Good morning. Thank you for waiting. We’d like to you welcome to Braskem Teleconference to discuss results concerning the Third Quarter of 2021. We have here with us, Mr. Roberto Simoes, CEO; Pedro Freitas, CFO; and Rosana Avolio, IR-Director. We inform that this event is being recorded. [Operator Instructions] This meeting is being transmitted simultaneously via webcast, and you can access it at https://www.braskem.com.br/ri, where the presentation will be available. This slide selection will be controlled by yourselves. The audio will be available at the end of the meeting and the participants of the webcast may register their questions via the website. And the questions will be answered at the end of the conference. Before proceeding, I would like to clarify that any declarations that may be done during this teleconference relative to business perspective from the company projections, operational goals, financial goals are beliefs and premises of the company. And based on current available information, future considerations are not guarantee of performance and they include risks, uncertainties, and premises, and they depend on circumstances that may or not occur. Investors and analysts should understand that general conditions and other operational factors may affect the future results of the company that may lead to results that are different from those expressed in such future consideration. I would now like to give the floor to Ms. Rosana Avolio Director of Investments that we will begin the presentation. Please go on.

Good morning and thank you for participation on this conference call. We will present our results for the third quarter of 2021. Let's go to Slide 3 with an overview of the petrochemical industry in the quarter. In the slide, we show the spread with the biggest impacts on Braskem’s business, since together, they represent two-thirds of our global production capacity in thermoplastic resins. In the third quarter, petrochemicals plants remained at high levels and above the up cycle of the petrochemical industry. Compared to the 3Q 20, the spreads widening -- widen significantly with the three spreads shown on the slide, increasing 120% mainly due to global supply chain constraints, related to impacts from natural events, closing of ports to contain the delta variant in Asia and global container shortage and associated rise in freight prices. Now on Slide number 4, we will comment the consolidated results. In the third quarter 2021, consolidate recurring operating result was around $1.5 billion, 17% lower quarter-over-quarter. This result is mainly explained by the lower international spreads for resins in Brazil, PP in Europe and for PE in Mexico, but which still remain above average of the last 10 years, which were partially offset by higher spreads for main based chemicals in Brazil and for PP United States. And comparing the results with the same period last year, the company represented 261% increase considering the operation result in dollars. The higher profitability in 2021 can be shown in recurring operating margin, which reached 31% and in the first nine months of 2021, an increase of 15 percentage points as compared to the same period of 2020. Now the next slide, we will come the net income. In the third quarter 2021, Braskem reported net income of around BRL3.5 billion in the -- by…

[Operator Instructions] Our first question comes from Bruno Montanari, Morgan Stanley.

Hello. Thank you for the question. I have one question, actually, two topics about capital allocation in view of the sharp deleveraging of the company and positive numbers. I'd like to understand across dividend payouts and investment opportunities. As for dividends, the expectation that you have in terms of timing announcement, what goes on in the mind of the company's controllers around the payout of dividends, and also in terms of the investments, if you have already concluded much of what you had to do some of the projects you listed are quite interesting, but I'd like to understand if you could perhaps list aside the green PE, what other sizeable investments are you thinking about in the U.S., in Mexico, in Brazil? What can we expect in terms of that pipeline going forward? Thank you.

Hi, Bruno. Good morning. Thank you for the question. It is a pleasure to, to be able to talk to you all investors and analysts during today's earnings call. That question does make sense. We have been talking about it capital location as an important topic coming from that, of course, the strong cash generation brings about the question. And as you said, we have been working extensively to reduce that and only have two other levers to allocate capital as you mentioned. I'll start with a dividend question. Today as is, we do not have pipeline to invest in site. So our investment perspective, talking about investments, right, we not have a new polymer plants in the pipeline just as we have in Mexico and U.S., we do not have a sizable investment like that in the pipeline today. A project like that would take two years to be completed, if something like that work to be part of our pipeline. And again, there's nothing in insight. This would be happening in two, three years’ time, where we do have investments under development. They include two areas, renewables. We have announced an MOU. It's an MOU based on a study for a new plant of green ethane in Thailand, as it was mentioned, but this study will lead to an investment decision going forward down the road, but it's a lower investment level. For this case, it would be a lower level investment. And again, no visibility so far, but when we look at renewables, which is the company's investment focus, there's nothing in the short run just to be sure. And once we call circular economy, which includes recycling initiatives, mechanical and chemical recycling, we do have short term projects in the pipeline still being matured, but as…

Perfect. Thank you.

Our next question comes from Pedro Soares, BTG Pactual.

