[Interpreted] Good afternoon, and thank you for standing by. Welcome, everyone, to Braskem’s Third Quarter 2022 Results Conference Call. With us today, we have Mr. Roberto Simões, Braskem’s CEO; Mr. and Pedro Freitas, the company’s CFO; and Ms. Rosana Avolio, IRO, Strategic Planning and Corporate Market Intelligence Director. This event is being recorded and all participants are connected in listen-only mode during the company’s remarks. After Braskem’s presentation, there will be a question-and-answer session when further instructions will be provided. [Operator Instructions] This event is also being broadcast live via webcast and may be found at Braskem’s website at www.braskem.com/ri, where the respective slide deck can also be found. Slide selection can be made by participants. The audio facility will be made available after the event is over. Webcast participants may post their questions via the website. They will be addressed after the closing of the presentation by our IR team. Before moving on, it’s important to say that forward-looking statements made during this call concerning the company’s business outlook, as well as financial and operating targets and prospects are based on the company’s assumptions and beliefs, and also on information currently available to the company. Those forward-looking statements are no guarantee of performance as they involve risks, uncertainties and assumptions as they refer to future events and, therefore, depend on circumstances that may or may not materialize. Investors and analysts should have in mind that macroeconomic conditions, industry conditions and other operating factors can also affect future results of the company and, therefore, lead to results that you’ll differ considerably from those expressing these forward-looking statements. I’ll now turn the floor over to Ms. Rosana Avolio, Investor Relations, Strategic Planning and Corporate Market Intelligence Director, who will start the presentation. Please, Ms. Avolio, you have the floor.

[Interpreted] Good morning, ladies and gentlemen, thank you for participating in Braskem’s conference call. We will present today the results for the third quarter of 2022. Let’s go to Slide #3. I will make some comments about the company’s main highlights for the quarter. The global scenario in the third quarter of 2022 remained impacted by global macroeconomic uncertainties, geopolitical tensions, and perspectives on the performance of the world’s major economies. These uncertainties directly influenced the global demand and, consequently, the dynamics of the petrochemical industry. Moving on to financial highlights, the company reported recurring EBITDA of US$371 million. Additionally, cash generation in the quarter was R$889 million. Concerning return to shareholders, the return on cash flow was 31%. Now, going to our credit metrics, the corporate leverage remained low in the period and we maintain strong liquidity position enough to cover the debt maturities for the next 5 years. It’s worth noting that the company’s debt profile continues to be very elongated and the company continues to maintain its rated investment-grade by S&P and Fitch Ratings. In the quarter, we had experienced significant advances in the ethane import terminal in Mexico. Braskem Idesa obtained its approval for the constitution of the joint venture with Advario from the Federal Economic Competition Commission of Mexico. The construction started in July 2022 with physical progress of 22% by September 2022. We would like to remind you that this terminal will have the capacity to import on average 80,000 barrels of ethane per year, providing conditions for Braskem Idesa to import all its raw materials needs, besides allowing a study for expansion of about 20% of the polyethylene production capacity in Mexico. Moving on to the highlights of ESG agenda, we launched Voqen, an energy and natural gas trading company that will help…

Ladies and gentleman, we will now start the Q&A session. [Operator Instructions] Our first question comes from Pedro Soares from BTG Pactual. Please go ahead.

[Interpreted] Good morning, everyone. Good morning Roberto, Pedro, Rosana. I have two questions actually. The first one about the spread issue. Rosana was quite clear in terms of the expectations of the company, and also talking about the further deterioration, if you could perhaps expand your horizon through 2023 mainly? Do you expect this final stretch for 2022 would be getting closer to the valley as opposed to the peak? Or if next year we would see further deterioration vis-à-vis what we’ve seen in the second half of this year? So if you could put those results into context. And if we would be expecting, maybe that’d below US$2 billion. In other words, we’d be facing a down cycle going forward. If you could comment on it, I’d appreciate it. Thank you. And also a second question about CapEx, the company has been going through a more controlled phase in terms of capital allocation. But with this deteriorating scenario, if you would foresee additional reduction in the short-term, or not, if you have got that all under control. Thank you.

