Braskem SA ADR

Good morning, everyone, and thank you for waiting. Welcome to Braskem's second quarter of 2026 results conference call. With us here today, we have Mr. Alessio Tokeshi, Braskem CEO, Mr. Carlos Brandão, Braskem CFO, and Mrs. Rosana Avolio, Investor Relations Strategic Planning and Global Market Intelligence Director. We inform you 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, using the Show Captions and View Options buttons, respectively. After Braskin remarks, there will be a Q&A session. Please be advised that questions must be sent through the Q&A button.

I will now repeat the same instructions in Portuguese. 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, using the show captions and view options buttons respectively. After asking remarks, there will be a question and answer session. Please note that questions should be submitted in writing through the Q&A button.

The audio of this event will be available on the Investors Relations website after it ends. We remind you that the participants will be able to submit questions to BroadScan, which will be answered after the end of this conference. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding Braskem's business prospects, projections, operational and financial goals are beliefs and assumptions of the company's management, as well as information currently available to Braskem. Future considerations are not guaranteed of performance and involve risks Alessandro de Castro Melo, Helcio Tokeshi de Toledo Tapias, Roberto Prisco Pereira de Almeida Brandão, Luiz Gustavo Perrotti Jens, Geraldo Magela de Moraes Vilaca Netto, João Henrique Rittershaussen, Stefan Lanna Lepecki, Rosana Avolio Considerations. Now I'll turn the conference over to Mrs. Rosana Avolio, Investors Relations Strategic Planning and Global Market Intelligence Director. Mrs. Avolio, you may begin your presentation. Good morning, ladies and gentlemen. Thank you for participating in the Breskin Earnings Release Conference Call for the second quarter of 2026. Today we will present the main operational and financial highlights for the period, discuss the market environment that affected our business, detail the performance of each segment and share our market outlook for the coming quarters, as well as the company's priorities for the second half of 2026. Following the agenda on slide number 3, We will begin by presenting the context observed in the second quarter of 2026, starting with slide number 4. In the second quarter of 2026, the global macroeconomic environment remained volatile due to the conflict in the Middle East, which restricted the global supply of feedstock, particularly to Asia, and raised international market prices of oil and NAFTA, the company's main feedstock. Given the above context, production costs among marginal producers in Asia were higher, which positively impacted the prices of resins and chemicals on the international market. Prices were higher when compared to the first quarter of 2026. As you can see, this trend is evident in the main PE and PP spreads, which were significantly higher than the average from 2016 To 2025, in the US PE market, for example, the spread was almost 40% higher, driven mainly by the temporary widening of arbitrage between the US and Asia. This move opened up an export opportunity to the US PE market, with more attractive netbacks and higher margins. Behaviors similar to that observed in the US PE e-thing markets. which also saw significant increases given that the price of ethane in the U.S. market did not follow the price increases of other petrochemical feedstocks. It's worth noting that this improvement in international spreads results mainly from an on-off supply shock and not from a structural change in the dynamics of the global petrochemical cycle. Moving on to the next slide, the performance of each segment of the company will be presented below, starting with Brazil on slide number six. The petrochemical plants in the Brazil segment presented an average utilization rate in line with the previous quarter, higher by one percentage point. This result is mainly attributable to the strategy of maintaining production levels In response to the high volatility of feedstock prices in international markets, resulting from the conflict in the Middle East. In relation to sales, the volume of resins in the Brazilian market was 2% lower compared to the previous quarter. This result is mainly attributable to a 6% decrease in polyethylene sales volume and a 1% decrease in PVC sales volume. Due to higher volumes of imported products during the period, this effect was partially offset by the 3% increase in polypropylene sales, in line with the growth in demand in the Brazilian market. Sales volume of chemicals, however, was down 4%, mainly due to the lower availability of gasoline and benzene for sale, and lower demand for ethylene and quinine in the Brazilian market. Regarding the quarter's results, the segment recurring EBITDA was $869 million, an increase of 261% compared to the previous quarter. This result was mainly driven by the segment's higher contribution margin due to approximately 50% increase in the spreads for resins and major chemicals in the international market, 50% as mentioned previously. In addition to the positive impact of $115 million from PES-COFINS credits on the purchase of feedstocks under the REIC and SUMOS program. In addition, the recovery of nearly $27 million in credits related to vessel damage and the reversal of accounting provisions had a positive impact on the segment's results. These effects were partially offset by the 4% appreciation of the average Brazilian real against the average dollar for the period, and by the lower sales volume of resin and major