quarter, the Company imported 90.2 kton of EDC. Sale
Slide 9: Provision action fronts in Alagoas
The amounts included in the provision may be divided among the following action fronts: a. Support for relocating and compensating the residents and owners of the properties located in the risk protection and monitoring areas, including properties that require special measures for their relocation,
Slide 10: Net revenue
A) NET REVENUE: increase in Brazilian real and U.S. dollar compared to 3Q20 (+18%), mainly explained by the higher prices of resins and main base chemicals in the international market. In relation to 4Q19, the increase in U.S. dollar (+8%) is explained by the higher sales of resins and main chemical
Slide 11: Braskem sales by economic activity
Braskem Sales by Economic Aetivity| PE ‘Braskem Sales by Economic Activity | PP Braskem Sales by Economic Actvity| PVC | | 3 al ~ 4019 3020 3020 4020 09 20 Wi various Sectors Consumer goods Hl others Wi construction i Agrctural sector 1H coumoticand Pharmaceutical Wi Food |B cormeticand Pharmaceutic
Slide 12: Cost of goods sold
B) COST OF GOODS SOLD (COGS): the increase in COGS in Brazilian real and U.S. dollar compared to 3Q20 (+13%) is mainly explained by the higher naphtha price reference in the international market influenced by higher oil prices, driven by optimism on the COVID vaccination campaigns. Compared to 4Q19,
Slide 13: SG&A expenses
C) SG&A Expenses: in line with 3Q20 (+1%) and down in relation to 4Q19 (-45%) mainly due to the lower expenses with third-party services related to the geological event in Alagoas and with the independent monitorship.
Slide 14: US and Europe PP spreads
§ U.S. PP Spread [9] : increase compared to 3Q20 (+18%) due to interruptions caused by the hurricane season and the recovery of the durable goods sectors. The PP price increased (+18%) due to (i) inventory rebuilding in the production chain; (ii) PP supply constraints in the region; and (iii) the hi
Slide 15: Average utilization rate of PP plants
b) Average utilization rate of PP plants: in the United States, excluding the production and capacity of the new PP plant (Delta), there was a decreased in relation to 3Q20 (-15 p.p.) due to the scheduled maintenance shutdowns, and in line with 4Q19. In Europe, the capacity utilization rate decrease
Slide 16: Sales volume US and Europe
c) Sales volume: decrease in relation to 3Q20 (-14%) and 4Q19 (-5%) due to lower supply of products for sale in both regions.
Slide 17: Braskem sales volume US & Europe
Braskem Sales Volume (kton) | US & Europe 3020 TE PPUSA Im PP Europe Braskem Sales Volume (kton) | US & Europe 1,920 2019, 2020 IE PPUSA Im PP Europe
Slide 18: Net revenue and COGS US and Europe
A) NET REVENUE: increase in Brazilian real (+15%) and in U.S. dollar (+14%) compared to 3Q20 explained by the higher PP price in the United States. Compared to 4Q19, net revenue in U.S. dollar increased (+47%) due to higher PP price in the United States. In Brazilian real, net revenue was higher (+9
Slide 19: SG&A and recurring operating result
C) SG&A Expenses: increase compared to 3Q20 (+22%) due to higher expenses with third parties and other general and administrative expenses. In relation to 4Q19, the decline (-4%) is due to lower selling and general expenses. D) RECURRING OPERATING RESULT: accounted for 13% of the Company’s consolida
Slide 20: Mexico: agreements and PE plant utilization
iii. a memorandum of understanding ("MoU") with PEMEX setting out respective understandings for the discussion of potential amendments to the Ethane Supply Contract and for the development of an ethane import terminal, subject to negotiation, entering into definitive documentation, approvals of BI's
Slide 21: Sales volume Mexico
c) Sales volume: declines compared to 3Q20 (-18%) and 4Q19 (-11%) due to the lower availability of PE for sale due to the shutdown of plants in December.
Slide 22: Braskem sales volume Mexico
Braskem Sales Volume (kton) | Mexico Braskem Sales Volume (kton) | Mexico I oe 213 207 mre
Slide 23: Net revenue Mexico
A) NET REVENUE: increase in Brazilian real (+3%) and U.S. dollar (+2%) compared to 3Q20 due to higher price of PE in the international market.