[Interpreted] Hello, Pedro. This is Pedro Freitas speaking. It’s nice talking to you. So as for the spread issue this year and next year, part of the reason that this spread in this year is dropping, and we’ve been talking about this since last year, we had an expectation of a downtrend and spread levels. But that’s 3 main drivers some non-recurring events, which happened last year. And also from the point of view of demand, this year we had lower demand than expected, because of the lockdowns in China. And on the offer side, my third driver this year we had new capacity coming in, which was expected, so this down cycle was somewhat expected as well. So, this new capacity coming in is unfolding now, especially in China. For 2023, there is some more new capacity to kick in. On the demand side, we expect to see a growth in demand across the world below historical levels, of course, because of some events. But based on macroeconomic news, global wise, when we look at polyethylene next year we see a growth in supply more than the growth in demand not to the tune of this year, but higher. But 2024, we see a reverse in that trend, because investments for 2025 are not being made now. Things that should be under construction now are not, so looking at those numbers coming from my external consultancy firm. We have this outlook that 2022 will still see more capacity kicking in, but then we’ll see a reverse especially for polyethylene, which suffer if I make more than other products. Right now, we see a spread moving sideways – I am getting some feedback hear from my voice. Hang on a second please. [Technical Difficulty] Okay. Here we are, okay. So,…

[Interpreted] Okay, thank you. Thank you, Pedro.

Our next question comes from Bruno Montanari from Morgan Stanley. Please go on.

[Interpreted] Good morning, everyone. Thank you for taking my questions. A follow-up to Pedro’s question about the spreads. It’s part of the cyclic nature of the industry, but perhaps the size of the drop was higher than expected. So in addition to CapEx, what other measures can the company take or is taken right now on the side of expenses and costs to be able to offset those negative numbers in the company’s operating margins? And whether if you could perhaps manage more working capital going forward after several quarters last year, where we were consuming that we saw a better cash generation flow? And also, how can that evolution of the spreads of the cash generation affect the dividend payout discussions, apparently, there is less room to higher payouts? And the last question, if I may, if you could please comment on the material fact released on Novonor Corporation or partnership, so perhaps their potential sale of their stake in the company? Has anything happened on that front? Have you been meeting with them? So any news on that front would be very welcome. Thank you.

[Interpreted] Hi, Bruno. As you said, the magnitude, the speed of the drop in spreads was slightly higher than expected or above what we expected. Basically, I would say for 2 reasons. The lockdowns in China, one of the reasons early the year, nobody would imagine that things would play out that way; even last year, when we working on our projections, nobody thought about that scenario to have that level of lockdowns in China, so widespread and for so long. And, of course, that has an impact on demand, and that led to that drop in spreads. That’s one of the main reasons. A secondary driver was the war in Ukraine, and the subsequent increase in the cost of energy in Europe. Of course, that also led to a drop in spread, because of the cost of gas, an impact on feedstock once again. So that’s a fact. When we look at the working capital, which was a comment that you made just now. When we have a drop in prices, it is only normal to see that happening. When spreads go up, you have an increase in prices, and then, we increase the value of what we have in terms of accounts receivable; or in other words credit that we provide our clients, our inventory levels also go up. So you have more working capital be consumed. When feedstock prices go down, we have the opposite effect. We have more working capital freed up. So this offset, or even a hedge if I may, it’s something we see happening quite often in our industry. As to what else we’re doing to your point, I mentioned, CapEx, we are reviewing our fixed costs line, the hiring of new personnel is going out through a much more rigid approval process…

[Interpreted] Okay. Thank you, Pedro.

The next question comes from Leonardo Marcondes with Bank of America.

