Good morning everyone and thank you for waiting. Welcome to Braskem’s Results Conference Call to discuss Second Quarter of 2024. We have us here today Mr. Roberto Bischoff, CEO of Braskem, Mr. Pedro Freitas, CFO of Braskem and Mrs. Rosana Avolio, Investor Relations, Strategic Planning and Corporate Market Intelligence Director. We inform you that this event is being recorded. The presentation will be held in Portuguese, with simultaneous translation into English. All participants can choose which language to listen to and see the presentation, using the show captions and interpreting options at the bottom of your screen. After Braskem remarks, there will be a question-and-answer session. At that time further instructions will be given. The audio of this event will be made available on the Investor Relations website after it ends. We remind you that participants will be able to submit questions for Braskem, which will be answered after the end of the conference, by the IR department. Before proceeding, we would like to clarify that any statements that may be made during this conference call, regarding Braskem's business prospects, projections, operational and financial goals or constitute beliefs and assumptions of the Company's management, as well as information currently available to Braskem. Future considerations are not a guarantee of performance and involve risks, uncertainties and assumptions, as they refer to future events and, therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions and other operational factors may affect Braskem's future results, and may lead to results that differ materially from those expressed in such future conditions. Now, I’ll turn the conference over to Rosana Avolio, Investor Relations, Strategic Planning and Corporate Market Intelligence Director. Mrs. Avolio, you may begin your presentation.

Hello, ladies and gentlemen, thank you very much for participating in Braskem's earnings call. Today we will present the results for the second quarter of 2024. According to the agenda on slide number 3, we will begin with the company's main financial highlights for the period, which can be found on slide number 4. During the second quarter of 2024, the petrochemical spreads scenario in the international market has improved when compared to the first quarter, due to the better balance between global supply and demand, associated with the effects of conflicts in the Red Sea which still impact global logistics, resulting in higher maritime freight rates. In this scenario, added to the company’s continuous efforts to reduce costs and expenses, the recurring EBITDA was $320 million, 39% higher than the previous quarter and 128% higher when compared to the second quarter of last year. In this context, operating cash generation increased by 9% compared to the last quarter, recording $ 214 million in the period, while recurring cash generation was positive in $ 69 million. Braskem maintained its robust liquidity position, with $ 2,8 billion in cash at the end of the quarter, without considering the international revolving credit line available in the amount of $1 billion, a sufficient amount to cover debt maturities over the next 61 months. In this context, Braskem's debt profile remains very long, with an average term of 12 years, with more than 64% of the debt maturing after 2030. Therefore, the company ended the quarter with a leverage of 6.8 times, lower if compared with the last quarter, mainly due to the better results in the period. It is important to highlight Braskem's constant commitment to resilience and financial health, which has played an important role in managing results during the current petrochemical…

[Operator Instructions] Our first question comes from Rodrigo Almeida from Santander. Please you can proceed.

Hello, good morning, Rosana, Roberto, Pedro, and everyone from Braskem. I have two things I want to ask about. First, I want to talk about Brazil. You mentioned a little bit about some of that, but I'd like to hear a little bit about your opinion on when it comes to demand. Now, usually this is a stronger quarter, third quarter, so we'd like to hear about what you believe is going to occur for July or August. I'm interested in that. And when it comes to Brazil, could you please share with us a little bit about any updates when it comes to the import tariffs for CAMEX? Do you have anything you could say about the technical aspects? Are your forecasts aligned with Abiquim? And also, could you mention something about ABP [ph] I'd like to get your take on that topic as well. Now the second thing I want to ask about is the United States. You mentioned in your outlook some very interesting points about the flat spreads. And I'd like to hear what that means specifically for Braskem. I think last week one of your competitors mentioned in their results call the higher prices for July. So I'd like to get your opinion on whether you've seen some price changes in there and how have inputs been priced differently for you in your case? Thank you.

