bakpr4q17.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16
OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934


For the month of March, 2018

(Commission File No. 1-14862 )

 

 
BRASKEM S.A.
(Exact Name as Specified in its Charter)
 
N/A
(Translation of registrant's name into English)
 


Rua Eteno, 1561, Polo Petroquimico de Camacari
Camacari, Bahia - CEP 42810-000 Brazil
(Address of principal executive offices)



Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ___X___       Form 40-F ______

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1). _____

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7). _____

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ______       No ___X___

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _____.


 
 

Record EBITDA of US$3.9 billion in 2017

Stock price (BRKM5) gains 29% in the period

HIGHLIGHTS:

Braskem – Consolidated:

4  In 4Q17, EBITDA amounted to US$911 million, up 5% from 3Q17, mainly due to the widening of international spreads after Hurricane Harvey in the United States. Compared to 4Q16, EBITDA advanced 25%, explained by sales volume growth and the improvement in chemicals spreads in the international market, PP spreads in the United States and Europe and PE spreads in Mexico.

4  In 2017, consolidated EBITDA was US$3,872 million, a new record for the Company and 17% higher than in 2016, with positive impacts from: (i) sales volume growth in Mexico, due to the complex reaching full ramp-up; (ii) wider spreads for chemicals in the international market, for PP in Europe and for PE in Mexico; (iii) expansion in production capacity and sales volume growth at the units in the United States and Europe; (iv) higher sales volume  in the Brazilian market and record-high production volumes of key chemicals, PP and PE; and (v) capital gain of US$88 million from the quantiQ divestment.

4  In 4Q17, Braskem posted consolidated net income of R$313 million and net income of R$386 million in the Parent Company. In 2017, consolidated net income amounted to R$4,133 million, while net income attributable to shareholders came to R$4,083 million, corresponding to earnings of R$5.12 per common share and per class “A" preferred share1.

4  In the year, free cash flow was R$2,460 million.

4  Financial leverage measured by the ratio of net debt to EBITDA in U.S. dollar stood at 1.91x at the end of 2017.

4  The recordable and lost-time injury frequency rate, considering both Team Members and Partners per million hours worked, stood at 1.03 in the year, or 41% lower than the global industry average2.

4  In December, the Company paid in advance R$1 billion in dividends for fiscal year 2017, representing 24.5% of net income attributable to shareholders for the year.

4  Standard & Poor's reaffirmed Braskem’s investment grade rating of BBB-, with a negative outlook, given the downgrade in Brazil’s sovereign rating in January 2018. In this scenario, the Company maintained investment grade ratings at Standard & Poor's (BBB-) and Fitch Ratings (BBB-) and a rating above Brazil’s sovereign risk at Moody’s.

 

Main Financial Results    4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
R$ million    (A)  (B)  (C)  (A)/(B) (A)/(C) (D)  (E)  (D)/(E) 
Net Revenue    12,628  12,162  12,046  4%  5%  49,261  47,664  3% 
EBITDA    2,952  2,746  2,379  8%  24%  12,334  11,507  7% 
Net Profit (Loss)*    386  799  (2,531)  -52%  -  4,083  (411)  - 
Free Cash Flow Generation**  -  43  1,068  215  -104%  -120%  2,460  2,247  9% 
Net Revenue (US$ million)    3,929  3,788  3,658  4%  7%  15,441  13,734  12% 
EBITDA (US$ million)    911  868  727  5%  25%  3,872  3,304  17% 
*Net Profit (Loss) Attributable to Company's Shareholders                 
*** Free Cash Flow Generation relates, according to Annex IV, to the Net Cash provided by operating activities excluding (i) the payment of the leniency agreement and (ii) the effects of 
reclassifications between the lines of Financial investments held for trading and Cash and Cash Equivalents; subtracted by the line of Cash used in Investing Activities.   

 


1 The amount for the class “B” preferred shares is R$0.61.

2 The industry average is 1.75, according to the American Fuel & Petrochemical Manufactures (AFPM)


1

 

 

 

Petrochemical Industry:

4  In 4Q17, the spread of the key chemicals3 produced by Braskem stood at US$344/ton, down 5% from 3Q17, due to the naphtha price increase, which has not been fully reflected in the prices of these products. In 2017, the chemicals spread was US$411/ton, up 28% from 2016, due to increases in the prices of chemicals, especially butadiene and benzene in the first quarter of 2017.

4  In the quarter, the average international spread4 for the resins produced by Braskem in Brazil was US$637/ton, down 2% from 3Q17. In the year, the resin spread stood at US$654/ton, down 3% from 2016. In both cases, the spread remained at healthy levels, since resin prices eventually accompanied the increase in naphtha prices.

4  The PP spread in the United States5 was US$610/ton, increasing 4% from 3Q17, reflecting the effects from Hurricane Harvey. In the year, the PP spread in the United States was US$585/ton, down 17% from 2016, reflecting the higher propylene price due to the increase in exports and the lower inventories of this product.

4  The PP spread in Europe was US$509/t, down 6% from 3Q17, due to the hike in oil prices, which led to higher propylene prices and to lower seasonal demand for PP in the fourth quarter.

4  The PE spread in Mexico6 was US$1,069/ton, increasing 12% from 3Q17, explained by the effects from Hurricane Harvey, by the higher prices for oil/naphtha, which had a greater impact on PE prices than on ethane prices, and by the delays of new capacities expected to come online in the period. In the year, the PE spread in Mexico stood at US$1,001/ton, up 3% from 2016.

 

Petrochemical Spreads - IHS*  4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
US$/ton  (A)  (B)  (C)  (A)/(B) (A)/(C) (D)  (E)  (D)/(E) 
Chemicals Spread  344  362  325  -5%  6%  411  321  28% 
Resins Spread                 
Brazil  637  650  649  -2%  -2%  654  677  -3% 
United States  610  584  588  4%  4%  585  702  -17% 
Europe  509  544  438  -6%  16%  505  476  6% 
Mexico**  1,069  951  941  12%  14%  1,001  969  3% 
* Source: IHS                 
**Difference between PE and ethane reference prices                 

Compliance:

4  In keeping with its commitment to acting ethically, with integrity and transparency, the Company launched in 2016 a comprehensive Compliance Program comprising various initiatives to improve its Compliance system. In 4Q17, a total of 31 initiatives under the Compliance Program were concluded, which included:

·       Directives on: (i) Relation with Government Officials; (ii) Internal Controls; (iii) Global Sales; (iv) Attracting & Identifying People; and (v) Disciplinary Measures.

·       Hiring of a Compliance Officer in Europe; and

·       Training programs on the Code of Conduct, Anticorruption and Fair Competition.

 


3 Difference between the prices of key chemicals (15% ethylene, 10% propylene, 35% BTX, 10% butadiene, 5% cumene and 25% fuels, based on the capacity mix of Braskem’s industrial units in Brazil) and the price of naphtha – Source: HIS.

4 Difference between the price of resins based on the capacity mix of Braskem’s industrial units in Brazil and the price of naphtha – Source: IHS.

5 Difference between the U.S. polypropylene price and the U.S. propylene price.

6 Difference between the U.S. polyethylene price and the U.S. ethane price.

2


 

 

 

Highlights by Segment:

Brazil:

4  Brazilian demand for resins (PE, PP and PVC) was 1.3 million tons in 4Q17, down 4% from 3Q17, due to seasonality. In the year, resin demand was 5.1 million tons, growing 4% from 2016, driven by stronger economic activity, especially from the packaging, automotive, agriculture, retail and electronics industries.

4  Braskem’s resin sales in the Brazilian market amounted to 892 kton in 4Q17, decreasing 2% from 3Q17, lower than the market contraction of 4%. In the year, sales volume in the Brazilian market came to 3.5 million tons, growing 4% from 2016 and setting a new record for PE sales volume. Braskem’s market share stood at 70% in 4Q17 and 69% in 2017.

4  In 4Q17, the average cracker capacity utilization rate was 95%, increasing 3 p.p. from 3Q17. In the year, the average cracker capacity utilization rate was 94%, up 2 p.p. from 2016, supporting record-high production of ethylene, butadiene and gasoline.

4  In 4Q17, the Company exported 339 kton of resins, representing decreases of 15% and 18% compared to 3Q17 and 4Q16, respectively. In the year, resin exports amounted to 1.5 million tons, down 11% from 2016.

4   In 4Q17, the units in Brazil posted EBITDA of R$1,952 million. In the year, EBITDA came to R$8,675 million, which corresponds to 68% of consolidated EBITDA.

United States and Europe:

4  In 4Q17, the average capacity utilization rate stood at 99%, increasing 4 p.p. and 3 p.p. from 3Q17 and 4Q16, respectively. In 2017, the average capacity utilization rate was 97%, down 3 p.p. from 2016.

4  The units in the United States and Europe posted EBITDA of US$175 million in 4Q17 and US$647 million in 2017, corresponding to 16% of the Company’s consolidated EBITDA.

4  Construction of the new PP plant in the United States reached 9% completion in 2017, with investment of US$172 million already disbursed.

Mexico:

4  In 4Q17, the PE plants operated at an average capacity utilization of 86%, down 1 p.p. from 3Q17. In 2017, the average capacity utilization rate was 88%, increasing 46 p.p. from 2016.

4  In the quarter, PE sales in the local market amounted to 144 kton, down 6% from 3Q17. In the year, PE sales in the local market came to 551 kton.

4  EBITDA from the Mexico unit was US$174 million in 4Q17 and US$623 million in the year, corresponding to 16% of the Company’s consolidated EBITDA.

 

OUTLOOK

In January 2018, the International Monetary Fund (IMF) revised upwards its forecast for world GDP growth in 2018 by 0.2 p.p. in relation to its last forecast in October 2017. The current expectation is for the global economy to grow by 3.9% in 2018. The revision reflects (i) the stronger momentum in global growth; (ii) the recent growth in world trade; and (iii) the expected impact from the recently approved U.S. tax policy changes.

According to the Brazilian Central Bank’s “Focus” report, the country’s GDP is expected to grow 2.7% in 2018. The positive result is based on higher levels of household consumption and investments. In the medium and long terms, the main risks to the performance of the Brazilian economy are associated with political uncertainties, which threaten the implementation of structural reforms.

With regard to the dynamics of the oil market, factors supporting the recent upturn in oil prices include the more robust world economy, weather events in the United States, the extension of the agreement to cut oil production by OPEC member nations and other large producers, led by Russia, and geopolitical tensions in the Middle East, while Brent crude oil was quoted as high as US$70 per barrel in mid-January. According to the International Energy Agency (IEA), this price level is not expected to last, given the growing supply of shale oil from the United States, which renders less effective the efforts of global producers to limit production and reduce international inventories. In this scenario, in mid-February, the Brent crude oil price already registered a decline, to US$63.33/barrel.

3


 

 

In the petrochemical industry, the scenario remains positive with healthy spreads expected for the coming years:

§  Chemicals: the chemicals spread in the international market is expected to remain at healthy levels, albeit lower than in 2017, when prices peaked in 1Q17 due to one-off problems with product shortages, especially of butadiene and benzene.

§  Polyethylene (PE): PE spreads in the international market are expected to remain at healthy levels, though still below the level in 2017, given the new polyethylene capacities to come online in the United States during 2018. Spreads should begin to recover as of 2019, given the lack of a second investment phase in the region and the lower production of coal-based product in Asia, leading to high capacity utilization rates for this resin in the global market.

§  Polypropylene (PP): spreads in the international market are expected to remain at healthy levels due to the resin’s supply-demand balance in the global market. In the U.S. market, however, the expectation is for even better PP spreads compared to last year, given the higher supply of propylene feedstock in the region following the startup of another propane dehydrogenator and no new PP capacities expected to come online in 2018.

§  PVC: the scenario remains positive, with the expectation of spreads widening in relation to 2017 over the coming years, since demand exceeds the new capacity added each year, supporting higher global utilization rates.

Furthermore, the global petrochemical market could be affected by the growth in initiatives promoting ethical consumerism and by the change in the Chinese law impacting solid waste imports from other countries to produce resins.

 

In this scenario, the Company’s strategy remains focused on: (i) pursuing higher productivity and competitiveness in its current operations, with a focus on operating efficiency and cost leadership; (ii) diversifying the feedstock profile by increasing the share of gas and maintaining assets flexibility; (iii) expanding the global footprint; and (iv) strengthening Braskem's image and reputation towards Team Members, Clients, Suppliers, Society and Investors, through advances in compliance, sustainability, innovation and people management.

 

4


 

 

 

1.   BRAZIL

Braskem’s results in Brazil7 are formed by the following segments: Chemicals, Polyolefins & Vinyls.

 

BRAZIL

4Q17

3Q17

Chg.

2017

(A)

(B)

(A)/(B)

Financial Overview (R$ million)

 

 

 

 

Net Revenue

10,115

9,635

5%

38,698

COGS

           (7,723)

           (7,381)

5%

         (29,357)

Gross Profit

2,392

2,254

6%

9,341

   Gross Margin

24%

22%

1 p.p.

92%

SG&A

               (647)

               (662)

-2%

           (2,229)

Other Operating Income (Expenses)

               (307)

               (192)

60%

               (423)

Investment in Subsidiary and Associated Companies

                  11

                    6

64%

                  40

EBITDA

1,952

1,930

1%

8,675

   EBITDA Margin

19%

20%

-1 p.p.

22%

   Net Revenue (US$ million)

3,115

3,045

2%

12,123

   EBITDA (US$ million)

601

610

-1%

2,719

 

 

 


7 Braskem’s result in Brazil corresponds to the sum of the results from the Chemicals, Polyolefins and Vinyls units less eliminations from the revenues and costs with transfers of products among these segments. In 2Q17, EBITDA from Brazil includes the capital gain from the divestment of quantiQ, of R$277 million, which is not allocated to any operating segment.

