(Commission File No. 1-14862 )

EXECUTIVE SUMMARY

In a still uncertain global scenario, the 1Q13 was marked by the recovery of prices and global demand for resins and basic petrochemicals, influenced by the restocking trend in Asia and the scheduled and unscheduled maintenance shutdowns. The average price of naphtha, the main feedstock used by the petrochemical industry, remained practically stable in relation to 4Q12. Consequently, the spreads for resins¹ and basic petrochemicals²  in the international market increased by 24% and 6%, respectively.

The Brazilian market followed the global trend and domestic demand for thermoplastic resins reached 1.3 million tons, growing by 5.6% from 4Q12. In line with its focus, Braskem’s sales amounted to 921 kton, increasing by 6.2% and supporting a market share gain of 1 p.p. to 71% in 1Q13.

After the volatility in the electricity supply in the 4Q12, the Company’s industrial facilities normalized their operations, and the average capacity utilization rate of the crackers reached 90% in the first quarter of this year.

EBITDA in 1Q13 amounted to R$937 million, growing by 6% from 4Q12 recurring EBITDA , explained by the higher sales volume and better spreads, which followed the international market trend. In U.S. dollar, EBITDA was US$470 million.

On March 31, 2013, Braskem’s net debt stood at US$7.4 billion, 8% higher than in the end of 2012, mainly explained by the financial resources provided to the Mexico project. To date, the project has received US$619 million in financial resources, which will be reimbursed to Braskem upon the payment of the 1^st installment of the project finance, expected in June 2013. The EBITDA recovery of the last 12 months partially offset the increase in net debt, and the financial leverage measured by the net debt/EBITDA ratio increased from 3.42x in December 2012 to 3.62x in March 2013 when measured in U.S. dollar. Excluding the financing structure of the Mexico project, the leverage in U.S. dollar stood at 3.34x, in line with the 4Q12.

The Brazilian government has responded to the uncertainties in the global economy by adopting important measures to recover part of the competitiveness of local industry, which is suffering from infrastructure, productivity and foreign-exchange issues. On May 8^th was approved a reduction in the rate of PIS (Social Integration) and COFINS (Social contribution) tax for the acquisition of feedstock by first- and second-generation chemical producers, which are consumed by around 50 companies. The tax rate will be reduced to 1% from 2013 to 2015 and, as of 2016, will rise gradually until 2018.

The outlook for the global scenario remains challenging, which reinforces the need for a more comprehensive industrial policy that continues to strengthen Brazilian industry. In this context, the government is expected to announce new measures. The tax reduction implemented by the government is essential for supporting a recovery in growth and higher capacity utilization rates in the industry, which has been operating with idle capacity in recent years. This should improve the industry’s ability to generate profits and strengthen its capacity to invest, reversing the sector trade deficit and meeting the growing local demand.  

PERFORMANCE

4  Net Revenue

In 1Q13, Braskem’s consolidated net revenue was US$4.7 billion. The 4% increase from 4Q12 is mainly explained by the higher average price and higher sales volume in the domestic market, which partially offset the lower resale volume. In Brazilian real, consolidated net revenue was R$9.3 billion, up 1% from the fourth quarter of last year. Excluding resale volume, net revenue in 1Q13 increased by 6% in U.S. dollar and 3% in Brazilian real.

Compared to 1Q12, consolidated net revenue in U.S. dollar increased 2%. In Brazilian real, consolidated net revenue grew 15%, benefitting from the average U.S. dollar appreciation of 13% between the periods.

Revenue from sales to the external market was US$1.9 billion in 1Q13, stable compared to 4Q12, but down 6% from 1Q12, explained by the lower resale volume and higher resin sales in the domestic market.

Highlights by Segment

4  Capacity Utilization Rate

Following the operating issues at crackers in 4Q12 due to instability in the power supply, capacity utilization rates recovered in 1Q13. The capacity utilization rates for Braskem’s main products are presented below:

4  Polyolefins  

Brazilian market: estimated demand for Polyolefins (PE and PP) was around 994 kton in 1Q13, increasing 3% from 4Q12, driven by the restocking trend in the chain and the healthy performance of the food and agribusiness sectors. Compared to 1Q12, estimated demand grew by 4%.

