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May, 2006
José Marcos TreigerHead of Investor Relations
Individual Investor Meeting
22
Forward-looking Statements
This presentation contains forward-looking statements. Such statements are not statements of historical facts, and reflect the beliefs and expectations of Braskem’s management. The words “anticipates”, “wishes”, “expects”, “estimates”, “intends”, “forecasts”, “plans”, “predicts”, “projects”, “targets” and similar words are intended to identify these statements. Although Braskem believes that expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to Braskem’s management, Braskem cannot guarantee future results or events.
Forward-looking statements included in this presentation speak only as of the date on which they are made (March 31, 2006), and the Company does not undertake any obligation to update them in light of new information or future developments.
Braskem shall not be responsible for any transaction or investment decisions that are taken based on information included in this presentation.
33
Value Creation to Shareholders
Plastic and the Petrochemical industry in Brazil
Agenda
Braskem: World class Brazilian petrochemical
44
The History of PlasticThe History of Plastic
1839 Charles Goodyear discovers the vulcanization of rubber from latex
1862 Parkes presents its first products made of Parkesine – a compoundmade of pulp nitrate, naphthalene and camphor.(eg. pool ball)
1872 The discovery of PVC through the polimerization of vinyl cloridecatalized by sun light
1909 L. H. Baekeland announces the discoverty of a phenol resinand registers the patent as Baquelite: first synthetic polymer.
55
The History of PlasticThe History of Plastic
1920 In the USA, Ford uses compounds made of phenolic resinswith fabric to produce car parts.
1937 Low density polyethylene was discovered, as a powder,in England.
1954 G. Natta prepares isostatic polypropylene to be producedby Montecatini in Ferrara (Italy) in 1957.
1954 High density polyethylene was created by Professor Zieglerat Philips Petroleum.
1964 The copolymers of ethyl-acetate of vinyl (EVA) were developped for sale.
66
The market for plasticsThe market for plastics
Pharmaceutical
White Goods
Consumption Goods
Automotive
Hygiene and Cleaning
Food and Beverage
Textiles
Agribusiness
77
Petrochemical industry in South AmericaBraskem – Consolidated as the largest producer in the regionPetrochemical industry in South AmericaBraskem – Consolidated as the largest producer in the region
Source: CMAI and Braskem
6.1 million tons in total annual capacity of chemical and petrochemical products
Eteno
PVC
PE
PP
700
700
1,400
Dow
1,135
Copesul1
520
540
1,060
Rio Polímeros2
520
150
670
Ipiranga
500
130630
PQU / Unipar
85
476
561
Solvay
1,280
1,230
580
515
3,615
Braskem
625
Suzano
000 tons / yearRegional CapacityRegional Capacity
1. Braskem controls Copesul together with the Ipiranga Group
2. Jointly controlled by Suzano, Unipar, Petroquisa and BNDES
88
Value Creation to Shareholders
Plastic and the Petrochemical industry in Brazil
Agenda
Braskem: World class Brazilian petrochemical
99
Current Ownership (*)
Free-Float above 50%Current Ownership (*)
Free-Float above 50%
% Voting Capital % Total Capital
Controlling Shareholder
Investments in affiliated companies
Source: Braskem
* On April 31, 2006
29.5% 29.5% 100.0% 96.1%100.0% 63.7%
POLIALDEN
FREE FLOATPETROQUISA8.4%
ODEBRECHT51.9%30.5%
NORQUISA9.1% 10.0%48.6% 25.4% 16.0%
1010
A new approach to the Brazilian petrochemical sector
Strong platform for growth
Oil exploration 1st Generation 2nd Generation 3rd Generation
INTEGRATION
New dynamics in the value chain
NaphthaNaphtha andand CondensateCondensate CompetitivenessCompetitiveness
1111Source: Braskem and FIERGS/CEPAL
Perspectives for 2006:
Lingering of global economic growth, led by China and India
In Brazil:
Gradual reduction in interest ratesIncrease in public investments in infrastructureProbable domestic demand boost coupled with higher expected GDP growthIncrease in disposable income
Market segmentation for Braskem’s resins in 2005
* Includes personal hygiene, infrastructure, electronics, auto parts and others
% of Revenues% of Revenues
*
FOOD AND BEVERAGES33%
CONSUMER GOODS15%
CIVIL CONSTRUCTION15%
OTHERS16%
RETAIL9%
AGRICULTURE7%
COSMETICS AND PHARMACEUTICALS
5%
Sales Diversification at BraskemSales Diversification at Braskem
1212
Braskem is the Market LeaderStrengthened with the acquisition of PolitenoBraskem is the Market LeaderStrengthened with the acquisition of Politeno
Source: Braskem
