Braskem SA ADR

strategic planning and corporate market intelligence director. Please note that this event is being recorded. The presentation will be held in Portuguese with simultaneous translation into English. All participants can choose which language to listen to and see the presentation in using the show captions and interpretation buttons respectively. After Brascam's remarks, There will be a question and answer session. Please note that questions must be sent through the Q&A button in writing. Now I will repeat these same instructions in Portuguese, translated into English. The presentation is being held in Portuguese and simultaneous interpreting into English. All participants can choose what language to see the presentation and listen in using the interpretation button and the tabs on top. After Brascam's remarks, there will be a Q&A session. Please note that questions must be sent through the Q&A button. The audio for this event will be available on the Investor Relations website after it ends. 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 we proceed, please note 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 BrassChem. 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 Brascam's future results and may lead to results that differ materially from those expressed in such future conditions. Now, I'll turn the conference over to Ms. Rosana Avoglio, Investor Relations, Strategic Planning, and Corporate Market Intelligence Director. Ms. Avoglio, you may begin your presentation.

Good morning, everyone. Thank you for participating in Braskem's earnings conference call for the third quarter of 2025. As indicated in the agenda described on slide three, I will begin the presentation with the company's main highlights in the period, starting on slide four. In the third quarter of 2025, the industry's performance continued to be impacted by the prolonged downward cycle, Utilization rate at petrochemical plants in Brazil were lower than in the second quarter due to the scheduled maintenance stoppage at the Rio de Janeiro plant and the continued implementation of this strategy to optimize production at NAFTA-based plants, which takes into account demand levels and spreads on the international market. In the United States and Europe, the increase is mainly due to the normalization of operations and the rebuilding of stocks in the United States, while production levels in Mexico remained lower given the first general maintenance stoppage since the start of production, which was completed at the end of July 2025. With regard to safety and non-negotiable value, Braskem recorded an average exit frequency rate of 0.75 events per million hours worked, down on the previous quarter and well below the global industry average. In the quarter, the company recorded consolidated recurring EBITDA of $150 million, 104% higher than that in the second quarter of 2025, with the Brazil-South America segment standing out. With regard to operating cash flow, despite the better EBITDA recorded in the quarter, the company had operating cash consumption of approximately $62 million. Braskem's cash position at the end of the quarter was approximately $1.3 billion, sufficient to cover debt maturities over the next 27 months, without taking into account the international standby revolving credit line and the full amount of $1 billion and maturing in December 2026. The company's total liquidity including this credit line was approximately $2.3 billion at the end of the quarter. Let's move on to the next slide. In the third quarter of 2025, the global macroeconomic scenario was marked by moderate growth, decelerated inflation, high interest rates and strong geopolitical and trade tensions. And considering the still volatile scenario, we have seen a significant impact in the regions where we operate, resulting in lower industrial activity in resin processing and a typical downturn in demand for the period. reflecting the challenges faced by the industry on a global scale, especially in Brazil and Europe. In addition, most international petrochemical spreads fell in the period, remaining at historically low levels due to excess installed capacity, which together with weakened demand, continue to put negative pressure on the sector's profitability at the global level. Moving on to the next slide. The performance of each of the company's segments will be presented below, starting with Brazil on slide number 7. In Brazil, the utilization rate at the petrochemical plants was lower due to the scheduled shutdown of the Rio de Janeiro petrochemical plant and the strategy of optimizing production at NAFTA-based plants in face of demand levels. Resin sales in the Brazilian market were lower, mainly due to the higher volume of polyethylene imports and lower demand for polypropylene. This reduction was offset by higher sales of key chemicals. In the quarter, recurring EBITDA was $205 million, 35% higher than in the previous quarter. This increase is explained by the prioritization of sales with higher added value, the implementation of the commercial strategy to supply the Brazilian market, and the initiatives of the resilience program. Let's move on to the next slide, please. In the third quarter of 2025, the utilization rate of green ethylene plant was 40%, 31 percentage points lower than the previous quarter, impacted by the continued implementation of measures to optimize stock levels, which is part of the resilience program. Sales were lower compared to the second quarter due to lower demand from Asian markets. In relation to the strategy of accelerating