Good morning, all. I have a follow-up on the previous question. If you could talk about the dynamics that you brought and also about what we talked on the last quarter that was sort of an informal data on leveraging. Is there a perspective, as you mentioned? In terms of business and the medium run, do you see any risk for this spread dynamics to become normal in a quicker way so that you may postpone or reduce what you expected to pay in dividends?

Pedro, This is Rosana. Good morning. Could you repeat the question? Because the sound is really not good enough.

Of course. Can you hear me now?

Yes, it's better.

The question was a follow-up on the previous question on dividends, trying to link that not only to the leverage that you mentioned in the previous call, in the market, the current situation of the company would enable you to pay a lot with all this cash generation that we saw. But if somehow this spread dynamic normalizing, and you have mentioned that somehow you expect in relation to business plan in the medium run, is there any risk that the spread dynamics -- that the risk a postponing of this dividend that you thought of in the previous quarter, maybe you could talk about next year?

We -- this scenario that we see ahead has been sustained that next year will have results. That will be very good, historically speaking, but of course, less than this year, because of the scenario petrochemical scenario and these perspectives that we see from the specialists in 2023 lower position than compared to 2022, according to the specialists, I would say that our view of future has not changed. We have maintained a favorable perspective, of course, the result, not as good as this year, but a favorable result for the coming years. This dividend analysis is aligned with the policy. And when we assess different scenarios, it's not one single scenario. You have to remember that petrochem has, if you look at the net profit it's BRL14 billion, but we have to absorb the losses of last year. We have to have legal reserves that came to zero because of last year. And we have an analysis that is being done of how much we can pay, because we have to absorb, this issues of the previous year. We also have to remember that the company has a precedent of distributing the anticipated dividends. This was done in 2017. And even in that moment, we did not just distribute all the net profit beforehand. What we have here is an analysis that we will follow the policy plans, but the scenario has not changed, considering that we have a few years back materially speaking, and most likely it will follow the precedent of 2017 of having a reasonable distribution anticipated in an second moment after the general assembly will compliment. This is also subject to the conclusion of this analysis and to the approval by the board.

Our next question comes from Luiz Carvalho, UBS.

Thank you. Thank you, Pedro, Rosana. Thank you. Basically, I have a few questions. Pedro, if you could go back to this dividends issue following the first question, also, you don't have large projects or large increment to the near future. That's what I understood. And obviously, even this scenario of this spreads is slowing down a little bit. Could you maintain a cash generation that's quite robust? So the idea is that this cash sum that would be that would come back via buyback or dividend something on that sense. And second, if you could provide you an idea of the increase of the U.S. to Braskem, they have recently announced in agreement with U.S., I mean Braskem Idesa, incrementing that offer. Could you give more details on that? And if I may, one last, I don't know how much you'd be able to answer to that, but anything new -- any additional demands from the controller for the company's management that may indicate a type of movement from the standpoint of market ability, liquidity of the company. Thank you.

Good morning. Thank you for your questions. Yes, there's a cash summon up is probably to pay dividends. This is what we have mentioning -- been mentioning. There's one other point that we have on the rather, which is Braskem because of COVID in 2020 did small investment. And from this year, it was postponed for next year. So you have a backlog of maintenance investment, but this is not so important materially speaking to be done. There is a difference. I think the portfolio of investment that who announced for next year, maybe we'll be bolder in this part of investment and plant maintainers to have a catch-up of what was not done last year and what was postponed from this year too. But nothing material for discussion as far as capital allocation is concerned. So that's a natural avenue in regards to importing anything from the U.S., the imports increased and the end of second Q and third Q, we extended the capacity of importing ethane from Mexico. It's around 26,000 barrels a day. And the expectation we have throughout this next half is to expand even more. This capacity to 35 million barrels a year, since we use 66,000 a day, we are talking about half of our feedstock that will come from Fast Track and the rest from Pemex. We have reached, we have operated at 100% in October, but the average was 75%. If we compare to the third quarter, this one was 68% from 68% to 75% quarter-to-quarter, we have a perspective in the next six months adding the change that was done with APEX, with the agreement, plus there's no capacity expanding the Fast Track capacity. We think that we could reach a 100% of use in a recurrent way, after the second…

Our next question comes from [Gabrielle Baga] from Citibank.