[Interpreted] Good morning. Thank you for getting my questions. Trying to quantify spreads for 2023, I’d like to understand, if you’re seeing something along the lines of what we observed for the second part of this year? Or do you expect to have narrow spreads for next year? Now, trying to understand when are we going to see the bottom of the cycle, because spreads will probably pick up again by 2024? So I’d like to know, what are the main drivers in your perspective? Would it be increase of demand, reduce capacity? Where would you really expect to see that coming from? Thank you. Roberto Simões: [Interpreted] Hello, thank you very much for the question. Concerning spreads for 2023, we are still running internal discussions, because of all the uncertainties in the macro perspective. But relying on our external consulting companies, it seems to expect – we are expecting greater demand. So PVC, PP, PE is estimated based on the history to have an increase. So there is an effect of global demand not developing so much. And the demand for petrochemical products really growing slowly, it was 1.3% of 1.5% kind of ratio. So considering all, that situation we expect to have spreads similar to what would be the low cycle spreads. So this is a general comment, of course. And I’ll go back again into diversification. Why have we invested on diversification, it brings positive effect that’s why we invest it for the past 10 years. So basic petrochemical products have some resistance spreads. In the U.S. spreads, the average is even higher than the average of the industry. So diversification shows that spreads, yes, the lowest of cycles, but some of the spreads are still sustained, and above the average of the industry. And this resulted from our process of resilience. Now, speaking of upside, when you analyze the foundations of petrochemical industry, everything has changed in terms of offering. There has been a substantial change, as Pedro pointed out in previous question. It has been a change in the perspective of growth of global demand. So the upside results from the scenario in Europe, political tensions, but also the policy of restrictions in China. And China, of course, plays a very important role in the plastic consumption in the world. So, if China opens the market again, we’ll go back to that narrative that we consider to be more appropriate for upcoming years, which is a spread above the industry levels.

Great. Thank you very much.

The next question comes from Vicente Falanga from Bradesco BBI.

[Interpreted] Good morning. Good morning, Roberto, Pedro, Rosana. Thank you very much for answering my questions. I have 3 quick questions. First, the prices of ethane. They have changed since the end of September like 30% over to now, and you kept for the benefit of it on the fourth quarter, especially in Mexico, do you have any estimate of impact? Second one, concerning the export of resins, and considering Brazil and Mexico. Last time, I checked, Mexico exports to Europe as well. So, how badly they’ve been affected by the slowdown in China and Europe? And when do you expect the international global chain due [indiscernible] again? And finally, as we have seen a price adjustment to freight costs, do you expect to keep on running on U.S. pricing? Or do you plan to change? Or do you expect to change the indexation? Thank you very much.

[Interpreted] Okay. You asked for ethane, it dropped at normal levels. Our cycle from when we buy the feedstock, because we calculate the cost based on the average. At the end of the day, we’re talking about a moving average for costs. So in Mexico, that effect is felt in 2 months. So we expect to see that benefit, quote unquote, of the drop in ethane costs in the last quarter of the year. Now, we need also to assess the spread. We also had a difference in the polyethylene price, as you mentioned, because of the lower availability of the product across the world. And, of course, we have this, a lot of those effects on global demand. So, basically, when we look at those specific effects coming from a thing, the answer is the effects will be seen in the final quarter of the year. As for exports in Mexico, we continue to export to Europe. We sell into the U.S., too, but Mexico is very competitive. So they are able to allocate products across any region. For, the U.S. right now, they have excess offerings in the U.S., given all the investments that were made. So right now to sell in the U.S. is not a priority, because it’s not very attractive. It’s better for us to sell elsewhere in Europe, for example, or in the Central America, South America regions that continues to be our focus. And the main one, of course, across the Americas minus the U.S. Then, to your question about the indexing metrics, we see no change in that, because those indexes are given by the region that exports the most. So the ones who export the most resins [ph], so polyethylene and PVC come from the U.S., so the American prices are the index and polypropylene coming from Asia as a different indicator. So those indicators will not change. Because within our commercial policy, in terms of pricing, that’s what basis our numbers, that’s what we see happening in real life, commercial flows. And that’s what we continue to use going forward.

Okay. Thank you.

Our next question comes from Luiz Carvalho of UBS.

[Interpreted] Hi, Pedro, Rosana, thank you for answering the question. I’d love to go back to some points that you’ve discussed, but maybe take a different side of them. You have broken down results by region, which is great, so Brazil, Mexico, U.S., and Europe. And in this level of spread, what attracted me attention is that the only region that has really maintained cash generation in Brazil? Could you please tell us about competitiveness levels in all the 3 regions where we are represented? Mexico involved R$40 million, something like that. And the second question about dividends. We can see some of the companies today changing somewhat their policies, Petrobras has done that that has gained more visibility of basing dividend distribution based on cash generation. So my question is, would it make sense to come up with any changes along these lines? Considering that have controlled leverage very long-term debt profile, many projects? So would it make sense to ease your dividend distribution on cash generation? And thirdly, concerning sales, you were talking about that in the upcoming week. So I would like to know based on the contact you have Novonor, because there was an attempt to follow on the beginning of the year, in apparently, there was a demand for one specific price close to R$42. And now the number seems to be very far from that. So how does it all interact going into a well structured, let’s say, conversation, trying to get to appropriate share prices earning? Of course, consider that the Novonor’s creditors would also have assay in this process. Thank you.

