(Commission File No. 1-14862 )

EXECUTIVE SUMMARY

The performance of the world economy continued to be influenced mainly by the recession in the Eurozone and lower-than-expected growth in emerging markets.

In the global petrochemical industry, the average price of naphtha, its primary feedstock, continued to follow oil prices, declining 12% in relation to 1Q13. Prices for resins ¹ and basic petrochemicals² followed the same trend, declining 3% and 8%, respectively. However, operational problems helped to restrain the supply, leading thermoplastic resin spreads to widen by 16% in the period, while spreads for basic petrochemicals remained virtually stable.

In the domestic market, apparent consumption of thermoplastic resins in 2Q13 amounted to 1.4 million tons, increasing 10% from the previous quarter. The main drivers were: (i) the continuous restocking trend in the chain; (ii) the good performance of sectors related to agribusiness, infrastructure and water supply; and (iii) the opportunistic entry of imported products. Braskem’s sales followed the upward trend to reach 947 kton; however, stronger market growth, the higher volume of imported materials and operating issues at one of the PVC plants led to a decline in the Company’s market share, which reached 66% in the quarter.

In 1H13, estimated demand for thermoplastic resins was 2.7 million tons, growing 15% from the same period last year, when demand was affected by the contraction of the Brazilian industrial sector in 2Q12. Braskem, in line with its commitment to supply the Brazilian market, recorded sales of 1.9 million tons, 14% higher than in 1H12.

Braskem’s crackers operated at an average capacity utilization rate of 94% in 2Q13, increasing 4 p.p. from 1Q13, positively affected by its better operating efficiency and the performance of certain second-generation clients. The result was also positively impacted by the provisional measure announced by the Brazilian government on May 8, which reduced the PIS (Social Integration) and COFINS (Social Contribution) tax rates for raw material purchases from the chemical industry, aiming to help Brazilian producers recover part of their competitiveness.

In this scenario, the Company’s EBITDA in 2Q13 amounted to R$1,051 million, increasing 12% from the previous quarter, explained by the higher sales volume, the better operating performance and the increase in thermoplastic resin spreads, which followed the upward trend of the international market. In U.S. dollar, EBITDA was US$506 million, increasing 8% and 18% from 1Q13 and 2Q12, respectively.

In 1H13, Braskem posted EBITDA of R$1,988 million. In U.S. dollar, EBITDA reached US$976 million, 13% higher than in 1H12, benefitting from the continued recovery in spreads, which followed the international market trend, and from the higher sales volume.

On June 30, 2013, Braskem’s net debt stood at US$6,977 million, decreasing 5% from the end of 1Q13. This amount included the advance on investment of US$649 million provided to the Mexico project that was reimbursed to Braskem after the close of the quarter, on July 24, upon disbursement of the first installment of the project finance. Excluding the financing structure of the Mexico project, financial leverage measured by the net debt/EBITDA ratio, in U.S. dollar, decreased from 3.34x to 3.01x. The 10% decrease is mainly explained by the recovery in EBITDA over the last 12 months.

Braskem's cash flow is heavily dollarized. With practically 100% of its revenue directly or indirectly linked to the U.S. dollar and approximately 80% of its costs also linked to the same currency, the Company believes that maintaining a significant portion of its debt also in U.S. dollar creates a “natural hedge”. As a result of this exposure, which Braskem considers adequate and is in compliance with its Financial Management Policy, the effects of the exchange variation affect its financial accounting result, which is mandatorily recorded in Brazilian real.

As Braskem regularly exports a portion of its production, and with the objective of better reflecting these exchange variations impacts in its result, the Company decided, as of May 1^st, to designate part of its dollar- denominated liabilities as hedge for its future exports (for more information see Note 23.2.1 (b.ii) to the quarterly financial statements – Non-derivative financial liabilities designated as export hedge accounting).

In 2Q13, after the adoption of the hedge accounting practice, the 10% depreciation in the Brazilian real on the remaining net currency exposure had a negative impact of R$126 million on the financial result. If this hedge accounting practice had not been adopted, this impact on financial result would have been negative in R$1.5 billion.

It is important to note that in both cases this effect does not have an immediate impact on the Company’s cash position. It represents currency translation accounting impacts, especially on Braskem’s debt, with any expenditure occurring upon the maturity of the debt.

Net income in the first six months of the year amounted to R$99 million, influenced by the higher cash flow capacity generation and the adoption of hedge accounting. If Braskem had maintained its previous accounting practice, it would have registered a net loss of R$855 million.

Despite the recovery observed, the global economic outlook remains challenging. It is expected that the Brazilian government will continue responding to the uncertainties of this scenario and working to strengthen the local industry. The reduction in the tax rate on raw materials for the chemical industry provided for by the provisional measure announced in May is essential for supporting a recovery in the industry’s growth and in its capacity to invest, helping to reverse the industry’s trade deficit.