5


 

 

1.1.  CHEMICALS8

 

CHEMICALS  4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
  (A)  (B)  (C)  (A)/(B)  (A)/(C)  (D)  (E)  (D)/(E) 
Operating Overview (ton)                 
Production                 
Ethylene  902,772  865,570  844,392  4%  7%  3,518,658  3,459,861  2% 
Utilization Rate  95%  92%  90%  3 p.p.  5 p.p.  94%  92%  2 p.p. 
Propylene  360,984  367,016  330,266  -2%  9%  1,445,887  1,400,466  3% 
Cumene  52,817  52,714  54,513  0%  -3%  198,202  193,936  2% 
Butadiene  108,576  107,782  95,021  1%  14%  430,032  411,688  4% 
Gasolina  245,672  262,085  320,719  -6%  -23%  1,008,579  984,189  2% 
BTX*  233,094  257,576  234,028  -10%  0%  977,184  1,000,489  -2% 
Others  273,198  273,264  255,590  0%  7%  1,077,453  1,033,848  4% 
Total  2,177,113  2,186,008  2,134,529  0%  2%  8,655,996  8,484,476  2% 
Sales - Brazilian Market (Main Chemicals)                 
Ethylene  130,633  133,786  115,902  -2%  13%  523,639  511,865  2% 
Propylene  94,647  104,778  75,036  -10%  26%  360,394  291,311  24% 
Cumene  53,169  52,409  52,431  1%  1%  199,792  194,472  3% 
Butadiene  44,601  48,520  47,187  -8%  -5%  183,849  198,451  -7% 
Gasolina  232,772  224,513  213,752  4%  9%  925,867  745,087  24% 
BTX*  171,645  163,741  168,721  5%  2%  644,589  676,958  -5% 
Total  727,467  727,748  673,028  0%  8%  2,838,130  2,618,144  8% 
Exports (Main Chemicals)                 
Ethylene  36,083  18,397  7,917  96%  356%  100,927  64,193  57% 
Propylene  4,601  9,210  7,501  -50%  -39%  43,127  79,312  -46% 
Gasolina  14,258  25,508  31,977  -44%  -55%  78,030  194,222  -60% 
Butadiene  65,262  57,278  52,167  14%  25%  241,019  213,666  13% 
BTX*  80,618  89,734  95,965  -10%  -16%  361,476  347,498  4% 
Total  200,822  200,127  195,527  0%  3%  824,579  898,893  -8% 
Financial Overview (R$ million)                 
Net Revenue  6,706  5,958  6,548  13%  2%  25,179  25,063  0% 
COGS  (5,450)  (4,876)  (5,294)  12%  3%  (20,530)  (20,248)  1% 
Gross Profit  1,256  1,082  1,253  16%  0%  4,649  4,814  -3% 
Gross Margin  19%  18%  19%  1 p.p.  0 p.p.  18%  19%  0 p.p. 
SG&A  (190)  (207)  (179)  -8%  6%  (773)  (680)  14% 
Other Operating Income (Expenses)  (103)  (52)  (295)  99%  -65%  (197)  (410)  -52% 
EBITDA  1,255  1,117  1,076  12%  17%  4,809  4,910  -2% 
EBITDA Margin  19%  19%  16%  0 p.p.  3 p.p.  19%  20%  1 p.p. 
Net Revenue (US$ million)  2,065  1,884  1,989  10%  4%  7,891  7,242  9% 
EBITDA (US$ million)  388  353  329  10%  18%  1,510  1,415  7% 
BTX* - Benzene, Toluene and Paraxylene                 

 

Capacity Utilization:

Compared to 3Q17, the 3 p.p. increase in the average capacity utilization of crackers is mainly explained by the record-high utilization rate of 103% at the Rio de Janeiro cracker, which in the prior quarter had been affected by a scheduled shutdown. Compared to the same period of 2016, the average capacity utilization rate of the crackers in 4Q17 was 5 p.p. higher, due to the scheduled shutdown at the Bahia cracker in 4Q16.

In 2017, the average capacity utilization rate of the crackers stood at 94%, advancing 2 p.p. on 2016, reflecting the good operating performance and record production of ethylene, butadiene and gasoline.

 


8 The Chemicals segment is formed by and operates four petrochemical complexes (Camaçari, Triunfo, São Paulo and Rio de Janeiro) producing olefins, aromatics and utilities. These units have total annual ethylene production capacity of 3,952 kton, of which approximately 78% is naphtha-based, 16% is gas-based and the remainder is ethanol-based. Of the total ethylene produced by the Chemicals Unit, approximately 80% is transferred for use by Braskem’s Polyolefins and Vinyls units. Total annual propylene production capacity is 1,585 kton, of which approximately 65% on average is transferred for use by the Company’s Polyolefins segment.

In 2017, ethylene, propylene, cumene, gasoline, benzene, toluene and paraxylene accounted for approximately 80% of net revenue in the Chemicals segment, for which reason they are considered key chemical products.

6


 

 

 

Sales Volume – Brazilian Market:

In 4Q17, the volume of sales of key chemicals to third parties was 727 kton, in line with 3Q17 and 8% higher than in 4Q16, which is basically explained by the stronger sales volumes of propylene, ethylene and gasoline.

In 2017, the volume of sales of key chemicals to third parties was a record-high 2,838 kton, growing 8% from 2016, led by the higher volume of propylene sales to the acrylics unit in Camaçari, Bahia and of gasoline sales, reflecting the change in the sales policy.

Sales Volume - Export Market:

Exports of key chemicals came to 201 kton in 4Q17, in line with the volume exported in 3Q17 and 3% higher than in the same period of 2016, driven predominately by sales of ethylene and butadiene.

In 2017, exports of key chemicals amounted to 825 kton, down 8% from 2016, due to the change in the sales mix of gasoline and propylene, both of which are sold in the local market, even though the Company posted record export sales of butadiene and ethylene.

COGS9:

In 4Q17, COGS amounted to US$1,678 million, increasing 9% and 4% from 3Q17 and 4Q16, respectively, explained mainly by higher prices for key raw materials.

·         The ARA naphtha price reference averaged US$556/ton, increasing 20% and 26% compared to 3Q17 and 4Q16, respectively, accompanying the higher prices of Brent crude oil. The crude oil price rose 17% and 26% compared to 3Q17 and 4Q16, respectively, reflecting the extension of the OPEC+10 agreement to cut production and the low oil stocks in the United States. For naphtha supply in the Brazilian market (average of n-1 quote), the average international price reference in 4Q17 was US$532/ton, 24% and 27% higher than in 3Q17 and 4Q16, respectively.

·         The USGC reference price for ethane, the main feedstock used by the Rio de Janeiro cracker, averaged 25¢/gal (US$185/ton), down 4% compared to 3Q17, due to the high inventory build in expectation of new crackers coming online in late 2017, which did not occur on schedule. Compared to 4Q16, the USGC price for ethane rose 4%, which is explained by higher ethane export volumes from the United States, by the higher price for LPG, which led producers to prefer cracking ethane, and by the startup of two new crackers.

·         The USGC price reference for propane in 4Q17 was 96¢/gal (US$ 499/ton), 24% and 65% higher than in 3Q17 and 4Q16, respectively, reflecting the higher volume of exports, especially to Asia, and the signs of a more severe winter in the northern hemisphere.

In 2017, COGS in the Chemical segment amounted to US$6,432 million, up 10% from 2016, due to the growth in sales volume and the higher prices for raw materials, especially naphtha, whose price increased 26% in the period, accompanying the oil price.

SG&A Expenses11:

Selling, general and administrative expenses in 4Q17 and 2017 corresponded to around 3% of the segment’s net revenue in the period.

EBITDA: In 4Q17, EBITDA came to US$388 million, advancing 10% and 18% from 3Q17 and 4Q17, respectively. In 2017, EBITDA from the Chemicals segment was US$1,510 million, up 7% from 2016.

 


9 Cost of goods sold: the Chemicals segment uses naphtha, HLR (refinery gas), ethane and propane as the main feedstocks for its production of olefins and aromatics. Petrobras supplies 100% of the HLR and most of the ethane, propane and naphtha consumed by Braskem, with the remainder met by imports from various suppliers.

10 Organization of Petroleum Exporting Countries

11 Selling, general and administrative expenses.

 

7


 

 

 

1.2.  POLYOLEFINS12

 

POLYOLEFINS  4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
  (A)  (B)  (C)  (A)/(B)   (A)/(C)  (D)  (E)  (D)/(E) 
Operating Overview (ton)                 
Production                 
PE  697,318  670,673  667,187  4%  5%  2,719,245  2,708,466  0% 
Utilization Rate  91%  88%  87%  3 p.p.  4 p.p.  90%  89%  1 p.p. 
PP  426,753  430,534  393,676  -1%  8%  1,711,741  1,592,474  7% 
Utilization Rate  92%  92%  85%  0 p.p.  7 p.p.  93%  86%  7 p.p. 
Total  1,124,071  1,101,207  1,060,862  2%  6%  4,430,986  4,300,940  3% 
Sales - Brazilian Market                 
PE  455,557  477,676  419,557  -5%  9%  1,795,446  1,705,462  5% 
PP  289,680  309,945  266,864  -7%  9%  1,164,947  1,105,675  5% 
Market Share  74%  73%  71%  1 p.p.  3 p.p.  73%  73%  0 p.p. 
Total  745,237  787,621  686,421  -5%  9%  2,960,393  2,811,137  5% 
Exports                 
PE  213,903  222,992  233,859  -4%  -9%  916,115  1,024,233  -11% 
PP  116,227  136,175  142,174  -15%  -18%  522,210  566,255  -8% 
Total  330,130  359,168  376,032  -8%  -12%  1,438,325  1,590,488  -10% 
Financial Overview (R$ million)                 
Net Revenue  4,984  4,961  4,730  0%  5%  19,650  20,307  -3% 
COGS  (3,985)  (3,968)  (3,724)  0%  7%  (15,572)  (15,981)  -3% 
Gross Profit  1,000  993  1,007  1%  -1%  4,079  4,326  -6% 
Gross Margin  20%  20%  21%  0 p.p.  -1 p.p.  21%  21%  -1 p.p. 
SG&A  (346)  (336)  (342)  3%  1%  (1,322)  (1,285)  3% 
Other Operating Income (Expenses)  (75)  (57)  (78)  32%  -4%  (178)  (199)  -11% 
EBITDA  684  704  694  -3%  -1%  3,001  3,291  -9% 
EBITDA Margin  14%  14%  15%  0 p.p.  -1 p.p.  15%  16%  -1 p.p. 
Net Revenue (US$ million)  1,536  1,569  1,437  -2%  7%  6,157  5,850  5% 
EBITDA (US$ million)  212  223  200  -5%  6%  943  935  1% 

 

Capacity Utilization:

The average capacity utilization of PE industrial units rose by 3 p.p. from 3Q17 and by 4 p.p. from 4Q16, when they were affected by the scheduled shutdown of the Rio de Janeiro cracker and one of the cracker lines in Bahia, respectively.

The average capacity utilization rate of the PP industrial units maintained its high level of the previous quarter and increased by 7 p.p. compared to 4Q16, reflecting the improved supply of propylene by the Chemicals segment.

In 2017, the average capacity utilization of the PE plants stood at 90%, increasing 1 p.p. compared to 2016. In the same period, the PP plants operated at an average utilization rate of 93%, 7 p.p. higher than in 2016, influenced by the better performance of the plants in São Paulo state and of the Rio Grande do Sul complex, supported by the improved supply of propylene by the Chemicals segment. In the year, polyolefins production grew 3% compared to 2016, setting a new record.

Brazilian Market:

Influenced by seasonality, the estimated market for polyolefins (PE and PP) in 4Q17 was 1,004 kton, down 7% from 3Q17. Compared to 4Q16, the estimated market for polyolefins expanded 4%, led by sales of PE to the packaging industry, especially for the consumer goods segment, driven by higher household consumption, and of PP to the automotive industry and of raffia to the growing agriculture industry.

In the year, the estimated market for PE and PP grew 5% to 4,061 kton, driven by brisker growth in the packaging industry and by the recovery of certain industries, especially automotive, agriculture, retail and electronics/appliance.

 

12 The Polyolefins segment is formed by 18 industrial plants in Brazil producing polyethylene (PE) and polypropylene (PP), which includes the production of Braskem’s Green PE from renewable feedstock. The industrial operations consist of the PE and PP plants located in the petrochemical complexes of Triunfo, Camaçari, São Paulo, Paulínia and Rio de Janeiro, which have combined annual production capacity of 3,055 kton of PE, with 200 kton of Green PE and 1,850 kton of PP. In 1Q17, the UTEC business, which previously was part of the Polyolefins segment, became part of the United States and Europe segment. 

8


 

 

Sales Volume - Brazilian Market:

In 4Q17, due to seasonality, sales volume in Brazil fell 5% from 3Q17, supporting a market share gain of 1 p.p., to 74%. Compared to 4Q16, sales volume in Brazil grew 9%, outpacing the growth in Brazilian demand for polyolefins.

In the year, sales volume in Brazil accompanied the performance of the local market to grow 5% from 2016, with market share of 73%, in line with the previous year. The highlight was the sales of PE in Brazil, which grew 5% to set a new record.

Sales Volume - Export Market:

Reflecting the stronger demand for resins in the Brazilian market, sales volume from the Polyolefins unit decreased 12% and 10% compared to 4Q16 and 2016, respectively. Exports to South American countries remained strong, since they are priority markets for the Company. Compared to 3Q17, export volume decreased 8% due to seasonality. 

COGS13:

In 4Q17, COGS of the Polyolefins unit stood at US$1,227 million, down 2% from 3Q17, explained by lower sales volume, which offset the higher feedstock prices.

·         The average USGC propylene price reference in 3Q17 was US$1,080/ton, 18% higher than in 3Q17, explained by Hurricane Harvey in Texas, which affected the region’s refineries and crackers and significantly reduced the supply of propylene in the market.

·         The European (NWE) price reference for ethylene, which is used for internal transfers from the Chemicals unit, averaged US$1,219/ton in the quarter, up 6% from 3Q17.

Compared to 4Q16, COGS in U.S. dollar of the Polyolefins unit increased 9%, explained by the 19% increase in the European (NWE) price reference for ethylene and by the 35% increase in the USGC price reference for propylene, combined with the sales volume growth.

In 2017, COGS of the Polyolefins Unit came to US$4,878 million, up 6% compared to 2016, explained by higher feedstock prices in the international market and sales volume growth. The average price reference for propylene in the U.S. Gulf Coast (USGC) was US$986/ton, while the international price reference for ethylene in Europe (NWE) averaged US$1,146/ton, up 30% and 14%, respectively, from 2016.

SG&A Expenses:

Selling, general and administrative expenses in both 4Q17 and 2017 corresponded to 7% of the segment’s net revenue in the period.

EBITDA:

EBITDA amounted to US$212 million, declining 5% from 3Q17, due to the narrowing of international polyolefin spreads. In Brazilian real, EBITDA came to R$684 million, 3% lower, positively influenced by the 3% average Brazilian real depreciation in the period.

Compared to 4Q16, the higher spreads for polyolefins, especially PP, in the international market led EBITDA to increase 6% in U.S. dollar and decrease 1% in Brazilian real, affected by the 1% average local-currency appreciation.

In the year, EBITDA came to US$943 million, growing 1% from 2016, adversely affected by the lower PP spreads. In Brazilian real, EBITDA was stable and also was influenced by the 9% appreciation in the local currency in the period.


