I turn the floor over to Mr. Fernando Musa.

Good afternoon, everyone. Welcome. It is a pleasure to be here. As Francisco mentioned, it’s a partnership that have lasted for 20 years with [indiscernible] so let’s welcome not only you, gentlemen and ladies present here, but also those following was up on via webcast. We’ll be showing a presentation, which will cover topics relative to the businesses, and we’ll break it down by geography: Brazil, U.S., Europe and Europe, then a broad overview of the quarter results. And then we’ll touch upon two important topics for our business, which have shown important developments recently: compliance and circular economy, both very important topics for the industry as a whole and specifically for Braskem. We were happy last week that we are in a good position. Then we’ll wrap-up with an outlook for the industry going forward, and then a Q&A session. After that, my colleagues will share the presentation with me. And we’ll start with Marcelo who will talk about the chemicals unit here in Brazil. Our raw material business – we apologize, we’re not getting sound here at the translation booth. 70% of the firm is allocated externally, 30% domestically. In our chemicals portfolio, we have about 40 products. We only show a few of them here on the slide, the most relevant, ethylene, which is used for the production of polyethylene and polyurethane; butadiene used for the production of synthetic rubber and also used in the household appliance industry; propylene for the production of propylene; acrylic acid, which also be used for other products; and also propane oxide; also polyurethane for the production of foam; then benzene used for nylon and also used for detergents and also for the production for polyurethane along with ethane, which is another product which is quite important in our portfolio. On top…

Good afternoon, everyone. Now I’ll be talking about our presence business here in Brazil, PE, PP, including PVC and also caustic soda. Our production capacity, if you look to the left, in polyethylene, 3,055,000 tons year and propylene was 1,850,000 tons. All these capacities are greater than the demand in the Brazilian market today, which allow us to cater to the demands of our Brazilian customers and also have a strategy for target markets, especially in South America and to complement with the assets we have in Europe and U.S. and Mexico with a portfolio that we have from Brazil. Our sales can basically support the domestic market once they’re export. And for PP and PVC sales, the food industry is the main destination, accounting for 23% of our sales; and then manufacturing industry, 13%; still, the construction is very relevant for PVC and with 11% of our sales. And then you can see that there is a very wide range of a variety of product. When I start talking about polyethylene, 60% of the application of PE are destinated for the packaging industry. So flexible and rigid packaging, primarily in secondary bags, so this is an industry that has a very fast response to improve in the economy on the whole. So Whenever consumption goes up, packaging consumption goes up. So every industry uses packaging and bag, so it has a high potential of leveraging the production of polyethylene whenever there is an economic – the economy picks up. And then for PP, there’s also packaging. But when we talk about polyethylene, we are more really – we have a significant share in more long-lasting goods or products such as home appliances and automobiles. For PVC then, this is very much related to the civil construction, in engineering. So…

Thank you. I’m talking about both geographies, U.S. and Europe. Starting with the U.S. and Europe, it’s basically PPE operation, 1.5 million tons production capacity in the U.S. and 625,000 in Europe. It starts propylene passed on several suppliers in the market. We also have a very important contract in the U.S. for propylene supply. We buy it from a brand which processes gas and propane turning it into propane. It’s a long-term contract with the economic rationale linked to the price of propane and also adds a competitive edge to us in terms of demand. Seasonally, both markets, the second quarter is usually more stronger or stronger. We have summer vacation right after that, or several times build up inventories the second quarter, then we see a drop of 5% in the third quarter when compared to the second quarter, which is quite common. In the year-to-date, we have some stability of sales when we add together both regions in the year where expectations, then to stabilize both for Europe and for the U.S. The auto market had been growing strongly, but this year, we see those sales becoming flatter, leading to a more stabilized market. As for the utilization rate on the same chart, operations have improved. We saw an improvement in the third quarter with 87% when compared to 84% in the second quarter. But when compared to our historical levels, those utilization rate levels are lower. We have been facing some operating problems in some plants in the U.S. We had a very long shutdown in one of the plants, which lasted for more days than we expected. It was an impact. And in Europe, the challenges faced by the petrochemical industry because of the low level of the rain river has impacted the availability of…