2005MarketMarket--Share (Brazil)Share (Brazil)
PE (After the acquisition)
PE (Before the acquisition)
30%
18%52%
46%
18%
36%
PVC
PP
49%42%
9%
Braskem
Imports
Others
55%
28%
17%
1313
1Q06 HighlightsAccumulated results for the last twelve months
2,7081,803
EBITDA
-33%
11,169
1Q06
Net Revenues
-7%
1Q05
11,978
1Q06
887
Net Income
-33%
1Q05
593
R$ million
1Q061Q05
1Q05
1Q06Price
O thers FX Volume
68
(111)
319
Raw materials
(457)
(107)
688400
Price Volume
FX1Q05 1Q06
1,256
277
(70) 1,242
(221)
Impacts on EBITDA and CoGS Impacts on EBITDA and CoGS –– 1Q05 x 1Q061Q05 x 1Q06 R$ million
EBITDA CoGS
1414
Revenue in constant growthChallenging current scenario due to strong R$
2002 2003 2004 2005
R$ millionGross RevenueGross Revenue
11,284
8,858
14,342 15,193
20% CAGR
US$ millionGross RevenueGross Revenue
R$ millionNet RevenueNet Revenue
18% CAGR
US$ millionNet RevenueNet Revenue
26% CAGR
9,191
6,991
11,04411,607
3,6883,013
4,900
28% CAGR
6,252
3,0082,375
3,771
4,775
2002 2003 2004 2005
2002 2003 2004 2005 2002 2003 2004 2005
Source: Braskem
1515
TJLP24% CDI
28%Pré1%
US$47%
40%
Debt Profile16 years of average debt maturity (April) and reduction in FX exposure
Source: Braskem
Net Net DebtDebt / / EbitdaEbitda**
Mar 2006
+21%
Dec 2005
Net Net DebtDebt (US$ MM)(US$ MM)
Mar 2006
+12%
Dec 2005
*Subordinated debentures, with payment of interest and principal scheduled for July 2007, fully subscribed by the controlling shareholder
Average Maturity9.3 years
Gross DebtR$ 5,646 million
AmortizationAmortization ScheduleSchedule R$ million
03/31/2006Cash and cash
equivalents
12%
31%
19%
8%
2007 2009
1,103666 726 444
2008
810(em R$)
1,299(em US$)
1,033*
2010
7%
381
23%
2011...
1,293
2,109
*LTM – last twelve months
1,454
1,211
240243
1,388
1,628 1.971.63
1.671.36
Trade Finance
7%
TypesTypes ofof FinancingFinancing
CVM 408
20069 months
1616
A Level 1 Company in BOVESPA since February 13th, 2003
Intention to move up to BOVESPA’s Level 2, in 2005
100% tag-along rights - in case of transfer of control - for all shareholders and all classes of shares
Code of Conduct: sets values, principles and practices governing corporate behavior
Pre-established corporate policies:Trading of securitiesFinancial management Insurance and GuaranteesHealth, Safety and Environment
Compliance with SOx by Dec 2005
Qualified, motivated and experienced management
High levels of Corporate Governance
1717
Braskem Aiming at Sustainable DevelopmentBraskem Aiming at Sustainable Development
ECONOMICSECONOMICS
To ensure operational excellency and to develop Sustainable Products, using minimum natural resources and competitive raw materials. To properly divulge to the interested parties and to develop strategic alliances.
To be recognized as a transformation agent in environmental awareness, in the development ofself-sustainable communities and in the creation of social responsible products. To promote qualityof life inside and outside of the company.
SOCIALSOCIAL
To be a reference in sustainable development through eco-efficiency, in the use of clean tecnologiesand in the use of renewable raw materials, by promoting environmental education andinfluencing the production chain as a whole.
ENVIRONMENTALENVIRONMENTAL
1818
Corporate Responsibility
Braskem is committed to the well being of its surrounding communities through a number of programs directed towards
Environmental education
Recycling of plastic waste
Social and cultural inclusion
First Brazilian company to sign the “International Statement of Cleaner Production”, a United Nations initiative in Environmental Protection
Social responsibility
1919
Safety and Environmental Concern
Safety performance in line with the best petrochemical companies worldwide
All industrial plants are ISO 14001 certified
Continuous improvement in environmental performance
6% reduction in water consumption (~ to the consumption of 12,000 people per year)27% reduction in liquid effluents (~ to the sewage of 33,000 people per year)
39% reduction in industrial waste (~ to the garbage of 21,000 people per year)
2020
Value Creation to Shareholders
Plastic and the Petrochemical industry in Brazil
Agenda
Braskem: World class Brazilian petrochemical
2121
Hight returns in the long-term and LiquidityPerformance above the main indexes and high liquidityHight returns in the long-term and LiquidityPerformance above the main indexes and high liquidity
Source: Braskem - Dec 2002 = 100
Braskem (BRKM5) confirmed its position as the 9th most liquid share in the Ibovespa index, with a 3% share in the theoretical portfolio from May to August2006.