13 Cost of goods sold: ethylene and propylene are the main feedstocks used to make PE and PP, respectively. For PE production, 100% of the ethylene used is supplied by the Chemicals Unit, as is 65% of the propylene used to make PP, with the remainder supplied by Petrobras.

9


 

 

 

 

1.3.  VINYLS14

 

VINYLS  4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
  (A)  (B)  (C)  (A)/(B) (A)/(C)  (D)  (E)  (D)/(E) 
Operating Overview (ton)                 
Production                 
PVC  157,329  157,052  162,873  0%  -3%  611,217  594,039  3% 
Utilization Rate  88%  88%  91%  0 p.p.  -3 p.p.  86%  84%  2 p.p. 
Caustic Soda  109,899  108,807  113,282  1%  -3%  408,981  440,907  -7% 
Total  267,228  265,859  276,156  1%  -3%  1,020,198  1,034,945  -1% 
Sales - Brazilian Market                 
PVC  147,210  127,193  137,377  16%  7%  525,683  528,314  0% 
Market Share  56%  51%  54%  4 p.p.  2 p.p.  52%  52%  0 p.p. 
Caustic Soda  96,163  105,748  101,673  -9%  -5%  402,001  436,607  -8% 
Total  243,374  232,942  239,050  4%  2%  927,684  964,921  -4% 
Exports                 
PVC  8,452  37,078  39,035  -77%  -78%  82,008  116,919  -30% 
Financial Overview (R$ million)                 
Net Revenue  810  800  794  1%  2%  3,067  3,016  2% 
COGS  (670)  (683)  (730)  -2%  -8%  (2,606)  (2,815)  -7% 
Gross Profit  140  117  64  20%  118%  461  201  129% 
Gross Margin  17%  15%  8%  2 p.p.  9 p.p.  15%  7%  8 p.p. 
SG&A  (51)  (36)  (67)  40%  -25%  (163)  (237)  -31% 
Other Operating Income (Expenses)  (94)  (19)  (51)  384%  86%  (163)  (72)  127% 
EBITDA  73  146  38  -50%  92%  454  241  88% 
EBITDA Margin  9%  18%  5%  -9 p.p.  4 p.p.  15%  8%  7 p.p. 
Net Revenue (US$ million)  250  253  241  -1%  3%  962  870  11% 
EBITDA (US$ million)  22  46  12  -51%  92%  143  69  108% 

 

Capacity Utilization:

The average capacity utilization of PVC stood at 88% in 4Q17, in line with 3Q17 and 3 p.p. lower than in the year-ago period. In 2017, the average capacity utilization of the PVC plants stood at 86%, up 2 p.p. from 2016.


14 The Vinyls segment is formed by the industrial and commercial operations of the PVC, Chlorine and Caustic Soda units, as well as other products such as hydrogen and sodium hypochlorite. The industrial operations include three PVC plants located in the petrochemical complexes in Camaçari and Alagoas and the two chlor-alkali plants located in the same two petrochemical complexes. The Company’s production capacity is 710 kta of PVC and 539 kta of caustic soda.

10


 

 

 

Brazilian Market:

The estimated market for PVC in 3Q17 was 265 kton, expanding 7% and 4% from 3Q17 and 4Q16, respectively. In the year, the estimated PVC market contracted 2%, mainly due to the performance of the construction and infrastructure sectors.

Sales Volume - Brazilian Market:

In 4Q17, PVC sales grew 16% on the prior quarter, outstripping demand in the Brazilian market. In this scenario, Braskem’s market share stood at 56%, gaining 4 p.p. in relation to 3Q17. Compared to the same period last year, PVC sales grew by 7%.

In 2017, sales amounted to 526 kton, in line with 2016, with the highlight the sales to the clothing and footwear sector. Market share also was stable in relation to 2016, at 52%.

Sales Volume - Export Market:

Braskem continued to export PVC to offset the contraction in the local market, although at lower volumes compared to 2016.

COGS15:

In the year, COGS amounted US$818 million, up 1% from 2016 as a result of higher feedstock prices in the international market. 

SG&A Expenses:

Selling, general and administrative expenses in 4Q17 and in 2017 corresponded to 6% and 5% of the segment’s net revenue, respectively.

EBITDA:                                                   

Supported mainly by the better international spread for PVC and caustic soda, EBITDA in U.S. dollar advanced 108% compared to 2016, to US$143 million. Despite the Brazilian real appreciation in the period, EBITDA amounted to R$454 million, growing 88% from 2016.

 

2.   UNITED STATES AND EUROPE16


15 Cost of goods sold: ethylene and salt are the main inputs used by the Vinyls segment to produce caustic soda, chlorine and PVC. The ethylene is 100% supplied by the Chemicals segment. In salt consumption, Braskem holds significant cost advantages over some competitors thanks to its low-cost extraction of sodium chloride (especially compared to sea salt) and low transportation costs, given its industrial unit’s proximity to the salt mine.

16 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.

11


 

 
VINYLS  4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
  (A)  (B)  (C)  (A)(B)    (A)/(C) (D)  (E)  (D)/(E) 
Operating Overview (ton)                 
Production                 
PVC  157,329  157,052  162,873  0%  -3%  611,217  594,039  3% 
Utilization Rate  88%  88%  91%  0 p.p.  -3 p.p.  86%  84%  2 p.p. 
Caustic Soda  109,899  108,807  113,282  1%  -3%  408,981  440,907  -7% 
Total  267,228  265,859  276,156  1%  -3%  1,020,198  1,034,945  -1% 
Sales - Brazilian Market                 
PVC  147,210  127,193  137,377  16%  7%  525,683  528,314  0% 
Market Share  56%  51%  54%  4 p.p.  2 p.p.  52%  52%  0 p.p. 
Caustic Soda  96,163  105,748  101,673  -9%  -5%  402,001  436,607  -8% 
Total  243,374  232,942  239,050  4%  2%  927,684  964,921  -4% 
Exports                 
PVC  8,452  37,078  39,035  -77%  -78%  82,008  116,919  -30% 
Financial Overview (R$ million)                 
Net Revenue  810  800  794  1%  2%  3,067  3,016  2% 
COGS  (670)  (683)  (730)  -2%  -8%  (2,606)  (2,815)  -7% 
Gross Profit  140  117  64  20%  118%  461  201  129% 
Gross Margin  17%  15%  8%  2 p.p.  9 p.p.  15%  7%  8 p.p. 
SG&A  (51)  (36)  (67)  40%  -25%  (163)  (237)  -31% 
Other Operating Income (Expenses)  (94)  (19)  (51)  384%  86%  (163)  (72)  127% 
EBITDA  73  146  38  -50%  92%  454  241  88% 
EBITDA Margin  9%  18%  5%  -9 p.p.  4 p.p.  15%  8%  7 p.p. 
Net Revenue (US$ million)  250  253  241  -1%  3%  962  870  11% 
EBITDA (US$ million)  22  46  12  -51%  92%  143  69  108% 

 

Capacity Utilization:

The average capacity utilization rate in the United States and Europe was 99% in 4Q17, increasing 4 p.p. compared to 3Q17, given the shutdown of plants in Texas in August due to Hurricane Harvey. Compared to 4Q16, the utilization rate increased 3 p.p., due to the shutdown for the capacity-expansion project at the Marcus Hook plant in late 2016.

In 2017, the capacity utilization rate was 97%, down 3 p.p. from the previous year, reflecting the revision of production capacity conducted in 2017. Considering the same nominal capacity for both years, the capacity utilization rate in 2017 was 5 p.p. higher than in 2016. In the year, production in the United States and Europe grew 5% to set a new record.

Market:

United States: Despite Hurricane Harvey and the weaker performance of the automotive industry, U.S. PP demand increased in relation to 2016, mainly supported by the food packaging and nonwoven industries.

Europe: The recovery of European economies gained traction over the year, with PP demand in 2017 higher than in the prior year, driven by the automotive industry. Furthermore, local producers increased production in the period due to the lower volume of PP imports, due to maintenance shutdowns in the Middle East and the effects from Hurricane Harvey in the United States. This enabled Braskem to use its position as a local competitor to leverage exports from Brazil.

Sales Volume:

Sales volume in 4Q17 declined 5% compared to 3Q17, due to seasonality, and increased 3% compared to 4Q16, due to stronger PP production in the United States coupled with the increase in demand.

In the year, sales set a new record by advancing 5%, which is basically explained by the capacity expansion projects at the plants in the United States (late 2016) and Germany (early 2017) and by the firm PP demand in these regions.

12


 

 

 COGS17:

In 4Q17, the segment’s cost of goods sold (COGS) amounted to US$611 million, increasing 29% from 4Q16.

·         The average price of USGC polymer grade propylene in 4Q17 was US$1,080/ton, up 18% and 35% from 3Q17 and 4Q16, respectively, explained by the products shortage due to Hurricane Harvey.

·         The European price reference for propylene averaged US$1,025/ton in 4Q17, increasing 9% and 29% from 3Q17 and 4Q16, reflecting the longer-than-expected maintenance shutdowns at the region’s crackers.

In 2017, COGS stood at US$2,324 million, increasing 33% from 2016.

·         In the year, propylene prices in the United States averaged US$986/ton, increasing 30% from 2016, explained by higher propane prices and low inventory levels. In 2017, the reference price for Europe was US$946/ton, up 30% on the prior year, reflecting the higher oil prices and the growing share of gas used as feedstock by European crackers at the expense of naphtha, which reduced the supply of propylene in the region.

 

SG&A Expenses:

Selling, general and administrative expenses corresponded to 6% of the segment’s net revenue in 4Q17 and 2017.

EBITDA:

EBITDA in 4Q17 came to US$175 million, advancing 6% on 3Q17, explained by the 4% increase in the PP-propylene spread18 in the United States. In Brazilian real, EBITDA was R$567 million, accounting for 18% of consolidated EBITDA.

In the year, EBITDA was US$647 million, down 7% from 2016, due to the 17% decline in PP-propylene spreads3 in the United States. The result reflects the lower supply of propylene, given the growing demand for the product in the year, while exports increased and new capacity startups were delayed. In Brazilian real, EBITDA amounted to R$2,063 million, accounting for 16% of consolidated EBITDA.

 

3.  MEXICO (Braskem Idesa)19


17 Cost of goods sold: the main feedstock used to make PP in the United States and Europe is propylene, which is supplied to the Company’s industrial units by various local producers.

18 As of 2Q16, we are presenting the U.S. PP spread as follows to better reflect the U.S. market: difference between the U.S. PP (GP-homopolymer) price and the U.S. Propylene (polymer grade) price.

 

13


 

 

 

MEXICO  4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
  (A)  (B)  (C)  (A)/(B)   (A)/(C)  (D)  (E)  (D)/(E) 
Operating Overview (ton)                 
Production                 
PE  226,737  229,504  193,189  -1%  17%  923,540  443,180  108% 
Utilization Rate  86%  87%  73%  -1 p.p.  13 p.p.  88%  42%  46 p.p. 
Sales                 
Mexican Market  144,207  153,149  81,862  -6%  76%  551,264  201,066  174% 
Exports  86,534  82,357  116,843  5%  -26%  418,067  231,378  81% 
Total  230,741  235,506  198,706  -2%  16%  969,330  432,444  124% 
Financial Overview (US$ million)                 
Net Revenue  288  267  217  8%  33%  1,128  474  138% 
COGS  (159)  (166)  (141)  -4%  13%  (657)  (344)  91% 
Gross Profit  129  101  75  28%  71%  472  131  261% 
Gross Margin  45%  38%  35%  7 p.p.  10 p.p.  42%  28%  14 p.p. 
SG&A  (23)  (25)  (19)  -9%  16%  (90)  (68)  31% 
Other Operating Income (Expenses)  5  3  0  92%  2337%  9  0  11948% 
EBITDA  174  136  102  28%  71%  623  163  282% 
EBITDA Margin  60%  51%  47%  9 p.p.  13 p.p.  55%  34%  21 p.p. 
Net Revenue (R$ million)  936  843  714  11%  31%  3,601  1,587  127% 
EBITDA (R$ million)  567  429  336  32%  69%  1,987  530  275% 

Capacity Utilization:

In 4Q17, the average capacity utilization rate of the PE industrial units was 86%, down 1 p.p. from 3Q17, given the supply of ethane in the period, and up 13 p.p. from 4Q16. Compared to 2016, the average capacity utilization rate of PE increased 46 p.p., since the plants were in ramp-up phase during the period.

Mexican Market:

In 4Q17, the estimated PE market in Mexico was 523 kton, down 6% from 3Q17, impacted by seasonality and pent-up demand due to the expected decline in PE prices in the region following the startup of new gas-based capacities in the United States. Compared to 4Q16, the estimated market grew 2%.

In 2017, the estimated PE market in Mexico was 2.2 million tons, 1% higher than in 2016, but lagging the projected 2% growth in Mexico’s GDP, according to the IMF, adversely affected by lower consumption due to higher interest rates.

Sales Volume:

In 4Q17, sales volume followed the overall industry performance, decreasing 6% compared to 3Q17. Compared to 4Q16, when the plants were in the ramp-up phase, sales in the local market were 76% higher.

Surplus product in the quarter was directed to exports, which increased 5% compared to 3Q17, mainly to the United States, due to the lower supply of PE in the region caused by Hurricane Harvey. Meanwhile, compared to 4Q16, exports fell 26%, given the priority on sales in the local market.

In 2017, given the product’s higher supply, total PE sales volume grew 124% compared to 2016. Braskem Idesa increased its market share in Mexico, supported by sales growth of 174% compared to 2016.

Exports grew 81%, with more profitable markets, such as Europe and the United States, accounting for a higher share, driven by the expansion of the product portfolio and better coordination between the sales teams in the United States and Europe.

 

19 The segment comprises an ethane-based cracker, two high-density polyethylene (HDPE) plants and one low-density polyethylene (LDPE) plant with combined PE production capacity of 1,050 kta. This unit includes the results of Braskem Idesa SAPI and of the other subsidiaries of Braskem S.A. in Mexico.

14


 

 

 

 

COGS20:

In 4Q17, COGS21 stood at US$159 million, down 4% from 3Q17, influenced by the lower sales volume and lower prices of ethane and natural gas. Compared to 4Q16, COGS increased 13%, reflecting the higher sales volume.

·         the U.S. Gulf Coast reference price for ethane (ethane USGC) fell 4% from 3Q17 and increased 4% from 4Q16, as explained above.

·         the Henry Hub reference price for natural gas fell 2% and 5% from 3Q17 and 4Q16, respectively, given the expectation of temperatures above previous forecasts for the U.S. winter.