Good afternoon. So on the third quarter, we have good results in terms of EBITDA, USD 909 million, 4% up from second quarter, 5% of increased when compared to the same quarter of last year. Then year-to-date, we saw a drop of 12% in EBITDA. It was an expected drop. As you will remember, in the first half of last year, especially first two months of last year, we have spreads which were exceptionally good for benzene and butadiene. We had in atypical market situation, which lacks a very high spread, which did not happen this year. Most of that drop comes from that fact. The second effect was that at last year, we sold our chemical distribution unit. And this year, we did not sell the chem and fuel also that capital gain does not show in the numbers this year, of course. So when we compare the evolution quarter-on-quarter, we can identify an effect, which is mentioned before Marcelo. The effect coming from a lower production, the first half of the year because operating problems which affected the whole half of the year, something which we did not have in the third quarter of this year. As for CapEx investment, the lower – the estimated amount for the year, the main operating expense was the schedule shutdown for the cracker in Río Grande do Sul. And in terms of strategic investment, we have U.S. project. It was mentioned by Fernando before. And expectations for the year, we won’t, we won’t meet the CapEx number. For the last quarter, as usual, they’re stronger in terms of investment. So we will get close to the forecast of the year but not really meet that forecast. As for cash generation, we had a very strong cash generation this year. The year-to-date…

I would like to start remembering everyone what we call the belief and the purpose of Braskem. So the belief that plastic is very good and help people having a better life, we believe chemistry make life better and the purpose is to improve people’s lives by creating sustainable chemistry and plastic solutions. So when we talk about circular economy, so we have a typical linear base with the use and disposed in a chain where we produce, use and reuse. So we want to use products in some way, either through recycling or using or using it for energy production. There are many different alternative. I think that, undoubtedly, absolutely sure of this benefit that plastic has provided to society. Today, plastic is a fundamental solution for us to improve and increase the availability of food to avoid loss in the production of food. So the world wastes 1/3 of the food it produces without plastic. This number would be even greater with plastic when you’re able to reduce that number. Just as an illustration of this 1/3 of food that is produced and wastage accounts for 7% of the greenhouse effect gases that are annually produced in the world. So in terms of plastics playing a key role in full chain availability of water and sanitation, water is always present. Also in terms of hygiene and hospital security or safety. So I could go on and on for a long time. So the plastic is very successful. It uses – it has a growing use. There’s a program that is becoming clearer and clearer that we need to think about what happens after consumption, what we need to do with that so that we can responsibly deal with the management of waste and to avoid that plastic is…

My first question is for contracts. The contracts with Petrobras matures at the end of 2020. I’d ask first if there’s anything new on that front. And a second question as with Comex in Mexico, we heard that there could be some renegotiation. Is this is going to happen? Or is there any intention of searching for an independent distributor? So what kind of dynamic can we expect? And also a question about the flexibilization of the cracker. There, we have a growing demand for ethane and a decreasing demand for naptha. How do you see that playing out going forward? How do you see working around naptha and ethane going forward?

I’ll start and then Marcelo might complement if he wants, wishes to do so. In terms of the naptha contract with Petrobras, as you said, it’ll mature by the end of 2020, the naptha contract with Petrobras. We are midway through it now. It’s a 5-year contract. The negotiations for the renewal of that contract is something that in our view will happen next year. We won’t wait until the very last minute to do that. Today, though, it is not a priority for us now. I think we can wait for next year to address that issue. That’s when we’ll start the negotiations with Petrobras next year. As for the Mexico question, PEMEX has been facing operating challenge as I mentioned. We have a contract, which is quite well structured. And as it was said, this has helped the company maintain its normal flow. We have been having a very good, open dialogue with them in terms of what they need to do to improve their operating rate across the whole system. We have the production system, the extraction, the exploration system, the transportation system. So it’s a combination of systems that need investment. The good news is that they realize that in the short term, that would not be possible. So they started to import feedstocks in the U.S., and they’re trying to work around more structural solutions, both regarding their assets and also regarding the importation of ethane. As for renegotiation, as I said, we have a very strong contract. We will know about the contract, the operations. The balance for the contract finance was the main element that drove the investment decision. Our intention is to collaborate with PEMEX. We want to operate the plant at full steam. So we continue to talk with them and…

I am from Banco Santander. So going back to Mexico and talking about the contracts, you said that Braskem is seeking alternatives. And so what would be the additional investment to increase capacity? We have seen a drop in Q3. How is the fourth quarter going? So I would like to ask a question regarding Brazil. There is a new government – new President-elect. How can that affect structurally your business looking in the long-term interest of imports and the flow of goods to Brazil, thinking of China. And then last, after the growth of the U.S. that is going on, which would be the potential sources for you to seek organic or inorganic growth?

