Good morning. Thanks for waiting. Welcome to the Braskem Video Conference to present our Earnings Results for the First Quarter of 2023. Today, we have Mr. [Roberto Bishop] (Roberto Simoes), CEO of Braskem; Pedro Freitas, CFO of Braskem, and Rosana, Investor Relations Director. Please note that this event is being recorded. All participants will only hear the Braskem teleconference. Next, we will begin the Q&A session and we would like to take any questions you may have. If you have any issues or requests for assistance, please request assistance using the button here on this call. This event is also being broadcast live online through webcast and can be connected through www.braskem.com/ri. You will also find our presentation there. The slide deck is under your control. The audio will be available shortly after the event is concluded. Those following the presentation via the webcast may post their questions to the Braskem website. They will be answered by the IR team after the conference is finished. We'd also like to mention that any comments that may be made during this teleconference with regard to financial results, projections, or any other opinions, are only considered as projections. These results always pertain to uncertainty and there is always risk that is possible. Please be aware that macroeconomic conditions, industry conditions and other factors can also cause results to differ materially from those expressed in such forward-looking statement. Now, I'd like to turn the conference over to missus Rosana Avolio, Investor Relations, Strategic Planning and Corporate Market Intelligence Director. Mrs. Avolio, you may begin your presentation.

Good morning. Ladies and gentlemen, and thank you for participating in Braskem’s results conference call. Today, we’ll present the results for the first quarter of 2023. Moving on to slide number three. I will comment on the company's main highlights in the period. In the first quarter of 2023 Braskem reported recurring EBITDA of $205 million and net profit of $184 million and a cash consumption of $261 million. Regarding the financial highlights, Braskem continue to present solid credit metrics with a very long debt profile in a stronger liquidity position, which guarantees the coverage of debt maturities in the next six years. As for the operational highlights of the company registered the global accident frequency rate with and without leave of 1.08 events per 1 million man hours worked resulting in an 8% drop, compared to the same period in 2022, reinforcing that safety is and always will be a non-negotiable value for Braskem. Furthermore, given the better global industrial activity, the company's operating performance in the period was higher than the previous quarter. With an increase in utilization rate in all regions and increased sales volume in all segments. As far the strategic highlights, Braskem progress in the project to expand the current capacity of green ethylene by 30% with fiscal progress reaching 95% until March 2023. And another agreement for the purchase of wind energy was executed in the period. In addition, Braskem Idesa together with Advario made in advance in the construction of the ethane terminal in Mexico, reaching 34% of fiscal progress in the period. Let's move on to the next slide. In the first quarter of 2023, the recurring EBITDA was a rounded $105 million, driven mainly by the better performance of global industrial activity, an inventory consumption in the transformation chain, impacting the…

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Order first question comes from Pedro Soares with BTG Pactual.

Hi. Good morning, everyone. Good morning, Roberto, Pedro, Rosana. I have a few different questions, the first is about what we've been seeing with regard to a potential sale of Braskem. We -- could you please just remind us and go over the rights to minority shareholders in the event of purchase occurring by an outside agent or, let's say, perhaps, Petrobras exercises its right to preference or purchase. This discussion would be very interesting for us. If you could please elaborate a bit about that? The second question is about working capital. Could you please tell us a little bit about what we should think about the working capital dynamics? Especially with regard to -- from now up until the rest of the year and petrochemical prices? Can we envision something similar to what we have seen during the first quarter? Or is this something that should change over the next few quarters? Thank you.

Hello, Pedro. Thank you for the question. I'm going to answer your first question related to the rights of the minority shareholders. Today, we have a shareholder agreement, just as a reminder. In addition, we have high loss, which governs the company activities and we are at level one. So, if there's any control change, if sales occur, the company will measure 100% of the tagalong for TQPM shares. So, we offer [Technical Difficulty] conditions of the offer. For TQPM, as to capital, I'm going to turn the floor to Pedro to talk about working capital. As you said, this is the topic related to shareholders. So we do not do any sort of negotiations in this context.

