1. Oil & Petrochemicals Conference
José Marcos Treiger Luiz Henrique Valverde
IRO IR Manager
October 2005
2. Disclaimer
Forward looking statements
The material that follows is a presentation of general background information about BRASKEM as of the date of this presentation. It
is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential
investors. This presentation is strictly confidential and may not be disclosed to any other person. No representation or warranty,
express or implied, is made concerning, and no reliance should be placed on the accuracy, fairness, or completeness of the
information presented herein.
This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees
of future performance. Potential investors are cautioned that any such forward-looking statements are and will be, as the case may
be, subject to many risks, uncertainties and factors relating to the operations and business environment of Braskem and its
subsidiaries that may cause the actual results of these companies to be materially different from any future results expressed or
implied in such forward-looking statements.
Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to,
the risks and uncertainties set forth in a prospectus that may be obtained from the underwriters. Although Braskem believes that
the expectations and assumptions reflected in the forward-looking statements are reasonable, based on information currently
available to Braskem’s management, Braskem cannot and does not guarantee future results or events. Braskem expressly disclaims
a duty to update any of the forward-looking statement.
Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the
Securities Act of 1933. Any public offering of securities to be made in the United States will be made by means of a prospectus that
may be obtained from the underwriters. Such prospectus will contain detailed information about BRASKEM and its business and
financial results, as well as its financial statements.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities.
Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.
2
3. A more ambitious strategic goal
To rank amongst the TOP
10 global petrochemical
To become companies
Latin America’s leader
in thermoplastic resins
3
4. Strong platform for growth
A new approach to the Brazilian petrochemical sector
Oil exploration 1st Generation 2nd Generation 3rd Generation
Naphtha and Condensate Competitiveness
INTEGRATION
New dynamics in the value chain
4
5. Strong platform for growth
R$ 350 million per year in recurring synergies already captured
R$ million
350 330
310 (2004)
285
260
240
208
Mar/03 Jun/03 Sep/03 Dec/03 Mar/04 Dec/04 Target
5
6. Strong platform for growth
Largest production scale in the region: cost competitiveness
5.8 million tons in total annual capacity of petrochemical and chemical products
3,255
Thousand tons / year
525
PVC
580 PP
PE
Ethylene
870 1,438
1,135
610 1,060
670
540 630 625 561
1,280 350
150 130
828
520 520 500 476
85
Braskem Dow Copesul1 Rio Polímeros2 Ipiranga Unipar Suzano Solvay Politeno1
1. Braskem’s affiliates:
a) Braskem jointly controls Copesul with the Ipiranga Group
b) Braskem owns 33.9% of Politeno´s total capital
2. Jointly owned by Suzano, Unipar, Petroquisa e BNDES
Source: CMAI and Braskem – 2005 (year-end capacities)
(year- 6
7. Strong platform for growth
Leading market shares in Brazil - 2004
Polyethylene (PE) PVC
29%
57%
55% 29%
16%
14%
Polypropylene (PP) Ethylene*
40% 43%
51%
57%
9%
BRASKEM IMPORTS OTHERS
(*) Based on production capacity
Source: Braskem and ABIQUIM - 2004 7
9. Strong platform for growth
Solid financial and capital structure
Net Debt/EBITDA
5.1
Net Debt Evolution
3.5
US$ million
1.5 1.1
2,166
1,929
2002 2003 2004 1H05
1,452
1,221
Debt/ Equity
57% 54%
80% 78%
2002 2003 2004 1H05
43% 46%
20% 22%
2002 2003 2004 1H05
Source: Braskem 9
10. Strong platform for growth
High Standards of Corporate Governance
A Level 1 Company in BOVESPA since February 13th, 2003
Commitment 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 securities
– Financial management
– Insurance and Guarantees
– Health, Safety and Environment
Compliance with SOx by Dec 2005
10
11. Strong platform for growth…
...new steps in the value creation process
New Integrated
Management
System
A World-Class
Company
Strong platform for growth • Best practices
R$ 350 million per year in recurring synergies, already captured
R$ million
• Simplification
310
350
330
• Integration
• SOx Compliance
285 (2004)
260
240
New Level of
208
Mar/03 Jun/03 Sep/03 Dec/03 Mar/04 Dec/04 Target
5
Competitiveness
Technology
and Innovation
Synergies Braskem Business System
11
12. New steps in the value creation process
Braskem Technology and
Innovation Center
Innovation
Projects
Focus on value creation for customers
– Product customization
– New applications
– Client services
Premium pricing and
Potential
customer loyalty
Value
RANPV*
(US$ million)
(*) NPV@risk calculated for a 5-year period at a discount rate of 11%
12
13. New steps in the value creation process
R$ 420 million in productivity gains planned for 2007
R$ 192 million accomplished by 1H05
R$ million/year
420
+ 37%
360
192
170
140
Target Achieved Target Target Target
1H05 1H05 2005 2006 2007
Annualized and recurring basis
Investments: R$ 334 million IRR: 79%
13
14. New steps in the value creation process
ERP Project: a new integrated management
system encompassing all business processes
Investment of R$ 130 million
Implementation until January 2007
NPV of R$ 260 million
14
15. Ethylene production capacity expansions in Asia
and in the Middle East
Even with the forecasted expansion, capacity utilization levels shall remain high (above 90%) in the next
years (2005-2007).