PERFORMANCE

4  Net Revenue

In 2Q13, Braskem’s consolidated net revenue was US$4.6 billion, similar to the previous quarter. In Brazilian real, net revenue amounted to R$9.5 billion, increasing 2% from 1Q13, driven by higher sales volume, which offset the lower resale volume and the reduction in the average price of basic petrochemicals that followed the international market trend. Excluding resale volume from the analysis, net revenue in 2Q13 was stable in U.S. dollar and increased 4% in Brazilian real.

Compared to 2Q12, consolidated net revenue in U.S. dollar was 1% higher. Measured in Brazilian real, consolidated net revenue grew by 6%, benefitting from the average U.S. dollar appreciation of 5% in the period and from the higher sales of resins and basic petrochemicals between the periods.

Export sales revenue in 2Q13 amounted to US$2.0 billion, stable in relation to the previous quarter. Compared to the same period of 2012, export sales revenue declined 6%, impacted by the lower resale volume and higher allocation of resin sales to the Brazilian market.

In 1H13, Braskem’s consolidated net revenue totaled US$9.3 billion. In Brazilian real, revenue was R$18.8 billion, increasing 11% from the prior-year period, due to the higher sales volume and U.S. dollar appreciation.

Export revenue in the period was US$3.9 billion, down 6% from 1H12, which is basically explained by the lower resale volume.

Highlights by Segment

4  Capacity Utilization Rate

Braskem’s plants operated at higher utilization rates in 2Q13, led by the performance of crackers, which benefitted from the reduction in the PIS and COFINS tax rates for raw material purchases, and by the U.S. assets. The Company’s utilization rates are presented below:

4  Polyolefins  

Brazilian market: estimated demand for Polyolefins (PE and PP) was 1,082 kton in 2Q13, increasing 9% from 1Q13, which is explained by: (i) the good performance of sectors related to agribusiness, automotive, construction and water supply; and (ii) the opportunistic entry of a higher volume of imported products. Compared to 2Q12, which was impacted by the contraction of the Brazilian industrial sector, demand grew 25%.

Compared to 1H12, the market expanded by 14% to 2.1 million tons, influenced by a restocking trend in the chain and stronger demand from the automotive, food, construction and agribusiness sectors.

Production: in 2Q13, production was 1,056 kton, down 1% from 1Q13, reflecting the lower capacity utilization rate of the PP assets, which was impacted by the volatility in propylene prices. Compared to 2Q12, production increased 4%.

Domestic sales: the Company’s sales reached 787 kton in 2Q13, up 4% from 1Q13, following the Brazilian market trend. Braskem’s market share stood at 73%. Compared to 2Q12, sales volume increased by 18%.

Export sales: in 2Q13, exports amounted to 263 kton, increasing 9% from 1Q13, driven by the better performance of Latin American countries and opportunities to export overseas. Compared to 2Q12, the decrease in export volume is explained by the redirection of sales to the domestic market.

In 1H13, production reached 2,125 kton. Domestic sales came to 1,542 kton, growing 12% from the same period in 2012, driven by stronger domestic demand. Exports amounted to 503 kton, decreasing 24%, which is explained by the higher sales volume in the domestic market as mentioned above.

4  Vinyls  

Brazilian market: in 2Q13, estimated PVC demand was approximately 350 kton, growing 13% on the prior quarter, driven by the continued good performance of the infrastructure sector, the restocking trend in the chain and the increased volume of imported products in the period. Compared to 2Q12, domestic demand was 29% higher, driven by the better performance of the Brazilian market, which last year was affected by the slowdown in the local economy.

In 1H13, the PVC market reached 661 kton, increasing 19% from the same period of 2012, influenced by the same factors described above.

Production: with an average utilization rate of 83% still, PVC production in 2Q13 was 147 kton, explained by one scheduled shutdown and operating issues at one of the plants. Meanwhile, caustic soda production amounted to 111 kton, declining 4%.

Compared to 2Q12, PVC production increased 33%, which is explained by the output from the new plant in Alagoas. Caustic soda production, which had been impacted by the scheduled shutdown, grew 12% in 2Q13.

Domestic sales: in this scenario, Braskem’s PVC sales volume came to 160 kton, with market share of 46% in 2Q13. Caustic soda sales were 112 kton, decreasing 6% from 1Q13 in response to the lower demand from certain sectors of the Brazilian economy, such as beverages and pulp and paper.

Compared to 2Q12, PVC sales increased by 20%, reflecting the higher product supply. Caustic soda sales remained virtually flat.

In 1H13, PVC production reached 294 kton, an increase of 30% compared to 1H12, positively affected by the operations of the new plant in Alagoas. Caustic soda production was 226 kton, reflecting the higher utilization rate between the periods. The better product availability led to an increase in PVC and caustic soda sales volume, which reached 326 kton and 232 kton, respectively.