Good morning. Thanks for your question. First, I'd just like to mention. As Rosana mentioned, we need to look at the company's bylaws and articles of incorporation there is a scenario where Petrobras may make a purchase and that will not constitute a change of control. So this brings us back to the that whole idea with the tagalong, and that's at 80%. This is essentially theoretical. Now, thinking about your second question with regard to prices and volume, there is utilization of working capital. This is something that occurs at many different points in time. What happens when we break apart working capital and look at accounts payable and other line items. What we see is that our level of earnings is that currently at a positive level, especially compared to other possibilities. What we see today is that we are improving our working capital, as well as our ability to generate additional capital. This is in addition to the normal scenario, and that's valued at currently $200 million. So if we think about what happens from now until the rest of the year, I certainly expect our capacity and that the $200 million that I mentioned to contain the natural utilization of this working capital. It's important to always be aware and to follow the price of oil, of course, and the price of our different products. There are many different elements that can have an impact on working capital.

Thanks, Pedro. Thanks, Rosana. Can I just follow-up, I don't know if it was just my connection, but there were some points where Pedro's audio cut out. But Pedro, when you mentioned 80%, can I just confirm this is only for standard shares, right?

Yeah. That's right. It's exactly that 85% [Technical Difficulty] shareholders. Fix it according to the shareholders agreement, and [Technical Difficulty] the company.

Thanks, everyone.

Our next question comes from Vicente Falanga with Bradesco BBI.

Thanks, Roberto, Pedro and Rosana. I also have two questions. First, what is the conversation at like right now with the rating agencies? And vis-à-vis, the 3.9% release. How receptive are they to hold the company's rating or to improve it? And another question with regard to a potential M&A. Pedro, what kind of experience could risk a potential risk of reducing the rating. Maybe a leverage buyout, would that have that risk? Because the media are mentioning a potential issuing of debt in order to assuage that that risk. So I'd like to understand whether that is something you're considering? And secondly, with regard to a potential shareholder, someone from Apollo perhaps or ADNOC, is it a matter of know-how for raw material usage or something else? Could you talk a little bit about that, please?

I'm going to start, and Pedro will add to my [Technical Difficulty]. In relation to rating agencies, it’s very important to keep all the rating agencies very close to us, and we have done this for more than 10-years. So we provide them with information, assumptions. That being said, the ratings agencies are quite well aware of how our cycles work. So leveraging will respond to these different cycles. Now that being said, our interaction with ratings agencies is not just about the raw numbers, just the EBITDA, the agency does look at leverage numbers they do expect something like 2.5 times. So in the high period, we'll be at 1.5 times, and for a low period will be something like 4 times, this is similar to what we have seen in the past. Now there are also discussions with the ratings agencies that are very important, for instance, future projections. Otherwise, every time a cycle completes, the agency would upgrade or downgrade every company, and that's not what happens. They know about cycles. And when I look at our upcoming period that has some uncertainties, this needs to account for a relatively high volatility period. But if we look at the short and medium term, we see that especially our spreads, the vector of our spreads are pointing in the right direction. Now, any company which is in a low cycle, but as I mentioned, we have an extremely robust working capital. As I mentioned $7 million, so today, our company has $3.7 billion in capital and working. And I mean, we obtained a very small window. We did issue a few titles and we are in an extremely comfortable position for the coming year. And many of the comments that people make about that Braskem during a period such as this I mean, come on, we announced in our latest report, a previous report, a number of different initiatives. And now, we are reporting their development, and we're also announcing new ones. So again, it's not just a number, it’s -- it is the number during the moment in our cycle and considering future projections, and the company's momentum with regard to its movement and its ability to maximize cash flow. So when we look at all that, especially looking at our leverage, which is [3.86] (ph) as we as we reported during the last quarter, these numbers are extremely in line with what the ratings agencies expect. We have seen this year some changes in our leverage. If we look at our last year's first quarter results, we had a high cycle EBITDA rating, and I think this brings a lot of light to the company's EBITDA ratings.

Thank you, Rosana.

Hi, Vicente. This is Pedro. To answer your second question, ADNOC has direct operations in oil and gas among others. So there could be some synergy there. In terms of inputs or access to inputs or something along those lines. It also owns or rather controls as part of corporation, a complex that has a number of different units in Abu Dhabi called [Indiscernible]. I don't know what their strategy would be. So it's difficult for us, you know, without being aware of the transaction and what the proposal is, to imagine what, kinds of, synergies could arise. But looking at ADNOCs footprint, we see oil, gas, refineries, so we certainly can see some synergies there in terms of inputs, raw materials, and their control. But we'd need to look at it in more depth because they're separate, they're distinct participations. But they do have a partner in the [Indiscernible]. Now I don't know if they would engage in any kind of a composition, but it's possible.

