Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — Q2 2021 Earnings Presentation
56 slides from Braskem's earnings presentation, Aug 5, 2021
Slide 1: 2Q21 Earnings Release
2Q21- gs: Release Earnin Braskem ®
Slide 2: 2Q21 Highlights
1. 2Q21 HIGHLIGHTS 1.1 BRASKEM – CONSOLIDATED: § In 2Q21, the Company’s recurring Operating Result was US$1,776 million, 40% higher than 1Q21, mainly due to: (i) better international spreads for PE, PVC and main chemicals in Brazil, for PP in the United States and Europe and for PE in Mexico; and (i
Slide 3: PE Spread
§ PE Spread 6 : increase compared to 1Q21 (+23%). The higher PE price in the United States was due to: (i) healthy demand, explained primarily by the changes in consumer habits caused by COVID that continue to influence the market, driving, for example, demand for packaging, and inventory rebuilding
Slide 4: Average utilization rate of petrochemical crackers
b) Average utilization rate of petrochemical crackers: reduction in relation to 1Q21 (-6 p.p.), mainly due to the scheduled general maintenance shutdown carried out over 63 days at the petrochemical complex in ABC, São Paulo. Compared to 2Q20, the utilization rate increased (+6 p.p.) given the norma
Slide 5: Resin sales volume
c) Resin sales volume: in the Brazilian market, decreased compared to 1Q21 (-17%), explained by: (i) the normalization of demand in the region, but remaining at healthy levels; and (ii) the reduction in market share mainly due to the scheduled general maintenance shutdown of the petrochemical comple
Slide 6: Main chemicals sales volume
d) Main chemicals sales volume: in the Brazilian market, sales volume decreased in relation to 1Q21 (-10%), due to the lower product availability. Compared to 2Q20, sales volume in the Brazilian market increased (+51%), reflecting the higher product availability and stronger demand. Export volumes i
Slide 7: Situation in Alagoas
2.1.3 SITUATION IN ALAGOAS a) Operational Average PVC utilization rate: considering the plants in Alagoas and Bahia, the capacity utilization rate stood at 71%, lower than in 1Q21 (-2 p.p.), mainly due to the scheduled maintenance shutdown at the PVC plant in Alagoas, which started on June 13 and la
Slide 8: Provision action fronts in Alagoas
The amounts included in the provision can be divided into 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, s
Slide 9: Net revenue
A) NET REVENUE: increases in Brazilian real (+9%) and U.S. dollar (+13%) compared to 1Q21, explained by the higher prices for PE, PVC and main chemicals in the international market. Compared to 2Q20, the increases in Brazilian real (+124%) and U.S. dollar (+127%) are explained by the higher price fo
Slide 10: Braskem Sales by Economic Activity
Braskem Sales by Economic Activity| PE Braskam Sales by Economic Actvity| PP Braskem Sales by Economic Activity| PVC 2% ey 1% a 16% 2920 gat 2ga1 2920 agai 2gat 220 1gza 2gaa Bi Food Mi Various Sectors Wi Consumer goods Ml Others Wi construction Ml Agricultural Sector, WEindustrial Ml Cosmeticand Ph
Slide 11: Cost of goods sold (COGS)
B) COST OF GOODS SOLD (COGS): increases in Brazilian real (+4%) and U.S. dollar (+7%) compared to 1Q21, explained mainly by the higher prices for the main feedstocks (naphtha and ethane) in the international market, influenced by the higher prices for oil and natural gas. Compared to 2Q20, the incre
Slide 12: Gradual reduction of REIQ
On July 15, the President of the Republic sanctioned the proposed text by the National Congress in the Conversion Law Project n o 12/2021, arising from the approved modifications of Provisional Measure 1,034/2021, that provides for a gradual reduction in Special Regime for the Chemical Industry (REI
Slide 13: SG&A Expenses and recurring operating result
C) SG&A Expenses: in U.S. dollar, increases compared to 1Q21 (+10%) and 2Q20 (+4%), mainly due to the higher expenses with third parties. D) RECURRING OPERATING RESULT: accounted for 62% of the Company’s recurring consolidated Operating Result.
