Braskem SA ADR

and thank you for waiting. Welcome to the Braskem video conference for the discussion of the results related to the first quarter of 2025. We have with us today Mr. Roberto Ramos, CEO of Braskem, Felipe Gens, CFO of Braskem, and Rosana Volho, Director of Relations with Investors, Strategic Planning and Corporate Market Intelligence. Informamos que este evento está sendo gravado. A apresentação será realizada em português com tradução simultânea para o inglês. Todos os participantes podem escolher qual idioma ouvir e ver a apresentação através dos botões Interpretação e Opções de Visualização, respectivamente. Agora, informarei essas mesmas instruções em inglês. The presentation will be held in Portuguese with simultaneously translation into English. All participants can choose which language to listen to and see the presentation using the show captions and view options buttons respectively. After asking remarks, there will be a question and answer session. At the time, further instructions will be given.

After Brascam's presentation, we will begin a Q&A session. At that time, further instructions will be given. The audio of this event will be available on the Investor Relations website after its conclusion. We remind you that participants will be able to submit questions for Brascam, which will be answered after the end of the conference by the IR department. Before proceeding, we'd like to clarify that any statements that may be made during this conference call regarding Brascam's business prospects, projections, operational and financial goals, constitute beliefs and assumptions of the company's management, as well as information currently available to Brascam. Future considerations are not a guarantee of performance and involve risks, uncertainties and assumptions. as they refer to future events, and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions, and other operational factors may affect Braskem's future results, and may lead to results that differ materially from those expressed in such future conditions. Now I'd like to turn the conference over to Ms. Rosane Avoglio, investor relations, strategic planning, and Corporate Market Intelligence Director. Ms. De Valio, you may begin your presentation.

Good morning, ladies and gentlemen. We would like to thank you all for participating in the Breskin Earnings Conference Call for the first quarter of 2025. According to the agenda on slide number 3, we will begin with the company's main highlights for the period, which can be found on slide number 4. In the first quarter of 2025, the operations of Braskem's petrochemical plants presented a better performance than in the last quarter of 2024. All segments showed a higher utilization rate in the period, while the high level of operational safety was maintained, resulting in an average global accident frequency rate of 0.92 events per million hours worked, in line with the best market references. In parallel, the company presented a consolidated recurring EBITDA of $224 million, 121% higher than compared with the fourth quarter of 2024. In addition, the net profit attributable to shareholders was $113 million. Contributing to this result were the greater spreads of PE and chemicals in the international market and the greater sales of chemicals in the foreign market and of PP in the United States and Europe segment. Regarding debt, the company's profile remained quite elongated with an average term of around nine years, with more than 68% of the corporate debt maturing from 2030. In addition, Braskem's cash position ended the first quarter of 2025 at $2 billion, sufficient to cover debt maturities over the next 33 months, without considering the available international revolving credit line of $1 billion maturing in December 2026. Moving on to the next slide. In the next slides, I will present the performance of each of the company segments, starting with Brazil. The petrochemical plants in the Brazil segment showed an increased average utilization rate compared to the fourth quarter of 2024 by 4 percentage points, with emphasis on the inventory management carried out at the gas-based plant in Rio de Janeiro in anticipation of the scheduled shutdown of this plant due to take place in the third quarter of 2025. In terms of sales, the volume sold on the domestic market remained in line with the previous quarter, impacted by the increased PE and PP sales, offset by the decreased PVC sales. Regarding the quarter's results, the segment recurring EBITDA was $199 million, an increase of 101% in the previous quarter. The result was mainly positively impacted by the segment's increased contribution margin, mainly due to the higher spreads of PE and main chemicals on the international market, and by reducing fixed costs and other expenses in the period. Moving on to the next slide. In the first quarter of 2025, green ethylene operations increased when compared to the last quarter of 2024, resulting in an increase of 10 percentage points in the plant's utilization rate. The normalization of operations after the unscheduled shutdown of the Rio Grande do Sul plant in the previous quarter contributed to this result. On the other hand, green polyethylene sales were impacted by the decreased demand due to the Chinese New Year. In addition to the operational performance, two important milestones were celebrated in the company's renewable segment. First, the green ethylene capacity in Triunfo was revised to 270,000 tons a year, since industrial tests proved the production of 15,000 tons a year more than the forecast in the expansion project completed in 2023. In addition, we celebrated 15 years of AppGreen BioBase portfolio, which includes a variety of solutions produced from a new pool source, Sugarcane, which has the property of capturing CO2 from the atmosphere. These solutions play a significant role in facilitating our customers' sustainability journey without the need to invest in new technologies. These achievements reinforce our leadership position in biopolymers, in line with our sustainability strategy and goals. Moving on to the next slide. The performance of the United States and Europe segment was better than in the first quarter of 2024. With regard to the utilization rate, an increase of 13 percentage points was a result of the normalization of the plants in Europe after maintenance shutdowns in the previous quarter and the adjustment of production in the United States to meet higher demand. In this sense, the volume of PPE sold was 11% higher