Thanks, Pedro. And just one last thing. The biggest risk, what would be the biggest risk? Could you talk a little bit about that?

It really depends on how the transaction is carried out, we don't know exactly. There are some cases where there is an effect and there the buyout, and there are others where there's no effect. We don't know yet, we can't give you a definitive answer.

But thank you. You've answered.

Now Vicente with regard to the ratings agencies, they are so many different elements, but it's difficult to estimate what the impact might be. It really depends on who is issuing the rating, it depends on the governance rights. They need to look at the shareholders' agreements to figure out whether it's standalone or not. There are so many different variables, so that it's difficult to predict right now whether that would be a positive impact. And certainly, it's difficult to explain how, you know, how that affects our strategy, it really is up to each individual shareholder.

Thanks, Rosana.

Our next question comes from Bruno from Morgan Stanley.

Good morning, folks. Thanks for taking these questions. I don't know if mutual fox is here as well, but to reply to Rosana’s last answer, I understand that the company is following its strategy as normal. So I'd like to understand what happens with the company's change in leadership in the face of a challenging petrochemical scenario? What are the different considerations of the top management with regard to what happens at Braskem and upward? And, additionally, talking about financials, is the level of leverage at any risk of crossing any kind threshold, there's a company looking for a waiver or anything of the sort, I don't recall the exact details of the bonds. But could you answer anyway? And a third question, there was a relevant use of news that there was a loss in an arbitrage with regard to a shareholders' agreement. Could you tell us a little bit about what that discussion was like with regard to that arbitration?

Hi, Bruno. Thanks for your question. We remain fully committed to implementing our strategy, the one that we have shared with the market. Just as a reminder, this strategy includes two very well defined routes for growth. One is linked to Bio Products, and our main anchor there is green ethylene. We are currently at the very last stages of investment, we've already started operating it, and we've ramped up production past the 30% that we have completed in the State of RS in Brazil. And we are committed to 1 million tons by 2030. This is a renewable material. We've already brought to the media a number of different discussions. For instance, in the United States to produce green PPE there, and also discussions with potential partners, especially located in Asia to expand our production of green eco polyethylene. So I believe that this would be an essential strategy for our growth. Another element with regard to renewables is our role in the circular economy and the image of plastic as a component. In that sense, we've been announcing investments in acquisitions and partnerships of all sorts. Not just in Brazil, but also in other regions, such as Europe. All of this is essentially focused on our two main new routes for growth. And our major vector for the company, which is to create value for shareholders, that's what really matters after all. So in that sense, we are completely uncoupled with regard to any discussion of purchase or sale. This is down to shareholders, it doesn't affect our strategy in the slightest in terms of looking at the future. So, again, to reiterate, our strategy remains the same, there are no changes. Okay, no changes to our strategies. With regard to our assets, which is, as I mentioned, the investments, they are the third pillar of our strategy. They occur where access to inputs and raw materials can be important, especially where we have the potential to remove bottlenecks. And where that could potentially lead to new investments. So we remain strongly committed to our strategy, and there is no connection to any change depending on the potential for a sale. Now with regard to the Petrobras question, I will let Rosana answer.

Thank you, Bruno, for the question. In relation to arbitration, we have monitored the announcement of Petrobras this morning. And we are replicating what they commented on. This is an arbitration process, which is confidential. And with the information that we have, oh, as just like you, we do not have any further information, and that would be no -- there will be no impact on Braskem. We are just replicating what we heard this morning.

And, Bruno, in relation to your question related to covenant. Braskem has an investment grade since 2011. So 11 years, 12 years, so when we did the process, of diversification, globalization of the company. Today, we have the balance base of feedstock, as you know, so well with the classified base of products. Braskem has a business of the specialties, so all this put together first gives us the seal of investment grade and considering that we are a company of investment grade. The company has no covenant for its corporate debts. So that would not be applicable to us. Thank you, Bruno, for the question.