chemicals in the Brazilian market. Next slide, please. In the second quarter of 2026, the green ethylene utilization rate was higher by 2 percentage points compared to the first quarter of 2026. Mainly due to the adjustment of production levels in response to higher demand. During the period, sales of green polyethylene increased by 49%, mainly due to greater commercial opportunities in Europe and the normalization of demand following the seasonal effect of the Chinese New Year in the previous quarter. Highlights for the quarter include the renewal of our commercial partnership with New Balance to use Amgreen bio-based EVA in the soles of running shoes, strengthening our existing commercial partnerships. Next slide. The United States and Europe segment registered a utilization rate of 76% in the quarter. The reduction of 3 percentage points in relation to the previous quarter is explained by the scheduled maintenance shutdowns in plants in the US and in Germany, lasting 35 and 30 days, respectively. It's worth noting that the higher sales volumes in the United States was offset by the lower sales volume in Europe, due to the inventory management and the processing chain in the region. which meant that the sales volume in the quarter was in line when compared to the first quarter of 2026. In the quarter, the recurring EBITDA of the United States and Europe segment was $147 million. The increase in relation to the previous quarter is mainly explained by the positive impact of the higher polypropylene spreads in the international market arising from the conflict in the Middle East. Moving on to the next slide. In Mexico, the capacity utilization rate for polyethylene plants was 43%, down 12 percentage points from the previous quarter, mainly due to the liquidity preservation measures adopted by Braskem and Dessa. During the quarter, average Ethane imports through the terminal amounted to 14.7 thousand barrels per day, a decrease of approximately 3 thousand barrels per day compared to the first quarter of 2026. Additionally, the supply of ethane by Pemex in the second quarter was 11.8 thousand barrels per day, a reduction of about 3 thousand barrels per day when compared with the first quarter of 2026. Polyethylene sales were lowered by 11%, impacted by the lower availability of product for sale due to the lower utilization rate. In this context, the recurring EBITDA of the Mexico segment was $57 million in the second quarter of 26. The improvement in relation to the previous quarter is mainly explained by the increase in the polyethylene spread In the United States by 73% impacted by the uncertainties related to the conflict in the Middle East. Next slide, please. This next chapter, I will present the company's consolidated financial results. Consolidated recurring EBITDA in the second quarter of 26 was $1,043,000,000 with an EBITDA margin of 24%, representing an increase compared to the previous quarter. This increase compared to the previous quarter is mainly due to the increase of 82% and 98% in the average international spreads of resins and main chemicals in the Brazil and South America segments. A 28% increase in the average polypropylene spread in the United States and Europe market segments and a 73% increase in the international polyethylene spread in the Mexico market segments. Additionally, results were positively impacted by $115 million or 578 million reais result of PIS-COFINS credits for the purchase of feedstocks under the REIC inputs program in Brazil. Such effects were partially offset by the average appreciation of the Brazilian real against the dollar of 4% during the period. Also, sales of resins and main chemicals decreased in the Brazilian market by 2% and 4%, respectively. Additionally, there was an 11% decrease in PE sales in Mexico. Next slide, please. The company presented an operating cash generation of $385 million, which mainly reflected an increase in chemical and petrochemical spreads in the international market. In the Middle East. Negative variation in working capital was mainly due to the high volatility of feedstock prices in international markets and an increase in inventory volumes due to prioritization of sales with higher added value. Recurring cash generation total approximately 210 million dollars. Finally, when disbursements for Alagoas and payments related to lease purchase agreements are considered, the company presented a cash consumption of approximately $15 million in the period. Next slide, please. As of the end of June 2026, work fronts in Maceió continued to move forward as planned. The relocation and compensation work front ended the quarter of With a 99.9% completion rate through the residence relocation program. The same percentage of proposals were submitted under the financial compensation and relocation support program. And approximately 99.7% of the proposals were accepted and also paid out. In parallel, we continued to move forward with the closing and monitoring of cell cavities. Every effort has been made along this work front to ensure, if necessary, that these 35 cavities require zero maintenance over the long term. Six cavities were filled naturally during the second quarter of 2026. A further eight cavities were completed and the technical fill limit was reached in six cavities. Three cavities are in the filling process and one cavity in the planning phase. As a result, the total financial provision implemented for the event in Alagoas as of the end of June 26 was approximately R$18.2 billion, which approximately R$14.6 billion was previously disbursed. and nearly 1.2 billion reals were reclassified under other payables. As a result, the total provision balance as of the end of the second quarter of 26 was 3.2 billion Brazilian reals.