than in the previous quarter. In this scenario, the segment's recurring EBITDA was $20 million, mainly as a result of the increased sales volume and the revenue obtained from the sales of logistics wagons in the United States. Let's move on to the next slide to discuss the Mexico segment. Regarding its operation, the increased supply of ethane, mainly through the fast-track solution, resulted in an increase in the utilization rate of 2 percentage points in the quarter. On the other hand, the inventory management in anticipation of the general maintenance shutdown of the petrochemical complex that will occur in the second quarter of 2025 contributed to the volume of polyethylene sold being 5% lower. Despite the decreased sales volume, the higher spreads of ethane-based polyethylene and lower fixed costs and expenses positively impacted the segment, ending the quarter with a recurring EBITDA of $37 million, 6% higher than the result of the fourth quarter of 2024. Moving on to the next slide. With great celebration, Braskem Ideza inaugurated the Ethane Info Terminal in Mexico last week through the subsidiary Terminal Químico Puerto México, a joint venture between Braskem Ideza and Advario. The terminal has the capacity to receive and store 54,000 tons and transport 80,000 barrels of ethane per day, guaranteeing the necessary feedstock and Brescan's full operational capacity in the region. In line with this goal, Breskin, through its subsidiary Breskin Trading and Shipping, BTNS, has two ethane transportation vessels dedicated to operation in Mexico, contributing to a reduction in logistics costs, lower CO2 emissions, around 40% than the industry average, and the full supply of feedstock. The terminal also supports Breskin EDESA in its long-term growth strategy, ensuring a diversified supply of feedstock to enable future expansions of up to 25% of the current capacity. Now let's move on to the next slide, please. Moving on to the next chapter, I will discuss the company's consolidated results. Regarding the company's consolidated EBITDA, the quarter's result was 121% higher than that of the fourth quarter of 24, with an improvement in the margin of 4 percentage points. As mentioned previously, the higher polyethylene and chemical spreads on the international market as a result of the lower supply of resins increased. in the American market and the volatility in feedstock costs, a reflection of the geopolitical uncertainties, had a positive impact on EBITDA. The increased volume of sales in Brazil and exports of the main chemicals in the United States and Europe in BP contributed to the result. In addition, the actions implemented with a focus on the company's financial preservation had a positive impact on the quarter and will be detailed in the last chapter of the presentation. Moving on to the next slide. At the end of the first quarter of 2025, the company had an operating cash consumption of approximately 936 million rials, explained mainly by the negative variation in working capital, due mainly to the management of feedstock and finished products inventories as a result of scheduled shutdowns in the period. Recurring cash consumption of R2.4 billion was mainly impacted by the half-yearly interest payments on the company's debt securities, which are concentrated in the first and third quarters of the year. Considering Alagoa's disbursements, which were 65% lower than the previous quarter, the company had a cash consumption of around R$ 2.7 billion. Now let's move on to the next slide. Breskem ended the first quarter of the year maintaining an elongated profile of it. At Breskem, it is a corporate debt with an average term of around nine years and 68% of the debt concentrated as of 2030. The company continually analyzes the market in search of the most competitive opportunities for maintaining its debt profile. Considering the company's level of liquidity, the available cash of $2 billion is sufficient to cover its obligations for the next 33 months without taking into account the international credit line available in the amount of $1 billion. In conclusion, the corporate leverage stood at 7.92 times at the end of the first quarter of 2025. Moving on to slide 15, I will comment on the main updates from Alagoas during the period. By the end of March 2025, all work fronts in Maceió had progressed according to the plan. On the relocation and compensation front, the percentage of execution of the resident relocation program reached 99.9%, considering that the entire risk area defined by the civil defense in 2022 was cleared. Regarding the proposals related to the financial compensation and relocation support program, more than 99.9% of the estimated proposals have already been submitted, of which around 99.5% have already been accepted and around 99.2% have already been paid. On the salt cavity closure and monitoring front, as announced in 2024, provision has been made for actions, if necessary, to ensure that the 35 cavities reach a maintenance-free state in the long term, suitable for the definite closure of the field. These actions for the definite closure, should they be necessary, are scheduled to begin in 2027, with execution over several years or even decades. Of the 35 cavities, 18 will be filled primarily with solid material, six of which have already been completed. In addition, 11 cavities that remain in the salt layer and are suitable for pressurization are in the group of recommendations for the long-term filling with solid material considered by the company following a technical note issued by a specialist consultancy. The other six cavities were filled naturally, with five already confirmed and one in the process of being confirmed. In relation to the financial provision, the total provision for the Alagoas event was around R17.6 billion, of which about R12.8 billion have already been disbursed, and approximately R431 million have been recorded in other obligations payable. In addition, around 637 million reals was recorded as a realization of the adjustment to present value. As a result, the total provision balance at the end of the first quarter of 2022 was 5.1 billion reals, 9% lower than the balance at the end of the fourth quarter of 2024. Following our agenda, let's move on to slide 16. This concludes an overview of the results for the first quarter of 2025, and we will now present the outlook for the next quarter. The company's operating scenario will be mixed in the second quarter, with the expectation of greater use of Brazil's