Braskem S.a. · BMFBOVESPA:BRKM3
Braskem — Q3 2020 Earnings Presentation
57 slides from Braskem's earnings presentation, Nov 19, 2020
Slide 1: Earnings Release 3Q20
Slide 2: 3Q20 highlights
§ The Company’s recurring EBITDA was US$699 million, 126% higher than 2Q20, mainly explained by (i) the better spreads of PE in Brazil, PP in the United States and PE in Mexico and (ii) an increase in sales volume in Brazil and in the United States due to the recovery in demand for resins in the Bra
Slide 3: PE and PP spreads in Brazil
§ PE Spread [4] : increase compared to 2Q20 (+16%). Price of PE in the USA increased 29% due to a strong demand and a limited supply of PE in the period. Disruptions caused by hurricane Laura had an impact on the PE supply in the region, while demand was higher than expected, especially for the pack
Slide 4: Average utilization rate of petrochemical plants
b) Average utilization rate of petrochemical plants: increase compared to 2Q20 (+17 p.p.) and 3Q19 (+2 p.p.), due to the recovery of demand for resins in the Brazilian market.
Slide 5: Resins sales
c) Resins sales: record volume of resins sold in Brazil representing an increase of 47% over 2Q20, mainly due to (i) the increase in demand for resins in the Brazilian market; (ii) seasonality; and (iii) the increase of market share in the Brazilian market. Compared to 3Q19, sales volume in Brazilia
Slide 6: Main chemicals sales
d) Main Chemicals sales: in the Brazilian market, sales were higher than in 2Q20 (+61%) and 3Q19 (+4%), due to the increase in demand and higher product availability, given the higher utilization rate of the crackers. Exports went down compared to 2Q20 (-26%) and 3Q19 (-6%), due to the strategy of p
Slide 7: Situation in Alagoas
2.1.3 SITUATION IN ALAGOAS a) Operational Average PVC utilization rate: it was 72%, up (+20 p.p.) compared to 2Q20 due to the economic recovery, affected by COVID during the second quarter. Despite the increase over the previous quarter, the production was impacted by restrictions on the supply of E
Slide 8: Alagoas provisions and discussions with authorities
The Company’s provisions are based on current estimates and assumptions and may be subject to future changes arising from new facts and circumstances, including changes in the execution time and extent of the action plans, the findings of current and future studies that indicate the recommendations
Slide 9: Brazil net revenue
A) NET REVENUE: increase in US dollar compared to 2Q20 (+50%), mainly explained by the higher sales volume of resins and chemicals in the Brazilian market and the increase in prices in the international market. Compared to 3Q19, a drop of 18%, due to lower prices of PP, PVC and main chemicals, which
Slide 10: Braskem sales by economic activity
Braskem Sales by Economic Activity! PE Braskem Sales by Economic Activity| PP Braskem Sales by Economic Activity| PVC 3019 Food Mi Industral others ; m% 7% 20% 2920 3020 sq19 2920 3q20 3019 2020 3020 I Various Sectors Consumer goods Ml Others Wi construction Il Agricultural Sector I Cosmeticand Phar
Slide 11: Brazil SG&A and EBITDA
C) SG&A: increase compared to 2Q20 (+8%), due to an increase in sales expenses. Compared to 3Q19, there was a drop (-51%) mainly due to the reduction of expenses with third-party services related to the geological event in Alagoas. D) EBITDA: represented 70% of the Company’s consolidated segments EB
Slide 12: US and Europe PP spreads
§ PP USA Spread [8] : increase (+4%) compared to 2Q20. The price of PP in the USA rose by 18% due to the increase in demand for PP in the USA, given the increase in industrial activity in the region, and the impact of hurricane Laura on the supply of PP in the period. Propylene price in the USA incr
Slide 13: Average utilization rate of PP plants
b) Average utilization rate of PP plants: in the United States, increase compared to 2Q20 (+9 p.p.), due to higher demand for PP in the region and 3Q19 (+8 p.p.), due to operational problems in PP plants in 3Q19. In Europe, the operation rate also increased compared to 2Q20 (+4 p.p.) and 3Q19 (+12 p
Slide 14: US and Europe sales volume
c) Sales volume: increase in relation to 2Q20 (+10%) and 3Q19 (+8%) due to higher demand of PP in the USA, sustained by the recovery of industrial activity in the country and limited supply in the region caused by hurricane Laura.