Hello, Rodrigo. How are you doing? Thank you for your questions. Well, first I'll start with demand. We don't measure demand specifically. What we do measure is apparent consumption, apparent usage. So that's consumption plus imports minus exports. So it's a less reliable metric than demand, but for this year our forecast for growth in polymer demand is in the order of 13% in Brazil, so it's very expressive growth. Part of that comes from higher imports under that formula, but when we look at our own sales, we have been seeing sales recovering more slowly for the year in the order of 2% to 3%. So we see that the competitiveness of imports are higher, are stronger. And that links with your other question about import tariffs and anti-dumping and commercial protection. Now Abiquim argument, it was built along with the Associates, so our request, our argument is exactly the same in the PP, PVC imports up to and so on, up to the 20% level. So we do have the forecast that CAMEX will issue a position soon. This is not under our control or Abiquim’s, but we expect that in the third quarter we will see some kind of a definition from CAMEX on that topic. The arguments have been made, the rationale, all the explanations, and now it's up to the government to make their decision. With regard to anti-dumping, what we have concretely is PVC anti-dumping, which we requested a review for now in May and June for PVC anti-dumping. There was a remedy, an 8.2% tariff there, and we requested that to be increased. Historically, that level is 16%. And in association with Unipar, we submitted a request to increase the current level because the 8% remedy is not being successful given the level…

Perfect, thank you Pedro.

Our next question comes from Vicente Falanga from Bradesco BBI. Vicente, please proceed.

Good morning, everyone. Good morning, Pedro, Rosana. Thanks for taking my questions. I'd like to ask you to comment about the spike in container prices. How have you been dealing with that in your internal market pricing? Have you already started equalizing the prices, balancing them out? My second question is, could you talk a little bit about the spike in the price of butadiene and to what extent should that is likely to be recurring?

Hello Vicente, how are you? Thank you very much for the question. So first in relation to the freight rate, this is what we saw. In fact, as a result of the conflicts in the Red Sea, we saw an increase in sea freights and this has an impact in the resin and also impact in the freights, for example, from Asia to Latin America. So it's a double effect, so as to say, this higher effect of the resins, as you have monitored along the second quarter. And we see that this is also reflected in the next months of the third quarter. And there's a second effect, which is the import disparity. This is a market dynamic at the global level of the local producer of any country. They define the pricing in the regional and domestic markets using the import parity. So whenever this freight rate is higher, the domestic price, the local price, naturally, since it's a variable, the price goes up. So we saw freight rate, as I mentioned, and we follow the reference for PP, and PVC we follow the Asia reference. So we saw this increase not only in the international references, but also in the domestic prices as a result of the import parity. In August, however, we saw a lower price. If we compare year-on-year, we saw that the freight increased to 100 per ton. And in August, we saw this normalizing but still at a higher level. So those effects that have been providing support to those international spreads, we see that this is going to be carried over to the next periods. In relation to butadiene, we saw that the prices increased almost by 50%, and as an effect we saw some shutdowns in Asia, a lower offer in the global market, the prices impact in the important way, those central areas in Asia started the operation in the past few weeks and we expect that for the next weeks, but we see this price at high levels. And based on the external consulting, we understand that those levels are going to be kept at high levels up to the end of this month or beginning of next year.

Thank you, Rosana. Now let's, if you'll allow me, can we go back to the topic of shipping? If we look at container prices in June, they were $3,000 for 40 feet up to $6,000. So it seems that the delta there can still be captured, especially when we talk about import parity from Q2 to Q3. Is that correct?

Yeah, that's exactly that. We saw lower prices in August, but still higher than the average level. And I base myself from the prices of last year. So we still see this effect, positive effect in the third quarter. Thank you, Vicente.

Our next question comes from Henrique Drumond from BTG Pactual.

Hey everyone, how are you doing? Good morning. Thanks for the chance to ask my question. I’d like to ask what you think about working capital and CapEx dynamics for the rest of the year, working cash, apology. What do you think that will mean for the results? And do you think we can capture that over the year 2024 still? And my second question is, I understand that you were not so strongly affected by the catastrophe in Rio Grande do Sul, but you mentioned the fabric infrastructure, so do you think we still have some impact to be seen in the rest of the year?