[Interpreted] Hi, Luiz. Well, as to cash generation, you did mention that, while the U.S. also came out, above average for the cycle, when we look into the details of why that happened in the U.S., and in Brazil. In Brazil, we have the basic chemical products, so the effect on basic chemicals bring to Brazil is unique to this country. That’s one of the positive effects that we saw for Brazil. Also, as Brazil is larger in terms of volume. So most of the working capital that we used was allocated in Brazil, of course, when we look at those two components, they can explain the point that you have raised. So that’s the reason why in summary, right? Once again, I’m looking ahead, looking forward, we do believe that that ratio, a better cash generation should not present such a mismatch across different regions, but we’ll have to wait and see. When we talk about the dividend payout and what we see other companies do using cash flow levels. That’s a topic that Braskem is considering adopting in our dividend payout policy. But what we’re living through now is a good explanation of why we haven’t done it yet. Ours is a cyclical industry with significant speed, historically speaking. So when we look at those factors, we are also concerned about preserving our investment grade. We do not want to push it and commit to a dividend policy that will lead to a mandatory payout at a relevant level, when we are in a down cycle. So to strike that balance within our policy is something we are trying to do. And the asset test, right now, will help us find that balancing point. In our case, it is more difficult than for other companies, which are dependent…

[Interpreted] Okay, thank you. Thank you.

Next question comes from Gabriel Barra with Citibank.

[Interpreted] Thank you, Roberto, Pedro, Rosana, thank you for getting my question. Can you hear me all right? Yes. Most of the discussions have already been made. But I would like to make some follow-ups and maybe some new sides of it. If we can talk about the change in the President, and in Brazil, and all the differences that we have observed in terms of input rates and everything, can you tell us your perspective on it for the upcoming year? Will there be any potential changes or impacts for the company? Secondly, if you could tell us more about Alagoas. In this quarter, there was a small amount in your provisions according to the balance, where there’s still a potential point for discussion and increases. What are, let’s say, the sensitive points of this discussion? So that we can understand really, what it means for the company in the future? And something with Novo Mercado, we started this discussion, and then no longer it was addressed. So what is the current status? Do you still expect changes into Novo Mercado? And what kind of discussion are you having with Petrobras? Is this still an open discussion to migrate? So these were my points.

[Interpreted] Hello, Gabrielle, thank you for your questions. As to the change in administration government, we can put it all under the same umbrella of industrial policy. We do not know what the new administration will be doing in terms of industrial policies. We’re still waiting to see what’s going to happen. Of course, actions which are taken this year in terms of import fees and taxes, we believe that they should be linked to a reduction in the so-called Brazil costs, but we need to wait and see what the next government will do. But our focus will remain on the fact that any change on industrial policy, or any change on the longstanding framework should be linked to a reduction in the so-called Brazil cost, and that’s where our focus will be. But it’s still early to know. We do not know what the new government will do in terms of concrete measures. As for Alagoas within our provision for Q3, slightly over R$7 billion, when we split that have the relocation and compensation, we are looking to complete the proposal submission process and to the end of the year. That’s our goal with we’ll try to reach that goal to the end of the year to avoid extending that to next year, but we are well advanced in that process. As for payments, we make the proposal, the proposal is analyzed, and then we get a feedback. There is an acceptance of that they form monetization process, and then we make the payment. So that process takes about 2 to 3 months, on average. So that this investment today at R$2.4 billion one-third of the provision, give or take, this should go on until early next year for most of that to be really dispersed. As for…

[Interpreted] Okay, one follow-up if I may. You talked about Petrobras or any offer made for Novonor, Petrobras has a right to receive the same terms, correct?