Saudi Arabia Others – Middle East
Total 2005-2007 = 300 thousand tons Region total = ZERO
3850 2500
3600
1000
850
1000 World
300
Ethylene
0 0 Capacity in 0 0 0
2005 2006 2007 2008 2009 2010 2005 2005 2006 2007 2008 2009 2010
117 million
Iran ? ton/year Asia – India, China* and Taiwan
6000
Total 2005-2007 = 3,970 thousand tons (?) Total 2005 - 2007 = 3,600 thousand tons
3100
1620
1350 2000
1000 1000 1600
850
900
0 0
2005 2006 2007 2008 2009 2010
2005 2006 2007 2008 2009 2010
? = Capacity additions in Iran have been systematically postponed
Source: Deutsche Bank and CMAI – information updated until June/05 (in 000 ton/year) * Not including potential projects in China
15
16. Global Supply and Demand Balance
Supply Demand
Relevant Ethylene capacity growth should be Global GDP growth at approximately 4% per
concentrated in Asia and in the Middle East from year, from 2005 to 2008;
2008 to 2010; Increase in global demand for main thermoplastic
Delays in the addition of new Ethylene capacities products (PE/PP/PVC);
should make the cycle last longer; Gradual inventory reduction expected by 2007;
Global capacity utilization rates above 90%. China should remain as a net petrochemical
importer until the end of the decade M2
Prices and Margins
Expectation of higher margins for petrochemicals
through 2007;
Raw material prices (oil and naphtha) continue to
have the highest impact on margins;
Margins should maintain their high levels.
Source: CMAI / Braskem
16
18. Strategic drivers for the future
Internationalization Organic
Growth
Value creation
Enhancement of the Selective
Aromatics Chain Growth
17
19. Organic Growth
Brazil: a growing and dynamic market for thermoplastic resins…
Overall Market Consumption
(Polyethylene, Polypropylene and PVC)
Elasticity: 3.0x
Ton (000) GDP growth
3,419
3,107
2,293
8.0% CAGR*
1,601
1993 1996 2000 2004
* Compounded Annual Growth Rate
Source: The Brazilian Association of Chemical and Derivative Products (ABIQUIM) and Braskem
Source: 18
20. Organic Growth
…and strong potential for growth
Per-Capita Thermoplastics Consumption – 2004
kg / person
Brazil 45.2
China
Europe 32.0
USA
21.3 22.8
20.4
14.2
9.8
5.9 7.5
5.6
3.7 5.4
PVC Polypropylene Polyethylene
Source: Chemical Market Associates, Inc. (CMAI) and Braskem / 2004
Source: Associates, 19
22. Organic Growth
Industry Consolidation: Petroquisa Option
Potential for important synergies and impact on Braskem’s future cash flow
Recent amendment establishes new terms and conditions
– Option to increase Petroquisa’s voting capital in Braskem from 10%
to 30%, through capitalization of petrochemical assets
– List of assets to be disclosed by Petroquisa no later than September
29, 2005
– All assets will be valued based upon respective discounted cash flow
(DCF method)
– Option deadline: December 31, 2005
21
23. Selective Growth
Paulínia Project: becoming the #1
Venezuela Polypropylene player in the region
Joint Venture with Petroquisa:
– 60% Braskem
– 40% Petrobras
350Kt PP annual production capacity
Brazil / US$ 240 mm investment
Bolivia Polymer – Grade Propylene supplied by
Paulínia Petrobras
Start up – end 2007 / beginning 2008
New greenfield capacities based on competitive
raw materials with high rates of return
PP: Venezuela: 400 kt in partnership with
Pequiven*
PE: Brazil-Bolivia complex: 600 kt (2009) *
* To be presented to Braskem´s Board of Directors
22
24. Enhancement of the Aromatics Chain
Opportunities for Value Creation from aromatics, fuels and by-products
Paraxylene capacity increase, combined with a potential
downstream integration to produce PTA
Start ETBE production - as an alternative to MTBE
Isoprene debottlenecking
Butadiene profitability enhancement
23
25. Internationalization
Product and Process Technology
Agreement with Basell for the development of
processes and products related to the spherilene
(PE) technology
Technology licensing for Petroquímica Paulínia
Development of new products and services
– 10% of 2004 revenues from sales of new
products developed in the previous 2 years
A pioneer in nanocomposite research in Latin
America:
– Focus on cost reduction and performance
improvement for thermoplastic resins
24
26. Internationalization
Strategic presence in international markets
Evolution of exports Destination of exports – 1H05
US$ million Row
~1 Bi * 2%
Asia
14%
710
617
South North America
America 41%
301 509 18%
1H05
Europe
25%
2002 2003 2004 2005
* Annualizing 1H05 exports
25
27. Strategy to grow with value creation
Expand production and sales Strengthen market leadership in
outside of South America, Brazil through consolidation in the
capturing value and creating a local market, capturing synergies
growth platform for the future
Internationalization Organic
Growth
Value creation
Enhancement of the Selective
Aromatics Chain Growth
Leverage aromatics production Consolidate market position in
chain by broadening its portfolio key products in Latin America
of products and services in the and guarantee competitive
local market sources of raw material
26
28. A unique investment opportunity
Market leadership in the region
Consistent operational performance
Solid financial structure
Ongoing competitive improvements: and ERP
Structural market growth opportunities in the region
Consolidation in the Brazilian Petrochemical Industry: an opportunity
for value creation
Greenfield projects in the region based upon access to competitive
raw materials
Technology autonomy to pursue internationalization
High Standards of Corporate Governance
27
29. Oil & Petrochemicals Conference
José Marcos Treiger Luiz Henrique Valverde
IRO IR Manager
October 2005