Hi, Enrique, thanks for your questions. So first, CapEx, we did post a CapEx for the year except for Mexico at $400 million [ph] We are still in line with that trend there may be a 5% difference, that's what I think, for the year. The foreign exchange variation is also likely to have an impact there because of course there is dollar to BRL exchange, part of the CapEx is in BRL, part is in USD. The USD portion does not change equipment, but the other portions such as labor is going to have some variations. So there may be a slight increase there. But when we dollarize these numbers, there may be a higher increase, but we don't know yet. But we think the year's CapEx is going to be around $400 million. Now with regard to working cash, I think our perspective for the rest of the year when we look at the first half of the year overall, we did see a recovery in working cash. With a rise in prices it is possible for there to be some usage of that, but we're also working on inventory and that is likely to counterpose that. So my expectation is that there's not going to be a material change to the working cash, but again, all of that variation in foreign exchange may have an impact. So it's not likely that working capital is going to have a material impact, but for CapEx, it's likely to be around $400 million. As far as deliveries in working capital, it's in the order of $100 million, and that's part of our package of measures to tackle the low cycle and we already delivered $59 million, and that’s found in one of the slides in our presentation. So there is…

All right. Thank you, Pedro.

Thank you.

Our next question comes from Anne Milne from Bank of America. Anne, please you may proceed.

Okay. Good morning. I had to unmute myself. Good morning, Pedro, Rosana, and Roberto. Thank you very much for the call. I was just hoping you could provide an update on the global supply and demand dynamics of capacity and what you might be seeing from China in particular and any other regions, Middle East perhaps. Are you seeing any capacity being shut down in any of the divisions or new plants coming online? And maybe what indicators you are monitoring so that we could see that. And the second question is really just if you could just give us an update. Is Kuwait Investment Authority still continuing to do due diligence on the company and is there any indication of other players who might be interested? Thank you very much.

All right, I will first translate the question for everyone and then I will answer in Portuguese. So the question is, in our opinion, what is the global dynamic for supply and demand for products, especially when we look at China and the Middle East and any other regions where we see relevant changes in that sense. And also, what do we see for closing out capacity for new plants and as well as other indicators that we are monitoring as far as supply and demand. And her second question has to do with sales. Do we still have that due diligence for the company from Kuwait and any other topics? I'll answer the second question first because it's shorter. We do not have another company. That Kuwaiti company is still in due diligence process. Anyway, today it's the only company we are conducting that process with. And it is still ongoing, it has not ended. Now back to the first question about supply and demand. In polyethylene, we see new capacity coming in that's more relevant than what happened up to last year. This year, I would say that we have a bit more balance in polyethylene between supply and demand. And in polypropylene, we see more capacity coming in, especially in China, up until next year. So there is a reduction in new capacity, and as demand for polyethylene grows, we are already looking at balance. At a global level, it's still pretty low. But in polypropylene, we do think there are new capacities that are going to come in up before next year. Now when we look at how the industry is responding to that scenario, we see a lot of discussion between the players talking about competitiveness and also reviewing their industrial assets. Many players are…

Thank you very much.

Our next question comes from Gabriel Barra from Citi. Gabriel, please you may proceed.

Hi, everyone. Good afternoon. I have two questions I want to mention. On the topic of capacity, I was thinking about what Roberto said about the rationalization of capacity here in Brazil, and especially his interview talking about competition here, especially in terms of import costs and competition with imports. So, could you please comment or add to your answer in that sense, or put it into context compared to what was mentioned in the beginning when you talked about import prices. Is that likely to have an impact? And if so, how on the company's capacity and what is the timeline likely to be for that discussion? And also what about values? How would that influence the company moving forward? Second question, I remember in our last conference call there was a lot of discussion about cash generation for this year. And unless I'm mistaken, I think this year we should think about a neutral cash flow, and for next year we should think about positive cash generation, looking at the improved spreads and perspective. So I'd like to get your opinion about whether we can still see those thoughts in mind. And putting into perspective the drop in foreign exchange prices, the depreciation in ForEx, is there likely to be an improvement in that perspective when it comes to cash generation?