Slide 15: Braskem sales volume US & Europe
Braskem Sales Volume (kton) | US & Europe Ce Ss) n IE PPUSA EPP Europe
Slide 16: US and Europe net revenue and COGS
A) NET REVENUE : increase in US dollar compared to 2Q20 (+31%) and to 3T19 (14%) explained by higher sales volume in the United States. In Brazilian Real, revenue was higher in 3Q20 compared to 3Q19 (+57%) due to depreciation of the Brazilian Real against the US dollar between the two periods. B) CO
Slide 17: US and Europe SG&A and EBITDA; Mexico spreads
C) SG&A : in line with 2Q20 (+1%). The reduction compared to 3Q19 (-25%) is due to the lower administrative and travel expenses. D) EBITDA: represented 18% of the Company’s consolidated segments EBITDA. 2.3 MEXICO 2.3.1 PETROCHEMICAL SPREADS
Slide 18: Mexico PE plant utilization and ethane supply
b) Average utilization rate of PE plants: higher compared to 2Q20 (+4 p.p.), due to an increase in ethane supply by Pemex combined with the volume of ethane imported from the United States. Compared to 3Q19, it was higher (+12 p.p.), due to the start of importing ethane from the United States in Feb
Slide 19: Mexico sales volume
c) Sales volume: drop compared to 2Q20 (-2%) due to inventory replenishment. Compared to 3Q19, the increase (+12%) was due to the higher availability of products for sale.
Slide 20: Braskem sales volume Mexico
Braskem Sales Volume (kton) | Mexico 4a) 198 3019 2920 ‘3920 mr
Slide 21: Mexico net revenue
A) NET REVENUE: increase in US dollar compared to 2Q20 (+14%) and 3Q19 (+10%) due to higher price of PE in the international market. In Brazilian Real, revenue was higher in 3Q20 compared to 3Q19 (+48%) due to depreciation of the Brazilian Real against the US dollar between the two periods. Sales by
Slide 22: Mexico cost of goods sold
B) COST OF GOODS SOLD (COGS): increase in US dollar compared to 2Q20 (+13%), due to the higher price of ethane in the international market. Compared to 3Q19, COGS had an increase of (+6%) due to higher sales volumes of PE and higher prices of ethane in the period. In Brazilian Real, the cost was 42%
Slide 23: Mexico other operating income, SG&A and EBITDA
C) OTHER NET OPERATING INCOME (EXPENSES): includes other revenues in the amount of US$18.2 million related to the delivery-or-pay of the ethane supply contract. In the quarter, Braskem Idesa did not receive the credit note in the approximate amount of US$8 million, which should have been issued by P
Slide 24: Consolidated income statement
‘Income Statement 3q20 «292000319 Cha, ‘Chg. 9m2000 -9M19——Ch. R$ milion w © © ae) woo) (CONG) ‘Gross Revenue 16,999 13,163 15,918 44% «19% 47,281 47,298 ‘09% Net Revenue 1599211188 13,368 43% 20% 39,805 39,683 09% Cost of Good Sold (2427) (556) (11.851) 2356 7% (33533) (34.515) 3% Gross Profit 3566
Slide 25: Net revenue by region
———EE— Ee 15,992 7% 13,368 6% 11,188 9% 21% 54% 47% 319 2920 Brazil USA and Europe Mi Exports | Mexico ‘Does not consider feedstock resale and others
Slide 26: Other net revenue (expenses)
C) OTHER NET REVENUE (EXPENSES) The Company recorded a revenue of R$485 million in 3Q20, mainly due to, (i) the effect of the credit of R$190 million from PIS/COFINS; (ii) the recovery of taxes, mainly from INSS in the amount of R$117 million; and (iii) penalties from inputs supply contract in the a
Slide 27: EBITDA
D) EBITDA [11] The Company’s recurring EBITDA was US$699 million, 126% higher than 2Q20, mainly explained by (i) the better spreads of PE in Brazil, PP in the United States and PE in Mexico and (ii) an increase in sales volume in Brazil and in the United States due to the recovery in demand for resi
Slide 28: Financial overview 1Q20 (R$ million)
Financial Overview (RS milion) CONSOLIDATED 1920 Net Revere Srl 9.054 (6.231) 323 (G60) 95 558 907 US. and Europe 2376 (2.636) 340 Ga) 2 208 287 Mico 220 (7) 192 (203) 2 107 356 ‘Segments Total iss (soa) 4.345 (608) 5 373 Tos ‘Other Segments* 74 45) 28 16 @ 2 38 262 Corporate Unt : ea) a (22) (318)
Slide 29: Financial overview 1Q20 (US$ million)
