Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — Q2 2019 Earnings Presentation
33 slides from Braskem's earnings presentation, Aug 8, 2019
Slide 1: 1Q19 Results - Restatement
1Q19 RESULTS - RESTATEMENT Braskem has spontaneously restated, on the date hereof, its Interim Financial Statements (ITR) for the first quarter of 2019 and its earnings release to reflect: (i) the recognition of PIS/COFINS tax credits due to the exclusion of ICMS tax from lawsuits issued final and u
Slide 2: Braskem reports free cash generation of R$2.3 billion
Braskem reports free cash generation of R$2.3 billion 2Q19 HIGHLIGHTS: Braskem – Consolidated: 4 Recurring EBITDA was US$375 million, 12% higher than in 1Q19, explained by (i) better operating performance of PP plants in the United States; (ii) higher sales volume of chemicals in the Brazilian marke
Slide 3: NYSE hearing, Odebrecht update and highlights by region
4 The New York Stock Exchange (NYSE) scheduled for October 17, 2019 the hearing related to the appeal filed by Braskem against the NYSE’s decision to suspend trading and commence delisting of the American Depositary Shares (ADS) of the Company after failing to file its 20-F Form for fiscal year 2017
Slide 4: Brazil operating and financial overview
Chg. 2918 Chg. po (Cy) (AD/(B) (AD/( Production Ethylene 829,984 816,555 841,720 2% Utilization Rate* 89% 88% 90% Ipp. Propylene 347,875 344,335 320,628 1% Resins demand in the Brazilian market 1,263,315 1,361,043 1,253,220 -7% Sales - Brazilian Market Resins 843,341 877,841 821,330 -4% Resins Marke
Slide 5: Brazil international references
Brazil International References* 2Q19 1919 2Q18 Chg. Chg. 1H19 1H18 Chg. (US$/ton) (A) (B) (c) (A)/(B)_(A)/(C) (D) (E) D)/(E) Prices Brent (US$/bbl) 70 63 74 10% -7% 66 ZAL -6% Naphtha 527 497 636 6% -17% 512 605 -15% Ethane 156 220 214 -29% -27% 188 201 -6% Propane 283 346 456 -18% -38% 314 451 -30
Slide 6: Status of Situation in Alagoas
Status of Situation in Alagoas: In May, as announced to the market, Braskem suspended its salt mining, chlor-alkali and dichloroethane (EDC) production activities in Maceió. Accordingly, in 2Q19, the average capacity utilization rate of PVC plants stood at 48%, due to the transition from an integrat
Slide 7: United States and Europe segment description
10 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.
Slide 8: Spreads
Spreads: PP spread in the United States 11 : stable compared to 1Q19, with PP prices accompanying the decline in propylene prices. Propylene supply remained high, both from refineries and from PDHs and crackers, while imported PP remained widely available in the market, adversely affecting prices. C
Slide 9: Polypropylene spread footnotes
11 Difference between the U.S. polypropylene price and the U.S. propylene price. 12 Di fference between the Europe polypropylene price and the Europe propylene price.
Slide 10: Mexico operating and financial overview
2Q19 1919 2918 Chg. Chg. 1H19 1H18 Chg. dass (A) (8) ( (ay/(B)_ (A/C) (0) © (ye) Production PE 189,160 203,953 187,349 -7% 1% 393,113 408,642 -4% Utilization Rate* 72% 79% 72% -7 p.p. Opp. 76% 79% -3pp. Sales Mexican Market 119,249 118,513 134,505 1% -11% 237,762 280,128 -15% rts 80,672 90,219 61,93
Slide 11: Spreads
Spreads: PE spread 14 : wider compared to 1Q19, explained by the lower ethane price, which offset the lower PE price, mainly due to the startup of new gas fractionators in the region, coupled with delays in the startup of ethane crackers previously planned for the first half of 2019. The narrowing c
Slide 12: Mexico segment description
13 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 kta. This unit includes the results of Braskem Idesa SAPI and of the other subsidiaries of Braskem S.A. in Mexico.
Slide 13: EBITDA (R$ million) and EBITDA (US$ million)
EBITDA (R$ million) EBITDA (US$ million) | Q 3,177 3,291 877 864 34% 34% 56% 56% 20% 1,611 20% 412 37% 37% Hi Brazil oERe 38% i 47% Hi Overseas : 47% {N others* 2Q18 1Q19 2Q19 2Q18 1Q19 2Q19 *Considers, mainly: (i) Cetrel’s result already excluded together with its transactions with the Company; (ii
Slide 14: 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 15: Restatement of 1Q19 results and tax credits
The Company restated its 1Q19 results to account for credits related to the period between June 2002 and December 2011. Due to the restatement, the total amount of credits provisioned for in 1Q19 is R$1,809 million, of which R$1,708 million was recorded under “Other income (expenses), net” and R$101
Slide 16: Financial expenses, income and exchange variation
Financial expenses: reduction of R$3 million compared to 1Q19, a period affected primarily by the amount of 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 to the Selic. Financial incom
Slide 17: Liquidity position
Braskem’s liquidity position of US$2,404 million is sufficient to cover the payment of all obligations maturing over the next 35 months. Considering the international stand-by credit facility of US$1 billion, which remained untapped by the end of the period, coverage is of 46 months. Considering bot
Slide 18: Risk-rating agencies
Risk-rating agencies: Braskem maintained investment grade ratings at Standard & Poor's (BBB-) and Fitch Ratings (BBB-) and credit ratings above Brazil’s sovereign risk at the three main rating agencies. The reports are available on the Investor Relations website ( http://www.braskem-ri.com.br/ ). 6.