In the year, COGS21 came to US$657 million, increasing 91% from 2016, due to the higher sales volume.

·         The USGC price reference for ethane increased 26% compared to 2016, due to stronger demand after the startup of ethane export terminals, the higher prices of LPG and the expected startup of new crackers.

·         The Henry Hub price reference for natural gas increased 19% compared to 2016, due to higher export volumes to Mexico. Furthermore, in 2016, the natural gas price was affected by inventories above the average in last 5 years, due to high winter temperatures.

 


20 Cost of goods sold: for its ethane supply, Braskem Idesa has a 20-year agreement with the subsidiary of Petróleos Mexicanos (PEMEX), whose price is based on the USG ethane price reference. For its natural gas supply, Braskem Idesa has a supply contract with prices referenced to a basket of sources of natural gas in the U.S. South, especially the Henry Hub natural gas price reference.

21 Book COGS – Excludes costs with resales of PE produced in Brazil and includes impacts from the accounting standard CPC 30.

15


 

 

 

SG&A Expenses:

Selling, general and administrative expenses corresponded to 8% of the segment’s net revenue in 4Q17 and 2017.

Other Income/Expenses, Net (OIE):

In 4Q17, OIE included income of R$11.4 million related to the financial penalty established in the ethane supply agreement. In the year, this income amounted to US$19.5 million.

EBITDA:

In 4Q17, EBITDA was US$174 million, growing 28% from 3Q17, due to the higher spreads in the international market. Compared to 4Q16, EBITDA advanced 71%.

In 2017, EBITDA was US$623 million, increasing US$460 million compared to 2016, due to the ramp-up process.

Financial Results Braskem Idesa: 

In 4Q17, the financial result was an expense of R$741 million (compared to the net financial expense of R$363 million in 3Q17), reflecting the impact from an exchange variation loss on the outstanding balance of the loan, due to the depreciation in the Mexican peso against the U.S. dollar in the quarter. On December 31, 2017, the outstanding principal of the loan with the project’s shareholders stood at US$1,998 million. In 4Q17, the Company recognized an expense of R$51 million related to the adoption of hedge accounting in the profit or loss.

Excluding the effects from exchange variation, the financial result in 4Q17 was an expense of R$227 million, down 2% from the expense recorded in 3Q17.

 

Financial Result (R$ million)  4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
BRASKEM IDESA  (A)  (B)  (C)  (A)(B)   (A)/(C)  (D)  (E)  (D)/(E) 
Financial Expenses  (241)  (238)  (253)  1%  -5%  (974)  (689)  41% 
Interest Expenses  (229)  (218)  (249)  5%  -8%  (867)  (643)  35% 
Others  (12)  (21)  (4)  -41%  192%  (107)  (46)  131% 
Financial Revenue  14  8  1  80%  n.a.  25  3  672% 
Interest  2  2  1  23%  159%  6  3  95% 
Others  12  6  0  96%  n.a.  18  0  n.a. 
Foreign Exchange Variation, net  (514)  (132)  (384)  289%  34%  132  (1,094)  -112% 
Foreign Exchange Variation (Expense)  (595)  (146)  (412)  308%  44%  134  (1,163)  -111% 
Foreign Exchange Variation (Revenue)  80  14  28  491%  187%  (2)  69  -102% 
Net Financial Result  (741)  (363)  (636)  104%  17%  (817)  (1,780)  -54% 

In 2017, the financial result was an expense of R$817 million (compared to net financial expense of R$1,780 million in 2016), positively impacted by an exchange variation gain on the outstanding balance of the loan, due to the appreciation in the Mexican peso against the U.S. dollar in the year. The Company recognized an expense of R$164 million related to the adoption of hedge accounting in the profit or loss.

Excluding the effects from exchange variation, the net financial result in the year was an expense of R$949 million, compared to an expense of R$686 million in 2016, explained by the capitalization of interest through April 2016, corresponding to the project phase of Braskem Idesa, and by the increase in LIBOR.

 

16


 

 

CONSOLIDATED22

 

Financial Overview (R$ million)  Net        Minority  Other Revenues  Operating  EBITDA 
 CONSOLIDATED 4Q17   Revenue COGS Gross Profit SG&A  Interest   and Expenses   Profit  
Brazil  10,115  (7,723)  2,392  (647)  11  (307)  1,449  1,952 
U.S. and Europe  2,671  (1,983)  687  (161)  -  (16)  510  568 
Mexico  936  (519)  418  (72)  -  16  362  567 
Other Segments  69  (19)  50  (15)  -  7  42  48 
Eliminations and Reclassifications  (1,163)  986  (176)  24  -  (3)  (155)  (182) 
Braskem Total  12,628  (9,257)  3,371  (870)  11  (304)  2,208  2,952 
 
 
Financial Overview (R$ million)  Net        Minority  Other Revenues  Operating  EBITDA 
 CONSOLIDATED 2017  Revenue   COGS  Gross Profit  SG&A   Interest  and Expenses   Profit 
         
Brazil  38,698  (29,357)  9,341  (2,229)  40  (423)  6,729  8,675 
U.S. and Europe  9,854  (7,419)  2,435  (583)  -  (21)  1,831  2,064 
Mexico  3,601  (2,097)  1,503  (283)  -  28  1,248  1,987 
Other Segments  81  (33)  48  (15)  -  (68)  (35)  56 
Eliminations and Reclassifications  (2,974)  2,506  (468)  49  -  6  (414)  (447) 
Braskem Total  49,261  (36,401)  12,860  (3,061)  40  (480)  9,359  12,334 

 


22 The consolidated figures are formed by the results from the Brazil, United States & Europe and Mexico segments adjusted by eliminations and reclassifications. 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. EBITDA for 2Q17 includes the capital gain from the divestment of quantiQ, in the amount of R$277 million, which is not registered in any operating segment.

17


 

 

 

NET REVENUE

 

 

In 2017, net revenue amounted to US$15.4 billion, advancing 12% on 2016, which is explained by (i) the sales volume of the Mexico complex; (ii) the recovery in local demand; (iii) higher prices for resins and key chemicals in the international market; and (iv) the capacity expansion projects at plants in the United States and Germany. In Brazilian real, net revenue came to R$49.3 billion, advancing 3% on the prior year.

 

COST OF GOODS SOLD (COGS)

Consolidated COGS in 4Q17 was US$2,852 million, down 1% from 3Q17, due to the lower sales volume in nearly all segments, which offset the higher feedstock prices in the international market. In Brazilian real, consolidated COGS came to R$9,257 million, up 1% from 3Q17, due to the local currency’s depreciation in the period.

Compared to 4Q16, COGS in U.S. dollar increased 4%, due to sales volume growth and higher feedstock prices. In Brazilian real, COGS increased 3% from 4Q16.

In 2017, COGS amounted to US$11,407 million, increasing 13% from 2016, explained by the sales volume growth in Mexico due to reaching full ramp-up and by the higher feedstock prices in the international market. In Brazilian real, COGS came to R$36,401 million, up 4% from 2016.

18


 

 

 

 

SG&A EXPENSES

In 4Q17, selling, general and administrative expenses amounted to R$870 million, increasing 9% compared to 4Q16, reflecting sales volume growth and higher expenses with advertising and publicity. In U.S. dollar, expenses amounted to US$250 million, 4% lower than in 4Q16.

In the year, expenses were R$3,061 million, up 7% from 2016, due to the higher selling expenses in Mexico and audit expenses. In U.S. dollar, SG&A expenses amounted to US$906 million, 3% higher than in 2016.

OTHER INCOME/EXPENSES, NET (OIE)

The Company recorded an expense of R$ 304 million in Other Income (Expenses), Net in 4Q17, which is mainly related to the provision for recovery of environmental damages in the amount of R$102 million, adjustment to the profit sharing of team members in the amount of R$113 million, and provision for legal and labor claims in the amount of R$57 million.

In 2017, other expenses decreased by R$3.4 billion compared to 2016, mainly due to the financial penalty under the global settlement executed in 2016 and provisioned for in 4Q16. Excluding the capital gain from the divestment of quantiQ, in the amount of R$277 million in 2017, the Company recorded an expense of R$756 million under Other Income (Expenses), Net, which mainly includes:

§  employee profit sharing (R$400 million);

§  provision for impairment losses from fixed and intangible assets (R$77 million);

§  write-off of fixed and intangible assets due to discontinuity, including investment projects and ongoing maintenance shutdowns (R$129 million); and

§  provision for legal and labor claims (R$120 million).

19


 

 

 

EBITDA

In 4Q17, Braskem’s consolidated EBITDA23 amounted to US$911 million, advancing 25% on the year-ago period. In Brazilian real, EBITDA came to R$2,952 million, 24% higher than in 4Q16. Despite the impact from seasonality, EBITDA in 4Q17 grew by 5% compared to 3Q17, due to the widening of spreads caused by shortage of resins in the aftermath of Hurricane Harvey in the U.S. Gulf Coast.

In 2017, consolidated EBITDA was US$3,872 million, a new record for the Company and 17% higher than in 2016, with positive impacts from: (i) higher sales volume in Mexico, due to the conclusion of the complex’s ramp-up process; (ii) higher international spreads for chemicals, PP in Europe and PE in Mexico; (iii) expansion in production capacity and higher sales volume at the units in the United States and Europe, with record PP production in the United States; (iv) higher sales volume in the Brazilian market, with record production volumes of key chemicals, PE and PP; and (v) capital gain of US$88 million from the quantiQ divestment. In Brazilian real, EBITDA amounted to a record-high R$12,334 million, advancing 7% from 2016, influenced by the Brazilian real appreciation in the comparison period.

NET FINANCIAL RESULT24


23 EBITDA is defined as the net result in the period plus taxes on profit (income tax and social contribution), the financial result and depreciation, amortization and depletion. The Company opts to present adjusted EBITDA, which excludes or adds other items from the statement of operations that help improve the information on its potential gross cash generation.

24 Excludes the financial result of Braskem Idesa SAPI.

20


 

 

 

Financial Result (R$ million)

4Q17

3Q17

4Q16

Chg.

Chg.

2017

2016

Chg.

EX-BRASKEM IDESA

(A)

(B)

(C)

(A)/(B)

(A)/(C)

(D)

(E)

(D)/(E)

Financial Expenses

         (1,113)

            (639)

            (818)

74%

36%

         (3,045)

         (3,051)

0%

Interest Expenses

             (362)

             (403)

             (466)

-10%

-22%

          (1,624)

          (1,974)

-18%

Others

             (751)

             (235)

             (352)

219%

113%

          (1,421)

          (1,077)

32%

                 

Financial Revenue

              188

              217

              194

-13%

-3%

              850

              951

-11%

Interest

               164

               186

               178

-12%

-7%

               747

               897

-17%

Others

                24

                31

                17

-24%

39%

               104

                54

92%

                 

Net Foreign Exchange Variation

            (275)

            (216)

            (280)

27%

-2%

            (937)

         (2,115)

-56%

Foreign Exchange Variation (Expense)

             (561)

               153

             (109)

-

415%

          (1,129)

             (911)

24%

Foreign Exchange Variation (Revenue)

               287

             (369)

             (171)

-

-268%

               192

          (1,204)

-

                 

Net Financial Result

         (1,199)

            (638)

            (903)

88%

33%

         (3,131)

         (4,215)

-26%

 

The net financial result in 4Q17 was an expense of R$1,199 million, compared to an expense of R$638 million in the previous quarter. Excluding the effects from exchange variation, the net financial result in 4Q17 was an expense of R$925 million, increasing R$503 million from the expense in the prior quarter.

In the year, the net financial result was an expense of R$3,131 million, down R$1,084 million from 2016. Excluding the effects from exchange variation, the net financial result in 2017 was an expense of R$2,194 million, stable compared to the expense in the prior year.

Currency Hedging Program

Braskem holds net exposure to the U.S. dollar (i.e., more USD-pegged liabilities than USD-pegged assets). At the end of 2017, this net exposure was formed: (i) in the operations, by 56% of suppliers, which was offset by 66% of accounts receivable; and (ii) in the capital structure, by the higher exposure of net debt to the U.S. dollar. Since its operating cash flow is heavily linked to the dollar, maintaining this level of net exposure to the dollar in liabilities acts as a natural hedge. Virtually 100% of its revenue is pegged to the variation in the U.S. dollar and approximately 80% of its costs also is pegged to this currency.

Therefore, in September 2016, Braskem launched a recurring currency hedge program to mitigate the exposure of its cash flows to liabilities denominated in Brazilian real and not pegged to the U.S. dollar (e.g., electricity, payroll, etc.).

With the sole purpose of protecting its cash flow, the program adopts two strategies using derivative instruments: (i) purchase of put options (“puts”) and (ii) purchase of put options associated with the sale of call options (“collars”).

Both alternatives protect Braskem in the event of appreciation in the local currency, with the difference being that the collar strategy can also result in losses for the Company if the USD/BRL exchange rate surpasses the strike price of the call options. With collars, however, the payment of the net premium for obtaining the puts is lower, since the Company receives a premium from the sale of the call options. Lastly, note that any losses from the collar strategy always are offset by gains in competitiveness from the reduction in costs denominated in BRL when translated into USD.

As of December 31, 2017, Braskem held put options in the amount of U$1.4 billion, with an average strike price of 2.96 R$/US$. Braskem also held a total notional value of short options in call option contracts in the amount of U$926 million, with an average strike price of R$4.32. The operations have a maximum term of 18 months.

Such operations were designed for the hedge accounting of cash flows as from January 1, 2017, and seek to hedge future exports denominated in USD with maturities in months coinciding with the maturity of the derivatives.

21


 

 

 

                     

NET INCOME/LOSS

Net Profit (R$ million)

4Q17

3Q17

4Q16

Chg.

Chg.

2017

2016

Chg.

CONSOLIDATED

(A)

(B)

(C)

(A)/(B)

(A)/(C)

(D)

(E)

(D)/(E)

Net Profit (Loss)

        313

        764

    (2,617)

-59%

-112%

     4,133

       (729)

-

Company's shareholders

        386

        799

    (2,531)

-52%

-115%

     4,083

       (411)

-

Non-controlling interest in Braskem Idesa

        (73)

        (36)

        (86)

106%

-15%

          50

       (318)

-

 

 

 

 

 

 

 

 

 

Net Profit (Loss) per share

 

 

 

 

 

 

 

 

Common Shares

         

       5.12

      (0.56)

-

Class 'A' Preferred Shares

         

       5.12

      (0.56)

-

Class 'B' Preferred Shares

 

 

 

 

 

       0.61

          -  

-

 

DIVIDENDS

In November 2017, the Board of Directors approved the early payment of dividends for fiscal year 2017 in the amount of R$1 billion, representing 24.5% of the net income attributable to shareholders in the year, in the approximate gross amount of R$1.26 per common or class “A” preferred share and R$0.61 per class “B" preferred share. Payment was made in December 2017.