Production: production reached 1,068 kton, increasing 10% from 4Q12 due to the higher supply of feedstock. Compared to 1Q12, production decreased by 2%.

Domestic sales: following the trend in the Brazilian market, sales amounted to 754 kton in 1Q13, 4% higher than in 4Q12,  which supported a market share gain of 1 p.p. to 76%. Compared to 1Q12, sales increased 5%, reflecting the better performance of the Brazilian market and the recovery in market share.

Export sales: exports amounted to 240 kton in 1Q13, down 9% and 28% from 4Q12 and 1Q12, respectively, which is explained by the inventory buildup for the future supply of the domestic market ahead of the scheduled shutdown and the better sales mix in the domestic market.

4  Vinyls  

Brazilian market: estimated PVC demand in 1Q13 was 311 kton, or 15% higher than in 4Q12, reflecting the chain inventory reconstruction and the better performance of the construction sector. Compared to 1Q12, domestic demand increased by 9%.

Production: PVC production in 1Q13 was 147 kton, increasing 12% from 4Q12 in response to the stronger domestic demand. Caustic soda production amounted to 115 kton, or 6% higher than in the prior quarter. Compared to 1Q12, PVC production increased 28%, reflecting the new PVC plant in the state of Alagoas, while caustic soda production remained practically stable.

Domestic sales: in line with the trend in domestic demand, Braskem’s PVC sales amounted to 166 kton, increasing 16% from 4Q12, with a market share gain of 1 p.p. to 54%. Meanwhile, soda sales volume amounted to 119 ktons. Compared to 1Q12, PVC sales grew by 27%, reflecting the new PVC plant in the state of Alagoas. Caustic soda sales grew by 5%, reflecting the stronger demand between the periods.

Ethylene production in 1Q13 was 836 kton, increasing 8% from 4Q12, supported by the recovery in the crackers average capacity utilization rate, which were impacted in the last quarter of 2012 by interruptions in the power supply. Compared to 1Q12, production volume decreased by 4%.

Ethylene and propylene: in 1Q13, total sales volume amounted to 226 kton, increasing 2% from 4Q12, reflecting the scheduled shutdowns and operational problems at certain clients. Compared to 1Q12, sales volume decreased 7%, also influenced by the lower production volume.

Butadiene: sales amounted to 98 kton in 1Q13, decreasing 2% from 4Q12, but increasing 33% from 1Q12, reflecting the expansion in butadiene capacity at the plant in Triunfo, Rio Grande do Sul.

BTX: sales of Aromatics amounted to 231 kton in 1Q13, down 18% from 4Q12, reflecting the operating issues at certain clients and the market opportunities taken advantage of in 4Q12. In relation to 1Q12, sales decreased by 7%.

4  Braskem America (USA and Europe)

Market: in the United States, 1Q13 was marked by a strong increase in propylene prices, due to the lower supply in the market caused by the scheduled shutdowns at the region’s refineries, and by the 4% decrease in regional PP demand. Meanwhile, the European market continued to be affected by the economic scenario while demand remained depressed.

Production: with an average capacity utilization rate of 88%, production volume in 1Q13 was 428 kton, or around 3% lower than in both 4Q12 and 1Q12.

Sales: in 1Q13, sales volume was 431 kton, down 3% from 4Q12, reflecting the weaker demand in the U.S. and European markets.

4  Cost of Goods Sold - COGS

Braskem's cost of goods sold (COGS) in 1Q13 was R$8.3 billion, in line with 4Q12. The higher sales volume of resins and basic petrochemicals in the period was partially offset by (i) the lower naphtha resale volume and (ii) the 3% appreciation in the Brazilian real against the U.S. dollar, which generated a gain of R$223 million. In 1Q13, the average ARA naphtha price reference, the Company’s main feedstock, was US$945/ton, in line with the fourth quarter of last year (US$941/ton). The three-month moving average, which is a reference for domestic supply, was US$943/ton, up 1% from US$937/t in 4Q12. Braskem acquires around 70% of its naphtha needs from Petrobras, with the remainder imported directly from suppliers in North African countries, Argentina, Mexico and Venezuela. Regarding the average gas price, between 4Q12 and 1Q13, the Mont Belvieu reference prices for ethane and propane decreased by 9% and 2% to US$26 cts/gal (US$191/ton) and US$86 cts/gal (US$451/ton), respectively, reflecting the continued growth in the supply of these products. The average price of USG propylene was US$1,653/ton, increasing 34% in the period, impacted by the lower product supply due to shutdowns at the region’s refineries. Compared to 1Q12, COGS increased 11%, due to: (i) the 4% increase in the ARA naphtha price reference for the domestic market (moving average of the last three months); and (ii) the 13% U.S. dollar appreciation (average exchange rate in periods).