[Interpreted] Yes, this would be the tagalong, right. Not only Petrobras, but all Braskem’s shareholders, when they change and control happens, so that’s a given. And the write-off preference, which is the [full name] [ph] Petrobras may offer the same value, the same terms, same conditions to the contract to Novonor. And so Novonor could buy it, right. Or Petrobras could buy Novonor, right, if it was in their best interest.

[Interpreted] Okay. Thank you, Pedro.

The next question in English comes from [Matias Ramily of Dudley Asset Management] [ph].

Hi, good afternoon. Thank you very much for the call and for answering my question. Hopefully, you can hear me all right. Just a few questions from my site. The first one is, I see that both at Braskem, but also the Braskem Idesa are the Mexican operation level. There has been a positive release of working capital and Braskem it seems to be related to inventories in the Mexican operations. It seems to be related to accounts receivables, given the positive and sizable impact that these had on the overall cash flows on the free cash flow of both entities, if you could comment a little bit, what was the driver behind that and whether you think this would be reversed in the coming quarter? And then also wondering if you had any contact with the rating agencies to keep them informed and discuss whether the current environment would have any implications on the ratings of either Braskem or Braskem Idesa? Thank you.

[Interpreted] Hi, Matias. I’ll take the question. It’s nice talking to you. Matias asked about the working capital, just to be sure I’m going to translate his questions. The working capital in Brazil, happened based on inventory. And in Mexico, it was based on accounts receivable. And the question is, what were the drivers for that to happen? And if we see in the coming quarter, you can see a reversal of that. The main driver, Matias, was the drop in prices. In the case of Brazil, the drop in Nafta in oil prices lead to a lower inventory value. We also had some effect coming from a reduction in products prices. So that also affected accounts receivable in Brazil. We also saw a drop there in Brazil accounts receivable. In the Mexico, the same, they drop in polyethylene, when you’re talking about Mexico led to a reduction and accounts receivable. So, basically, the main reason was this drop in price, we also had a slow reduction in the sales volume. And some points, especially in exports, leaving Brazil, which also a reduction in accounts receivable. Looking at the price trends, what we see happen in October and November, and as we look to the next quarter. We do not see a reversal of that trends in that short-term. But, again, it will depend on oil prices, and also on prices of products. As I mentioned earlier, we are closely monitoring our assets, our inventory levels, not only our finished products feedstocks, but other inputs as well. So this optimization process will help us maintain our position in working capital. That’s what we believe. There is a point which is in our release, we did not really highlight during the presentation, but I’ll take the opportunity does not have a…

I was wondering, I don’t know if I can squeeze one more question that you didn’t mention at some point that the CapEx for this year was being revised by about US$200 million at the Braskem level. And that you were also thinking of lower CapEx next year, I was wondering, if you can give us a bit more – if you have a bit more visibility into next year, but also, if you could comment [Technical Difficulty] of CapEx plans given that they have a big project currently undergoing? Thank you.

[Interpreted] A part of your question was cut, if you could repeat the last bit, please?

Yeah, thank you. Sorry. Basically, with regards to capital expenditures, I think on the Braskem side, you mentioned that this year’s fiscal 2022 was expected to be US$200 million lower, and also a bit lower for next year. But if you have a bit of visibility, or you can give us some sort of frame as to how much lower will it be next year? And also thinking about your Mexican operations, given that there’s a big project in Mexico? Do you have any flexibility on delaying or postponing some of their CapEx? Thank you.

[Interpreted] Okay, I’ll take that, Matias. Matias has asked about CapEx, the review over US$200 million approximately, that’s clear. The question is, if from next year, what do we expect? We are now still defining we do not have a number to announce for next year. But it is a definition process, a revision process to have a smaller portfolio. So, we’re talking about a reduction relative to what we will complete this year actually. This is part of what we have always done looking at the cycle, cash generation, leverage level and CapEx. Our CapEx is also more cyclic driven, right, when I have shorter cycles, and that’s what we do. If we look at historical levels, I got backs up 60% of EBITDA or something like that. As for Mexico, the construction of the terminal is a priority, because at the end of the day, this will provide us with a stable operating capacity for the future. So, delaying the terminal is not something we are considering right now. What we are doing is the following. We have brought in a partner Advario, a Dutch company part of a German group, a global leader in midstream logistics industry for liquids and gas. And we brought them in Advario will – the total investment is R$400 million. R$400 million half of that will be – no, just let me take a step back out of the R$400 million, we are now trying to find external funding, and for at least 60% of the amount to be a long-term financing for 60% at the very least, 6% of R$400 million. And the balance would come from a joint venture 50-50. So the equity coming in from Braskem would be to the tune of US$80 million part of it this year within our portfolio, but with complements throughout another 2 years. So, if you look at the annual effort is not very material, it is restrict to Braskem Idesa. Braskem corporate is not part of that in terms of investments for that project. So, that’s how we have designed it. So, it’s a non recourse ideally, right? So coming from the two partners, but again, we do not see as an interest in alternative to delay that investment right now.