the production of new bioproducts and with the aim of seeking opportunities to create value, Brascam Green Co. was created at the end of 2023, a company that already owns the green ethylene assets in Rio Grande do Sul and which will concentrate the growth of Brascam's green portfolio. Next slide, please. The utilization rate in the United States and Europe segment was higher due to the normalization of operations and the rebuilding of inventories in the United States. The lower sales volume compared to the previous quarter is mainly explained by the lower industrial activity in Europe and the weakened demand in the United States. The segment's results continued at negative levels, impacted by weakened demand in the regions, pressured spreads, and higher ship expenses. These effects were partially offset by the lower inventory effect of feedstock acquired in previous periods in the United States. Moving on to the next slide, we will talk about the Mexico segment's performance in the quarter. The utilization rate for the quarter was 47%, still impacted by the first general maintenance stoppage since the planned start-up, which was concluded on July 31. With regard to To ethane supply, the lower volume of ethane supplied by Pamex compared to the previous quarter was offset by the increase in the volume imported through Fastrack and the start of supply from the ethane import terminal. In this scenario, the volume of polyethylene sales was lower than in the second quarter. Recurring EBITDA of the segment for the period was negative by 37 million, also impacted by the higher idle expenses in the quarter due to scheduled stoppages and lower provisions for fine receivable for delays in the construction of the terminal of ethane imports compared to the second quarter of 2025. Now let's move on to the next slide. The general maintenance stoppage at Braskem Zideze petrochemical plant was completed at the end of July with the participation of more than 3,000 people. This was the first scheduled maintenance stoppage at the petrochemical complex in Mexico since its inauguration in 2016. In addition, the start of ethane supplies from Terminal Química Puerto Mexico in September 2025 marks the beginning of a new chapter in the history of Braskem Ideza, with the reduction of the need to use fast-track solution and guaranteeing the possibility of access to 100% of Braskem Medesa's feedstock at lower logistics cost. This ethane will be transported using two ethane transport vessels, leased by Braskem Trading and Shipping, which are dedicated to this operation. TQPM is connected to the petrochemical complex in Mexico via pipelines, guaranteeing greater reliability to the operation when compared to the fast track solution. It's worth noting that in September, TQPM supply of ethane to brass chemidase amounted to approximately 11,000 barrels per day. Next slide please. In the next chapter, we will discuss the company's consolidated results. Consolidated recurring EBITDA in the third quarter was $150 million. The increase in relation to the previous quarter is mainly explained by the prioritization of higher value-added sales, prioritization of supply to the Brazilian market, positively impacting the contribution margin. lower inventory effect in the United States, and the implementation of the resilience plan initiatives, with emphasis on reducing fixed costs in general. These effects were partially offset by higher idle expenses due to scheduled stoppages in Brazil and Mexico, and by the appreciation of the real against the dollar. Moving on to the next slide. By the end of September 2025, all work fronts in Maceió were progressing according to plan. The Relocation and Compensation Front continued to show progress in its indicator and ended the quarter with 99.9% execution of the Residence Relocation Program. The same percentage applies to the number of proposals submitted for the Financial Compensation and Relocation Support Program. of which around 99.6% were accepted and 99.5% were paid out. At the same time, the closure and monitoring of the salt cavities is being implemented. After all the actions have been taken, if necessary, to ensure that the 35 cavities reach a maintenance-free state in the long term, This quarter we highlight the achievement of the technical filling limit of cavity 16. As a result, 6 cavities have now been naturally filled, 6 cavities have been completed, 3 have reached the technical filling limit and 7 cavities are being filled. Additionally, as announced by the company, through a material fact, Braskem and the state of Alagoas signed an agreement related to the Alagoas geological event, providing for a total payment of R$ 1.2 billion, of which around R$ 139 million had already been paid. The outstanding balance is to be paid in 10 variable and adjusted annual installments, mainly after 2030, taking into account the company's payment capacity. The state agreement establishes compensation, indemnification and or reimbursement to the state of Alagoas for full reparation of any and all state property and of patrimonial damages and grants the company full discharge for any damages arousing from and or related to the geological event in Alagoas, including the extinction of the Alagoas state suit in action. The signing of this agreement represents a significant and important step forward for the company in relation to the impact resulting from the geological event in Alagoas. Therefore, in relation to the final provision, the total provision related to Alagoas' event was around R$ 18.1 billion, of which around R$ 13.6 billion have