As I said, PEMEX is already importing ethane and trying to change that into something more structural, they have adapted a few systems to create that capacity to import. As they advance the investment, there may be an opportunity to use more of that structure that would be potentially built even by third parties, and then we might operate without making any investments. So we are looking at the alternatives. We have the know-how of how to do it, how to deal with ethane from what we learned in Bahia. We have already logistic know-how of how to do that. So we are following up what PEMEX is doing and assessing the alternatives. Our preference is that a system that’s built by third parties that could facilitate it. Today, there’s an existing structure for the export of ethane in U.S. by companies. And ideally, the same thing should happen in Mexico with the new government in a previous reform. There was a natural evolution. With the new government, we need to see whether PEMEX is going to build the structure, if they are going to have a third party building it. And then depending on what happens, we will assess whether there is any possibility for us to make any sort of investment there. But our priority is to discuss with PEMEX the contracts and the deliveries that they are mandated to make according to contract clauses. So we are going to go to them and say, "Well, you have an obligation. What are you doing to deliver what has been contracted to supply all raw materials?" And the fourth quarter is slightly better, but we still have a lot of volatility. Sometimes, they deliver 100% of the contracted amount. Sometimes, it’s 70%. On average, it’s slightly better than it…

I am Vinicius from HSBC. Which synergy do you see for a possible integration?

I am going to answer your question just in theoretical approach because a possible transaction is being conducted by our controlling shareholder and the participation in the company’s management is just in terms of supporting the due diligence in terms of obtaining information. So I will see – what I would do if I were buying the sales? I think that, and there are some significant opportunities of synergies that go along the line of continuing some actions that Braskem has taken, and they have created value. As we acquire polypropylene plants in U.S. and Europe and integrated them in our management model, we could start some actions that were important. And Brazil is structurally an important polypropylene and then Europe imports polypropylene. We manufacture a range of products that is why in Europe because when we bought the plants, the previous owner was operating in a number of segments and needed products. As we learned to manage the system, we started getting some of the products that are sold in Europe and then were no longer manufactured in Europe and are exclusively manufactured in Brazil. The products were slightly higher value-added than some of the things we used to see in Brazil. So it improves exports from Brazil. It goes to market that we are already serving in Europe and frees up space in the plants in Europe for us to manufacture products that are more competitive for that specific asset. So as we manage the network as a whole, we create the cycle of opportunity, maximizing our assets and optimizing both as there are many flows of resin going to a different regions. There are many different uses in managing the network as a whole and making use of its synergies. So you’re doing synergies, part of the…

My name is Roger. I’m an investor. So the question is about the new terms for the New York Stock Exchange. I’m sorry, but the sound from the question’s mic is impossible to understand. Let’s go to the answer then.

So the first thing to mention that Braskem has already published the necessary documents early in the year, and what we’re doing now is working around our internal controls. We had a term, which was extended this week, a deadline. We did not conclude all the ongoing work. So we asked for an extension. What can I tell you is that the team has been working hard and focused to finish that as soon as possible. The scope changes with time. So as new headlines emerge or new facts emerge, we need to check and see it will go according to plan. So it’s a bit of a moving dynamic, if you will. With what we have today, that additional deadline is in line with our expectation. But of course, there’s always a certain level of uncertainty because of this moving quality of the product. But in terms of results, numbers, we are not concerned about that. It is rather a workaround internal consult as I said and meeting the deadline.

Thank you. We’ll now start the Q&A [Operator Instructions] [indiscernible] from UBS has a question.

Good afternoon everyone, thank you for taking my question. I have two questions. The first one about the deal with Lyondell again. What are the main hurdles for that deal? Is Mexico involved? Is Petrobras involved? What are the main hurdles for closing that deal? My second question has to do with the EBITDA generation outside of Brazil. Your guidance is to generate around 50% EBITDA abroad. So my question is how do you plan on reaching that number, and when? Thank you.

