Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — Q2 2017 Earnings Presentation
31 slides from Braskem's earnings presentation, Aug 16, 2017
Slide 1: Brazil and United States/Europe operating highlights
Brazil: 4 Brazilian demand for resins (PE, PP and PVC) reached 1.3 million tons in 2Q17, growing 2% in relation to 1Q17. In the year to date, demand for resins (PE, PP and PVC) reached 2.5 million tons, expanding 4% compared to 1H16. In the period, the Company's market share stood at 68%, supporting
Slide 2: 1.1. Basic Petrochemicals
1.1. BASIC PETROCHEMICALS The Basic Petrochemicals segment operates four petrochemical complexes (Camaçari, Triunfo, São Paulo and Rio de Janeiro) producing olefins, aromatics and utilities. These facilities have total annual ethylene production capacity of 3,952 kton, of which approximately 78% is
Slide 3: Basic Petrochemicals: capacity utilization and net revenue
Capacity Utilization: Braskem’s crackers in Brazil operated at an average utilization rate of 93% in 2Q17, down 1 p.p. and 2 p.p. from 2Q16 and 1Q17, respectively. The decline is due to the scheduled shutdown of the São Paulo cracker for maintenance of the Flare system, which lasted approximately 12
Slide 4: Polyolefins: capacity utilization and Brazilian market
Capacity Utilization: In 2Q17, the utilization rates of the PE and PP industrial units were affected by the scheduled shutdown of the São Paulo cracker. Brazilian Market: The estimated market for polyolefins (PE and PP) in 2Q17 reached 1,009 kton, growing 6% from 2Q16, due to increased activity in t
Slide 5: Vinyls: PVC utilization and Brazilian market
In 2Q17, the average utilization rate of PVC was affected by the scheduled shutdowns in Alagoas. Capacity Utilization: Brazilian Market: In 2Q17, estimated PVC consumption amounted to 241 kton, down 4% in relation to both 2Q16 and 2Q17. Compared to 1H16, PVC sales in the domestic market contracted 2
Slide 6: USA and Europe operating and financial overview
USA AND BROPE a a See CEE TOM ONG ‘Operating Overview (ton) Production PPusA 3520 «LSI GGT aT TIS Usain Rate ‘Oe ‘3% 101% ipp pp ‘37% ‘35% pp. rar sass 153989 146767 tO ee 2B 67H Uilestion ate 115% 108% 2épp._-19 101% 105% Total SIS792 30567 53415 -1%~ 1% 1,045,660 —L012.648 3% ition Fat 2% «1 —«TO
Slide 7: COGS U.S. and Europe 2017
COGS U.S. and Europe 2017 Salaries and Wages 39,
Slide 8: Mexico: capacity utilization and sales volume
Capacity Utilization: In 2Q17, the polyethylene plants operated at an average capacity utilization rate of 83%, lower than in the previous quarter, reflecting the operating adjustments and the one-off impact from lower ethane supply in the period. Sales Volume: Compared to 1Q17, given the lower prod
Slide 9: Mexico: SG&A, EBITDA and financial results
SG&A Expenses: In 2Q17, selling, general and administrative expenses increased 17% compared to 2Q16, due to the higher sales volume. EBITDA: In 2Q17, EBITDA increased US$140 million from 2Q16, supported by the ramp-up in production, to total US$142 million. Financial Results Braskem Idesa In 2Q17, n
Slide 10: Consolidated
4 CONSOLIDATED The consolidated figures are formed by the results from the Brazil, United States & Europe and Mexico segments adjusted by eliminations and reclassifications.
Slide 11: Net Revenue
§ Net Revenue In 2Q17, net revenue amounted to US$3.7 billion, advancing 11% on the same quarter last year, which is explained by (i) the good sales volume of the Mexico complex; (ii) the higher polyolefins sales volume in the domestic market; (iii) the capacity-expansion projects carried out at the
Slide 12: SG&A expenses and other income (expenses)
§ SG&A expenses In 2Q17, selling, general and administrative expenses amounted to R$709 million, increasing 4% compared to 2Q16, reflecting the growth in sales volume; the higher expenses in Mexico; the higher expenses in the United States with the startup of the new UTEC unit; and the wage increase
Slide 13: Consolidated EBITDA in 1H17
In 1H17, Braskem’s consolidated EBITDA amounted to US$2,092 million, advancing 27% from the year-ago period, due to: (i) the higher sales volumes of PP in the United States and PE in Mexico; (ii) the widening of international spreads, especially for basic petrochemicals, which increased 57%; (iii) t
Slide 14: EBITDA definition
7 EBITDA is defined as the net result in the period plus taxes on profit (income tax and social contribution), the financial result and depreciation, amortization and depletion. The Company opts to present adjusted EBITDA, which excludes or adds other items from the statement of operations that help
Slide 15: Net profit and net profit per share