Slide 14: U.S. and Europe PP spreads
§ U.S. PP Spread 10 : increase compared to 1Q21 (+33%). The PP price in the United States increased mainly due to: (i) strong demand, driven by the gradual relaxation of physical distancing measures related to COVID due to the speed of the vaccination campaign; and (ii) the lower-than-expected recov
Slide 15: Average utilization rate of PP plants
b) Average utilization rate of PP plants: in the United States, the utilization rate increased in relation to 1Q21 (+20 p.p.), reflecting the normalization of production after the impacts from Winter Storm Uri on the U.S. Gulf Coast in 1Q21. Compared to 2Q20, the rate increased (+8 p.p.) given the n
Slide 16: PP sales volume
c) PP sales volume: in the United States, the increase in relation to 1Q21 (+14%) is explained by the higher product availability in the period. Compared to 2Q20, the increase (+26%) is mainly due to the expansion in production capacity after the commercial startup of the new PP plant (Delta) in the
Slide 17: Braskem Sales Volume US & Europe
Braskem Sales Volume (kton) | US & Europe [j Lak 1921 IPP USA Bll PP Europe
Slide 18: Net revenue and COGS
A) NET REVENUE: increases in Brazilian real (21%) and in U.S. dollar (26%) compared to 1Q21 and increases in Brazilian real (179%) and in U.S. dollar (184%) compared to 2Q20, explained by the higher PP price in the United States and Europe and by the higher PP sales volume in the United States. B) C
Slide 19: SG&A, recurring operating result, Mexico spreads
C) SG&A Expenses: in U.S. dollar, in line with 1Q21 (+2%). Compared to 2Q20, expenses increased (+17%), mainly due to the higher expenses with logistics and storage and with selling. D) RECURRING OPERATING RESULT: accounted for 27% of the Company’s recurring consolidated Operating Result. 2.3 MEXICO
Slide 20: Average utilization rate of PE plants
b) Average utilization rate of PE plants: the utilization rate was in line compared to 1Q21, explained by the lower imported ethane supply for production as consequence of the non-scheduled shutdown in May at the petrochemical complex in Mexico due to a specific instability in power electricity supp
Slide 21: PE sales volume
c) PE sales volume: increased in relation to 1Q21 (+15%) due to the limited product availability for sale in the previous quarter after the interruption of natural gas supply at the end of 2020 and after the impacts from winter storm Uri on the U.S. Gulf Coast. Compared to 2Q20, sales volume decreas
Slide 22: Braskem Sales Volume Mexico
Braskem Sales Volume (kton) | Mexico
Slide 23: Net revenue Mexico
A) NET REVENUE: increases in Brazilian real (+45%) and U.S. dollar (+51%) compared to 1Q21 due to the higher PE price in the international market and the higher sales volume in the period. Compared to 2Q20, the increases in Brazilian real (+76%) and U.S. dollar (+79%) are explained by the higher PE
Slide 24: Braskem Sales by Economic Activity Mexico
Braskem Sales by Economic Activity| Mexico 5% 5% 5% 3% 3% 3% M% 8% 8% : 2920 1Q21 2Q21 Bags & Films Hl industrial Construction & Infrastructure Ill Others Ml Packaging i Chemicals Hygiene and Cleaning
Slide 25: Cost of goods sold (COGS)
B) COST OF GOODS SOLD (COGS): increases in Brazilian real (+13%) and U.S. dollar (+17%) compared to 1Q21 due to the higher sales volume and the higher ethane price in the international market. Compared to 2Q20, the increases in Brazilian real (+3%) and U.S. dollar (+4%) are explained by the higher c
Slide 26: SG&A Expenses and Ethylene XXI allegations
C) SG&A Expenses: in U.S. dollar, increase in relation to 1Q21 (+4%), mainly due to the effect of Mexican Pesos appreciation against U.S. dollar in expenses with salary. Compared to 2Q20, the increase (+18%) was due to higher expenses with salary, with third parties and with profit sharing. D) RECUR
Slide 27: Income Statement