I’ll start with the second question first. It’s not a guidance. It’s rather an ambition, a wish that we have. And there is no defined deadline for that. We want to work towards generating EBITDA abroad at a level above 50% in the mid to the long run. But as we talk about the balance for feedstock with the flexibility range of around 20%, we also talk rather about a mid- to long-term ambition than a guidance. There is no defined specified deadline, as I said, for that. As for the deal with LyondellBasell, my ability to answer your question is quite limited. As I said, the role of the management has been to support the diligence process. We have not participated in many conversations between the management of Lyondell about the deal specifically. We are not active participants in contract. I wouldn’t even know if they’re already talking about spreading contract. In my view, what I can tell you is that, we are close to the end of a deal. We have already answered a significant amount of questions coming from the controlling shareholder. But as I like to say, it’s only final when the contract is signed. And our expectations now that as shareholders are in negotiations with multiple buyers, other questions might emerge. So it’s an open process. I wouldn’t know if there are any hurdles as you mentioned. Your question talked about hurdles. It is a very complex deal, which involves two different geographies, which are unknown to Lyondell, mainly Brazil and Mexico, without the idiosyncrasies involving those geographies, both countries going through government transition, very complex. We’re talking about a very big company such as Braskem, different countries, different geographies. So to me, we are all within the expected process for such a huge deal. Once again, given the specificities of our structures and also group participation of Petrobras, I do believe that Lyondell is applying the same thing with Petrobras. But again, like we said, this is just off the top of my head. I’m not a participant in that process. If I were the CEO of Lyondell, I’d also be talking with Petrobras. That’s what I would imagine. He’s an intelligent man, and he’s probably doing that talking to other stakeholders. If there are hurdles, as you mentioned, I don’t know. I wouldn’t know. The 20F issue might be relevant, yes. But I wouldn’t know how that would fit in this specific deal. We have to ask Lyondell directly actually.

Okay. Got it, thank you.

This is Andre from Itaú. Another question about a trend of a closed economy. You have the green polystyrene made of ethane. Has this become more viable in terms of price? Do you see any more space for this product in the future? And there was a problem with supply recently. And the last question is you’re quite good at cash. So what is your cash projection? The CapEx from now on is quite okay. How do you imagine that you’re going to manage your cash and the payout of dividend?

So it’s a complex question. Three people will answer it. So beginning with the issue of renewable, I think there’s a difference that is important for us to make clear. One thing is the cost of ethanol-based ethane. They are structurally different costs. Ethane, naptha-based ethane versus ethanol-based ethane have different drivers, although we know naphtha in ethanol, we’re already talking to each other in the fuel markets. They had some relationship. What we see ethanol ends up as being less correlated to the foreign exchange rates. It’s more pricing BRL than naptha. So from time to time, there may be variations in relative cost of production of ethanol-based ethane. And structurally speaking, on the whole, naptha-based ethane is slightly cheaper. But there are times when, for example, when the BRL-USD FX rate is for BRL per dollar, the cost is almost equivalent. What defines the pricing of green polystyrene is not that. So green polystyrene today is a niche product, and it competes with the other renewable source resins. And if we are to compare the pricing of green polystyrene versus the other resins, it’s the most competitive resin available. What we say to our customers is that if they cannot see any, if they not captured value in using green polystyrene or if they have an internal indicator or some internally of risk-weighting sustainability, which is important, so it doesn’t make sense for them migrating from naptha polystyrene to green polystyrene. So it’s detached from cost. It’s related to the value. And so the issue of raw material, what I mentioned here about the ultra-deepwater oil is related to the shortage of ethane and propane domestically in Brazil. Brazil before the ultra-deep oil, Brazil used to be very deep, poor in these raw materials. As the ultra-deepwater oil…

Mr. Pedro Medeiros from Citibank would like to ask a question.

Good afternoon to everyone and congratulations on your performance, thank you for opening for question. I have two questions. One is slightly more strategic. I would like to hear your opinions as to the expansion of capacity and the possibilities for expanding capacity. When do you think the time will come for you to start considering investments in new or polyethylene capacities, new PE capacity? And the second question is looking more the trend of performance in 2018. We discussed a long time about supply of raw materials. But in 2018, you have demonstrated significant reduction as compared to the historic average in terms of naptha provided by Petrobras in Brazil. Could you comment whether there is any targets, any level of equilibrium or how much you could process of imported naptha. And the last question, looking into the two next quarters to understand, and you’ve addressed this in the presentation, is there any plan of scheduled downtime that is relevant in the next two quarters that we should take into account? Thank you very much.