4  Selling, General and Administrative Expenses

In 1Q13, Selling, General and Administrative (SG&A) expenses amounted to R$508 million, decreasing 9% from the previous quarter. Compared to 1Q12, SG&A expenses increased by R$31 million or 6%.

Selling Expenses totaled R$246 million, decreasing 11% from 4Q12, when these expenses were impacted by the payment of demurrage and freight expenses related to prior quarters. Compared to 1Q12, selling expenses increased by 12%, due to the shift in the sales mix between the periods.

General and Administrative Expenses amounted to R$262 million in 1Q13, down 7% from the prior quarter, explained by lower expenses with outsourced services and corporate campaigns. Compared to 1Q12, general and administrative expenses increased 2%, reflecting the Company’s efforts to control its fixed costs, despite the environment marked by inflationary pressures.

4  EBITDA 

Braskem’s consolidated EBITDA³ in 1Q13 amounted to R$937 million or US$470 million, decreasing 33% or 31%, respectively, from 4Q12. Excluding the nonrecurring positive impact of R$516 million in the previous quarter from the sale of non-core assets, 1Q13 EBITDA increased by 6% in Brazilian real and 10% in U.S. dollar, with EBITDA margin ex-resale of 10.4%. The main factors were (i) the higher sales volume, especially in the domestic market; (ii) the improvement in international spreads for thermoplastic resins and main basic petrochemicals, which expanded by 24% and 6%, respectively.

Compared to the 1Q12, EBITDA increased 19% in Brazilian real and 6% in U.S. dollar. The increase was mainly due to the higher spreads for thermoplastic resins and main basic petrochemicals in the international market, which expanded by 24% and 32%, respectively, between the periods.

4  Net Financial Result

The net financial result in 1Q13 was an expense of R$107 million, compared to an expense of R$596 million in the prior quarter. The decrease is mainly explained by the Brazilian real⁴ appreciation through the quarter.

Since Braskem holds net exposure to the U.S. dollar (more dollar-denominated liabilities than dollar-denominated assets), any change in the exchange rate has an impact on the accounting financial result. On March 31, 2013, this exposure was formed of: (i) in operations, by 55% of trade accounts payable, which was partially offset by 63% of accounts receivable; and (ii) in the capital structure, by 75% of net debt. Since Braskem’s operating cash flow is heavily dollarized, maintaining this level of net exposure to the dollar in its liabilities complies with the Company’s Financial Management Policy. Virtually 100% of its revenue is directly or indirectly pegged to the variation in the U.S. dollar exchange rate and approximately 80% of its costs are also pegged to this currency.

It is important to note that the foreign exchange variation effect, which was positive in R$328 million in the quarter, does not have a direct cash impact in the short term. This amount represents currency translation accounting impacts, especially on the Company’s debt, with any expenditure occurring upon the maturity of the debt, which has a total average term of 14.2 years (down from 14.8 years). The portion of debt denominated in U.S. dollar has an average term of 19 years.

Excluding the effects of foreign exchange and monetary variation, the net financial result in 1Q13 was an expense of R$364 million, increasing R$48 million from the expense in the previous quarter, which is mainly due to the increased financial charges resulting from the higher volume of naphtha purchased in the period, which grew 9%. On the same basis, compared to 1Q12, the net financial result increased by R$62 million, mainly due to the change in the feedstock payment term in the domestic market to 90 days with segregation of its financial charges, as per the accounting standard for adjustment to present value.

The following table shows the composition of Braskem's financial result.