Tncome Statement 2021 R$ milion (a) Gross Revenue 30,488 Net Revenue 26,421, Cost of Good Sold (16,609) Gross Profit 9,813 ‘Selling and Distribution Expenses (460) (Loss) reversals for impairment of accounts receivable * General and Administrative Expenses (589) Expenses with Research and Technology
Slide 28: Net Revenue Consolidated
Net Revenue (R§ million) | Consolidated 26.421 22,692 11.188 2920 1921 2Q21 WM Brazil MI USA and Europe WM Exports? lll Mexico Does not consider feedstock resale and others 2Considers only exports from Brazil
Slide 29: Other net revenue (expenses)
C) OTHER NET REVENUE (EXPENSES) In 2Q21, the Company registered revenue of R$656 million, mainly due to: (i) the effect from the recognition of PIS/COFINS tax credits in the amount of R$473 million; (ii) the effect of R$68 million from other tax credits; and (iii) the reversal of the provision for p
Slide 30: Other revenue (expense), net
(OTHER REVENUE (EXPENSE), NET 2921 1921-2920 1H21 © «1H20—Chg. R$ milion (a) (8) © (ay) (AC) (p) (e) (DE) (Other Revenues PIS and COFINS credits — exclusion of ICMS from the calculation be 473 558 10 15% 4762% 1,031 10 10495% Fines, imprisionments and indemnities 0 22 131 99% 100% 22 161 86% Taxes 6
Slide 31: Net financial result
E) NET FINANCIAL RESULT BRASKEM (ex-BRASKEM IDESA)
Slide 32: Financial expenses
Financial expenses: decrease compared to 1Q21 (-22%) due to (i) the reduction in the balance of gross debt with the prepayments concluded in the period; (ii) the reduction in expenses with derivatives; and (iii) the impact of the appreciation of the Brazilian real against U.S. dollar on interest exp
Slide 33: Cash Flow Hedge
Cash How Hedge (average) Zero-Cost Collar 3021 4.37 5.81 1,830 Zero-Cost Collar 4021 451 6.05 1,932 Zero-Cost Collar 1022 458 6.28 1,578 Zero-Cost Collar 2022 4.73 6.89 1,235 Zero-Cost Collar 3Q22 4.69 7.00 1,048 Zero-Cost Collar 4022 472 7.15 1,132 Zero-Cost Collar 1023 4.76 7.52 645 Zero-Cost Coll
Slide 34: Braskem Idesa financial result
Financial expenses: down compared to 1Q21 (-3%) and 2Q20 (-7%) explained by the impact from the lower interest linked to the Project Finance structure and to the bond issued by Braskem Idesa in late 2019 due to the reduction in the debt balance and Brazilian real appreciation against the U.S. dollar
Slide 35: Free cash flow generation
2921 A Recurring Operating Result 9,400 Changes in Working Capitalt (5,646) Operational CAPEX (683) Interest Paid (459) Income tax and social contribution paid (1,032) Strategic Investments (51) Others? 25 Free Cash Flow Generation? 1,554 1921 B) 6,943 (2,882) (436) (1,131) (318) (54) 15 2,136 2920
Slide 36: Liquidity position
The liquidity position of US$3,274 million is sufficient to cover the payment of all liabilities coming due in the next 78 months, considering the international rotating credit facility of US$1 billion available through 2023. In the quarter, given its strong cash position and to reduce its gross deb
Slide 37: Debt Profile
Debt Profile (US$ million) 06/30/2021 sais 2 son 2,274 108i - _ om ss eo 1 ‘ios 7) Ey ay ay 4% 06/30/2021, 2021 2022 2023 2024 2025 2026/2027 2028/2029 2030 onwards Cash i Invested in R$ Ml Local Currency [J Standby I Invested in US$ lll Foreign Currency (1) Does not consider the amount of R§!.2 bil
Slide 38: July bond redemption and loan prepayment
Additionally, in July, the Company fully redeemed the 2022 bonds in the amount of US$255 million and concluded the prepayment of the bank loan in the amount of US$110 million. After these payments, the average debt term turned to around 15 years, with 53% of maturities concentrated after 2030. The w
Slide 39: Braskem Idesa
BRASKEM IDESA On June 30, 2021, the average debt term was around 5 years, with 40% of maturities in 2029 onwards. The weighted average cost of the Company’s debt was exchange variation plus 5.4%.
Slide 40: Braskem Idesa project finance guarantees
Braskem Idesa has guarantees typical to Project Finance structures: debt service reserve account and contingent equity commitment. At the close of June 2021, such guarantees corresponded to US$194 million and US$208 million, respectively.