As to the capacity expansion for PE. Okay. Among our assets in Brazil, we have at least three alternatives to expand capacity in those assets. Capacity expansion projects usually have a group level of profitability provided we have feedstock and demand. And so there is a possibility. When we have that, we have a good possibility to expand our duplicate share assets, both for the cracker and for the PE plant. Unfortunately, what we have as a scenario for the past few years starting in 2013, 2014, 2015 and 2016, we saw a drop in market demand in Brazil. And that delayed possible decisions. But all the projects are ready. It’s only a matter of having availability of feedstock, but some of the more smaller projects, it would be a matter of simply redirecting projects towards our PE plant. For the duplicate shares plants, we have to solve a raw material issue as well. Today, we have about 1/3 of our PE production from 1/3 to 40% of our PE production is exported. So we have no problems in meeting a strategic market demand, both in Brazil and abroad, markets that we could be a quick service from Brazil, especially in Latin America. Just a brief follow-up in terms of feedstock, naptha specifically as had mentioned when he made his presentation, we’ve been expanding our supplier portfolio globally. And with that, some opportunities have emerged that have shown us that we can better use, better negotiating conditions to import. So we saw opportunities, and we ended up importing more naptha than buying from Petrobras. In terms of bringing naptha to Brazil, we have a limitation because of logistics issues. We depend on Petrobras’ infrastructure to bring back naptha in on top of what we already bring in, about 57%. But there is room for us for that. And from a certain point on, we would need to assess costs. It would be an economic decision at the end. In terms of schedule shutdowns, the third question, which you have, is scheduled shutdown at one of our plants in Bahia. That’s for next year. And then for 2020, we have a schedule shutdown for PP, a PP plant – I’m sorry, 2021 as well. There was a change in the present legislation, which allows us to conduct an internal study that will allow us to extend the campaigns to another eight to nine years. So that’s something we’re going to be doing throughout the next five years. We have already started, and we should have a potential extension of field campaign.

Okay.

(126:28):

Okay. That issue around relationships with society and communities, that’s a priority for us. And it is in line with our intention of being good corporate citizens. We invest a lot of effort in social projects. We do use incentive a lot, but we invest a lot more than we benefit from the law. Now all initiatives are geared towards needs that we identify from the standpoint of the communities located around our industrial plant and that we focus our energies also on priority topics. For example, the cooperatives of residue scrapers that we do across Brazil. So yesterday, by the way, we had a meeting to discuss the topic, and we are now going through a moment where we will fine-tune the way we approach that. We are conducting a very detailed study of the surroundings of our plant, including socioeconomic indicators, human development indexes. We have higher survey companies to try and identify demand coming from those communities. And the idea is to work closer with those communities in a more efficient way. So to answer your question, it’s a combination of incentives and investments. But it’s always more on our side to invest more than we benefit. But given the size of the company, it is a relevant amount of investment. But the impact is quite – also quite significant. Another component we have, we discussed yesterday coincidentally is to try and find a balance in terms of our allocating efforts both in Brazil and in other geographies where we operate. Of course, the priority would fall in Mexico given that Europe and U.S. are geographies where we have a higher level of development. And so insomuch as those – of course, they are used, but they’re used differently in those more developed societies. So we have a stack of efforts that in Brazil alone, the private social investment has impacted over 180,000 people either directly or indirectly, people who were touched by those projects. They include the revamping of an elderly home to a refer station, environmental education program, revamping our public schools. It’s a series of activities that we execute. I could add we also sponsor Brazilian polo athletes, and this sponsorship will continue throughout the current Olympic cycle. We have a partnership in the U.S. with the Philadelphia Eagles around sustainability initiatives. We also support a recycling project inside the Philadelphia Eagles stadium, initiatives that we also have in place in Brazil in terms of recycling.

(131:37): (132:44): So it’s a day-to-day dialogue that our Investor Relations team has with all investors, and we try to incorporate this in our communications with you. And just in closing, in addition to thank, I would like to reinforce or to stress our strategy that has been quite successful in meeting our customer needs, in operating our plants with safety within the concept of sustainability that have enabled the reduction of our indebtedness level and that put Braskem today is condition, both in terms of its presence and globally, in many geographies where we operate in a position of highlight with the portfolio pipeline of new projects that we are working on. And over the next few years, we hope to mature in order to start and to continuously create value to all our shareholders. So once again, thank you very much for your presence, and I’ll see you next time when we publish the results for the year of 2018 in the beginning of next year. Thank you very much.