Hi, Pedro, Rosana. Thank you for taking my question. I have a few questions. I will start by -- one of the things that got my attention was the material fact about the compliance and auditing committee, as far as I can see and understand. That is a mandatory issue. Right. Looking from that point of view, how would that migration process be to the Nova Mercado? As it was said in the media, there were other options of migration to the Nova Mercado. So in addition to that audit and compliance committee, what else would need to be done for that migration to happen? And how long would that take? Also, I'd like to understand in what concerns Mexico things that we're going to be decided concerning the ethane contract, those are already past waters. But looking forward, I'd like to have some more color on the operational front. I'd like to understand about the margins, taking into account the higher capacity that you have now, vis-a-vis what you had in the past, and we explore that in the presentation, that capacity expansion. And also having in mind a slightly higher raw material price. How do you address that equation? Those are my two questions. Thank you.

Hi, Gabrielle. Thank you. Two good questions because they allow me to elaborate a little more on those changes that happen at the governance level and which are very relevant changes. And also it allows me to talk about the future of our operations in Mexico. About Braskem created a compliance committee back in 2016. It's part of the board. And it's a statutory committee made up of three independent members. And we had been discussing changes and also incorporate an audit committee. Braskem came to meet U.S. law, the audit committee was called the fiscal council before for the purposes of the SEC requirements. We are now at the level one, there is no requirement for an audit committee at the level one, but as you said, the best governance practices ended up in Mercado require that we have a an audit committee. So we have converted the compliance committee into a compliance and audit committee, and this committee will meet both U.S. legislation. So it will of course meet SEC requirements and it also meets the Brazilian legislation. So we are following all the requirements for the Nova Mercado. And we now have an additional two members, they are external independent members. And we are external specialists that now have joined the compliance and audit committee. So it is a very relevant change in our governance structure. It takes to the Board level, a whole different view in that it strengthens our governance structure. And, of course, has a consequence on the way we announced our results. This was already in place, but now it has been formalized. So this was a change, which was instrumental, I'd say, and we are very, very satisfied with the results. And we're very happy that this was approved by the shareholders…

Thank you for your answer. Now I'm going to read a question that regard from through the webcast. I will translate a question that came from. Thank you for your question. He asks about the -- it in relation the last conversations with in relation to ROI. And he asks whether this expectation in the short run in the context of commodities, in the expectations of the futures spreads, if that changes anything in our expectation on ROI, think of the cloud. So talking about the discussions with the agencies?

First, I'd like to enforce some point. We had a downgrade from the agencies and the 2Q 2020 in July last year. From then on, we did a huge exercise. If we go back to the gross debt it was R$8.7 billion. We're closing with gross debt 6.3 in this 3Q. So only from that standpoint, we reduced almost R$2.5 billion net debt also in the 2Q 2020 it was 6.3. And now we are closing with $4 million. So it was an excess as of the company reducing the net debt in $2.3 billion in leveraging reducing. Importantly, reaching the lowest position. So where I'm bringing this variations because in the end of the day, the figures picked by itself by themselves. And when we look at the expectation forward we are in a moment. That's very simple, very strong spreads, but the expectation is positive and again the company to the next size of reducing to be prepared for any cycle turn. So we have been talking with the same agencies in a recurrent way with fit as well as with Moody's. And we do respect all the work they do, but yes, we do believe that our investment level will come back. And in relation to leveraging and comparing to the average of the most important place of the industry. In the U.S. making this comparison, the company has a credit profile that's quite positive. It has an inferior leveraging, as compared to the average of partners. This is one more argument that leads us to have this confidence and recovering this investment level in the short run. In September, we had this change. We have been talking with the agencies. And, of course, we respect everything that the agencies do, and we are sure that we will recover this investment level.

Our next question comes from Christian Audi, Santander.

Thank you, Pedro and Rosana. I had a few questions. First one, have you had deleveraging that was so strong. I wanted to understand to what extent do you believe that it's healthy? What level do you want? Could you give us a figure? And I have other questions, operational questions if you could detail. A little bit now Rosana mentioned something. But could you talk first about the demand per region not only for next quarter, but for next year? And the last question is if you could make it clear that 3Q '21 was a record number -- record for the spreads. But historically what's going to happen? So if you could just give an idea of what level you've expect those spreads in 2022, as against '21?

Hi, Christian, how are you? Thank you for your questions. In relation to the in debt level, we today are at a low level of leveraging. We have two assessments that we do regarding that. One of them is the assessment of the number of leverages, we have as reference internally for a cycle mean around to twice the net debt per EBITDA. And we can reach 2.53 as happened last year. So we know that in the cycle lowest it lowers also, and in the mean level around two is what we have as reference. There may be variations. but it's one we have. So today it's quite low. We know that we have to change this and another number that we have as reference is a historical mark of net debt that we have. There is a slide in the presentation number 16. That shows the historical net debt since 2020. It's not a long history, but our net debt is around $5 million, more or less in a very stable way. So we believe now with the operations, the number may be even higher. But if we look at $5 billion in net debt, we closed this quarter at four. So we would have a buffer to improve the net debt. And now we talk about capital allocation. Again, we have quite a few million, at least $1 million to adjust and we believe that that's something that connects well with the discussion of capital allocation. In relation to demand, we have G&P view. We use analysts and other experts. What we see is the market talking about 1.2% for next year. The demand analysis in Brazil was 1.5% the GDP is around 2% a year. It's -- that what we expect for the demand of Brazil.…