60% above iBovespa572
358
426401
0
200
400
600
800
1000
1200
1400
dec-
02fe
b-03
apr-0
3ju
n-03
aug-
03oc
t-03
dec-
03fe
b-04
apr-0
4ju
n-04
aug-
04oc
t-04
dec-
04fe
b-05
apr-0
5ju
n-05
aug-
05oc
t-05
dec-
05fe
b-06
apr-0
6
Braskem Ibovespa IGC Petrochemical industry
2222
Payment of R$ 326 million to shareholders in 200560% increase when compared to 2004Payment of R$ 326 million to shareholders in 200560% increase when compared to 2004
326
204
20052004
Dividends and Interest on EquityDividends and Interest on Equity R$ million
60%
48
30
20052004
Dividend PayDividend Pay--outout %
60%
2323
Strategy to grow with value creation
Strengthen market leadership in Brazil through consolidation in the local market, capturing synergies
Expand production and sales outside of South America, capturing value and creating a growth platform for the future
Organic Organic GrowthGrowth
Selective Selective GrowthGrowth
Enhancement of the Enhancement of the Aromatics Chain Aromatics Chain
InternationalizationInternationalization
Value creation
Consolidate market position in key products in Latin America and guarantee competitive sources of raw material
Leverage aromatics production chain by broadening its portfolio of products and services in the local market
2424
Growing investments: confidence in the futureR$ 900 million in investments to be made in 2006Growing investments: confidence in the futureR$ 900 million in investments to be made in 2006
InvestmentsInvestments
Completed 1Q06 2006
142
900
R$ million
244
202
151
134
118
51
23
27
27122429
16%
Capacity Increases
Equipment
Health, Safety & Environment
Technology
Productivity
Quality and others
Capacity Increases
Equipment
Health, Safety & Environment
TechnologyProductivity
Others
2525
Value creation to shareholdersValue creation to shareholders
55
R$ 350 million per year in recurring synergies, already captured
Strong platform for growth
R$ million
240
Jun/03
260
Sep/03
285
Dec/03
208
Mar/03
310
Mar/04
330(2004)
Target
350
Dec/04
Synergies
A World-Class Company
New Levels of Competitiveness
• Best Practices• Simplification• Integration• Compliance to
to SOx
Innovation & Technology
Braskem Business SystemBraskem Business System
2626
Braskem +Significant acceleration in capturing productivity gainsBraskem +Significant acceleration in capturing productivity gains
Results Achieved by 1Q06Results Achieved by 1Q06
Annualized and recurring basis
R$ 270 million in productivity gains captured by March 2006
R$ million / year
270218
420
360
+ 24%
Target by 1Q06
Target by 2006
Target by 2007
Achieved by 1Q06
2727
Politeno’s AcquisitionOne step forward in the consolidation of the Brazilian petrochemical industry
Politeno’s AcquisitionOne step forward in the consolidation of the Brazilian petrochemical industry
Polyethylene Producer (PE) based in Camaçari – State of BahiaR$ 1 billion in Revenues in 200516% market-share in PE2002 National Quality Award Winner
320 K tons of PE production in 2005Products with leading quality in numerous segmentsHighly skilled staff with excellent operational and technical know-howRecognized competent technical assistance
A complementary portfolio of productsSolid relationship with the customer base in the Northeast of BrazilDynamic business culture, focused on customers, quality and resultsExcellence in operations and processes
Profile
Tangible Advantages
Intangible Advantages
Source: Braskem
2828
Growth and Competitiveness New strategic internationalization opportunitiesGrowth and Competitiveness New strategic internationalization opportunities
* To be presented to the Board of Directors
MOU signed with Pequiven (April, 2006). Detailing should be concluded in 6 months;
Estimated investments between US$ 1.5 and US$ 2.5 billion;
1.2 million tons/year natural gas-based cracker, integrated with the production of polyethylene and other second generation products.
““JoseJose”” Olefins Complex * Olefins Complex *
The opportunities already announced in Venezuela are still under analysis
PP: El Tablazo, Venezuela: 400.000 tons/year, also in partnership with Pequiven*
In light of the last developments in Bolivia, the studies for the construction of a petrochemical complex in that country are temporarily on hold
Brazil / BoliviaBrazil / Bolivia
2929
Share Buy-Back ProgramAn excellent investment for BraskemShare Buy-Back ProgramAn excellent investment for Braskem
Source: Braskem
Braskem has announced the implementation of a buy-back program to repurchase common and class “A” preferred shares;
Repurchased shares are initially to be held in treasury, and may be subsequently resold or cancelled;
Deadline for completion of the program is 6 months;
Up to 1,400,495 common shares (7.1% of free-float) and up to 13,896,133 class “A” preferred shares (8.25% of free-float)
Authorized brokerage firms: Credit Suisse, Itaú, UBS, Hedging-Griffoand Ágora Senior.
3030
An Unique Investment OpportunityAn Unique Investment Opportunity
Market leadership in the region
Consistent operational performance
Solid financial structure
Ongoing competitive improvements: and
Structural market growth opportunities in the region
Greenfield projects in the region based upon access to competitive raw materials
Innovation and technology as value driver
100% Tag Along to all shareholders
High Standards of Corporate GovernanceHigh Standards of Corporate Governance
May, 2006
José Marcos TreigerHead of Investor Relations
Individual Investor Meeting