LIQUIDITY AND CAPITAL RESOURCES

22


 

 

 

Debt

Dec-17

 

Sep-17

 

Dec-16

 

Chg.

Chg.

US$ million

(A)

 

(B)

 

(C)

 

(A)/(B)

(A)/(C)

Consolidated Gross Debt

  10,087

 

  10,238

 

  10,623

 

-1%

-5%

in R$

        463

5%

     1,361

13%

     1,582

15%

-66%

-71%

in US$

     9,623

95%

     8,877

87%

     9,041

85%

8%

6%

(-) Debt - Braskem Idesa

    2,930

 

    2,979

 

    3,110

 

-2%

-6%

in US$

     2,930

100%

     2,979

100%

     3,110

100%

-2%

-6%

(+) Leniency Agreement

       492

 

       501

 

       875

 

-2%

-44%

in R$

        427

87%

        435

87%

        623

71%

-2%

-31%

in US$

          66

13%

          66

13%

        253

29%

-1%

-74%

(=) Gross Debt (Ex-Braskem Idesa)

    7,649

 

    7,759

 

    8,389

 

-1%

-9%

in R$

        890

12%

     1,795

23%

     2,204

26%

-50%

-60%

in US$

     6,759

88%

     5,964

77%

     6,184

74%

13%

9%

(-) Cash and Cash Equivalents (Ex-Braskem Idesa

    1,618

 

    2,219

 

    2,250

 

-27%

-28%

in R$

     1,132

70%

     1,584

71%

     1,204

54%

-29%

-6%

in US$

        486

30%

        635

29%

     1,046

46%

-23%

-54%

(=) Net Debt (Ex-Braskem Idesa)

    6,031

 

    5,541

 

    6,139

 

9%

-2%

in R$

      (242)

-4%

        212

4%

     1,000

16%

-214%

-124%

in US$

     6,273

104%

     5,329

96%

     5,139

84%

18%

22%

                 

EBITDA (LTM)

    3,153

 

    3,052

 

    3,155

 

3%

0%

 

 

 

 

 

 

 

 

 

Net Debt/EBITDA

1.91x

 

1.82x

 

1.95x

 

5%

-2%

 

On December 31, 2017, the average debt term was 16 years, and considering only dollar-denominated debt, the average debt term was 17 years. The weighted average cost of the Company’s debt corresponded to exchange variation + 5.58%.

Braskem’s liquidity position of R$1,618 million is sufficient to cover the payment of all obligations maturing over the next 40 months.

 

 

23


 

 

 

Risk-rating agencies:

Braskem maintained investment grade ratings at Standard & Poor's (BBB-) and Fitch Ratings (BBB-) and credit ratings above Brazil’s sovereign risk at the three main rating agencies (S&P, Fitch and Moody’s). The reports are available on the Investor Relations website (http://www.braskem-ri.com.br/home-en).

 

CAPITAL EXPENDITURE25

Braskem’s units in Brazil, United States and Europe made investments in the aggregate amount of R$1,760 million (excluding investments in the new PP plant approved in the year), in line with the initial estimate for 2017.

Investments in the Brazilian units came in 3% below estimate, explained by the savings obtained on the acquisition of equipment, by the effects from the stronger BRL on expenses pegged to the USD and by the changes to the project execution timetable.  In U.S. dollar, because of the difference in actual Brazilian real appreciation compared to expectations for the local exchange rate for the year, expenditures were 6% above the initial estimate.

Considering the investment made in building the new polypropylene plant in the United States, of R$532 million, Braskem’s units aggregate investment in Brazil, United States and Europe was R$2,293million. 

 

Investments

 R$ million

 US$ million

 4Q17

2017

2017e

 4Q17

2017

2017e

Corporates (ex-Braskem Idesa)

 

 

 

 

Brazil

    539

90%

    1,576

90%

    1,619

92%

    166

90%

       492

90%

       464

92%

Operating

     459

85%

     1,337

85%

     1,368

85%

     141

85%

        418

85%

        392

85%

Strategic

       81

15%

        239

15%

        251

15%

       25

15%

          75

15%

          72

15%

USA and Europe

      61

10%

       184

10%

       142

8%

      19

10%

         57

10%

         41

8%

Operating

       54

88%

        133

72%

        123

87%

       16

88%

          41

72%

          35

87%

Strategic

        7

12%

          51

28%

          19

13%

        2

12%

          16

28%

            5

13%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

    600

100%

    1,760

100%

    1,761

100%

    185

100%

       550

100%

       505

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

New PP Plant USA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strategic

     168

100%

        532

100%

          -  

0%

       52

100%

        167

100%

          -  

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

    168

100%

       532

100%

          -  

0%

      52

100%

       167

100%

          -  

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Operating

     512

67%

     1,470

64%

     1,491

85%

     158

67%

        459

64%

        428

85%

Strategic

     256

33%

        823

36%

        270

15%

       79

33%

        258

36%

          77

15%

Total

    768

100%

    2,293

100%

    1,761

100%

    237

100%

       717

100%

       505

100%

 

In the same period, Braskem Idesa made investments totaling R$ 22 million, 58% below the amount forecast for the year as a result of the investment portfolio’ optimization, which resulted in the postponement/ cancellation of some projects.

 

Investments

 R$ million

 US$ million

 4Q17

2017

2017e

 4Q17

2017

2017e

Non-Corporates (Braskem Idesa)

 

 

 

 

Mexico

 

 

 

 

 

 

Operating

        9

100%

          22

100%

          53

100%

        3

100%

            7

100%

          15

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

        9

100%

         22

100%

         53

100%

        3

100%

           7

100%

         15

100%

 


25 Considers operating investment, maintenance shutdowns and acquisitions of spare parts.

24


 

 

 

Investments in 2018

Braskem plans to invest around R$2,872 million this year, of which R$1,047 million (US$320 million) is pegged to the U.S. dollar related to operating investments in the United States, Europe and Mexico units.

Of this amount, R$1,987 million will be allocated to maintenance, productivity, HES and operational efficiency, including the disbursements for the scheduled maintenance shutdown of the cracker in Triunfo, Rio Grande do Sul, which is scheduled for 1Q18. The remainder will be allocated to other strategic projects, such as the new PP plant in the United States (US$263 million).

 

Investments

2018e

R$ MM

US$ MM

Corporates (ex-Braskem Idesa)

 

 

 

 

Brazil

     1,824

64%

       556

64%

Operating

      1,804

63%

        550

63%

Strategic

           20

1%

            6

1%

USA and Europe

     1,047

36%

       320

36%

Operating

         183

6%

          56

6%

Strategic

         865

30%

        264

30%

Total

     2,872

100%

       876

100%

 

       

Total

 

 

 

 

Operating

      1,987

69%

        606

69%

Strategic

         885

31%

        270

31%

Total

     2,872

100%

       876

100%

 

 

Braskem Idesa plans to invest around US$42 million (R$137 million) in projects related to maintenance, productivity, HES and operating efficiency.

 

Investments

2018e

R$ MM

US$ MM

Non-Corporates (Braskem Idesa)

 

 

 

 

Mexico

 

 

 

 

Operating

         137

100%

          42

100%

Total

        137

 

         42

 

 

25


 

 

CASH FLOW26

In 2017, Braskem recorded free cash flow27 of R$2,460 million, 9% higher than in 2016. 

Excluding (i) R$608 million related to the acquisition of interests in Cetrel and Distribuidora de Água Camaçari; (ii) R$450 million received from the quantiQ divestment; and (iii) R$39.6 million in proceeds from the sale of land in the ABC region of Greater São Paulo, free cash flow in the year was R$2,579 million, 15% higher than in 2016. The increase is mainly explained by (i) the higher cash generation from operations; (ii) the 20% reduction in payment of IR/CSLL in the United States; and (iii) the 10% decline in investments, due to the completion of construction of the Braskem Idesa petrochemical complex.

 

VALUE DRIVERS

4 New PP plant in the United States

Consistent with Braskem’s strategy to diversify its feedstock profile and to expand geographically in the Americas, strengthening its leadership in polypropylene production in the United States, the Board of Directors approved, on June 21, 2017, the project to build a new 450 kton polypropylene plant at its site in La Porte, Texas. The project’s startup is slated for the second quarter of 2020.

With investment approved of up to US$675 million, in 2017, Braskem already invested US$172 million, related to expenditures with detailed engineering and equipment purchases. In 2017, the project advanced 9%: 67% of engineering and 43% of purchases were completed, and also site preparation for construction and assembly of temporary facilities was started. Another highlight was the contracting of Linde Group to lead the project’s EPC and the selection of UNIPOL® technology, from Grace.

4 Feedstock flexibility project in Bahia:

In 4Q17, the project to enable up to 15% of the ethylene produced by the cracker in Bahia state to use ethane as feedstock was completed. A series of modifications were made to the industrial site and to the Port of Aratu over the past 13 months to ensure the reliability, quality and safety of the operations. A total of R$380 million was invested in the technological adaptation of the Chemicals Unit at Camaçari, in the interconnection pipeline and in the adaptation of logistics infrastructure at the Aratu Port Terminal.

In November, the project reached an important milestone with the first vessel loaded with ethane docking at the Port of Aratu. On November 20, the product arrived in the furnaces for cracking, marking Braskem’s first flex operation at Camaçari.

 

SUSTAINABLE DEVELOPMENT

Braskem continues to focus on strengthening its contribution to sustainable development, mitigating risks and seeking shared value creation. Its efforts in this area are structured along three main fronts: (i) Increasingly sustainable Resources and Operations; increasingly sustainable feedstocks and operations, a portfolio of increasingly sustainable products, and solutions for a more sustainable life. The highlights in the quarter include:

 


26 Note that the cash flow analysis above does not consider the reclassification of “cash and cash equivalents” to “financial investments held for trade” related to financial investments in Brazilian federal government bonds (Brazilian floating-rate (SELIC) government bond - LFT) and floating-rate bonds (LFs) issued by

 financial institutions, whose original maturities exceed three months, with high liquidity and expected realization in the short term, in accordance with Note 5 to the Quarterly Financial Statements as of September 30, 2017.

27 Excludes: (i) payment under the Leniency Agreement; and (ii) reclassification of cash and cash equivalents to financial investments held for trade, as explained in the above note.


 

 

26

 

 

4   ISE Index: for the 13th year in a row, Braskem was included in the Corporate Sustainability Index (ISE) of the São Paulo Exchange (B3), which recognizes the best publicly traded corporations in Brazil in managing sustainable development.

4   CDP Climate: for the second straight year, Braskem was named an “A List” company in the Climate ranking of the Carbon Disclosure Project (CDP), which recognizes the best publicly traded corporations in managing greenhouse gas emissions. Braskem was the only Brazilian and Latin American company to achieve the top score in CDP's Climate ranking, consolidating its position as a reference in the management of GHG emissions and recognizing its contributions to the transition towards a low-carbon economy.

4   CDP Water: for the first time Braskem was named an "A List" company in the CDP’s Water ranking, which recognizes the best publicly traded corporations in managing the use of water resources. Braskem was the only Brazilian and Latin American company to achieve the top score in CDP's Water ranking, consolidating its position as a reference in the management of water resources and recognizing its contributions to the transition towards a more sustainable economy.

4   LCA Study: With Braskem’s support, the Hospital Technical Committee of the Brazilian Association of Nonwovens and Technical Fabric Manufacturers (ABINT) worked on the review of the standard ABNT NBR 16064, seeking not only to specify the materials to be used in producing the kits, but also to establish performance and quality criteria for these products.

4   Wecycle platform: In 2017, Braskem created the Recycling & Wecycle Platform area, which aims to consolidate actions and leverage initiatives, businesses and sustainable solutions related to the circular economy for plastics, especially recycling. Created in 2015, the Wecycle platform will continue to be used to foster businesses and initiatives that value plastic waste and the development of solutions, products and processes that involve plastic recycling, among which we highlight the following:

 

o    The packaging for the stain remover Tira Manchas Qualitá, developed in partnership with Pão de Açúcar, was one of the winning projects of the 11th edition of the Great Packaging Case Studies Award of the Brazilian Packaging Association (ABRE). 31 projects were recognized at the awards ceremony, which was attended by 500 professionals representing the packaging value chain.

o    The Wecycle resin supported the creation of a new bicycle concept, which is the result of 12 years of research and of investment of some R$5 million by Muzzicycle. The bicycle frame contains around three kilograms of plastic, of which 30% has been recycled.

o    Braskem joined forces with the companies Martiplast, a producer of housewares, and Leroy Merlin, one of the largest construction materials chains, to offer consumers organizing boxes made of 100%-recycled plastic (polypropylene), which was recycled from big bags previously used by the company to transport and move their resins.

 

27


 

 

INDICATORS

 

Indicators

4Q17

3Q17

4Q16

Chg.

Chg.

R$ million

(A)

(B)

(C)

(A)/(B)

(A)/(C)

Operating

 

 

 

 

 

EBITDA

          2,952

       2,746

          2,379

8%

24%

EBITDA Margin (%)

            23.4

         22.6

            19.8

1 p.p.

4 p.p.

SG&A/Net Revenue (%)

              6.9

          6.5

              6.6

0.4 p.p.

0.3 p.p.