Slide 19: Reduction of 2019 investment
Considering the more challenging than expected petrochemical scenario, impacted by the slower global economy growth, and committed to financial health, the Company will reduce its 2019 investment announced at the beginning of the year by approximately US$100 million. 17 Considers operating investmen
Slide 20: Sustainable Development and Circular Economy 2Q19 Highlights
SUSTAINABLE DEVELOPMENT AND CIRCULAR ECONOMY 4 2Q19 Highlights o Climate change: obtained the first carbon credit certificate related to the verification of credits from the use of renewable fuel (ethanol) to substitute fossil fuels in the fleet of own vehicles in São Paulo, from July 1, 2017 to Jun
Slide 21: Indicators
Indicators 2Q19 1919 2918 Chg. Chg. US$ million (A) (B) (c) (A)/(B)__ (A)/(©) EBITDA 412 864 877 -52% -53% EBITDA Margin (%) 12% 25% 23% -l3pp. -10p.p. SG&A/Net Revenue (%) 7.4% 6.6% 5.3% Ipp. 2p.p. Net Debt* 4,771 5,287 5,396 -10% -12% Net Debt/EBITDA LTM* 2.16x 2.03x 1.90x 6% 14% EBITDA/Interest P
Slide 22: Exhibit II - Calculation of Consolidated EBITDA
EXHIBIT II Calculation of Consolidated EBITDA
Slide 23: EBITDA calculation footnotes
(i) Represents accrual and reversal of provisions for impairment of long-duration assets (investments, property, plant and equipment and intangible assets), which were adjusted for the composition of EBITDA as there is no expectation of financial realization and, when there is, it will be recorded i
Slide 24: Consolidated balance sheet - assets
ASSETS (R$ million) jun/19 dec/18 Change (A) (B) _(A)/(B) Current 20,009 21,384 -6% Cash and Cash Equivalents 5,788 5,548 4% Marketable Securities/Held for Trading 679 2,358 -71% Accounts Receivable 2,588 3,075 -16% Inventories 8,268 8,487 -3% Recoverable Taxes 1,782 1,197 49% Dividends and Interest
Slide 25: Reclassification of non-current liabilities
20 On the reporting date of the quarterly financial statements as of June 30, 2019, the non-financial clauses established by contracts remain in default. As a result, the Company continued to reclassify to current liabilities the entire balance of non-current liabilities, of R$ 8,935 million, in com
Slide 26: Consolidated Cash Flow
Consolidated Cash Flow 2Q19 1919 2Q18 Change Change 1H19 1H18 Change R$ million (G)) i) (c)___(A)/(B) (A)/(C)__(D) (E)__(D)/(E) Profit (Loss) Before Income Tax and Social Contribution and the result of (76) 1,192 295 — na. 1,116 1,722 -35% discontinued operations Adjust for Net Income Restatement De
Slide 27: Exhibit VI - Braskem Idesa Balance Sheet
EXHIBIT VI Braskem Idesa Balance Sheet
Slide 28: Braskem Idesa balance sheet
ASSETS (R$ million) jun/19 dec/18 Change (G9) (B) (A)/(B) Current 2,456 2,620 -6% Cash and Cash Equivalents 1,045 963 8% Accounts Receivable 347 628 -45% Inventories 575 579 -1% Recoverable Taxes 112 110 2% Derivatives operations 7 21 -69% Other Assets 370 319 16% Non Current 13,530 13,581 0% Taxes
Slide 29: Exhibit VIII - Financial Results Braskem Idesa
EXHIBIT VIII Financial Results Braskem Idesa
Slide 30: Braskem Idesa financial result
Financial Result (R$ million) 2Q19 1Q19 2Q18 Chg. Chg. 1H19 1H18 BRASKEM IDESA A L:) C ‘A)/(B) (A)/(C L) 3 Financial Expenses (289) (290) (262) 0% 10% (579) (507) 14% Interest Expenses (268) (260) (256) 3% 5% (528) (467) 13% Others (21) (30) (6) -31% 239% (51) (40) 26% Financial Revenue 10 16 16 39%
Slide 31: Production and sales by product
2Q18 Chg. Chg. 1H19 1H18 Ch (Cc) (A)/(B) (A)/(C)_(D) (E)_(D)/(E) Production Ethylene 829,984 816,555 841,720 2% -1% 1,646,538 1,674,607 -2% Utilization Rate* 89% 88% 90% Ipp. -lpp. 88% 90% -2pp. Propylene 347,875 344,335 320,628 1% 8% 692,210 642,942 8% Cumene 56,450 54,021 53,453 4% 6% 110,471 111,
Slide 32: Polyolefins production, sales and financial overview
a 2919 1919 2918 Chg. Chg. 1H19 1H18 Chg. (A) (B) (@) (A)/(B)_(A)/(C) (D) iG) (OG) Production PE 681,832 636,803 659,783 7% 3% 1,318,634 1,352,013 -2% Utilization Rate* 90% 85% 87% Sp.p. 3 p.p. 88% 90% -2 p.p. PP 398,314 427,283 389,442 7% 2% 825,597 800,868 3% Utilization Rate* 86% 94% 84% -8p.p. 2
Slide 33: Signatures and forward-looking statements
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 van La