"Non-controlling interest in Braskem esa [Net Profit (Loss) per share ‘Common Shares Class ‘A’ Preferred Shares Class ‘8 Preferred Shares 7 2q16 Cho. (OMG) 107 (132) -51% 140% 159 ost
Slide 16: Global Settlement and adjusted leverage
Through a Global Settlement with authorities in Brazil and abroad, the Company undertook to pay approximately US$957 million, equivalent to approximately R$3.1 billion. Including the restatement of the face value of the Leniency Agreement to June 30, 2017, the payment of US$65 million to the SEC and
Slide 17: Debt and adjusted net debt
Debt Mar-17 hg. US$ millon (8) (OMOMONG) ‘Adjusted Net Debt 6,044 “3% = Net Debt 5,233 1% - Leniency Agreement 957 0% - Value Adjustment (52) 29% - Repayment (95) 101% - EBITDA LT 3,337 3,105 “5% = 1.B1x 1.79% 2% - Adjusted Net Debt/ EBITDA jalue of the leniency
Slide 18: Risk-rating agencies and investment
Risk-rating agencies: Braskem maintained investment grade ratings at Standard & Poor's (BBB-) and Fitch Ratings (BBB-) and its credit risk is above Brazil’s sovereign risk at the three main rating agencies (S&P, Fitch and Moody’s). In May, Standard & Poor's placed Brazil’s sovereign credit rating on
Slide 19: Value Drivers: new PP plant in the United States
§ Value Drivers: Construction of a New PP Plant in the United States The development of shale gas energy in the United States led to an oversupply of propane and consequently an increase in propylene supply through additional volumes from refineries, crackers and, especially, propane dehydrogenation
Slide 20: Key indicators and enterprise value
2017 1917 (A) (B) 3,029 3,607 3,011 -16% EBITDA Margin (%) 255 286 25.7 3 pp. ‘SGRA/Net Revenue (%) 6.0 55 58 05 pp. Net Debt 19,424 19,149 17,825 1% ‘Net Debt/EBITDA LTM 1.90x 174% 156K 9% EBITDA/Interest Paid LTM 68 74 74 1% Share Price (Final) 342 318 18.1 Shares Outstanding (Million** 796 796 79
Slide 21: Exhibit II: Calculation of Consolidated EBITDA
EXHIBIT II Calculation of Consolidated EBITDA
Slide 22: Calculation of Consolidated EBITDA
et Profi. Fr a 30571070 rene Tax/Socl Crtibton rn a. ae ee es] Francia Result o7 Snake 053378 Deprecition amortization and deplon m mea ost Cr A ae. eee Eipenses 7% 3 rr er ee ee) Basic EBITDA 3034 3619 3.082 6% © 0% 66536154 rovisons fr the inpsimert of longed asses () 6 @ ey : - 6 Gs) ‘Reade wih d
Slide 23: Braskem Idesa debt covenant reclassification
* At the reporting date for the quarterly information at June 30, 2017, these clauses were not being complied with obligations customary in project finance contracts. In this sense, the entire balance of non-current liabilities, in the amount of R$9,147 million, was reclassified to current liabiliti
Slide 24: Cash flow statement
1Q7 246 aHI6 Change © © © oe = 0% om ranch invert ed fer ang (si) 888) aoe) 586) E ‘ecout Reel fom Cents Qs) @) me em). : Ivers G7) Gi) mw) Recoverble Taxes @ MS om a ee ae) ovanced pense a 2 @ + + 8 5 ‘ner cco Rect oe 4 ay = wa ome Supplies 2 81) 25% 3) ON OH ‘Tees Payabe a 2s ss 2 = am Go) rte ‘on
Slide 25: Exhibit VI: Balance Sheet - Deconsolidation Braskem Idesa
EXHIBIT VI Balance Sheet - Deconsolidation Braskem Idesa
Slide 26: Assets and liabilities, deconsolidated Braskem Idesa
[ASSETS (RS raion) des nsohdated Dec-16 iminations Jun-17 ‘Garrent 72S 149991340967 63)_18478 15,897 (ash and Cash Equals Sais 6500 2st «202 57 6702 Marketable Secures eld for Trading 2671190 2578 1190 ‘courts Recevable 2047 1455 Sol 287 (68) (8) 2ask Lee — 550 48533775 Sous 5238 Recoverable Taxes i
Slide 27: Cash flow, deconsolidated Braskem Idesa
Net Profit (Loss) Before Income Tax and Social Contrbuton andtheresuk of dscontnved operations 3,728 «1856941 (797) (S13) 408 4tsy 542 ‘Adjust for Net Income (Loss) Restatement 170 2393730265344) 24822175 Depeition Amartzaton ad epson io iH) te tae Ey felt oy) sr ewan) 3) Trees Monta and Exchange Va
Slide 28: Production consolidated
PRODUCTION CONSOLIDATED 2016 3Q16 ‘Polyolefins 1,037,965 1,086,706 1,115,407 1,060,862 1,109,350 1,096,358 PES 623,737 «699,663. —« 711,879 «667,187 «672,078 «679,176 PP 408,228 387,043 «403,527 393,676 «437,272 417,182 Vinyk 373,158 411,444 445,919 452,380 430,828 361,730 Pvc 125,908 —*+148,604~—~—
Slide 29: Exhibit X: Sales Volume - Export Market, Main Products
EXHIBIT X Sales Volume - Export Market – Main Products
Slide 30: Sales volume, Brazilian exports and international business
Sales Volume (Brazilan Exports / International Business) 1016 2q16 aus aque 1q7 2917 oleing. 7426395 207, EA i__358,57 5 2447 275322 270,05 253859 240.530 238,650 co ies iio 5a29kaza7a 50341119467 Vaye. a2s6 77485 16483 sg) 34701 9260 Pe 34256716568 38038 27,188 9,280 (Cause Soda ° - - 5537 758 : Ma
Slide 31: 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 1 6 , 2017 BRASKEM S.A. By: /s/ Pedro van Langendonck Teixeira de Freitas Name: Pedro van