4  Net Income / Loss

Braskem recorded net income of R$227 million in 1Q13, which was mainly explained by the higher cash generation and lower financial expenses, which was affected by the local currency appreciation in the period.

4  Cash Flow

Braskem’s operating cash flow, adjusted by Financial Investments, amounted to R$228 million in the first quarter of 2013. Working capital was affected by a negative impact of R$619 million, which is mainly explained by the R$526 million increase in Inventories due to the planning conducted for serving the domestic polyolefin market ahead of scheduled maintenance shutdowns and lower sales volumes of certain cracker co-products. Inventories levels should normalize over the next few months.

In 1Q13, Adjusted Free Cash Flow was negative R$904 million, reflecting the lower operating cash flow, as explained above. It’s also highlighted in the quarter the reduction of interest paid, which in the prior quarter was impacted by the payments of semiannual coupons on the bonds issued by the Company.

The R$923 million in investments includes the R$811 million invested by the subsidiary Braskem-Idesa (Mexico project) that was fully consolidated by the Company and the R$163 million in proceeds from the divestments of the Water Treatment Unit. Excluding from investment activities the Mexico project, cash flow in the quarter was negative R$94 million.

4  Capital Structure and Liquidity 

On March 31, 2013, Braskem's consolidated gross debt was US$8,991 million, up 5% from the balance on December 31, 2012. The increase is mainly explained by the additional financial funding contracted through bridge loan for the integrated project in Mexico. In Brazilian real, consolidated gross debt grew by 3% in the period. At the end of the period, 70% of gross debt was denominated in U.S. dollar.

In line with its strategy to maintain high liquidity and financial health, the Company maintains three stand-by credit facilities, with two in the aggregate amount of US$600 million and one in the amount of R$450 million, which do not include any restrictive covenants on withdrawals during times of Material Adverse Change (MAC Clause). Only prime banks with low default rates (credit default swap) and high credit ratings participated in the transactions. The cash balance, which had been positively impacted by the divestment of railcars at Braskem America, decreased US$95 million to US$1,615 million.

As a result, Braskem's consolidated net debt in U.S. dollar increased by 8% to US$7,376 million. In Brazilian real, consolidated net debt grew by 6%. The percentage of net debt denominated in U.S. dollar was 75%.

Excluding from this amount the cash and the bridge loan of the Mexico Project, which totaled US$619 million and will return to Braskem upon the payment of the 1^st installment of the project finance, expected in June 2013, the net debt balance was US$6,855 million.

The EBITDA growth in the last 12 months partially offset the higher net debt, with financial leverage as measured by the net debt/EBITDA ratio increasing from 3.42x to 3.62x when measured in U.S. dollar. In Brazilian real, this leverage ratio stood at 3.61x.

Excluding the Mexico project from the analysis, financial leverage measured by the net debt/EBITDA ratio was 3.34x in U.S. dollar, virtually stable compared to the prior quarter, and decreased to 3.33x in Brazilian real.

On March 31, 2013, the average debt term was approximately 14 years. Considering only the portion of debt denominated in dollar, the average debt term was around 19 years. The average cost of servicing the Company's debt as of March 31, 2013 was 5.98% in U.S. dollar and 8.00% in Brazilian real, compared to 6.24% and 7.58%, respectively, in the prior quarter.

The following charts show Braskem’s gross debt by category and indexer.

The following chart shows the Company’s consolidated amortization schedule as of March 31, 2013.

Excluding from the amortization schedule the bridge loan of the Mexico project, which will be repaid upon disbursement of the first installment of the project finance, as previously mentioned, only 5% of the Company’s total debt matures in 2013, and its high liquidity ensures that its cash and cash equivalents cover the payment of obligations maturing over the next 25 months. Considering the stand-by credit facilities, this coverage extends to 34 months.

CAPITAL EXPENDITURE: Maintaining its commitment to making investments with returns above the cost of capital, in 1Q13, Braskem made investments amounting to R$297 million (excluding capitalized interest). Of this amount, around 90% was related to maintaining assets and improving their reliability. The Company also invested R$25 million in productivity gains and in Health, Safety and Environment (HSE). In 1Q13, the investment in the Mexico project was made through a bridge loan by shareholders that will be repaid upon the disbursement of the project finance, as previously explained, with no impact on the line Capital Expenditure. Disbursements via equity are expected to be resumed in 2Q13.

