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BOVESPA Presentation February 13, 2003 A World Class Brazilian Petrochemical Company A World Class Brazilian Petrochemical Company José Carlos Grubisich1
Disclaimer – forward looking statements This presentation includes forward looking statements. Such information is not merely based on historical fact but also reflects management’s objectives and expectations. The words "anticipate", “wish", "expect", “foresee", “intend", "plan", "predict", “forecast", “aim" and similar words, written and/or spoken, are intended to identify affirmations which, necessarily, involve known and unknown risks. Known risks include uncertainties which include, but are not limited to price and product competition, market acceptance of products, the actions of competitors, regulatory approval, currency type and fluctuations, regularity in the sourcing of raw materials and in operations, among others. This presentation is based on events up to February 13, 2003 and Braskem is not liable to update the contents in the light of new information and/or future events. Braskem takes no responsibility for transactions or investment decisions made on the basis of information contained in this presentation.2
Braskem: Overview - Overview of the Braskem Project; - Thermoplastics in Brazil; - Petrochemical Industry Situation; - Cash Flow and Debt Reduction. José Carlos Grubisich - CEO3
Braskem’s Commitment with the Market: ! Corporate Governance ! New Bylaws ! 100% tag-along for all shareholders ! New Conduct Code ! Level 1 - Bovespa ! Disclosure Policy directed to the Market ! Stock Trading Policy ! Timetable of 2003 Events has already been set up ! Tender Offer - Nitrocarbono4
Braskem: 181 days later ... 29.5% 29.5% 35.0% 30.9% ! ! Braskem: fully integrated operations; Braskem: fully integrated operations; % voting capital - % total capital ! ! Nitrocarbono’s tender offer of common Nitrocarbono’s tender offer of common stocks; stocks; Note: Apart from the assets shown above, Note: Apart from the assets shown above, Braskem holds the assets formerly ! Merger of OPP expected to take place by ! Merger of OPP expected to take place by Braskem holds the assets formerly belonging to Copene belonging to Copene the end of the first quarter; the end of the first quarter; ! Trikem/Polialden: studies are in course. ! Trikem/Polialden: studies are in course.5
Braskem – The leading petrochemical company in Latin America: 13 modern and competitive plants: Alagoas PVC PVC Camaçari Chlorine Soda Chlorine Soda São Paulo HDPE HDPE LLDPE LLDPE Petrochemical Aratu Aratu Petrochemical Caprolactam Caprolactam Port Port Triunfo Complex Complex Terminal Terminal Assets with a replacement LDPE LDPE value of ~ US$ 4.5 billion, excluding investments in Petrochemical Petrochemical Copesul and Politeno Complex Complex HDPE HDPE PP PP6
Braskem – A “Catalyst” in the Petrochemical Sector: A World Class Brazilian Petrochemical Company! The creation of Braskem reiterates the advantages to the Brazilian petrochemical sector of an integrated business model, with competitive scale;! Braskem established a new strategic dynamics in the sector, intensifying competition in the domestic market, which will benefit customers in the petrochemical chain;! The Braskem project has brought forth the need for greater investments in output expansion, quality and productivity, which will also contribute to boost competitiveness of Brazilian petrochemical products both domestically and abroad.7
Thermoplastics in Brazil – Elasticity has remained high: Annual growth rate – Brazil % (1990 through 2002) 15 Thermoplastics’ CAGR*is 3.7 greater than GDP 11.7 10 7.7 6.5 6.1 PP PP 5 TP TP (thermoplastics) PE’s PE’s PVC 2.1 PVC GDP GDP 0 1990 - 2002 Source: Abiquim, 2002 CAGR * - Compound annual growth rate9
Thermoplastics in Brazil - Potential growth: Per Capita Consumption of Thermoplastics 60 Intensification in the use of plastics: replacement of traditional products USA 47 Korea 45 Eastern Europe Consumption (kg/inhabitant) Brazil 33 31 30 Mexico China 22 23 16 20 20 15 15 8 9 4.5 2.7 4 3.7 5 5 2.8 0 PVC Polypropylene Polyethylene10 Source: ABIQUIM / CMAI 2001
Braskem – Net Debt Reduction (2001/2002):US$ MM Initial Net Debt 2,500 REDUCTION FACTORS Final Net Debt 2,250 2,216 ! Strong Cash Generation in 2002; 2,000 ! Efficiency in the working capital 1,773 1,750 management efficiency; 1,500 ∆ = US$ 443 MM ! Synergies stemming from the 1,250 integration process. 1,000 Dec/01* Dec/02* Net Debt/GOC** = 4.50 Net Debt/GOC** = 2.40 * Unaudited ** Average FX rate in the period11
Braskem – Short-term Debt Reduction (Set – Dec/02):Short-term maturities In R$ MM Cash Flow in 2002 (estimated) > R$ 2 billion Base Sep - 02 Base Dec - 02 3,361 2,583 ∆ = 778 Braskem’s Net Debt 30/Sep/2002 31/Dec/2002 R$ 7,698 MM R$ 6,913 MM (*) Sep/02-Sep/03 - Dec/02-Dec/03* R$ USD * Unaudited12
Braskem : An excellent investment opportunity ! ! Leading thermoplastics producer in Latin America ! Integrated operations enable synergies to be captured ! Consolidated businesses and superior margins, with adjustment of capital structure already under way; ! Bovespa’s Level 1 corporate governance classification; will qualify for Level 2 in 2 years ! Adoption of 100% “tag along” rights for all shareholders ! High potential for creation of shareholder value A world class Brazilian Petrochemical Company13
BOVESPA Presentation February 13, 2003 A World Class Brazilian Petrochemical Company A World Class Brazilian Petrochemical Company José Carlos Grubisich14