One quick follow-up about Brazil, if I may. You talked about normalization of demand. How do you see that going forward? When you talk about demand normalization, what exactly do you mean? When you talk about normalization of demand, we had demand which was higher than expected especially late last year and early this year, when we see the demand in Brazil for the fourth quarter of last year and first two quarters of this year, until April, May, you had inventories being rebuilt in a change in consumption patterns that led to a higher demand across those three quarters. Now as we reach Q3, Q3 this year, we see lower demand than in Q2, our sales increased. As Rosana mentioned, we had a production shutdown. But our sales went up but the demand in the Brazilian market resumed what I'd call normal levels, it continues to grow, but at a lower pace more fitting to what the market is used to. But if we have a demand disruption in Brazil, driven by some macroeconomic effect, we will have a curve of foreign exchange devaluation which could be beneficial for the company for Braskem is a company that improves significantly when there is foreign exchange deval, so we have a natural hedge vis-à-vis the political/economic conditions or situation in Brazil. Okay, thank you, Pedro.

Our next question comes from [indiscernible] Citibank.

I have another question, as for the Green PE, I'd like to understand the size of that market. Remember when you release the relevant or material fact, some time ago and you talked about 200,000 tons through 2025. That target doesn't seem to be so aggressive so that understand the size of that market both for ethane and polypropylene, and what will be the return for that investment in SCG and as you could perhaps invest in the plants and participate more actively in the production. That's what I wanted to know. Thank you.

Okay, Gabriel, I think those two announcements we made, material fact we released they are part of a biopolymers strategy that we have been developing. So they didn't happen at the same time by chance. On the one hand, we are assessing several growth opportunities under renewables, especially biopolymers. What we call the Green PE that joint venture with SCG or for now, it's only an MOU, it falls under that scope of spinning up the capture of that market by having new production volumes in place. Of course, the global market for polyethylene is 100 million tons a year. Our forecast internally which is more conservative is of a market of around 1.3 million tons in 2030. If we had green, polyethylene, a million tons today, we would sell the whole amount today, I think the market is there today for a million tons. The issue is how can we accelerate the implementation of those new plants, we have for this business we are able to have some kind of hedging or hedge for raw material, the cost of ethanol we can pass on in our sales contract. So any potential oscillation in commodity prices, we can recover commercially, we do have clients who are willing to enter into long-term contracts for that product. So when we look at the clients alone, we are already getting close to that 1.3 million for 2013. So the market is much larger than that. So we are now trying to develop or to expand what we already have and we have rented and we see SCG as a partner for the second plant and partners for a fourth or fifth plants. So we are assessing all those avenues of growth, be it through partnerships or be it through new plants, which we…

This concludes the Q&A session. I'd like to turn the floor back over to the company for their final remarks. Please, you may carry on.

I'd like to thank you all for participating in our earnings call for Q3. And just to close, a couple of final observations to reinforce some of the points that myself and Rosana presented. I'll start by the results. Yet another quarter of very strong results I was talking with Rosana earlier today, we've had years which were similar to this one single quarter. So exceptional results for one single quarter. We continue to generate cash at historical levels. If we look at the return on cash flow, on the share price, it's sitting above 20% above any other company in the industry. So our performance was quite exceptional. We have always have also maintain our commitment to the company's financial health, our leverage level also at a low record 0.8 times, 0.83 times net debt over EBITDA, our target is to recover investment grade as it was mentioned, we have already done it with one agency, but we are now trying to get the same grade with other agencies and by working with them to also be able to recover that and we are confident that we will be able to make it with the other rating agencies. Also important our operations in Mexico a final solution to supply ethane, which was one of the main objectives for 2021 and we are once again reinforcing the company's delivery capacity. We had a clear objectives for this year, an important progress in Alagoas also that's also ongoing. The other objective which was important was Mexico. So this is done an overweight as we have signed the new contract amendment with PEMEX, a 15 year contract for the supply of natural gas, the replacement of the debt with the project finance, the issuance of debt bonds, which are sustainability linked, the…

Braskem’s audio conference is now over. We'd like to thank you all for participating and have a nice day everyone and thank you for using chorus call.