 

 

 

 

 

 

Financial*

 

 

 

 

 

Net Debt

19,951

17,553

20,007

14%

0%

Net Debt/EBITDA LTM

1.99x

1.80x

1.82x

10%

9%

EBITDA/Interest Paid LTM

              6.1

          6.6

              8.5

-7%

-28%

 

 

 

 

 

 

Company Valuation

 

 

 

 

 

Share Price (Final)

42.9

41.3

33.3

4%

29%

Shares Outstanding (Million**

             796

          796

             796

0%

0%

Market Cap

        34,125

     32,836

        26,507

4%

29%

Net Debt

        26,558

     23,995

        27,023

11%

-2%

   Braskem

        19,951

     17,553

        20,007

14%

0%

   Braskem Idesa (75%)***

          6,607

       6,443

          7,016

3%

-6%

Enterprise Value (EV)

        60,684

     56,831

        53,529

7%

13%

EBITDA LTM

        11,554

     11,047

        11,386

5%

1%

   Braskem

        10,045

       9,737

        11,022

3%

-9%

   Braskem Idesa (75%)

          1,509

       1,310

             363

15%

315%

EV/EBITDA

5.3x

5.1x

4.7x

2%

12%

 

     

 

 

EPS

5.1x

1.5x

-0.5x

250%

-1092%

 

 

 

 

 

 

Dividend Yield (%)

              2.9

          3.0

              7.5

-4%

-61%

 

 

 

 

 

 

FCF Yield (%)****

              7.2

          8.3

              8.5

-13%

-15%

*Não considera Dívida Líquida, EBITDA e Juros Pagos da Braskem Idesa

**Não considera ações mantidas em tesouraria

***Considera US$ 133 milhões de aplicação financeira dada como garantia para cobrir a obrigação da Braskem ligada à constituição de conta reserva para o project finance da Braskem Idesa

****Não considera: (i) pagamento do acordo de leniência; e (ii) reclassificação de equivalentes de caixa para aplicações financeiras mantidas para negociação

*Does not consider net debt, EBITDA and interest paid of Braskem Idesa

**Does not consider shares held in treasury

***Considers US$133 million of market security given as collateral to cover Braskem's obligation related to the construction of a reserve account for Braskem Idesa's project finance

**** Does not consider: (i) leniency agreement paymen;t and (ii) reclassification of cash equivalents to financial investment held for trading

 

28


 

 

 

EXHIBITS LIST:

EXHIBIT I:

Consolidated Statement of Operations

30

EXHIBIT II:

Calculation of Consolidated EBITDA

30

EXHIBIT III:

Consolidated Balance Sheet

31

EXHIBIT IV:

Consolidated Cash Flow

33

EXHIBIT V:

Calculation of Net Cash Flow

34

EXHIBIT VI:

Statement of Operations - Deconsolidation Braskem Idesa

34

EXHIBIT VII:

Balance Sheet - Deconsolidation Braskem Idesa

35

EXHIBIT VIII:

Cash Flow - Deconsolidation Braskem Idesa

36

­EXHIBIT IX:

Production Volume

37

EXHIBIT X:

Sales Volume - Domestic Market

38

EXHIBIT XI:

Sales Volume - Export Market

38

EXHIBIT XII:

Consolidated Net Revenue

39

 

DISCLAIMER

This release contains forward-looking statements. These forward-looking statements are not solely historical data, but rather reflect the targets and expectations of Braskem’s management. Words such as "anticipate," "wish," "expect," "foresee," "intend," "plan," "predict," "project," "aim" and similar terms seek to identify statements that necessarily involve known and unknown risks. Braskem does not undertake any liability for transactions or investment decisions based on the information contained in this document.

 

 


29

 

 

 

Appendix I

Consolidated Statement of Operations

 

Income Statement (R$ million)

4Q17

3Q17

4Q16

Change

Change

2017

2016

Change

CONSOLIDATED

(A)

(B)

(C)

(A)/(B)

(A)/(C)

(A)

(B)

(A)/(B)

Gross Revenue

     15,058

     14,440

     14,012

4%

7%

     58,281

     55,378

5%

Net Revenue

     12,628

     12,162

     12,046

4%

5%

     49,261

     47,664

3%

Cost of Good Sold

       (9,257)

       (9,162)

       (8,992)

1%

3%

     (36,401)

     (34,986)

4%

Gross Profit

       3,371

       3,000

       3,054

12%

10%

     12,860

     12,678

1%

Selling Expenses

          (374)

          (381)

          (391)

-2%

-4%

       (1,460)

       (1,404)

4%

General and Administrative Expenses

          (440)

          (372)

          (363)

18%

21%

       (1,434)

       (1,287)

11%

Expenses with Research and Technology

           (56)

           (39)

           (42)

45%

34%

          (167)

          (162)

3%

Other Net Income (expenses)

          (304)

          (283)

       (3,502)

8%

-91%

          (479)

       (3,904)

-88%

Investment in Subsidiary and Associated Companies

             11

               6

               7

64%

54%

             40

             30

33%

Operating Profit Before Financial Result

       2,208

       1,932

     (1,240)

14%

-

       9,359

       5,951

57%

Net Financial Result

       (1,939)

          (940)

       (1,569)

106%

24%

       (3,942)

       (6,091)

-35%

Profit Before Tax and Social Contribution

          268

          991

     (2,809)

-73%

-

       5,417

        (140)

-

Income Tax / Social Contribution

             44

          (228)

           188

-

-76%

       (1,292)

          (616)

110%

Discontinued operations result

             -  

             -  

               4

0%

-

               9

             27

-67%

Net Profit (Loss)

          313

          764

     (2,617)

-59%

-

       4,133

        (729)

-

Attributable to

               

Company's shareholders

           386

           799

       (2,531)

-52%

-

        4,083

          (411)

-

Non-controlling interest in Braskem Idesa

           (73)

           (36)

           (86)

106%

-15%

             50

          (318)

-

 

 

ANNEX II

Calculation of Consolidated EBITDA

 

EBITDA Statement R$ million

4Q17

3Q17

4Q16

Change

Change

2017

2016

Change

CONSOLIDATED

(A)

(B)

(C)

(A)/(B)

(A)/(C)

(A)

(B)

(A)/(B)

Net Profit

          313

          764

     (2,617)

-59%

-

       4,133

        (729)

-

Income Tax / Social Contribution

           (44)

           228

          (188)

-

-76%

        1,292

           616

110%

Financial Result

        1,939

           940

        1,569

106%

24%

        3,942

        6,091

-35%

Depreciation, amortization and depletion

           760

           745

           727

2%

5%

        2,929

        2,678

9%

Cost

           718

           697

           670

3%

7%

        2,766

        2,519

10%

Expenses

             42

             47

             57

-12%

-27%

           163

           159

2%

Basic EBITDA

       2,967

       2,677

        (509)

11%

-

     12,297

       8,656

42%

Provisions for the impairment of long-lived assets (i)

             (4)

             75

             (1)

-

639%

             77

           (23)

-

 Result with discontinued operations (ii)

             -  

             -  

               4

0%

-

             -  

             11

-

Results from equity investments (iii)

           (11)

             (6)

             (7)

64%

54%

           (40)

           (30)

33%

Adjusted EBITDA

       2,952

       2,746

       2,379

8%

24%

     12,334

     11,507

7%

EBITDA Margin

23.4%

22.6%

19.8%

1 p.p.

4 p.p.

25.0%

24.1%

1 p.p.

Adjusted EBITDA US$ million

           911

           868

           727

5%

25%

        3,872

        3,304

17%

 

 

(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 recorded on the statement of operations.

(ii)  Corresponds to the results of quantiQ and IQAG.

(iii) Corresponds to results from equity investments in associated companies and joint ventures.

 

 

30


 

 

ANNEX III

Consolidated Balance Sheet

 

 

ASSETS (R$ million)

Dec-17

Dec-16

Change

(A)

(B)

(A)/(B)

 

 

 

 

Current

          17,992

          16,426

10%

Cash and Cash Equivalents

3,775

6,702

-44%

Marketable Securities/Held for Trading

2,303

1,190

93%

Accounts Receivable

3,281

1,634

101%

Inventories

6,847

5,238

31%

Recoverable Taxes

1,349

1,356

0%

Dividends and Interest on Equity

11

15

-28%

Prepaid Expenses

134

102

32%

Related parties

0

0

n.a.

Derivatives operations

4

8

-55%

Other Assets

288

181

59%

Assets held for sale

                  -  

               360

n.a.

Non Current

          35,349

          35,566

-1%

Marketable Securities/ Held-to-Maturity

10

0

n.a.

Accounts Receivable

37

70

-47%

Advances to suppliers

46

62

-24%

Taxes Recoverable

1,024

1,088

-6%

Deferred Income Tax and Social Contribution

1,166

1,653

-29%

Compulsory Deposits and Escrow Accounts

290

233

24%

Related parties

0

0

n.a.

Insurance claims

40

51

-21%

Derivatives operations

33

29

11%

Other Assets

113

141

-20%

Investments

101

92

10%

Property, Plant and Equipament

29,762

29,337

1%

Intangible Assets

2,727

2,809

-3%

Total Assets

          53,342

          52,352

2%

 

 

31


 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY (R$ million)

Dec-17

Dec-16

Change

(A)

(B)

(A)/(B)

 

 

 

 

Current

          19,138

          23,568

-19%

Suppliers

5,266

6,545

-20%

Financing*

1,185

2,594

-54%

Braskem Idesa Financing*

9,691

10,438

-7%

Derivatives operations

7

29

-76%

Salary and Payroll Charges

631

562

12%

Taxes Payable

1,261

1,154

9%

Dividends

4

3

25%

Advances from Customers

353

203

74%

Leniency Agreement

257

1,354

-81%

Sundry Provisions

179

113

58%

Accounts payable to related parties

0

0

n.a.

Other payables

277

476

-42%

Debentures

27

0

n.a.

Non Current Liabilities Held for Sale

                  -  

                 95

-100%

Non Current

          28,513

          27,063

5%

Suppliers

260

202

29%

Financing*

22,177

20,737

7%

Debentures

286

0

n.a.

Derivatives operations

0

861

-100%

Taxes Payable

53

24

119%

Accounts payable to related parties

0

0

n.a.

Loan to non-controlling shareholders of Braskem Idesa

1,757

1,621

8%

Deferred Income Tax and Social Contribution

940

511

84%

Post-employment Benefit

194

162

20%

Provision for losses on subsidiaries

0

0

n.a.

Advances from Customers

0

163

-100%

Contingencies

1,093

985

11%

Leniency Agreement

1,372

1,499

-8%

Sundry Provisions

235

206

14%

Other payables

148

93

60%

Shareholders' Equity

            5,690

            1,721

231%

Capital

8,043

8,043

0%

Capital Reserve

232

232

0%

Profit Reserves

3,946

835

373%


Equity Valuation Adjustments**

-5,654

-6,322

-11%

Treasury Shares

-50

-50

0%

Retained Earnings

0

0

n.a.

Company's Shareholders

            6,518

            2,739

138%

Non Controlling Interest on Braskem Idesa

               (828)

            (1,018)

-19%

Total Liabilities and Shareholders' Equity

          53,342

          52,352

2%

 

* On the base date of the quarterly financial statements for the period ended September 30, 2017, Braskem was in non-remediated default with project finance contractual obligations. As a result, the entire balance of non-current liabilities, in the amount of R$8,700 million, was reclassified to current liabilities, in accordance with CPC 26 and its corresponding accounting standard IAS 1 (Presentation of Financial Statements). In accordance with the aforementioned accounting standards, reclassification is required in situations in which the breach of certain contractual obligations entitles creditors to request the prepayment of obligations in the short term. In this context, note that none of the creditors requested said prepayment of obligations and that Braskem Idesa has been settling its debt service obligations in accordance with their original maturity schedule. Furthermore, Braskem Idesa has been negotiating approval of such breaches with its creditors in order to reclassify the entire amount reclassified from current liabilities back to non-current liabilities.

** Includes the exchange variation of financial liabilities designated as hedge accounting.

 

 

32


 

 

 

EXHIBIT IV

Consolidated Cash Flow28

 

Consolidated Cash Flow

4Q17

3Q17

4Q16

Change

Change

2017

2016

Change

R$ million

(A)

(B)

(C)

(A)/(B)

(A)/(C)

(D)

(E)

(D)/(E)

                 

 Profit (Loss) Before Income Tax and Social Contribution and the result of discontinued operations

        268

        991

   (2,803)

-73%

n.a.

      5,417

        (99)

n.a.

Adjust for Net Income Restatement

               

 Depreciation, Amortization and Depletion

         760

         745

         728

2%

4%

       2,929

      2,683

9%

 Equity Result

         (11)

           (6)

           (7)

64%

54%

          (40)

         (30)

33%

 Interest, Monetary and Exchange Variation, Net

      2,124

         281

      1,028

655%

107%

       3,698

      3,026

22%

Leniency Agreement

           -  

           -  

      2,853

n.a.

-100%

           -  

      2,853

-100%

Gain on sale of investment in subsidiary

           -  

           -  

           -  

n.a.

n.a.

        (277)

           -  

n.a.

Provision for losses and write-offs of long-lived assets

          97

          90

          24

8%

298%

         213

          41

420%

                 

Cash Generation before Working Capital

     3,239

     2,102

     1,824

54%

78%

    11,940

     8,474

41%

                 

Operating Working Capital Variation

          -  

          -  

          -  

n.a.

n.a.

           -  

          -  

n.a.

Financial investments held for trading

           -  

           -  

           -  

n.a.

n.a.

           -  

       (428)

-100%

 Account Receivable from Clients

       (493)

       (285)

         371

73%

n.a.

     (1,598)

      1,008

n.a.

 Inventories

    (1,064)

         170

         296

n.a.

n.a.

     (1,558)

         862

n.a.

 Recoverable Taxes

         214

          74

          65

191%

229%

         471

      1,058

-55%

 Advanced Expenses

          57

          15

          38

282%

50%

          (31)

          64

n.a.

 Other Account Receivables

            9

          63

         421

-86%

-98%

           26

         354

-93%

 Suppliers

          32

       (122)

    (1,242)

n.a.

n.a.

     (1,436)

    (4,255)

-66%

 Taxes Payable

       (209)

         168

       (446)

n.a.

-53%

        (218)

       (292)

-26%

 Advances from Customers

         (11)

          69

         (39)

n.a.

-71%

          (14)

         217

-106%

Leniency Agreement

           -  

       (736)

           -  

-100%

n.a.

     (1,344)

           -  

n.a.

 Other Provisions

         146

          51

         441

186%

-67%

         195

         558

-65%

 Other Account Payables

         251

          32

          57

688%

344%

           56

          38

44%

                 

Operating Cash Flow

     2,171

     1,601

     1,786

36%

22%

      6,490

     7,660

-15%

                 

 Financial investments (includs LFT's and LF's

          64

         413

         254

-85%

-75%

        (953)

       (222)

330%

                 

Operating Cash Flow and

     2,235

     2,014

     2,040

11%

10%

      5,536

     7,438

-26%

                 

Interest Paid

       (661)

       (468)

       (463)

41%

43%

     (2,154)

    (1,827)

18%

Income Tax and Social Contribution

       (244)

         (74)

       (306)

228%

-20%

        (921)

    (1,153)

-20%

                 

Net Cash provided by operating activities

     1,330

     1,472

     1,271

-10%

5%

      2,462

     4,458

-45%

                 

Proceeds from the sale of fixed assets

          38

            0

            0

n.a.

n.a.

           40

            1

6932%

Proceeds from the sale of investments

           -  

           -  

           -  

n.a.

n.a.

         450

           -  

n.a.

Additions to investment in subsidiaries

       (608)

           -  

           -  

n.a.

n.a.