Slide 24: Braskem sales by economic activity Mexico
Braskem Sales by Economic Activity! Mexico 4019 3020 4Q20 Wi bags and Films Wi industrial (Construction andinfrastructure Ill Others I Rigid Packaging Ti chemicals Braskem Sales by Economic Activity| Mexico Bi bags and Films Wi industrial (Construction andinfrastructure Ml Others I Rigid Packaging I
Slide 25: Cost of goods sold Mexico
B) COST OF GOODS SOLD (COGS): increase in Brazilian real and U.S. dollar (+5%) compared to 3Q20, reflecting the increase of imported ethane volumes. Compared to 4Q19, the increase in COGS (+12%) is explained by the higher prices of ethane in the period. In Brazilian real, COGS increased (+47%), refl
Slide 26: Other net operating expenses, SG&A, recurring result
C) OTHER NET OPERATING INCOME (EXPENSES): includes accounting provision related to the write-off of the amount receivable from Braskem Idesa in the approximate amount of US$119 million (R$612 million) as payment for damages (“liquidated damages”) for the supply of ethane in a volume below that estab
Slide 27: Income statement 4Q20
‘Tncome Statement 4q20 ae) ‘Chg. 202002019, R$ milion (3) © ve) ie) __ a) ©) (0) ‘Gross Revenue 22,288 (18,999 (14,986 1796 49% 65,569 62,284 1290 Net Revenue 18,738 15,992 12,640 17% 48% © 58,543 52,324 1200 ‘Cost of Good Sold (33,798) (42,427) (11,085) 11% 25% (47,331) (45,680) 4% Gross Profit 494
Slide 28: Consolidated net revenue
Net Revenue (R$ million) | Consolidated” Net Revenue (R$ million) | Consolidated’ 18,738 50.503 3920 Wi Gras! USA and Europe Wm erexi USA anc Europe i Exports Mexico ports Mexico Does net cealdrfeadstock resale and th Does nt consider feedetock resale and others
Slide 29: Other net revenue (expenses)
C) OTHER NET REVENUE (EXPENSES) The Company recorded a net expense of R$2,625 million in 4Q20, mainly due to (i) accounting provision of approximately US$612 million (R$119.1 million) related to the write-off of the amount receivable from Braskem Idesa as payment for damages (“liquidated damages”) f
Slide 30: Other revenue (expense), net
THER REVENUE (EXPENSE), NET 4g20 aqz0 4919 Cha. 2020 ©2019 RS milton (O) @) © je) (0) © we) Other Revenues PIS and COFINS cred — exclsion of IOMS from the cakultion be 111 190 54-42% «105% 3111908 “84% Fes, imprisonments and indemnities (zany a2 50 na a a 375 -89% Taxes 24 11 0 23% na. 219 3 na, oth
Slide 31: Consolidated result note
[12] Braskem’s consolidated result is equal to the sum of the results of Brazil, United States, Europe and Mexico minus the eliminations of revenues and costs related to product transfers between these regions.
Slide 32: Net financial result
E) NET FINANCIAL RESULT BRASKEM (ex-BRASKEM IDESA)
Slide 33: Braskem financial result
Financial expenses: increase compared to 3Q20 (+6%) explained by the impact of derivative related to feedstock operations. Compared to 4Q19, the increase (+1%) is explained by (i) the increase in gross debt and (ii) the impact from Brazilian real depreciation against the U.S. dollar on interest. Fin
Slide 34: Hedge of cash flow
Hedge of Cash How Term Beas ea Zero-Cost Collar 4021 4.00 1,498 Zero-Cost Collar 2a21 4.24 1,670 Zero-Cost Collar 3021 430 1,595 Zero-Cost Collar 4021 4.35 1,307 Zero-Cost Collar 1022 442 976 Zero-Cost Collar 2022 47. 904 Zero-Cost Collar 3022 4.64 453, Zero-Cost Collar 4022 4.65 480 Total 433 3,883
Slide 35: Braskem Idesa financial result
Financial expenses: down compared to 3Q20 (-1%) explained by the effect from local currency appreciation on interest expenses. Compared to 4Q19, the increase (+14%) is explained by the effect from the depreciation in the Mexican peso against the U.S. dollar on interest expenses in the period. Financ
Slide 36: Liquidity & capital resources
G) LIQUIDITY & CAPITAL RESOURCES BRASKEM (ex-BRASKEM IDESA) On December 31, 2020, the average debt term was around 19 years [13] , with approximately 50% of maturities concentrated after 2030. The weighted average cost of the Company’s debt was exchange variation +5.3%.
Slide 37: Average debt term note
[13] Considers the 100-year perpetual bond. Including the 30-year perpetual bond, the average debt term is 14 years.
Slide 38: Perpetual bond redemption and Braskem Idesa debt
Due to its strong cash position and with the objective of reducing gross debt levels, the Company announced in March 2021, the total redemption of the 7.375% perpetual bond, at face value, in the amount of US$500 million. BRASKEM IDESA On December 31, 2020, the average debt term was around 5 years,
Slide 39: Braskem Idesa guarantees
Braskem Idesa has guarantees typical to Project Finance structures: debt service reserve account and contingent equity commitment. At the close of 2020, such guarantees corresponded to US$194 million and US$208 million, respectively.