Our next question comes from Gabriel Barra with Citibank.

Hi, everyone. Can you hear me?

Yes. Yes, we can.

Hi, Rosana. Hi, Roberto. Thanks for taking my questions. I have two questions, the first is about the tagalong question. That's something that's not so simple or clear to me, it’s clear to me that the matter of Petrobras, getting 80% of ordinary shares. But there is another possibility where Petrobras could cover other shareholders, because Petrobras has the right to cover any offers? In this case, would you still have a tagalong for 100% of shares in the event for instance, that Petrobras covers ADNOCs offer or Apollo's, or would you not cover shares in that case? That wasn't clear to me. The second question about the spreads, the U.S. has always been a very strong market and we know that they have a strong relationship with imports and they are movers in the market really. I'd like you to give us a few thoughts about where you stand, what you think about the U.S. market. Can we hope to see a spread improvement in the next year already. Thanks to the U.S. involvement. I'd like to understand a little bit about that, please. Thanks.

Thanks, Gabriel. Now about the tagalong, it is true this scenario that you describe is also not clear for us. We don't know yet either. I think it really depends on how any given potential transaction would occur and how the different steps in that process take place. Things could go either way. It really is not clear for me right now. Now with regard to spreads in the U.S., just to recap, up until the start of 2022, the U.S. was a net importer of, including polypropylene. And after the startup of two new plants, last year, they now became a net exporter. So Braskem has started looking at other markets in addition to the United States, and what we have been seeing ahead is a growing rise in capacity. We still don't know whether they will be realized, but they can be seen in the future. Our forecast or our expectation, I should say, for 2025, is that starting in 2025, the market will go back to being a strong market. Now that, that really depends on what happens over the coming year. We're not certain that, that will happen. It's just something that seems to be in the future. And it's important for us to also monitor the American macroeconomic situation. Although, this isn't happening, we do see an important job creation dynamic in the U.S. So we could even have -- even more positive demand than what I'm envisioning now. But since we're looking at a basic scenario here, we are still expecting currently the very start of 2025 to be this inflection point.

Our next question comes from Luiz Carvalho with UBS.

Hi, thanks for taking my question.

Luiz, I don't know if it's just on my end, but I can barely hear you. Luiz, I'm sorry.

Can you hear me now?

Yes. It's pretty muffled for us. It's still a little muffled.

Okay, I'll try to speak up. I'd like to ask about this other topic you mentioned Pedro. There's been announcements made about the interest to develop a vertical vertically, I should say. Could you please confirm with us about the right of preference? Because how can we benefit the company without hurting the tagalong the clause? And also what do you think about being a minority shareholder of Petrobras? And what about closing out the forecast.

We do apologize from the interpretation Luiz, it’s very difficult to hear this question.

There's something we've looked at a few times, and it might be worth revisiting. What would be the potential synergies in spinning off the company? For instance, in North America, in terms of potential inputs and fiscal consequences. Thank you.

Alright, Luiz. Well, with regard to your first question, this again, comes down to the same scenario that we are -- it falls under the same scenario that Gabriel's question did. To be honest, it really depends on what the actual step-by-step developments are in any potential purchase. Petrobras does have the right to cover any third-party offers.

Now, today we don't have a clear conclusion about what would happen to tagalong or what tagalong would look like within that scenario. Would it be a 100% or would it be a tagalong that follows the DSA rule, namely 80%?

And that's something that today we don't have a concrete answer to give you. I think it really depends on a concrete case and what actually happens and how things actually develop. We have discussed this internally some time ago. This is a scenario that could happen, so we have had internal discussions about this. Oh, let's talk to legal counsel. Let's investigate this scenario. But it really depends heavily on concrete cases. So it wouldn't be very productive for us to hypothesize about a topic like this.

With regard to spin offs, and a scenario, as you mentioned, where the company is sliced up and sold to different parties?