        (608)

           -  

n.a.

Additions to Fixed and Intangible Assets

       (758)

       (760)

       (834)

0%

-9%

     (2,273)

    (2,587)

-12%

Option Premium in the US dollar sale

           (2)

           (3)

           -  

-18%

n.a.

          (15)

           (5)

202%

Financial Assets Held to Maturity

           -  

           -  

           -  

n.a.

n.a.

           -  

          38

-100%

                 

Cash used in Investing Activities

   (1,330)

      (763)

      (833)

74%

60%

    (2,406)

   (2,552)

-6%

                 

Short-Term and Long-Term Debt

          -  

          -  

          -  

n.a.

n.a.

           -  

          -  

n.a.

Obtained Borrowings

      6,023

         982

      1,286

513%

368%

       8,492

      4,108

107%

Payment of Borrowings

    (5,471)

    (1,795)

    (1,146)

205%

377%

     (8,779)

    (4,902)

79%

Derivative Transactions- payment

       (810)

           -  

           -  

n.a.

n.a.

        (810)

           -  

n.a.

Braskem Idesa Debt

           -  

           -  

           -  

n.a.

n.a.

           -  

           -  

n.a.

Obtained Borrowings

           -  

           -  

           -  

n.a.

n.a.

         188

         504

-63%

Payment of Borrowings

       (370)

       (262)

         (99)

41%

273%

     (1,081)

       (469)

130%

Dividends

       (999)

           (0)

       (999)

n.a.

0%

        (999)

    (1,998)

-50%

Capital Increase of non-controlling interest

           -  

           -  

           -  

n.a.

n.a.

           -  

           -  

n.a.

Repurchase of treasury shares

           -  

           -  

           -  

n.a.

n.a.

           -  

           -  

n.a.

                 

Cash used in Financing Activities

   (1,626)

   (1,075)

      (959)

51%

70%

    (2,988)

   (2,757)

8%

                 

Exchange Variation on Cash of Foreign Subsidiaries and Jointly Controlled Companies

         (51)

         107

          60

n.a.

n.a.

             6

         587

-99%

                 

Cash and Cash Equivalents Generation (Aplication)

   (1,677)

      (259)

      (461)

548%

264%

    (2,927)

      (265)

1003%

                 

Represented by

               

Cash and Cash Equivalents at The Beginning of The Period

      5,452

      5,711

      7,239

-5%

-25%

       6,702

      7,043

-5%

Cash and Cash Equivalents at The End of The Period

      3,775

      5,452

      6,778

-31%

-44%

       3,775

      6,778

-44%

                 

Increase (Decrease) in Cash and Cash Equivalents

   (1,677)

      (259)

      (461)

548%

264%

    (2,927)

      (265)

1003%

 


28 The effects from reclassifications between the lines Financial Investments Held for Trade and Cash and Cash Equivalents were: (i) reduction in financial investments of R$167 million in 1Q17; (ii) increase in financial investments of R$1,648 million in 2Q17; (iii) reduction in financial investments of R$378 million in 3Q17; and (iv) reduction of financial investments by R$ 42 million in 4Q17

33


 

 

 

EXHIBIT V

Calculation of Free Cash Flow

 

Free Cash Flow Generation  4Q17  3Q17  4Q16  Chg.  Chg.  2017  2016  Chg. 
R$ million  (A)  (B)  (C)  (A)/(B) (A)/(C)   (D)  (E)  (D)/(E) 
Net Cash provided by operating activities  1,330  1,472  1,271  -10%  5%  2,462  4,458  -45% 
(-) Cash used in Investing Activities  1,330  763  833  74%  60%  2,406  2,552  -6% 
(+) Leniency Agreement  -  736  -  n.a.  n.a.  1,344  -  n.a. 
(+) Reclassification of cash and cash equivalents  (42)  (378)  (223)  -89%  -81%  1,061  342  210% 
(=) Free Cash Flow Generation  (43)  1,068  215  -104%  -120%  2,460  2,247  9% 

 

 

 

 

EXHIBIT VI

Statement of Operations – Deconsolidation Braskem Idesa

 

  Consolidated
Ex Braskem Idesa 
Braskem Idesa
Consolidated 
       
Income Statement (R$ million)  Eliminations  Consolidated 
  2017  2016  2017  2016  2017  2016  2017  2016 
Net Revenue  46,207  46,343  3,657  1,495  (603)  (174)  49,261  47,664 
Cost of Good Sold  (34,899)  (34,041)  (2,125)  (1,109)  623  164  (36,401)  (34,986) 
Gross Profit  11,308  12,302  1,532  386  20  (10)  12,860  12,678 
Selling and Distribution Expenses  (1,288)  (1,287)  (172)  (117)  -  -  (1,460)  (1,404) 
General and Administrative Expenses  (1,336)  (1,201)  (122)  (124)  24  40  (1,434)  (1,286) 
Research and Development Expenses  (167)  (162)  -  -  -  -  (167)  (162) 
Other Net Income (expenses)  192  (923)  -  -  (152)  953  40  30 
Investment in Subsidiary and Associated Companies  (512)  (3,914)  32  8  -  -  (479)  (3,906) 
Operating Profit Before Financial Result  8,197  4,816  1,270  153  (108)  983  9,359  5,951 
Net Financial Result  (3,131)  (4,215)  (817)  (1,780)  6  (96)  (3,942)  (6,091) 
Financial Expenses  (3,045)  (3,054)  (974)  (689)  271  172  (3,747)  (3,571) 
Financial Revenues  850  955  25  3  (271)  (268)  604  690 
Exchange Variation, net  (937)  (2,116)  132  (1,094)  6  -  (799)  (3,210) 
Profit Before Tax and Social Contribution  5,066  601  453  (1,627)  (102)  887  5,417  (140) 
Income Tax / Social Contribution  (992)  (1,039)  (300)  423  -  -  (1,292)  (616) 
Discontinued operations result  9  27  -  -  -  -  9  27 
Net Profit (Loss)  4,083  (411)  153  (1,204)  (102)  887  4,133  (729) 

 

34


 

 

EXHIBIT VII

Balance Sheet - Deconsolidation Braskem Idesa

 

ASSETS (R$ million)

Consolidated

Braskem Idesa

 Eliminations

 Consolidated

 Ex Braskem Idesa

 Consolidated

Dec-17

Dec-16

Dec-17

Dec-16

Dec-17

Dec-16

Dec-17

Dec-16

                 

Current

    16,771

    15,529

      1,370

         967

       (148)

        (69)

    17,992

    16,426

Cash and Cash Equivalents

       3,480

       6,500

         295

         202

            -  

           -  

       3,775

       6,702

Marketable Securities/Held for Trading

       2,303

       1,190

           -  

           -  

            -  

           -  

       2,303

       1,190

Accounts Receivable

       2,809

       1,456

         621

         247

        (148)

         (69)

       3,281

       1,634

Inventories

       6,500

       4,863

         347

         375

            -  

           -  

       6,847

       5,238

Recoverable Taxes

       1,286

       1,241

           63

         115

            -  

           -  

       1,349

       1,356

Other receivables

         393

         279

           45

           27

            -  

           -  

         437

         306

Assets held for sale

           -  

         360

           -  

           -  

           -  

          -  

           -  

         360

Non Current

    28,598

    28,099

    12,450

    12,806

    (5,699)

   (5,340)

    35,349

    35,566

Taxes Recoverable

       1,024

       1,088

             0

             0

            -  

           -  

       1,024

       1,088

Deferred Income Tax and Social Contribution

         129

         190

       1,036

       1,464

            -  

           -  

       1,166

       1,653

Related parties

       5,052

       4,691

           -  

           -  

     (5,052)

    (4,691)

           -  

           -  

Other receivables

         638

         649

           33

           30

            -  

           -  

         671

         678

Property, Plant and Equipament

     19,180

     18,814

     11,228

     11,171

        (647)

       (649)

     29,762

     29,337

Intangible Assets

       2,576

       2,668

         152

         141

            -  

           -  

       2,727

       2,809

Total Assets

    45,369

    43,987

    13,819

    13,773

    (5,847)

   (5,409)

    53,342

    52,352

                 

LIABILITIES AND SHAREHOLDERS' EQUITY (R$ million)

Consolidated

Braskem Idesa

 Eliminations

 Consolidated

 Ex Braskem Idesa

 Consolidated

Dec-17

Dec-16

Dec-17

Dec-16

Dec-17

Dec-16

Dec-17

Dec-16

                 

Current

      9,343

    12,664

      9,943

    10,878

       (148)

        (69)

    19,138

    23,473

Suppliers

       5,254

       6,335

         160

         279

        (148)

         (69)

       5,266

       6,545

Financing

       1,185

       2,594

           -  

           -  

            -  

           -  

       1,185

       2,594

Braskem Idesa Financing

           -  

           -  

       9,691

     10,438

            -  

           -  

       9,691

     10,438

Debentures

           27

           -  

           -  

           -  

            -  

           -  

           27

           -  

Operações com derivativos

           -  

           -  

             7

           29

            -  

           -  

             7

           29

Salary and Payroll Charges

         610

         540

           21

           22

            -  

           -  

         631

         562

Taxes Payable

       1,248

       1,141

           13

           13

            -  

           -  

       1,261

       1,154

Other payables

       1,019

       2,053

           51

           97

            -  

           -  

       1,070

       2,150

Non Current Liabilities Held for Sale

           -  

           95

           -  

           -  

            -  

           -  

           -  

           95

Non Current

    29,439

    28,489

      6,830

      6,326

    (7,756)

   (7,753)

    28,513

    27,063

Financing

     22,177

     20,737

           -  

           -  

            -  

           -  

     22,177

     20,737

Accounts payable to related parties

           -  

           -  

       5,066

       4,699

     (5,066)

    (4,699)

           -  

           -  

Loan to non-controlling shareholders of Braskem Idesa

           -  

           -  

       1,757

       1,621

            -  

           -  

       1,757

       1,621

Provision for losses on subsidiaries

       2,690

       3,054

           -  

           -  

     (2,690)

    (3,054)

           -  

           -  

Other payables

       4,572

       4,699

             8

             7

            -  

           -  

       4,580

       4,706

Shareholders' Equity

      6,587

      2,739

    (2,954)

    (3,431)

      2,057

     2,413

      5,690

      1,721

Attributable to Company's Shareholders

       6,518

       2,739

     (2,954)

     (3,431)

       2,954

      3,431

       6,518

       2,739

Non Controlling Interest on Braskem Idesa

           69

           -  

           -  

           -  

        (897)

    (1,018)

        (828)

     (1,018)

Total Liabilities and Shareholders' Equity

    45,369

    43,987

    13,819

    13,773

    (5,847)

   (5,409)

    53,342

    52,352

 

 

 

 

35


 

 

EXHIBIT VIII

Cash Flow - Deconsolidation Braskem Idesa

 

Consolidated Cash Flow (R$ million)

Consolidated

Braskem Idesa

 Eliminations

 Consolidated

 Ex Braskem Idesa

 Consolidated

2017

2016

2017

2016

2017

2016

2017

2016

 Profit (Loss) Before Income Tax and Social Contribution and the result of discontinued operations

     5,066

        642

        453

   (1,627)

      (102)

        887

     5,417

        (99)

Adjust for Net Income (Loss) Restatement

     4,875

     8,049

     1,545

     1,561

        102

   (1,037)

     6,523

     8,573

 Depreciation, Amortization and Depletion

      2,230

      2,381

         742

         332

         (44)

         (30)

      2,929

      2,683

 Equity Result

        (192)

         923

           -  

           -  

         152

        (953)

         (40)

         (30)

 Interest, Monetary and Exchange Variation, Net

      2,901

      1,851

         803

      1,229

           (6)

         (54)

      3,698

      3,026

Gain on sale of investment in subsidiary

        (277)

           -  

           -  

           -  

           -  

           -  

        (277)

           -  

Leniency Agreement

           -  

      2,853

           -  

           -  

           -  

           -  

           -  

      2,853

Provision for losses and write-offs of long-lived assets

         213

           41

             0

             0

           -  

           -  

         213

           41

Operating Working Capital Variation

   (5,063)

   (1,094)

      (387)

        279

           -  

           -  

   (5,450)

      (815)

Financial investments held for trading

           -  

        (428)

           -  

           -  

           -  

           -  

           -  

        (428)

 Account Receivable from Clients

     (1,304)

      1,083

        (373)

        (127)

           79

           51

     (1,598)

      1,008

 Inventories

     (1,595)

         967

           37

        (105)

           -  

           -  

     (1,558)

         862

 Recoverable Taxes

         418

         977

           53

           81

           -  

           -  

         471

      1,058

 Advanced Expenses

         (22)

           64

           (9)

           -  

           -  

           -  

         (31)

           64

 Other Account Receivables

           35

         333

           (9)

           21

           -  

           -  

           26

         354

 Suppliers

     (1,238)

     (4,053)

        (119)

        (150)

         (79)

         (51)

     (1,436)

     (4,255)

 Taxes Payable

        (135)

        (674)

         (83)

         382

           -  

           -  

        (218)

        (292)

 Advances from Customers

           (3)

         207

         (10)

           10

           -  

           -  

         (14)

         217

Leniency Agreement

     (1,344)

           -  

           -  

           -  

           -  

           -  

     (1,344)

           -  

 Other Account Payables

         124

         431

         126

         166

           -  

           -  

         250

         597

Operating Cash Flow

     4,878

     7,597

     1,612

        213

           -  

      (150)

     6,490

     7,660

 Financial investments (includs LFT's and LF's

        (953)

        (222)

           -  

           -  

           -  

           -  

        (953)

        (222)

Operating Cash Flow and

     3,925

     7,375

     1,612

        213

           -  

      (150)

     5,536

     7,438

Interest Paid

     (1,649)

     (1,612)

        (505)

        (215)

           -  

           -  

     (2,154)

     (1,827)

Income Tax and Social Contribution

        (919)

     (1,153)

           (1)

           -  

           -  

           -  

        (921)

     (1,153)

Net Cash provided by operating activities

     1,356

     4,611

     1,105

          (2)

           -  

      (150)

     2,462

     4,458

Proceeds from the sale of fixed assets

           40

             1

           -  

           -  

           -  

           -  

           40

             1

Proceeds from the sale of investments

         450

           -  

           -  

           -  

           -  

           -  

         450

           -  

Additions to investment in subsidiaries

        (608)

           -  

           -  

           -  

           -  

           -  

        (608)

           -  

Additions to Fixed and Intangible Assets

     (2,186)

     (1,845)

         (88)

        (892)

           -  

         150

     (2,273)

     (2,587)

Other investments

         (15)