nancial Overview (US$ millon) CONSOLIDATED 1920 6 “Segments Total 2896 (2.596) 301 (35) 27 150 358 ‘Other Segments* 7 (10) 6 3 a ° 3 54 Corporate Unt - : @) 8 73) 2) Elninatons and Raclesficctne" 7) 2 22) @ 1) 24) (46) Braskem Total 2845 _@.581) 265 Gis) @ 38 Bt 294 Does not cons ted to geobgial phe
Slide 30: Financial overview 2Q20 (R$ million)
Financial Overview (RS milion) CONSOLIDATED 2920 Net Revenue 723 (6.355) 1,088 G49) 1,708) (935) 1137 3.058 (2.748) aie (73) 7 wa 21 Meco 365 (735) 229 (99) 27 258 523 Segments Total in4s___(@.846) 1,600 (628) 353) (36) a.882 Other Segrents= 70 48) 2 23 o) 6 4 21 Corporate Unt : (22a) (22) (346) (33
Slide 31: Financial overview 2Q20 (US$ million)
nancial Overview (US$ million) CONSOLIDATED 2020 Net Revenue Mica Gross Profit : 25 49 38 ‘Segments Total 29 239 G7) Go2) ais) 352 ‘Other Segments* 5 ¢ 5 ay 1 3 ar Corporate Unt - : (60) : ) (©) (@) Elninatons and Raclesficctns? (60) 2 17) a) : © (8) (a) Brazkem Total 2082 (2.736) 286 2) ie (G25) G3
Slide 32: Financial overview 3Q20 (R$ million)
Financial Overview (RS milion) CONSOLIDATED 3920 Net Revenue COGS, ai 11,140 (6413) 2.726 (75) - (3435) —(448) 2.860 US. 2nd Europe 4,010 G22) 738 (20) - a 628 720 Me 1036 (@2s) 266 fen - 97 252 524 Segments Total 16.283 (42.453) 3.790 (68) : 389) (G56) 4.093 ‘Other Segments* 77 7) 30 3 z © Eo ne Co
Slide 33: Net financial result
E) NET FINANCIAL RESULT BRASKEM (ex-BRASKEM IDESA)
Slide 34: Braskem financial expenses, revenues and exchange variation
Financial expenses: reduction compared to 2Q20 (-8%) explained by (i) mark-to-market of derivative financial instruments in the period; and (ii) reduction in expenses of zero cost-collar realization. Compared to 3Q19 increase (+36%) explained by (i) an increase in gross debt; (ii) the impact of exch
Slide 35: Zero-cost collar hedge
‘Strike Put ‘Strike Call ‘Notional eves) (average) (5 mhon) Zero-Cost Colar 4020 361 420 1192 Zero-Cost Collar 3021 400 534 1498 Zero-Cost Collar 2a21 408 556 1274 Zero-Cost Collar 3021 408 554 1083 Zero-Cost Collar a2. 436 57 824 Zero-Cost Collar 3022 aa 608 882 Zero-Cost Collar 2022 468 7.03 522 Z
Slide 36: Braskem Idesa financial result
Financial expenses: drop compared to 2Q20 (-2%) explained by (i) the impact of exchange rate variation on interest, and (ii) the reduction of derivative expenses, relative to the swap operation of interest rates linked to Project Finance. Compared to 3Q19, the increase (+32%) is explained by (i) the
Slide 37: Free cash flow generation
Free Cash How Generation 3020-20200 3019 Cha. 9M20-9M19 Rs (A) B) C) (A)/(B) D) G Recurring EBITDA 3,765 1,655 1,643 127% = 129% += 6,732 4,943. 36% ‘Changes in Working Capital* (1,349) (4,491) 395 10% na. (3,180) 1,632 na. Operational CAPEX (259) (278) (435) 7% = 40% (1,034) (1,123) 8% Interest Pai
Slide 38: Liquidity and capital resources
G) LIQUIDITY AND CAPITAL RESOURCES BRASKEM (ex-BRASKEM IDESA) As of September 30, 2020, the average debt term was around 19 years [12] , with approximately 50% of the debts due after 2030. The weighted average cost of the Company’s debt was of exchange rate variation + 5.2%. [12] Considers the perpe
Slide 39: Liquidity position
The liquidity position of US$3,349 million provides guarantee for the coverage of debt maturities for the next 53 months, considering the international revolving credit line available in the amount of US$1 billion available until 2023.
Slide 40: Debt profile
Debt Profile (US$ million) 09/30/2020) 50% = a ss ze fs] oo a 7 a a) ue? a carmanso “bm nek mangos ene ats ane soay rae Er invested in Rl Local Currency I Standby [H nvested in US$ Foreign Currency| (2) Does not consider acount rom tranenson corte and Lenincy Aareement {@) Considers the amortization
Slide 41: Braskem Idesa debt
BRASKEM IDESA As of September 30, 2020, the average debt term was around 5.25 years, with approximately 37% of the debts due after 2029. The weighted average cost of the Company’s debt was of exchange rate variation + 5.26%.