Well, Gabriel, looking at the rationalization all around the world and what that means for imports here in Brazil, I'd say that what we have today, first there is a recurring analysis and the decision to choose the rates, they do come from a contribution margin. So we don't have a contribution margin in production then we do not produce. We only produce when we have a positive contribution margin. A variable one I mean. And there is a second level of analysis that involves fixed costs for CapEx and cash flow per asset. That analysis is a lot more complex. It is not a recurring analysis that looks at every month, but to date that analysis has been indicating that the assets we have generate positive cash. Some more, others less, but it is the type of analysis that we perform when we think about that type of a discussion. What that indicates as far as tightening the spreads is that possibly some specific assets may be generating negative cash, but that's a very segregated analysis. When we look at the São Paulo site, the Rio Grande do Sul site, or the Bahia site, they all have positive results, but within a specific site, some may have, some lines may have negative production. So we do look at that. But any discussion about rationalization is a long-term analysis. So in the scope of our discussion with the government, and that also involves looking at imports and defense mechanisms, our analysis of the imports is that it's fleeting, the low, the lack of competitiveness in Brazil does not only apply to us. So it's a more - it's a specific thing that requires an acute intervention in industrial protection policies in the short term, whether that's in commercial defense or…

All right, Pedro. Thank you.

Our next question comes from Luiz Carvalho from UBS. Luiz, please you may proceed.

Hello, Bischoff, Pedro, Rosana. Thanks for taking my question. And kudos for your work during this very challenging past few months in the industry. My question is for Pedro, I'd like to get a bit more depth on this topic, because when we look at '25, as you mentioned, we have the elections in the US coming up, over the past week, we've had, let's say, some fears in the market about a potential recession, economic recession globally, and I'd like to understand a little bit about what your thoughts are as far as the company goes, thinking about a scenario that is, let's consider, a more challenging scenario for the industry. Let's say we don't see spreads recovering in '25. In that case, how would you prepare for a scenario that is even longer involving spreads that are at more compressed, more strongly compressed levels, whether it's liability management or closing capacity? What kinds of exercises are you running? What simulations are you running? And the second question, and maybe you can combine both things, what do you see in terms of feedstock and capacity being rationalized abroad with regard to feedstock? So, talking about NAFTA, ethane. And if you could follow up on your last comment about the availability of gas here in Brazil. And of course, we invariably discuss that with Abiquim, let's say, various different parts of the industry are clamoring for cheaper gas prices. But we see appetite from major consumers in assuming long-term contracts even at prices that are linked to international references. And we see a gap, let's say, in the oil and gas producers and the risk of building infrastructure without having guaranteed demand. So, what do you think about the petrochemical industry's behavior? And also about sidestepping, perhaps, to complement the gas market?

Hello, Luiz. All right. The international scenario touches on what I mentioned earlier about the scenario for next year and the discussion we've been having now about what our budget outlook is for next year and the start of the cycle. We are looking at alternative scenarios that are exactly in that line. US, for instance, that may result in more protectionism or less. If it's more protectionism, there will be a bigger impact on our US operation. And this holds true around the world. If the world becomes more protectionist, then our local operations, we do have flows between countries, but most of our sales are local sales in the different markets where we operate. So that reinforces competitiveness and capacity for the operations that we have locally at different countries. Conversely, a recession will reduce demand, or it will at least reduce the growth of demand, and that equation, the supply and demand equation I mentioned may be worse than a baseline scenario. In our scenarios, we are already considering lower growth worldwide. We've been doing that since last year. It would need to be a very strong recession in order to have a negative impact on our forecast. Everything we've been doing, all the forecasts and scenarios we've been working on since last year already consider, they do already consider a lower scenario, a lower level around the world. So everything Rosana mentioned with the reduction in fixed costs, reduction in CapEx and working capital, other asset monetization strategies, all of that ends up being wrapped into our process, our preparation process, which started over a year ago, well over a year ago. So I would say it is already ongoing. Sometimes, of course, a new idea will arise, oh, we could do this or that, and…

All right, that's very clear, Pedro. Thank you.