Slide 40: Project finance covenants and reclassification
In line with the Company’s Financial Policy, the investment in the Braskem Idesa petrochemical complex was financed under a Project Finance model, under which the construction loan is paid exclusively using the cash generated by the company itself and the shareholders provide limited guarantees. Thi
Slide 41: Investments in 2021
Investments in 2021 The investment expected to made during 2021 by Braskem is R$3,904 million (US$764 million), to be allocated mainly to scheduled maintenance shutdowns in ABC, São Paulo and Rio Grande do Sul plants, and strategic projects, such as the expansion of the biopolymers business and the
Slide 42: 2021 investment plan
2021e bat R$ MM__US$ MM. Corporates (ex-Braskem Idesa) Brazil 3,359 657 Operating 3,025 592 strategic 334 65 USA and Europe 545107 Operating 384 75 strategic? 161 32 Total 3,904 764 Total Operating 3,409 «667 strategic 495, 97 Total 3,904 764 SEment in the construction of the new Pi
Slide 43: Recycled resins and green PE
§ Brazil: increase in recycled resin sales compared to 3Q20 (+389%) and 4Q19 (+174%), due to the strong demand for plastic resins, mainly from the retail sector, and increase in production capacity of recycled resins, given the new partnership with recyclers, with a consequent increase in the supply
Slide 44: Stock performance
‘Stock Performance 160 0 “0 Dec dan Feb Mar Ar May unSsolSSCug)SSCSepSOtSCN Ce Source: Bloomberg ov — BrKMs — Bei — BAK Free Float distribution in Shareholding composition in 12/31/2020 12/31/2020 (B3 + NYSE) Brazilians Physical Person Others Ml Treasury Ii Foreigners i Legal Person Mi Petrobras ADR
Slide 45: Credit ratings
Since the last disclosure of results, the risk-rating agencies Fitch Ratings, Standard & Poor’s (S&P) and Moody’s have kept their ratings for Braskem on global scale unchanged. In the case of Fitch Ratings and Standard & Poor’s (S&P), the rating on the global scale remained BB+, with a stable outloo
Slide 46: Indicators
Indicators 4920 3920 4g19 cha. US$ million (A (B) C) A)/(B) Operating Recurring Operating Result 833 681 241 22% naa, Operating Margin® 24% 23% 8% I pp. I6 pp. SGRA/Net Revenue (%) 6% 6% 9% Opp. Spo. Financial Net Debt 5,557 6,153 5,369 10% 3% Net Debt/Recuting Operating Result (LTM) 2.98 4.98x 0.00
Slide 47: Annex II: Consolidated recurring operating result calculation
ANNEX II Consolidated Recurring Operating Result Calculation
Slide 48: Recurring operating result statement
Recurring Operating Result Statement (RS nilion) ago 3204019 Change Ghange | 20202019 Ghrange ‘consOLIDATED ww) cy FA) A (0) © oe Net Profit 978 (4,337) (2,885) na. na, (7,083) (2897) 14206 Tacoma Tax / Socal Catribution sist (1073) (4,560) na na (2568) (1,905) 088 Financial Result (ese) 1.522 or na
Slide 49: Consolidated balance sheet
[ASSETS (R$ millon) Current dec/20 (3) 34,190 deof19 O) 23,390 Change ye) ‘Cash ad Gach Equivalents aketable Securties/Held for Trading Accounts Receivable Inventors Racoversble Taxes Prepaid expenses Dividende and Interest on Equity Prepaid expenses 13,853 3627 4732 2304 4193, 1548 02 6,804 1688 2.
Slide 50: Cash flow statement
4Q19° Change Change 20202019 Change AIO ©) © oe Profit (Loss) Before Income Tax and Social Contribution 029 (2,416) 2 na. (9,684) (4,803) _ 10206 “Adjust for Result Restatement Depreciation, Amortization and Depletion toss 1,059 1024-28 2854083 3.832 18% Eauity Result @ (43) 79% 968 19) Interest, Mo
Slide 51: Annex VI: Braskem Idesa balance sheet
ANNEX VI Braskem Idesa Balance Sheet
Slide 52: Braskem Idesa balance sheet
ASSETS (R$ milion) dec}20 dec/19_— change «) ) ie) Current 2,159 2,439 =11% Cash and Cash Equivalents 904 -11% Accounts Receivable 578 74% Inventories 507 13% Recoverable Taxes 48 69% Other 121 -64% Ton Current 47,203 23% ‘Taxes Recoverable 225 5 na. Deferred Income Tax and Social Contribution 1,872
Slide 53: 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