Slide 41: Investments & Value Creation
H) INVESTMENTS & VALUE CREATION The Company’s investment plans for 2021 are as follows: (i) US$667 million for operating investments; (ii) US$97 million for strategic investments; and (iii) US$34 million for operating investments at Braskem Idesa. Operating Investments 2Q21: the main operating inves
Slide 42: Investments
Investments ia! 1H21 2021e R$ MM_US$ MM | R$ MM_US$ MM |_R$_MM_US$ MM Corporates (ex-Braskem Idesa) Brazil 94 151 1,236 231 3,359 657 Operating ee 142 1,163 217 3,025 592 Strategic 44 8 73 14 334 65 USA and Europe 36 7 83 15 545 107 Operating 29 6 si 9 384 75 Strategic Zz 1 32 6 161 32 Total 831 158
Slide 43: Sales of recycled resins
§ Brazil: increase in sales of recycled resins compared to 1Q21 (+5%) and 2Q20 (212%), mainly due to the Company’s progress in expanding its portfolio of resins with recycled content and its positioning as a supplier of post-consumer resins. In the case of chemicals 20 , sales decreased in relation
Slide 44: Operational Eco-Efficiency
4.5 OPERATIONAL ECO-EFFICIENCY
Slide 45: Social Responsibility & Human Rights
4.6 SOCIAL RESPONSIBILITY & HUMAN RIGHTS
Slide 46: Stock Performance
Stock Performance 280 240 200 160 120 40 Dec Jan Feb Mar Aor May June — IBOV — BRKMS —= BRKM3. = BAK Source: Bloomberg
Slide 47: Free Float and Shareholding Composition
Free Float distribution in Shareholding composition in 06/30/2021 06/30/2021 (B3 + NYSE) WB Brazilins {ll Physical Person ME Novonor Ml Others ll Tresury i Foreigners Tl Legal Person Mil Petrobras MI ADRs
Slide 48: Credit ratings update
In May, the risk rating agency Fitch Ratings upgraded Braskem’s outlook to positive and reaffirmed its risk rating on the global scale of BB+. Furthermore, in July, the risk rating agency Moody’s upgraded Braskem’s outlook to stable and reaffirmed its risk rating on the global scale of Ba1. The upgr
Slide 49: Key indicators and company valuation
hi Chg (A)/(B) (A)/ Recurring Operating Result 1,266 282 40% 530% Operating Margin? 31% 14% Spop. 22pop. SG&A/Net Revenue (%) 5% 8% Opp. 4 pop. mac Net Debt 5,242 6,332 8% 24% Net Debt/Recuring Operating Result (LTM) : 1.80x 71x 39% 85% Recurring Operating Resutt (LTM)/Interest Paid (LTM) .! 6.24 2.
Slide 50: Annex II: Consolidated Recurring Operating Result Calculation
ANNEX II Consolidated Recurring Operating Result Calculation
Slide 51: Recurring Operating Result Statement
Recurring Operating Result Statement (R§ millon) 2q21 021 2Q@20 0 Change = Change = 15211520 Ghange. ‘CONSOLIDATED. a) (8) Owe) ao) (CROC) Net Profit 7,562 2,414 (2,496) 213% na. 9,976 (6,555) na. Income Tax / Social Contribution 2,459 863 (023) 185% na 3328 (2,741) ne Financial Result (957) 3463 2,
Slide 52: Consolidated Assets
ASSETS (R§ milion) Sais pecan © we Current 39,039 39,694 -2% ‘Ces and cach Equivalents 9765 12,499 22% Marketable Securtieg/Hel for Tradng 3005 3,878 2% ‘Accounts Recehable 80075843 17% Inventories 12708 11938 6% Recoverable Taxes 1006 1,723 37% Prepad expenses 2675 856449 Divdends and interest on E
Slide 53: Consolidated Cash Flow
Consolidated Cash How 2921 Q21 2920 Change Change 1821 = 1820 Change R$ mi ) (8) (9 A/® AO © ow Profit (Loss) Before Income Tax and Social Contribution 10,021 3,273,419) naa. 13,297 (9,296) na. ‘Adjust for Result Restatement Depreciation, Amortization and Depletion 923 932 969 1% 5% 84,988 Equity Re
Slide 54: Annex VI: Braskem Idesa Balance Sheet
ANNEX VI Braskem Idesa Balance Sheet
Slide 55: Braskem Idesa Assets and Liabilities
jun/21 mar/21 ASSETS (R$ million) Change (G9) (B) (A)/(B) Current 2,626 2,537 3% Cash and Cash Equivalents 979 996 -29% Accounts Receivable 1,007 749 34% Inventories 551 667 “17% Recoverable Taxes (60) 3B na. other 149 113 329%, Non Current 16,025 18,463 -13% Taxes Recoverable 226 255 “119% Deferred
Slide 56: 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