Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — Q4 2018 Earnings Presentation
30 slides from Braskem's earnings presentation, Mar 14, 2019
Slide 1: Braskem – Strategy
Braskem – Strategy: 4 In line with the strategy to seek solutions that help address the challenges of the circular economy, in December, Braskem and the other thermoplastic resins producers that are members of the Brazilian Chemical Industry Association (ABIQUIM), launched the Voluntary Commitment t
Slide 2: Operating Performance in 4Q18 by Region: Brazil
OPERATING PERFORMANCE IN 4Q18 BY REGION: BRAZIL
Slide 3: Difference between the Europe polypropylene price and the Europe propylene price.
11 Difference between the Europe polypropylene price and the Europe propylene price. 12 Difference between the U.S. polyethylene price and the U.S. ethane price.
Slide 4: Brazilian Resin Market and COGS
Brazilian Resin Market: contraction in resin demand in the Brazilian market (PE, PP and PVC) compared to 3Q18 and 4Q17, explained by seasonality and expected price decreases throughout the quarter. In this scenario, the crackers operated at a lower capacity utilization rate and resin sales decreased
Slide 5: Brazil EBITDA
EBITDA: US$399 million (R$1,520 million), representing 63% of the Company’s consolidated EBITDA.
Slide 6: United States & Europe results table
4s 30184017 hg. a. 2018 2017 iw. (A) (B) (©) (A)/(B)_(A)/(C) (D) (Ee) (D)/(E) Production PP USA 361,533 355,028 404,976 2% 11% 1,388,625 1,521,894 -9% Utitzation Rate* 91% 89% 102% += 3pp. -l1pp. 88% 97% Opp. PP EUR 107,640 127,003 140,929 -15% © -24% © 523,797 SO1AI7—-11% tization Rate* 68% 81% 69%
Slide 7: PP Market
PP Market: The U.S. PP market recovered after a weak third quarter, when converters stopped buying due to the resin’s high price, with the highlight being the packaging and nonwoven industries. In Europe, demand was weaker due to the slowdown in the automotive industry, reflecting the new regulation
Slide 8: United States & Europe EBITDA; Mexico (Braskem Idesa)
EBITDA: US$81 million (R$308 million), representing 13% of the Company’s consolidated EBITDA. MEXICO (Braskem Idesa) 14
Slide 9: Mexico segment description
14 The segment comprises an ethane-based cracker, two high-density polyethylene (HDPE) plants and one low-density polyethylene (LDPE) plant with combined PE production capacity of 1,050 thousand tons/year. This unit includes the results of Braskem Idesa SAPI and of the other subsidiaries of Braskem
Slide 10: Mexico: Other Income and EBITDA
Other Income (Expenses) net: the result in 4Q18 includes income of US$51 million related to the delivery-or-pay provision under the ethane supply agreement related to lower availability of ethane in the second, third and fourth quarters of 2018. EBITDA: US$150 million (R$573 million), representing 2
Slide 11: Other Income (Expenses) Net
2. OTHER INCOME (EXPENSES) NET In 2017, the Federal Supreme Court (STF) decided that ICMS tax should not be included in the calculation base of PIS/COFINS. In this scenario, Braskem recognized in 4Q18 income of R$520 million related to PIS and COFINS tax liabilities paid in excess from March 2017 to
Slide 12: Other Net Income (Expenses) table
amis 30184017, Chg. hg. 20182017 Chg. OTHER NET INCOME (EXPENSES) A 5 ont fe ita Participation of members in profits and results| (8s) (90) (143) 3% 23% © (375) (00) 8% Expenses from fixed assets, (3) (5) (62) 169% 78% (40) (208) 81% Provision of legal and labor lavsuits (74) 16 (53) ma 25% = (83) (
Slide 13: Financial Result
Financial expenses: decrease of R$50 million compared to 3Q18, explained by the effects from the Brazilian real appreciation of 3% in the period on consolidated net exposure and the lower interest on financing. In the year, despite the effect from the Brazilian real depreciation of 17% on consolidat
Slide 14: Liquidity position
Braskem’s liquidity position of US$1,794 million is sufficient to cover the payment of all obligations maturing over the next 40 months. Considering the international revolving credit facility in the amount of US$1 billion and not used in the period, this coverage is 48 months. In September 2018, gi
Slide 15: Risk-rating agencies
Risk-rating agencies: Braskem maintained investment grade ratings above Brazil’s sovereign risk at Standard & Poor's (BBB-) and Fitch Ratings (BBB-) and a stable ratings outlook at the three main agencies. The reports are available on the Investor Relations website ( http://www.braskem-ri.com.br/ ).
Slide 16: Braskem Idesa investments
Braskem Idesa Regarding Braskem Idesa, the investment made was below the amount planned due to the cancelation/postponement of projects.
Slide 17: Braskem Idesa planned investments
Braskem Idesa plans to invest around US$29 million (R$107 million) in projects related to maintenance, productivity, HES and operating efficiency.