Well, our operating synergies first, there is a synergy at the point -- at the endpoint with regard to the purchase of raw materials. We currently purchase raw materials for Brazil, this is result of agreements made for Europe. This is also done for Mexico. But that's raw materials. For industrial, we do have lots of knowledge being shared, as well as best practices. We have a policy that allows us to hire and promote within the company and to have specialists in different fields and reactions in furnaces, and in many other different specific fields. So if that ceases to be the case, we will potentially lose this kind of specialized skill. Next, in industrial management, there is a search for global competence. This is coordinated around the globe. And this is, again, something that could potentially be lost. Our production is also coordinated in an integrated manner. So that means that we look at the different throughputs in many different regions. This is company-wide and of course, the sales management for exports. We today, we don't have separate sales teams handling international and national sales. It's all done by the same team. So there's synergy there that would be lost potentially. So in the case of a potential split, there are some synergies that would be lost, some of which have a greater financial impact. I would say that this would lead to a drop in efficiency and things of that sort. And there is also another element that is highly dependent on how these things actually develop, and that is the capital gain. Because today, Braskem, especially in the U.S. and Europe has very favorable positions especially, because these operations were developed during a very good period. So the cost of acquiring these operations would be much lower than the potential that was created when these operations will put into place. I don't know if there's anything else, but this is what comes to mind right now.

Just to spin off my first question, with regard to the values from what I understand, Petrobras does have the right to cover third-party offers right now? And at a later moment in time, whether or not the tagalong to that situation is used. The price could potentially be lower than other offers, is that the case?

Well, it if a shareholder decides to implement on OPA, my understanding is that -- well, let me restart, in the case of an OPA, based on a tagalong, we would need to use the tagalong price, that's one case. Now if it is not a tagalong based OPA, then it's just a matter of market prices. You can name a price, and investors can and buy or sell if they're interested. But the OPA has to follow the minimum price established during the tagalong. Now if it's a -- let's call let's say a voluntary OPA, then this is a voluntary price, okay. Whoever wants to make a purchase, can make that purchase.

Of course, yes. Thanks, everyone.

Our question comes from Leonardo Marcondes with Bank of America.

Hi. Good morning, everyone. Most of my questions have already been taken. I do have one last question. About the spreads in the U.S. and Europe, but it's more about costs. When we look at polypropylene prices, historically, there have been discounts. For instance, in 2022, however, you purchased with the premium and it looks like this year, there was a discount again on your purchase. Could you explain a bit about what you see looking ahead?

Hello, Leo. Thank you very much for your question. What's the dynamics of the American market? What are the competitive advantages for Braskem America, so that we can have a differentiation when we purchase feedstock. First, Braskem is the largest producer polypropylene in the United States from the conceptual viewpoint. Any large producer can get better prices. This is just natural considering our main characteristics in the United States. And this is premium price that would depend on a number of variables, it would depend on the variables of the spread or inventory costs. It will depend on the demand in one end. So there are many variables at play. So it's important to mention the advantage that the company has as producer of polypropylene in Americans. And depending on the conditions we can consider a premium commercial negotiation, inventory levels and different other conditions that we consider at the moment we make a decision.

Perfect. Thank you, Rosana.

[Operator Instructions] That concludes the Q&A session for the day. I would like to turn the call over to the company for their final remarks. You may proceed.

I'd like to thank all of you for joining us in our earnings call. And I'd like to conclude with a few general remarks from the administration. This quarter had good results. This is based on an improvement to operating performance, and also considering more favorable conditions internationally, not just in terms of demands in different regions, but also spreads. In any case, the pace of the growth of international demand over this year is not yet set in stone. We've discussed this during some of our presentations. And for that reason, we will continue to seek out strategies to maximize synergies between the different regions, where we operate, and also leveraging our competitive position in the global cost curve. We should highlight that these synergies between different regions are possible, due to our raw material profile. We discussed this as well, as well as product suppliers or vendors and clients, and the vast diversity of regions where we operate helps to leverage Braskem’s as a leading company around the world. Whatever the case may be, we will remain focused on maximizing initiatives to maximize our working cash flow, as we've mentioned. And also seeking out new ideas and initiatives to improve our financial status. And lastly, I'd like to remind all of you that we continue to have a very solid credit rating, a very robust working cash position. And a very, very long and extensive debt repayment flow. This is all based around the petrochemical sectors different criteria, different conditions. And I'd like to thank all of you for joining us in this call. And I look forward to meeting you again in August, when we announce our second quarter's results.

That concludes Braskem’s video conference for today. Thank you very much for your participation, and thank you very much for using Chorus Call.