Thank you.

[Operator Instructions] There is one question coming from Barbara Halberstadt of JPMorgan.

[Interpreted] Hello, thank you for taking my question. I think, we’ve already discussed most of the questions that I had in mind. But I would like to have a follow-up concerning the funding of the Mexico CapEx. It is to have a project financing. So do you already have discussions going on with potential banks to carry on this transaction? Is everything already in progress? So please – if you could please give us some more color on the topic? I would appreciate that. Secondly, concerning cash generation, have you monetized any tax credits? Do you still have them available to monetize in the last quarter or the future quarter of 2023? Or have you already done?

[Interpreted] Hello, Barbara. So the Mexico financing line is moving forward, we are trying to find that funding we are already in negotiations with counterparts, banks and other institutions. And we hope to finalize that in the coming months, so there is a very high level of interest. And we are now in the process of choosing right of bidding, to define how that funding we unfold. As we have the utility quality to it, we meet the terminal to work full steam, we have a very interesting level of return, very stable, and that generates very large interest in terms of financing that investment. That’s a very solid investment and higher, because of the critical role it plays for the operation of the complex as a whole. As for monetizing credits, we didn’t have anything above normal that PIS/COFINS that we had is now over. It has all been monetized and what we have now in terms of variation in terms of taxes and tax credits is the normal variation that we usually see. Nothing atypical on that front and we do not expect to have anything like that going forward. Thank you.

[Interpreted] You now allocated capital and liquidity, and you said about maintaining liquidity and robust better. But with the price of bonds in the market, is there any intention idea, have you been analyzing making an additional purchase and using this cash to re-buy anything?

[Interpreted] Oh, Barbara, we’re always looking at those opportunities. As I mentioned before, we’ve increased our cash level, because of that uncertainty linked to the nature of the cycle. If the overall scenario improves to a higher level than we had anticipated, then we will look at alternatives of repurchasing it, as we did before, and we did something like that this year. But it’ll depend on the scenario, the overall scenario, as is we are waiting to see what’s happening. And then, we’ll make a decision. Right now, the focus has been on preserving our liquidity before we make a final decision. Thank you.

With that, we close the Q&A session. I would now like to hand it over to Roberto Simões, CEO of Braskem, for his closing remarks. Roberto Simões: [Interpreted] Good afternoon, everyone. Thank you so much for being with us. Pedro and Rosana have covered your main observations and comments and questions. We are aware of the challenges and uncertainties at the macroeconomic level. Especially, as we go through very important geopolitical events in China and Ukraine. And, of course, those have impacts on what we do in our operations, it’s important for us to remind ourselves of our strengths, our strategies, which have adopted for the past decades to face challenges, such as those who have ahead of us now. From the point of view of competitiveness and productivity, it’s always nice to remember, as we are a global company leader in Americas with strong assets, all of them well positioned, and within the global cost curve, when compared with other players. And from the point of view of finance, you monitor this situation very closely. Our credit profile is quite robust. And we apply a very strong discipline and capital allocation. And we need a very strong liquidity position, and with long-term debt only. When we think about investments and looking ahead in the short run for 2023, we have just completed an analysis for the past 6 months of how we see the petrochemical industry, especially in the main markets by 2030, and where we would like Braskem to be in 2030. Not only where we should be investing, but also where we should perhaps reduce investments, as Pedro mentioned, perhaps reduced production, or even shutdown some of our internal operations. That exercise which was shared with you and then the main shareholders. We’re now looking, trying to…

The conference call is close now. Thank you all very much for your participation. Have a great day. Thank you. Thank you for using chorus call.