already been disbursed, and approximately R$ 1.5 billion have been reclassified to other obligations payable, including those related to the agreement signed with the State of Alagoas, as mentioned above. As a result, the total provisioned balance at the end of the third quarter of 2025 was R$ 3.8 billion. Now let's move on to the next slide. In the third quarter of 2025, the implementation of resilience measures, especially the optimization of inventory levels, was important in partially mitigating the consumption of working capital. The company had an operating cash consumption of R$ 334 million, impacted mainly by the higher seasonal disbursement of operating investments, including the scheduled stoppage at the Rio de Janeiro petrochemical plant and in Mexico. Recurring cash consumption was mainly impacted by higher half-yearly interest payments on debt securities issued on the international market by the company, which are concentrated in the first and third quarters of the year. The sales of fund quotas, part of the resilience plan, and the receipt of the last installment of the sales of Saigon Central reduced this consumption by R211 million. Finally, considering the disbursements in Alagoas, the company had a cash consumption of approximately R2.2 billion. Now let's move on to the next slide. Breskin ended the third quarter of the year with an elongated debt profile, with 69% of its debts concentrated after 2030. In order to strengthen its liquidity position in the face of the industry-prolonged downturn, the company drew down its standby line in the amount of $1 billion, At the beginning of October, the current line matures in December 2026. The available cash of $1.3 billion is enough to cover the debt principal repayments over the next 27 months. Finally, corporate leverage stood at approximately 14.7 times at the end of the third quarter of 2025, mainly due to the lower EBITDA over the last 12 months. Moving on with our agenda on slide 11. This concludes the overview of the results for the third quarter of 2025. And next, I will comment on the company's resilience and transformation program. Braskem continues to focus on implementing the initiatives set out in its Global Resiliency and Transformation Program, considering the significant impacts resulting from the prolonged downturn of the entire industry and the Brazilian chemical sector. To this end, the company has adopted measures aimed at generating sustainable value, with an emphasis on maximizing EBITDA and mitigating cash consumption. Braskem's resilience program is aimed at implementing tactical initiatives in the company's operations and processes and is structured around two pillars. Initiatives with an impact on EBITDA and short-term cash generation and actions to defend the competitiveness of the Brazilian chemical industry. with a focus on building a more competitive, brask and resilient and sustainable. The transformation program brings together initiatives that support the perpetuity of the business and is structured around three pillars. Optimization of NAFTA base, increasing and flexibility of the gas base, and finally migrating to products with renewable sources. Now let's move on to the next slide. Following on from what was presented on the previous slide, the implementation of the Global Resilience Programme fronts have been intensified considering the prolonged downturn in the industry. So far, we have established 79 action plans globally, which have been broken down into more than 700 initiatives. These actions are distributed on fronts presented above. institutional agenda, commercial agenda, monetization of assets, negotiation with suppliers, optimization of capital employed, and operational optimization. In 2025, the potential for capturing these actions is around $400 million in EBITDA and about $500 million in cash generation in relation to the business plan budget for the year 2025. Regarding the progress of the implementation of the actions, around one third of the initiatives have already been implemented and others are in execution or partially implemented, demonstrating the progress of the program. This program is an essential pillar to get through the challenging scenario of the global industry. Moving on to the next slide. Continuing what we saw in the previous slides, resilience initiatives have made programs that is fundamental to mitigating the impacts of the prolonged downturn in the industry. On the regulatory side, we have made significant programs in strengthening the Brazilian chemical industry, ensuring fair competitiveness. Among them, the approval of the provisional application of the anti-dumping duty for the PE imported from the US and Canada, mitigating the existing damage in the Brazilian market and the maintenance of the 20% import rate in Brazil for PE, PP and PVC resins. In addition, the approval of Bill 892 of 2025 by the Chamber of Deputies represent a significant step forward for the Brazilian chemical industry, which has been operating at the highest idle rate in the last 30 years. This bill has the purpose of extending the break, the special regime for chemical industry in November and December 2025, in addition to instituting the Prezic, which is the special program for the sustainability of the chemical industry from 2027 to 2031. The text of the bill is currently being processed in the Senate for approval and subsequent presidential sanction. Branscombe, together with Abiquin and other companies in the sector, reinforces the importance of approving the Bill 892. AB King's technical studies indicate that this