           33

           -  

           -  

           -  

           -  

         (15)

           33

Cash used in Investing Activities

   (2,319)

   (1,810)

        (88)

      (892)

           -  

        150

   (2,406)

   (2,552)

Financing

               

Obtained Borrowings

      8,492

      4,108

           -  

           -  

           -  

           -  

      8,492

      4,108

Payment of Borrowings

     (8,779)

     (4,902)

           -  

           -  

           -  

           -  

     (8,779)

     (4,902)

Operations with derivatives - payments

        (810)

           -  

           -  

           -  

           -  

           -  

        (810)

           -  

Project finance

           -  

           -  

           -  

           -  

           -  

           -  

           -  

           -  

Obtained Borrowings

           -  

           -  

         188

         504

           -  

           -  

         188

         504

Payment of Borrowings

           -  

           -  

     (1,081)

        (469)

           -  

           -  

     (1,081)

        (469)

Related Parties

           -  

           -  

           -  

           -  

           -  

           -  

           -  

           -  

Obtained (Payment of) Borrowings

           21

        (882)

         (21)

         882

           -  

           -  

           -  

           -  

Dividends Paid

        (999)

     (1,998)

           -  

           -  

           -  

           -  

        (999)

     (1,998)

Cash used in Financing Activities

   (2,075)

   (3,674)

      (913)

        917

           -  

           -  

   (2,988)

   (2,757)

Exchange Variation on Cash of Foreign Subsidiaries and Jointly Controlled Companies

           18

         542

         (11)

           45

           -  

           -  

             6

         587

Cash and Cash Equivalents Generation (Aplication)

   (3,020)

      (332)

          93

          67

           -  

           -  

   (2,927)

      (265)

Represented by

               

Cash and Cash Equivalents at The Beginning of The Period

      6,500

      6,909

         202

         135

           -  

           -  

      6,702

      7,043

Cash and Cash Equivalents at The End of The Period

      3,480

      6,576

         295

         202

           -  

           -  

      3,775

      6,778

Increase (Decrease) in Cash and Cash Equivalents

   (3,020)

      (332)

          93

          67

           -  

           -  

   (2,927)

      (265)

 

 

36


 

 

EXHIBIT IX

Production Volume

 

PRODUCTION CONSOLIDATED

tons

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

                 

 

     1,037,965

    1,086,706

    1,115,407

    1,060,862

    1,109,350

   1,096,358

   1,101,207

    1,124,071

 

         629,737

        699,663

        711,879

         667,187

         672,078

        679,176

        670,673

        697,318

PP

         408,228

        387,043

        403,527

         393,676

         437,272

        417,182

        430,534

        426,753

                 

Vinyls

        373,158

       411,444

       445,919

       452,380

       430,828

      381,730

      437,128

       437,157

PVC

         125,906

        148,604

        156,655

         162,873

         158,347

        138,489

        157,052

        157,329

Caustic Soda

         105,727

        102,071

        119,827

         113,282

         101,637

         88,637

        108,807

        109,899

MVC

         129,365

        149,143

        157,634

         163,650

         158,896

        141,456

        158,259

        159,462

Chlorine

           12,160

          11,625

          11,804

          12,574

           11,948

         13,147

          13,011

          10,467

                 

Chemicals

     2,077,406

    2,116,126

    2,156,415

    2,134,529

    2,175,049

   2,117,826

   2,186,008

    2,177,113

Ethylene

         831,422

        880,739

        903,308

         844,392

         879,795

        870,521

        865,570

        902,772

Propylene

         341,327

        367,036

        361,837

         330,266

         365,233

        352,654

        367,016

        360,984

High Purity Propane

             1,021

               692

               878

               744

               931

              875

           1,096

               998

Butadiene

         100,802

        106,708

        109,156

          95,021

         107,607

        106,067

        107,782

        108,576

Paraxylene

           51,230

          50,420

          48,516

          46,027

           45,434

         33,786

          50,546

          49,472

Benzene

         165,845

        170,399

        187,020

         166,644

         188,466

        174,194

        185,210

        170,031

Toluene

           32,666

          27,916

          32,449

          21,357

           17,129

         27,504

          21,821

          13,591

Orthoxylene

           13,987

          12,329

          15,084

          14,018

           14,476

           9,732

          16,011

          12,489

Isoprene

             3,912

            3,309

            5,433

            2,889

            5,391

           4,650

           4,015

            5,643

Butene 1

           11,746

          16,879

          19,039

          19,039

           19,039

         19,039

          19,072

          17,484

Dicyclopentadien

             4,702

            3,544

            7,872

            7,872

            7,872

           7,872

           6,452

            6,452

Hydrogen

             1,015

            1,490

            1,791

            1,372

            1,565

           1,303

           1,357

            1,872

ETBE/ MTBE

           74,978

          91,146

          82,927

          66,650

           87,695

         87,347

          80,867

          80,814

Aromatic Chain (RAP)

           30,898

          35,864

          32,183

          34,122

           33,299

         30,789

          36,184

          34,030

Piperylene

             5,111

            4,614

            7,400

            3,675

            6,792

           6,130

           5,221

            5,991

Gasoil

           16,239

            9,782

            1,633

          23,739

           10,207

           7,776

           6,619

          12,608

C4 Heavies

             7,084

            9,909

            7,820

            6,223

            9,107

         10,404

          11,367

            9,714

BTE Fuel Oil

           21,819

          21,206

          17,647

          14,934

           14,624

         19,605

          25,227

          28,073

Unilene

             1,708

            3,600

            3,365

            3,243

            3,286

           3,499

           4,175

            3,662

PIB

             4,889

            4,043

            5,692

            6,605

            5,039

           5,853

           6,651

            4,138

Mixed Xylenes

           16,472

          13,601

          16,239

          11,867

           11,807

         16,778

          10,244

            8,316

AB9 Solvent

             6,663

            3,284

          12,257

            9,438

            7,803

           8,620

          10,236

          10,020

Coperaf1

             1,632

            5,842

                77

            2,941

            3,308

           4,808

           5,645

            1,710

Aguarras

             5,313

            4,062

            6,592

            8,677

            6,985

           4,274

           6,323

            6,155

Fuel

         245,558

        213,330

        204,582

         320,719

         265,024

        235,798

        262,085

        245,672

Aromatic C7C8

             5,867

               391

             (393)

               333

              (375)

           2,214

           2,215

            3,350

Cumene

           56,553

          36,935

          45,935

          54,513

           42,059

         50,611

          52,714

          52,817

Nonene

             5,181

            4,142

            6,206

            5,498

            4,995

           4,613

           6,324

            6,075

Tetramer

             4,759

            4,249

            6,425

            3,696

            3,297

           3,416

           4,717

            5,065

Other Basic Petrochemicals

             7,007

            8,666

            7,445

            8,015

            7,159

           7,094

           3,247

            8,540

                 

United States and Europe

        499,233

       513,415

       512,361

       482,170

       525,867

      519,792

      521,746

       545,905

PP

         499,233

        513,415

        512,361

         482,170

         525,867

        519,792

        521,746

        545,905

                 

Mexico

                 -  

         83,538

       166,453

       193,189

       249,925

      217,374

      229,504

       224,882

PE

                 -  

          83,538

        166,453

         193,189

         249,925

        217,374

        229,504

        224,882

 

 

 

37


 

 

EXHIBIT X

Sales Volume - Domestic Market – Main Products

 

Sales Volume (Brazilian Market)

tons

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

                 

Polyolefins

        660,692

       712,674

       751,350

       686,421

       705,260

      722,275

      787,621

       745,237

PE's*

         391,425

        436,529

        457,951

         419,557

         420,438

        441,775

        477,676

        455,557

PP

         269,267

        276,145

        293,399

         266,864

         284,822

        280,500

        309,945

        289,680

                 

Vinyls

        229,349

       245,825

       250,697

       239,050

       244,973

      206,396

      232,942

       243,374

PVC

         119,698

        132,913

        138,327

         137,377

         139,017

        112,263

        127,193

        147,210

Caustic Soda

         109,652

        112,912

        112,370

         101,673

         105,956

         94,133

        105,748

          96,163

                 

Main Chemicals

        706,507

       562,465

       676,144

       673,028

       689,697

      693,218

      727,748

       727,467

Ethylene

         127,181

        125,343

        143,440

         115,902

         127,753

        131,467

        133,786

        130,633

Propylene

           60,747

          72,419

          83,109

          75,036

           85,226

         75,743

        104,778

          94,647

Butadiene

           49,832

          50,492

          50,940

          47,187

           44,428

         46,300

          48,520

          44,601

Benzene

         117,216

        120,119

        125,794

         111,411

           97,455

        117,036

        110,394

        118,842

Toluene

           11,952

          10,521

          10,398

            9,647

           11,129

         11,913

           8,731

            9,209

Paraxylene

           38,185

          41,726

          32,327

          47,663

           44,066

         27,602

          44,616

          43,594

Cumene

           49,530

          41,158

          51,352

          52,431

           41,352

         52,862

          52,409

          53,169

Gasoline

         251,862

        100,689

        178,785

         213,752

         238,288

        230,294

        224,513

        232,772

Considers Green PE and from 2017 does not consider UTEC sales

 

EXHIBIT XI

Sales Volume - Export Market – Main Products

 

Sales Volume (Brazilian Exports / International Business)

tons

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

                 

Polyolefins

        380,807

       426,395

       407,254

       376,032

       390,871

      358,157

      359,168

       330,130

PE's*

         244,227

        275,322

        270,825

         233,859

         240,530

        238,690

        222,992

        213,903

PP

         136,580

        151,072

        136,429

         142,174

         150,341

        119,467

        136,175

        116,227

                 

Vinyls

          34,256

         27,145

         16,483

         44,872

         34,741

          9,280

        37,078

           8,452

PVC

           34,256

          27,145

          16,483

          39,035

           27,198

           9,280

          37,078

            8,452

Caustic Soda

                 -  

                 -  

                 -  

            5,837

            7,543

                -  

                -  

                 -  

                 

Main Chemicals

        176,317

       306,982

       220,068

       195,527

       232,794

      190,836

      200,127

       200,822

Ethylene

           23,784

          19,637

          12,856

            7,917

           34,500

         11,947

          18,397

          36,083

Propylene

           19,314

          28,340

          24,157

            7,501

            7,828

         21,489

           9,210

            4,601

Butadiene

           52,907

          49,613

          58,980

          52,167

           57,498

         60,981

          57,278

          65,262

Benzene

           57,771

          37,211

          63,440

          78,266

           99,193

         63,105

          75,219

          64,671

Toluene

           17,291

          19,209

          18,972

          17,699

            6,209

         17,371

           9,521

            8,598

Paraxylene

             5,250

          16,396

          15,993

                 -  

                 -  

           5,246

           4,995

            7,349

Cumene

                 -  

                 -  

                 -  

                 -  

                 -  

                -  

                -  

                 -  

Gasoline

                 -  

        136,575

          25,670

          31,977

           27,567

         10,697

          25,508

          14,258

                 

United States and Europe

        499,577

       503,980

       502,850

       502,067

       534,338

      515,668

      548,231

       518,293

PP

         499,577

        503,980

        502,850

         502,067

         534,338

        515,668

        548,231

        518,293

                 

Mexico

          26,043

         54,000

       152,904

       198,706

       264,129

      238,953

      235,506

       230,741

PE

           26,043

          54,000

        152,904

         198,706

         264,129

        238,953

        235,506

        230,741

Considers Green PE and from 2017 does not consider UTEC sales

 

38


 

 

EXHIBIT XII

Consolidated Net Revenue

 

Net Revenue

R$ million

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

                 

Polyolefins

     5,092

     5,316

     5,170

     4,730

     4,845

     4,860

    4,961

     4,984

Domestic Market

      3,383

      3,575

      3,633

      3,311

      3,344

      3,402

     3,570

      3,541

Export Market

      1,709

      1,741

      1,536

      1,419

      1,501

      1,458

     1,391

      1,444

 

 

 

 

 

 

 

 

 

Vinyls

        742

        732

        736

        797

        813

        644

       795

        805

Domestic Market

         651

         665

        691

        672

        718

        617

        691

         780

Export Market

           90

           68

          45

        125

          95

          28

        104

           25

 

 

 

 

 

 

 

 

 

 Chemicals (Most Relevants)

     2,603

     2,513

     2,646

     2,595

     3,328

     2,845

    2,841

     3,073

Domestic Market

     1,926

     1,576

     1,828

     1,842

     2,076

     2,051

    1,984

     2,123

Ethylene/Propylene

         609

         598

        684

        570

        657

        668

        747

         761

Butadiene

         116

         134

        142

        175

        274

        217

        131

         130

Cumene

         142

         100

        122

        137

        110

        168

        146

         154

BTX*

         442

         410

        377

        400

        421

        424

        412

         461

Gasoline

         476

         201

        355

        408

        461

        429

        399

         463

Others

         141

         133

        149

        152

        154

        147

        149

         154

 

 

 

 

 

 

 

 

 

Export Market

        676

        937

        818

        753

     1,252

        794

       857

        949

Ethylene/Propylene

         142

         150

        109

          46

        157

          98

          92

         171

Butadiene

         150

         160

        191

        248

        456

        163

        222

         226

BTX*

         180

         167

        222

        213

        318

        209

        206

         232

Gasoline

           -  

         176

          24

          37

          50

          20

          47

           28

Others

         204

         285

        272

        209

        269

        303

        289

         293

 

 

 

 

 

 

 

 

 

United States and Europe

     2,535

     2,298

     2,066

     1,997

     2,425

     2,310

    2,449

     2,671

 

 

 

 

 

 

 

 

 

Mexico

        123

        215

        537

        714

        940

        880

       843

        936

PE

         123

         213

        529

        706

        923

        863

        824

         922

Mexico Others**

           -  

            2

            8

            8

          17

          17

          19

           15

                 

Resale***

        634

        402

        642

        904

          66

          13

         56

            1

                 

Others****

        187

        245

        184

        307

        183

        318

       217

        159

 

 

 

 

 

 

 

 

 

Total

   11,915

   11,722

   11,981

   12,046

   12,600

   11,870

  12,162

   12,628

                 

*BTX = Benzene, Toluene and Paraxylene

               

** Others Mexico = Fuel and Utilities

               

***Naphtha, condensate and crude oil

               

****Includes pre-marketing activity in Mexico until 1Q16

               

 

39

 

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: March 29, 2018
  BRASKEM S.A.
 
 
  By:      /s/     Pedro van Langendonck Teixeira de Freitas
 
    Name: Pedro van Langendonck Teixeira de Freitas
    Title: Chief Financial Officer

 

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.