Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — Q1 2019 Earnings Presentation
31 slides from Braskem's earnings presentation, May 9, 2019
Slide 1: Braskem – Strategy
Braskem – Strategy: 4 Braskem launched two new products in its Wecycle Platform portfolio, which use post-consumer resin and Green PE as feedstock: (i) in partnership with Embalixo, the first line of trash bags with bug-repellent action, called “Embalixo Repelente;” and (ii) “Zero CO2 Emissions Shri
Slide 2: Operating Performance in 1Q19 by Region: Brazil
OPERATING PERFORMANCE IN 1Q19 BY REGION: BRAZIL
Slide 3: Spread definitions footnotes
8 Difference between the U.S. polypropylene price and the U.S. propylene price. 9 Difference between the Europe polypropylene price and the Europe propylene price. 10 Difference between the U.S. polyethylene price and the U.S. ethane price.
Slide 4: COGS: positively influenced by reversal of provisions
COGS: positively influenced by the reversal of provisions for the Energy Development Account (CDE) 11 in the amount of US$54 million (R$200 million) and for REIQ while the injunction was in force in the amount of US$30 million (R$117 million) 12 . Excluding these nonrecurring events, COGS in the qua
Slide 5: ABRACE lawsuits on Energy Development Account charges
11 The Brazilian Association of Large Energy Consumers (ABRACE), of which Braskem is a member, filed lawsuits disputing the charges to fund public policies in the Brazilian electricity industry, known as the Energy Development Account, in 2015 and 2016 (CDE 2015 and CDE 2016), and obtained injunctio
Slide 6: USA and Europe operating and financial overview
1Q19 4Q18 1918 (A) (B) hg. Chg. USA and EUROPE (A)/(B)_(A)/( Production PP USA 351,464 361,533 358,277 3% —-2% Utilization Rate* 91% 91% 92% Opp. -Ipp. PP EUR 138,505 107,640 141,169 29% —-2% Utilization Rate* 90% 68% 92% _22pp._ -2pp. Total 489,969 469,173 499,446 4% -2% Utilization Rate 90% 86% 92
Slide 7: COGS: decline compared to 4Q18 and 1Q18
COGS: decline compared to 4Q18 and 1Q18, explained by the lower propylene price, given: (i) the monomer’s higher supply in the United States from on-purpose producers; (ii) the end of logistics constraints in Europe; and (iii) lower oil prices.
Slide 8: USA and Europe segment composition
13 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 9: Mexico operating and financial overview
1919 4qis 1918 Chg. Chg. (A) () (Cc) (A)/(B)_(A)/(C) Production PE 203,953 193,756 221,293 5% 8% Utilization Rate* 79% 73% 85% = bpp. -7pp. Sales Mexican Market 118,513 121,191 145,623 “2% — -19% Exports. 90,219 74,879 57,982 20%. 56%. Total 208,732 196,070 _ 203,605 6% 3% Net Revenue 214 239 268 =
Slide 10: Other Income (Expenses), net
Other Income (Expenses), net: the result in 1Q19 includes income of US$31 million related to the delivery-or-pay clause of the ethane supply agreement, which is explained by: (i) lower supply in 1Q19; (ii) the higher provision in 3Q18 related to the volume not offset by 1Q19; (iii) the increase in t
Slide 11: EBITDA by region
EBITDA (R$ million) EBITDA (US$ million) Hi brazil El overseas 4qis 1019
Slide 12: Other Income (Expenses), net
3. OTHER INCOME (EXPENSES), NET In 1Q19, advancing the process to recognize income from overpayment of PIS and COFINS taxes, as announced in the prior quarter, the Company recorded income of R$1,265 million related to overpayments made between January 2012 and February 2017, of which R$1,191 million
Slide 13: Consolidated results
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 14: Financial result and liquidity and capital resources
Financial expenses: increase of R$27 million compared to 4Q18, mainly explained by adoption of the accounting standard IFRS 16. Financial income: increase compared to 4Q18, mainly due to the R$74 million impact related to the overpayment of PIS and COFINS taxes between January 2012 and February 2017
Slide 15: Liquidity position
Braskem’s liquidity position of US$1,746 million is sufficient to cover the payment of all obligations maturing over the next 37 months.
Slide 16: BNDES facility and risk ratings
In December 2018, the Company signed a new BNDES on lending facility worth R$476 million with maturity in January 2031. On January 30, 2019, Braskem withdrew the first installment under this facility, in the amount of R$266 million, which is in aligned with the Company’s capital expenditures in Braz
Slide 17: Investments and value creation
Of the total investments in 1Q19, 36% were allocated to the construction of the new PP plant in the United States, which reached 56.2% completion, with investment of US$426 million already made. 16 Considers operating investment, maintenance shutdowns and acquisitions of spare parts.