bill could generate an estimated positive impact of R$112 billion on the Brazilian GDP by 2029, create up to 1.7 million direct and indirect jobs, recover up to 65 billion reals in tax revenues, as well as increasing the use of the sector's installed capacity, which currently operates at the lowest level in the industry. In addition, a series of initiatives with an impact EBITDA were implemented, such as commercial optimizations, reductions of logistics costs, energy, supplies, inputs, raw materials, optimization of inventory levels, as we commented on throughout the performance of the segments, monetization of tax credits, among others. These combined initiatives generated positive impact of around $240 million in EBITDA and approximately $330 million in cash in the year to date compared to the budget of the company's business plan for 2025. These results reinforce the importance of the resilience program in the current industry scenario. Now let's move on to the next slide. With regard to the transformation program, the company also made progress on initiatives to increase the competitiveness of its operations in the medium and long term, with the aim of ensuring the perpetuity of our business. Starting with Transform Alagoas, we highlight the beginning of actions to increase the competitiveness of the company's PVC operations and make them more sustainable. The Chlorosoda plant in Alagoas will be transformed into a unit dedicated to handling volumes of EDC, the raw material for the production of PVC. In this context, the Chlorosoda plant was hibernated in September 2025. The company thus started a new PVC operating model and will now import all its EDC needs through a long-term contract signed with an international supplier. Breskin, which has been present in Alagoas for 48 years, reaffirms its commitment to the socio-economic development of the States, boosting the strengthening of the chemical and plastic chain. With regard to Transforma SU initiative, the study into importing LPG for use as feedstock has been completed. It's worth noting that the Rio Grande do Sul petrochemical plant is the most competitive NAFTA-based plant in South America and the best positioned on the global ethylene cash cost curve. This study was carried out with the aim of taking advantage of the plant's existing gas processing flexibility combined with greater logistical efficiency by importing LPG from Argentina, taking advantage of Vaca Muerta production. This initiative brings potential incremental profitability of about $110 per ton, compared to using NAFTA as a feedstock. These actions demonstrate how the company has sought to modify its operations to ensure efficiency, flexibility, and long-term sustainability. Now let's move on to the next slide. Concluding this chapter, we come to the biggest transformation initiative underway, Transforma Rio. The expansion of the Rio de Janeiro plant's capacity was approved by the Board of Directors in October 2025. This project will add 220 tons per year of ethylene capacity with an equivalent expansion of PE, increasing the share of gas in Breskin's feedstock profile. The estimated investment of 4.2 billion reals with completion estimated for the end of 2028. The implementation of the project is conditional on obtaining funding, in addition to the resources already approved under the REC investments, benefit for 2025 and 2026, and a long-term supply contract with Petrobras. In addition to increasing the competitiveness of Brazil's most efficient petrochemical plant, this expansion will bring greater competitiveness to the Brazilian polyethylene market. which is in deficit, and positive socio-economic impacts, such as revenue generation for the states and the creation of more than 7,500 jobs during the project execution. With this, we conclude the chapter by reinforcing that the resilience and transformation program is essential for getting through the industry's challenging cycle, guaranteeing competitiveness and sustainability. On to the next slide, I will now comment on the company's strategic direction for the next five years cycle and the outlook for the petrochemical scenario. Now let's move on to the next slide. Every year, the company draws up its business plan with a five-year horizon through a regular process with a structured timetable and the involvement of various areas of the company. Discussions related to the strategic direction typically take place during the second half of the year, where we revisit our vision for the next five years, taking into account changes in the global scenario, trends and fundamentals in the energy and petrochemical industry. For this cycle, between May and July, we kick off by drawing up future scenarios for the petrochemical industry. In August and September, after a detailed discussion, the macroeconomic and petrochemical scenarios were validated with leadership. In October, we refined the market operational financial projections based on these validations. And in December, we will consolidate the strategic direction for approval by the board of directors. Now let's move on to the next slide. When we look at the global scenario in 2025, what stands out most is the high level of uncertainty and volatility. This movement has been driven by trade tensions between the United States and China. which have escalated throughout the year. These tensions are accompanied by a series of factors that are likely to continue over the next years, such as more fragmented global chains, increasingly protectionist industrial policies, and changes in investment flows, which directly