Our next question comes from Till Moez [ph] from Schroeders. Please, you may proceed.

Hello, thanks for taking my question. I'd like to dive in on the topic of ethane a little bit more. I'm looking at the Montville [j benchmark price here and it seems to be plunging quarter to date to $30.5 per gallon. Besides the escalation in the Middle East that limits the competitiveness of exports, are there any other deflationary factors that you're looking at that impact the price of ethane? And what do you assume for ethane prices in the third quarter and fourth quarter of this year?

All right. So Till's question is with regard to ethane. He sees the price of ethane drop very strongly in the US market, and that is true, it's at $88 per ton or $0.30 per gallon, so in fact it is an expressive drop in the price of ethane, and this represents competitiveness. And so his question is how do we see that scenario for the future, especially considering the recession scenario? So what do we think about Q3 and Q4 for those prices? So, first, the price of ethane in the US is strongly linked to the price of natural gas. And there's a lot of natural gas production in the US, so that ends up creating a very strong offer, a very strong supply of ethane because natural gas supply grows, the US is exporting more and more natural gas and that means more ethane is available. That does exist in the US, but there are logistical bottlenecks. There are new terminals that are being built, but until they are ready, we think the price of ethane is still going to be strongly linked to the price of natural gas in the United States. Looking now at Q3 and Q4, on average, it's $130 per ton, which is approximately a 50-fold increase compared to what we have today. But it's still a very low level. If we look at NAFTA, it's $600. So we're looking at a competitiveness difference in 500 per ton in inputs. For the second half of the year, we think $130 per ton, which is roughly 50% higher than the level it is currently at today. And we think it's going to remain at this lower level until our new export capacities increase. And there's also an effect from the Panama Channel, I think you've all been following the Panama Channel levels, the very low water levels there limits the passage of ships. So ethane exports from the US to Asia are now more strongly limited. So that means more accumulation of ethane in the Gulf of Mexico and consequently lower prices.

All right, thank you very much.

We now conclude the question-and-answer session. I'd like to pass the floor to Mr. Roberto Bischoff for his final remarks. Please, sir, you may proceed.

Hello, good afternoon, everyone. I'd like to thank everyone for being here at our earnings call and I'd like to conclude with a few remarks. As far as our results, as Pedro mentioned, we had a quarter that had better results when compared with the last few quarterly results here at the company, especially when we look at EBITDA. I see these improved results as a combination of three main factors, none of them are very strongly structural. The first one is linked to the foreign scenario, where we see better spreads abroad, internationally, but still clearly lower than expected. And that's due to the lack of rationalization at relevant levels by the industry. So there's still an imbalance between supply and demand that is very clearly present. The second one, which for the past few quarters has been mentioned in our reports, is linked to the financial preservation initiatives, which in the year to date have already added up to something in the order of $300 million, and that includes the impacts both of EBITDA and cash flow. And we have regularly shared those results with you. The third and last one, this one is related to the profile of our production capacity, especially in Brazil, which despite the weather event in southern Brazil, in Rio Grande do Sul, we were able to leverage one of our strategic competitive advantages, which is the geographical diversity of our petrochemical centers, which has allowed us to respond to an emergency, which did lead to a very significant drop in production. And the results were felt at different other centers, and this allowed us to become a better player, especially in the resin market. In any case, I'd like to conclude by making a comment about the Brazilian chemical industry overall, which…

Braskem’s video conference is now complete. We'd like to thank everyone for being with us and have a great afternoon.