petrochemical plants in anticipation of the planned maintenance shutdown in Rio de Janeiro, scheduled to begin in the third quarter of the year. On the other hand, the segment in the United States and Europe is expected to remain stable due to a balance between increased production in the United States and lower production in Europe, impacted by decreased feedstock supplies. for its part, will begin a general maintenance shutdown for its complex schedule to last 45 days. Lower production in Mexico should affect the sales in the region, while the expectation for the other segments is for increased volumes sold in the period. As for international spreads, the second quarter of the year will continue to be challenging due to the prolonged shutdown in international markets and possible impacts of the new tariff scenario. The expectation of lower NAFTA prices could positively influence the resin spreads in Brazil, leading to an increase in the next quarter. On the other hand, with the current increase in ethanol prices, gas-based polyethylene spread could be negatively impacted, while the polypropylene market remains challenging, maintaining the levels as seen in the first quarter. Moving on to the next slide. Given the growing scenario of geopolitical and tariff uncertainties, important competitive advantages will position Braskem to face possible impacts. Firstly, the company is prioritized serving the domestic market where there is still a large portion of demand to be reached. Additionally, the geographic diversification and the scale of its production give Braskem leadership in the regions where it operates. Finally, the company is a pioneer and a leader in the production of biopolymers, solutions that are not affected by the traditional petrochemical scenario, which provides greater resilience during the periods of down cycle. The combination of these competitive advantages will be fundamental for Breskin to navigate the uncertainties of the current scenario. Let's move on to the next slide. Next, we'll explore the strategic direction of the company and its main initiatives. Regarding the company's strategic direction, Breskin is focused on two main pillars of action, resilience and financial health, and transformation. On the resilience and financial health front, the focus will be on the tactical initiatives that mitigate the impact of the petrochemical downturn with the focus of maximizing cash generation. On the transformation front, we will implement actions to sustain the current business while continuing to focus on building the bread skin of the future. To this end, we are re-evaluating and prioritizing our assets and investments in order to optimize capital allocation and generate additional cash flow. These actions are essential for creating value to our shareholders for the perpetuity of the business, and they are fundamental to the recovery of the Brazilian chemical and petrochemical industry. Now let's move on to the next slide. Faced with a prolonged downturn in the petrochemical industry, Braskem has implemented initiatives on the three main fronts, seeking to increase the company's value capture and resilience. In this sense, the continuous reduction of capex for operational and strategic investments was carried out, reaching the lowest capex in history with expectation of 2025. As additional levers, the prioritization of projects and the evaluation of assets continue to be part of the company's goals, which will use the funds approved through the REIQ Investimentos to carry out projects to expand the installed capacity. In parallel, measures to reduce fixed and variable costs are continually being implemented, such as initiatives in the areas of logistics and supplies, including the renegotiation of feedstock contracts. In conclusion, Breskin considers it essential to continue supporting institutional initiatives and defending the Brazilian chemical industry. To this end, the company will support initiatives such as maintaining the import tax, expanding the special regime for the chemical industry, among others, which will support Brazil's quest for competitive equality in relation to other economies. Combining these three main fronts, the expected value capture per year will be between $5,000 and $7,000 million. Now let's move on to the final slide. In this context and considering the current assets, three priorities were defined for Braskem's transformation. Firstly, the company is focused on the continuous optimization of its NAFTA-based assets, maximizing its the utilization rates of the most competitive production lines while evaluating the hibernation of the least competitive production lines at the global level. At the same time, we are seeking to make the expansion of our gas-based assets viable. This includes the REIC investimentos to increase the capacity of the Rio de Janeiro petrochemical complex and unlocking the supply of ethane to the complex in Mexico. in order to guarantee full coverage of its feedstock's needs and enable an increase in the plant's capacity in the future. These two achievements exemplify what the company intends to achieve in its other assets, increasing the flexibility of feedstock and ensuring the operational stability of its plants, with the goal of increasing the competitiveness of its assets lastly in line with our goal of expanding by a product production to 1 million tons by 2030 we are implementing initiatives to selectively migrate to green production Considering the current initiatives, in the last quarter we had a review of the ethylene capacity, and in the short term we will have important advances, such as the expectation of a final investment decision for Braskem Siam, our future green ethylene plant in Thailand, for the second half of 2025, and Sustania, our JV with Sotsis. during 2026. These partnerships are examples of alternative investment models that we will actively seek to implement our priority project. Combining the efforts of the three priorities, the company is seeking to generate a value of $600 million by 2030 in EBITDA growth. Finally, we conclude the presentation of Braskem's results for the first quarter of 2025. Thank you very much for your attention and we'll soon start the Q&A session. Ladies and gentlemen, we are now going to begin the Q&A session. To ask a question, please click on the raise hand button or send your question using the Q&A window. To remove your question, click in the lower hand. Our first question comes from Gabriel Barra with Citi. You may proceed, sir.