affect international competitiveness. Even with interest rate cuts, the risk of global economic slowdown is still present. When we look at the GDP projections, the consensus is for growth similar to the start of the decade, but limited by the uncertainties of the trade war. This means that we are facing a scenario in which globalization is weakening and protectionism is advancing. The main impacts of this scenario are uncertainty about the stability of the global economic growth and the profound transformations in the dynamics of international trade, with additional risks of disruption in global supply chains. This is the macroeconomic backdrop that we are taking into consideration in our strategic discussions for the 2026 to 2030 cycle. Moving on to the next slide. The current scenario combines two factors that put pressure on the petrochemical industry, which are lower oil prices and subdue global demand. This configuration tends to reduce resin prices on the international market as the marginal producer's cost falls and there's not enough demand to sustain the price of resin on the international market. Even with relatively stable spreads for the marginal producer, based NAFTA, lower oil prices and consequently, NAFTA and resins on the international market could be unfavorable for base gas producers, as in the case of Mexico, depending on the magnitude of the drop in the NAFTA prices if gas prices remain stable. In 2025, the price of oil on the international market was intensified by the trade war between the United States and China, which brought uncertainties and reduced expectations of growth and global energy consumption. There was a significant increase in oil production, especially by OPEC+, which gradually resumed its supply, contributing to adjustments in global supply and putting pressure on rising prices benchmarks. In this scenario, realized oil prices this year were lower than expected when compared to the assumption made in the company's 2025-2029 business plan, as well as most of the market. This difference has resulted in a challenging environment for the petrochemical industry, with direct impact on competitiveness and profitability. Now let's move on to the next slide. In the company's internal discussions, supported by external consultants, it was concluded that dynamics of the petrochemical industry will remain structurally challenging until at least 2030, with China leading investments to achieve self-sufficiency. These investments, combined with the growth in demand impacted by the macroeconomic uncertainties as mentioned above, contributed to the continued imbalance between supply and demand, putting pressure on overall operating rates, which should remain at historically low levels, even with moderate growth in demand. Given the current expectations about the rationalization scenario, it's expected that the sector will begin to recover towards the end of the decade. Now let's move on to the next slide. Finally, when we look at the outlook for the petrochemical spreads until 2030, the scenario is structurally challenging, considering global trends and industry dynamics. The prolonged downward cycle is expected to last until the end of the decade, with a modest recovery after 2029. This behavior reflects the structural excess of supply combined with moderate growth in demand, which has kept international spreads below the historical average for a prolonged period. This reality reinforces the importance of the initiatives represented in previous chapters aimed at resilience and transformation, as well as the need for increasingly assertive commercial and operational strategies. With this, we end this chapter by emphasizing that, in the face of a challenging global environment and pressured margins, Breskin's strategic advances will be essential to ensure competitiveness, sustainability, and value generation. I would now like to close the presentation by reinforcing the company's priorities for 2025. On the next slide. We will continue to make progress with the initiatives to transform our assets. This front of the resilience and transformation plan is strategic if we are to continuously increase the competitiveness, efficiency and sustainability of our business, making Braskem better prepared to face the adversities of the global petrochemical scenario and guaranteeing its perpetuity. In order to guarantee the continued progress of the transformation, it's essential that the company continues to identify and implement resilience measures. These actions are fundamental to mitigating the impact of the cycle on the company's results and cash flow. strengthening thus the competitiveness of our business throughout this prolonged downturn. Braskem reaffirms its commitment to the competitiveness of the Brazilian chemical industry, together with associations, clients, suppliers and society. It will continue to promote initiatives that guarantee a level playing field and a fair competitiveness for the Brazilian industry, making a consistent contribution to the sector's development. In addition, the company maintains its commitment to the agreement signed in Maceió, conducting each stage with transparency, responsibility and respect for all parties involved. Finally, it is essential to emphasize that all our priorities will be carried out while maintaining our commitment to safety in our operations. Safety is and will continue to be a perpetual and non-negotiable value in Brascam's strategy, guiding every action and decision the company makes. This concludes the presentation of Brascam for the third quarter of 2025.