Slide 18: Sustainable Development: Circular Economy
SUSTAINABLE DEVELOPMENT 4 Circular Economy After the launch of its global positioning to promote the Circular Economy, Braskem and the other thermoplastic resins producers that are members of the Brazilian Chemical Industry Association (ABIQUIM), launched the Voluntary Commitment to the Plastics Cir
Slide 19: Indicators
Indicators agg 3018 4Q17 Chg. hg. US$ milion (A) (B) (© (ay/(B)_ (ay) EBITDA 501 909 911 -45% EBITDA Margin (%) 13% 22% 23% — -9pp. SGBA/Net Revenue (9%) 69% 56% 6.9% I pp. Net Debt" 5129 5,191 6,031 “1% [Net Debt/EBITDA LTM* 206K «181k 191x 14% EBITDA/Interest Paid LTM 592 5.69 5.61 Share Price (Fi
Slide 20: Appendix II: Calculation of Consolidated EBITDA
APPENDIX II Calculation of Consolidated EBITDA
Slide 21: EBITDA calculation 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 (RS million) tao Ge @ ye) Current 17,992 19% Cash and Cash Equivalents 3.775 a8 Marketable Securtes/Held for Trading 2303 26 Accounts Receivable 3231 6% Inventories 6.047 249% Recoverable Taxes 453 7% Income Tax and Social Contribution 836 14% Dividends and Interest on Equity rr Prepaid Expen
Slide 23: Liabilities notes
*On the reporting date, December 31, 2018, of these Financial Statements, certain non-financial contractual obligations were in unremedied breach. As a result, the entire balance of non-current liabilities, in the amount of R$9,544,476, was reclassified to current liabilities, in accordance with CPC
Slide 24: Cash flow statement
4Q8 3Q184Q17_— Change = Change = 20182017 Change (nO) We AO © © one Profit (Loss) Before Income Tax and Social Contribution and the 7 5 = a ee 72 4859 268 9606 73% 3,653 5,417 “3300 ‘Adjust for Net Income Restatement Depreciation, Amortization and Depletion 72 78760 56 “2% 2981 2,828 26 Equity Resul
Slide 25: Braskem Idesa Income Statement
Income Statement (Ré millon) 408-318 4Q17_-— Change Change ©2018) 2017S Change. BRASKEM IDESA @) (@) (A) (OA) (e)__(a)/() Net Revenue 938 1,033 949 9% — -1% = 3,766 3,657 3% Cost of Good Sold (652) (643) 19% (2,315) (2,125) 9% Goss Profit 276 390 30% = 4451 1,532 “5% Selling and Disbibution Expenses
Slide 26: Braskem Idesa liabilities notes
*On the reporting date, December 31, 2018, of these Financial Statements, certain non-financial contractual obligations were in unremedied breach. As a result, the entire balance of non-current liabilities, in the amount of R$9,544,476, was reclassified to current liabilities, in accordance with CPC
Slide 27: Braskem Idesa cash flow
agg 3Q18_— 4017 Change = Change == 20182017 Change R$ million « (O} © Ke) wie (o) © wy) Profit (Loss) Before Income Tax and Social Contribution and the 7 7 epee meine eect (251) 374 (368) -167% 3296 «163453 64% ‘Adjust fr Net Income Restatement Depreciation, Amortization and Depletion 2232s “5% me 7
Slide 28: Braskem Idesa Financial Result
‘Financial Result (R$ milion) ais 4q17 Chg. 2018 2017 ‘BRASKEM IDESA a CMEONOMON 0) G Financial Espenses (284) (238) (241) “5% 18% (1,080) (974) 12% Interest Expenses ea) (7) (23) te 2m (1038) (667) 17% a a () (2) 71% 4386 () (107) 33% Fancial Revenue 2 1 14 1118% —-17% 2 25 28% Invest 3 8 2 Ye 31%
Slide 29: Brazil production and sales
as 3018 407 hg. Chg. 2018 2017 @) Oo ais) (A) (0) ©) (ovite) Production Ethylene 523,363 SOLES 902,728 3H 338REID 3515658 3M Ubization Rate* om 95% 98% -Spp “Sp. 3135 38 pp Propylene 330259 «351158 SEO.SSF SMH SDEISS NS SET 8M ‘cumene 5559 64678 —SR,SI7_ “1M Me 2DSSS 188,202 18% ‘xtadione ioogsi 109
Slide 30: Polyolefins production and sales
PoLyou agi sus 4q7— Chg. hg. 2018 ‘2017 a) (8) (Q(ay/(a) _(A)/( (0) © Production PE 605,520 696,510 697,318 13% —-13% 2,656,083 2,719,245 2% Utilization Rate* 79% 91% 91% -I2pp. -I2pp. 88% 90% = -2pp. PP 359,234 432,378 426,753 “17% © -16% 1,592,480 1,711,741 “Pe Utilization Rate* 77% 93% 92% -I6pp.