Slide 42: Braskem Idesa leverage
sep/20 jun/20——sep/19 A B) c) Gross Debt 2457 2,443 2,524 3% in RS - - = 0% in US$ 2,457 2,443 2,524 3% (©) Cash and Cash Equivalents 190 196 262 27% in RS - - = 0% in US$ 190 196 262 27% () net Debt 2,267 2,247 2,263 0% in RS - - ~ 0% in US$ 2,267 2,247 2,263 0% EBITDA (LTM) 369 367 aan 16% Net Deb
Slide 43: Braskem Idesa debt profile
Braskem Idesa Debt Profile (US$ million) 09/30/2020 37%. 17% 7% 2024 2025/2026 2027/2028 2029 Ii Invested in US$ Foreign Currency
Slide 44: Investments and value creation
In line with the deleveraging plan and cash preservation strategy, the Company revisited investments for 2020, reducing from US$721 million to approximately US$600 million. With regard to strategic investments in the quarter, approximately 80% is related to the construction of the new PP plant in th
Slide 45: Recycled resins and green PE
§ Brazil: increase in sales of recycled resins compared to 2Q20 (+51%) and 3Q19 (+51%), due to the economic recovery after the impact of COVID and the increasing positioning of the Company as supplier of solutions with post-consumer resins. With regard to chemicals, there was an increase compared to
Slide 46: Safety
4.3 SAFETY § Safety of Personnel : the consolidated overall frequency rate CAF + SAF in the year to date was 0.92 (events/1MM HH), showing a reduction (-37%) compared to the year-to-date for the same period in 2019. This reduction is explained by the actions of the Human Reliability program and the
Slide 47: Stock performance
‘Stock Performance 160 0 0 "Dee Jan Feb Mar ‘Apr May June July Ago Sep Source: Bloomberg = TOV — BRKMS — BRKMS — BAK
Slide 48: Free float and shareholding composition
Free Float distribution in ‘Shareholding composition in 09/30/2020 (09/30/2020 (B3 + NYSE) 3une/20 June/20 Sune/20 i Eeasiine | Physica Person (Mi Odebrecht MADRE Legal Person Petrobras Ml Tressury Others
Slide 49: Credit ratings
Since the last disclosure of results, risk rating agencies Fitch Ratings, Standard & Poor’s (S&P) and Moody’s have maintained the same global rating scale of the Company. In the case of Fitch Ratings and Standard & Poor’s (S&P), the global rating scale of the Company remained at BB+, with a stable p
Slide 50: Indicators
Indicators 3020 2020 3019 Chg. ch. US$ million (A) (8) (c) (a)/(B) fai Recurring EBITDA 699 310 413 126% 69% EBITDA Margin (%) 24% 15% 2% 9pp. I pp. SGBA/Net Revenue (%) 6% 8% 7% 2p.p. pp. Net Debt 6.153 6.332 4.869 3% 26% Net Debt/Recutring EBITDA LTM 4,98x 7)Lix 405K 30% 23% Recurring EBITDA LTM/I
Slide 51: Annex II: Consolidated EBITDA calculation
ANNEX II Consolidated EBITDA Calculation
Slide 52: EBITDA statement
EBITDA Statement (R$ milion) 30 220319 Change © Change = 920 SMI9 Change: consoLDATED Oy @ AO) A) (0) © we Net Profit (337) (2456) (985) 696598 (7893) (12). Tacoma Tax / Socal Contribution (ors) 523) (47) zess, 3820) (5) na Financial Result 1s2 228-20 som «OSI 3.747186 Daprciation, amortization and
Slide 53: Consolidated balance sheet
_— sep/20— jun/20 Change (3) wy Current 30,805 31,385 28 (Cash and Gash Equnclnis 12328 ‘14,505 8% Maketable Securties/Held for Trading 3,205 2.753 16% Accounts Receivable 35992981 Zs Inventories 505s 7.369955 Recoverable Teves 4382135628 Preps expenses 378 3% Dividends and Interest on Equty 02 0 os
Slide 54: Consolidated cash flow
aqz0-2q20 3019 Change = 9M20 0 9M19_— Change Oo) AIO ©) © one Profit (Loss) Before Income Tax and Social Contribution (2416) (3,419) (1,474) -299 6406 (11,713) (358) n.2. “Adjust for Result Restatement Depreciation, Amortization and Depletion 4053363877985 3002 2608 15% Eauity Result @ 6 3 nw 20 3 o
Slide 55: Annex VI: Braskem Idesa balance sheet
ANNEX VI Braskem Idesa Balance Sheet
Slide 56: Braskem Idesa assets and liabilities
ASSETS (R$ milion) sep/20jun/20 range @) @) (OO) Current 3,293, 3,055, ‘Cash and Cash Equivalents 1,072 1,072 Accounts Receivable 651 592 Inventories 761 687 Recoverable Taxes: 86 Derivatives : Other 722 605 Non Current 17,556 16,563, ‘Taxes Recoverable 194 147.0 Deferred Income Tax and Social Contr
Slide 57: 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