Slide 18: Sustainable Development – Highlights in 1Q19
SUSTAINABLE DEVELOPMENT 4 Sustainable Development – Highlights in 1Q19 o Braskem Labs: During the Campus Party, Braskem launched the 5 th edition of Braskem Labs. At the event, the project received startups that registered for the program’s new edition: Scale, Ignition & Challenge o RobecoSAM Yearbo
Slide 19: Indicators
Indicators 1919 4Q18 = :1Q18 Chg. Chg. US$ million (A) (B) (@) (A)/(B)_ (ADI EBITDA 729 501 818 46% EBITDA Margin (%) 21% 13% 20% 8p, SGRA/Net Revenue (%) 6.7% 6.9% 5.5% Op. Net Debt* 5151 5,129, 5,606 0% Net Debt/EBITDA LTM* 2.09% —2,06x 198k 1% EBITDA/Interest Paid LTM 5.65 5.92 5.20 -4% Share Pri
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 (R$ million)
ASSETS (R§ million) Change (a)/(B) Current 20,845 21,384 -3% ‘Cash and Cash Equivalents 6,104 5,548 10% Marketable Securities/Held for Trading 1,720 2,358 27% Accounts Receivable 3,096 3,075 1% Inventories, 8,134 8,487 4% Recoverable Taxes 901 1,197 25% Prepaid expenses 256 239 7% Dividends and Inte
Slide 23: Reclassification of non-current liabilities
18 On the reporting date of these quarterly financial statements, i.e. march 31, 2019, certain non-financial contractual obligations were still in unremedied breach. As a result, the entire balance of non-current liabilities, in the amount of R$9,348 million, is still reclassified as current liabili
Slide 24: Cash flow statement
1919 (A) gis (8) 1918 Change Oi) Change (ay(c Profit (Loss) Before Income Tax and Social Contribution and the result of Sides 5 1177 72 1427 1546% = -17% discontinued operations ‘Adjust for Net Income Restatement Depreciation, Amortization and Depletion 862 742 740 16% 16% Equity Result 3 0 (0) 613%
Slide 25: Exhibit VI: Braskem Idesa Balance Sheet
EXHIBIT VI Braskem Idesa Balance Sheet 18
Slide 26: Braskem Idesa balance sheet
ASSETS (R$ nilion) mar/19 dec/18 Change (A) (B) (A)/(B) Current 2,636 2,620 ash and Cash Equivalents 1,030 963 7% Accounts Receivable 454 628 “28% Inventories 598 579 3% Recoverable Taxes 14 110 4% Derivatives operations 16 a “239% Other Assets 23 319 33% Non Current 13,882 13,581 2% Deferred Income
Slide 27: Exhibit VIII: Financial Results Braskem Idesa
EXHIBIT VIII Financial Results Braskem Idesa
Slide 28: Braskem Idesa financial result
Financial Result (R$ million) 1q19 48 Qis Chg. BRASKEM IDESA A B) ‘A)/(C) Financial Expenses (290) (284) (245) 2% += 18% Interest Expenses (260) (277) (211) 6% = 23% Others (30) ” (34) 323% = -12% Financial Revenue 16 12 3 39% — 468% Interest 7 9 3 15% 153% Others 9 3 0 177% na. Foreign Exchange Var
Slide 29: Brazil chemicals production and sales
1919 4Qis. 1918 Chg. Chg. Sibcitestaay (a) (5) © aye) (ays Production Ethylene 816,555 823,368 832,886 1% 2% Utilization Rate* 88% 87% 90% pp. -2Qpp. Propylene 344,335 330,259 322,313 4% M% Cumene 54,021 56,959 57,868 5% 7% Butadiene 103,581 100,491 89,087 3% 16% Gasoline (264,167 253,989 241,121 4%
Slide 30: Brazil polyolefins production and sales
1919 4Q18 1918 Ch Che (A) (B) (Cc) (A)/(B)_(A)/ Production PE 636,803 605,520 692,230 5% -8% Utilization Rate* 85% 79% 92% bpp. -7pp. PP 427,283 359,234 411,426 19% 4% Utilization Rate* 94% 77% 90% _I7pp.__4pp. Total 1,064,086 964,754 _ 1,103,656 10% -4%. Sales - Brazilian Market PE 463,640 418,059
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: May 8 , 2019 BRASKEM S.A. By: /s/ Pedro van Langendonck Teixeira de Freitas Name: Pedro van Lange