For 2013, investment is estimated at R$2.2 billion, with around (i) 70% allocated to maintenance and improving the productivity and reliability of the assets, including the additional expenses arising from the scheduled maintenance shutdown of one of the lines at the cracker of the Camaçari unit scheduled for 4Q13 and expected to last 30 days; and (ii) 25% allocated to the construction of the new petrochemical complex in Mexico. The remainder is related to other ongoing projects, such as the studies for the Comperj project and the construction of a pipeline for the future supply of propylene to the acrylics complex in Bahia.

PROJECT PIPELINE:

In keeping with its medium and long term strategy, Braskem focuses on investments that increase its competitiveness and diversify its raw material matrix, strengthening its leadership in the Americas and in the biopolymer market.

Special Regime for the Chemical Industry (REIQ)

On May 08, 2013, the federal government approved a measure to reduce the rate of PIS (Social Integration) and COFINS (Social Contribution) taxes on the acquisition of raw materials for the chemical and petrochemical industries, maintaining the tax credit at 9.25%. The tax rates are as follows:

§  reduction of 5.6% to 1.0% for: naphtha, HLR, ethane, propane and butane;

§  reduction of 9.25% to 1.0% for: ethylene, propylene, butene, butadiene, ortoxylene, benzene, toluene, isoprene and paraxylene.

The measure will remain valid in full until 2015. As of 2016, the discounts will be gradually reduced until 2018.

The incentives announced are aimed at supporting recovery in the competitiveness of the industry, which has suffered from the stronger Brazilian real, the higher labor costs and labor competitiveness as well as infrastructure issues. Around 50 companies will benefit from the measure. The capacity utilization rate of the industry, which has operated with idle capacity in recent years, is expected to increase, which would improve its ability to generate profits and strengthen its capacity to invest in meeting the growing demand and reversing the sector’s trade deficit.

BRASKEM’S COMPETITIVE ADVANTAGES:

4 VISIO Program With the aim of maximizing value for Clients and the plastics chain, the Visio Program launched new initiatives in 1Q13.

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NOTE:

(i) On March 31, 2013, the Brazilian real/U.S. dollar exchange rate was R$2.0138/US$1.00.  

UPCOMING EVENTS:

4       1Q13 Earnings Conference Call

EXHIBITS LIST:

            Braskem, a world-class Brazilian petrochemical company, is the leader in the thermoplastic resins segment in the Americas. With 36 industrial plants, of which 29 are in Brazil, 5 in the United States and 2 in Europe, the Company has annual production capacity of 16 million tons of thermoplastic resins and other petrochemical products.

DISCLAIMER

This press release contains forward-looking statements. These forward-looking statements are not just historical data, but rather reflect the targets and expectations of Braskem’s management. Words such as "anticipate", "wish", "expect", "foresee", "intend", "plan", "predict", "project", "aim" and similar terms, written, seek to identify statements that necessarily involve known and unknown risks. Braskem does not undertake any responsibility for transactions or investment decisions based on the information contained in this document.

EXHIBIT I

Consolidated Statement of Operations

(R$ million)

APPENDIX II

EBITDA CALCULATION

(R$ million)

(i) Represents accrual and reversal of provisions for the impairment of long-lived assets (investments, property, plant and equipment and intangible assets) that were adjusted to form EBITDA since there is no expectation of their financial realization and if in fact realized they would be duly recorded on the statement of operations.

(ii) Corresponds to the items current and deferred income and social contribution taxes, financial result, depreciation and amortization and equity income, which are included in profit or loss from discontinued operations.

(iii) Corresponds to results from equity investments in associated companies and joint ventures.

EXHIBIT III

Consolidated Balance Sheet

 (R$ million)  

EXHIBIT IV

Cash Flow

(R$ million)

EXHIBIT V

Production Volume – Main Products

EXHIBIT VI

Sales Volume - Domestic Market – Main Products

EXHIBIT VII

Sales Volume - Export Market – Main Products

EXHIBIT VIII

Consolidated Net Revenue

(R$ million)

EXHIBIT IX

Results by Segment

(R$ million)

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.