Ladies and gentlemen, we will now begin the question and answer session. Please, you may proceed. Good afternoon, everyone. This is Roberto Ramos, president of Brascam. Before we begin the Q&A session, I'd like to highlight some aspects from the presentation in addition to some updates about the financial and economic alternatives for our capital structure which are currently in effect in assistance from our external consultants as we announced in September 25. That work in developing our strategy for the 2026-2030 cycle begin in August and have now been finished by the administrative board, we've made some significant conclusions about the company's mid and long-term outlooks. We have ascertained that the perspectives for the local and international petrochemical industry have suffered a significant negative impact for a number of reasons because China will continue to make significant expansions in its ethylene propylene propylene and polypropylene chains using different feedstocks and solutions also because in the Middle East there are similar movements this Movement by the Chinese government will have a significant impact on the global scenario with over 40 new crackers increasing production by 70 or 100 million tons respectively. This will have a significant effect as well on the different petrochemical plants idle capacities. This combined with the very timid rationalization in the petrochemical industry, updates our idle projections. We project a significant gap between supply and demand up until at least the turning of the decade. As such, the companies' and the petrochemical industry's mid- and long-term outlooks must be updated. And so this leads to our strategic planning project. So in September, the company announced the contracting of external consultants to investigate a healthier capital structure. And this is given the projection that the downward cycle is going to be longer than we expected. Since then, we have been updating our mid and long term strategies and outlooks. This is made even more challenging by the 2025-26 cycle. Any potential change about the path forward must consider these projections. As always, the company will keep its investors and the market as a whole duly informed about all material developments and conclusions about the topic. Lastly, please note that In spite of any negative outlooks or projections, Brascam continues to move forward with its resiliency project, which was approved by its shareholders in 25 and focuses on increasing global competitivity around the world. As such, I'd like to highlight some initiatives linked to value generation for various stakeholders emphasizing on maximizing EBITDA and cash generation, which were announced recently by Rosana. First, defense of competitivity for the Brazilian industry by maintaining the 20% import rate for various feedstocks. Two, approving various anti-dumping laws and rights with regard to the US and Canada, and also with regard to PVC in the US. Approval in the Chamber of Deputies of a bill here, PL 892-2025, which sets forth rules about the REIC and PREZIC, which is now going to the Brazilian Senate for approval. Next, the hibernation of the ClorSoda plant in September 25, with the goal of making PVC production in Alagoas more competitive and sustainable by importing EDC. This feedstock makes our PVC plant more competitive and also approving the Transforma Rio project, which will make Brascam more competitive by using gas in its feedstock matrix to produce polyethylene. And next, operating improvements which have been generated by over 700 initiatives in 79 different action plans, which include the use of inventories linked to CapEx, producing resin with higher added value, reducing downtime in plants due to upgrades, which is something that used to hurt us, improving our use of feedstocks and inputs, and also the use of fiscal incentives and credits. So that being said, I will now begin to answer our listeners' questions. Thank you.