4  Basic Petrochemicals

Ethylene production in 2Q13 amounted to 876 kton, increasing 5% from 1Q13, reflecting the higher average capacity utilization rate of the crackers, which was supported by the better performance of second-generation clients and also benefitted from the government measure to reduce the PIS and COFINS tax rates for the purchase of raw materials in the chemical industry. Compared to 2Q12, production volume grew by 7%.

Ethylene and propylene: in this context, the Company’s 2Q13 sales totaled 234 kton, increasing 3% from 1Q13. Compared to 2Q12, sales volume grew 12%, also affected by the higher supply of product in the period.

Butadiene: sales amounted to 98 kton in 2Q13, similar to 1Q13 and 37% higher than in 2Q12, reflecting the butadiene capacity expansion at the Triunfo plant in Rio Grande do Sul state.

BTX: 2Q13 sales of aromatics were 288 kton, growing 25% from 1Q13, which is mainly explained by the strong sales of benzene driven by the resumption of production by certain clients that had carried out shutdowns in 1Q13. In relation to 2Q12, sales grew by 10%.

In 1H13, production volume growth supported higher sales volume, which increased by 2% over the same period last year for ethylene/propylene and BTX. In the case of butadiene, sales growth was explained by its capacity expansion.

4  Braskem America (USA and Europe)

Market: PP demand in the USA was 11% higher from 1Q13, influenced by the propylene price reduction and the gradual recovery of the local economy. Demand in Europe remained weak, with signs of a restocking trend in certain sectors of the chain.

The start of 1H13 was marked by the spike of raw material prices, which in April began to gradually decline, reflecting the better propylene supply in the U.S. market (higher utilization rate at refineries) and the European naphtha price decline.

Production: with an average utilization rate of 93%, which was benefitted from the reduction of U.S. raw material prices and the recovery in PP demand, production volume reached 457 kton in 2Q13, 7% higher compared to both 1Q13 and 2Q12.

Sales: in this scenario, sales volume in 2Q13 came to 465 kton, growing by 8% and 10% in relation to 1Q13 and 2Q12, respectively. 

In 1H13, production rose 2% from the same period of 2012, while sales volume increased by 6%, driven by the segments related to nondurable goods.

4  Cost of Goods Sold

Braskem's cost of goods sold (COGS) in 2Q13 was R$8.5 billion, up 2% on the prior quarter. The higher sales volume of resins and basic petrochemicals was partially offset by (i) the decrease in the ARA naphtha price reference for domestic supply (three month moving average) to US$901/t in 2Q13, from US$943/t in 1Q13; (ii) the lower resale volume; and (iii) the reduction of the PIS and COFINS tax rates for raw material purchases, which began to be recognized during the quarter. The 4% U.S. dollar appreciation generated a loss of R$264 million.

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. The ARA naphtha price, the price reference for imported naphtha, stood at US$831/t in the quarter, decreasing 12% from 1Q13 (US$945/t).

Regarding the average gas price, between 1Q13 and 2Q13, the Mont Belvieu reference prices for ethane and propane increased by 6% to US$27 cts/gal (US$202/t) and US$91 cts/gal (US$476/t), respectively. The increase is explained by the reduction in inventory levels resulting from the lower production level and higher-than-expected demand in the U.S. market. Regarding the USG propylene price reference, the average price was US$1,396/t, decreasing 16% in the period, influenced mainly by the higher supply due to the conclusion of the refineries schedule maintenance shutdowns in the region.

Compared to 2Q12, COGS increased 4%, reflecting the higher sales volume and the 5% average U.S. dollar appreciation between the periods, which generated a negative impact of R$380 million that offset the lower naphtha price.

In 1H13, COGS amounted to R$16.8 billion, up 7% from 1H12, which is explained by the U.S. dollar appreciation and the higher sales volume.

The average ARA naphtha price in 1H13 was US$888/t, down 6% from the 1H12, which was US$947/t. Regarding the average gas price, the benchmark Mont Belvieu prices of ethane and propane decreased between the periods by 45% and 21% to US$27 cts/gal and US$89 cts/gal, respectively. Meanwhile, the USG propylene price increased by 3% to US$1,525/t.

4  Selling, General and Administrative Expenses

In 2Q13, selling, general and administrative expenses (SG&A) amounted to R$495 million, decreasing 3% from the prior quarter. Compared to 2Q12, SG&A expenses decreased by R$29 million or 5%.

Selling Expenses were R$240 million, decreasing 3% from 1Q13, positively influenced by the improvement in credit quality. Compared to 2Q12, selling expenses grew 6%, due to the increase in sales volume between the periods.

General and Administrative Expenses came to R$255 million in 2Q13, down 3%, mainly due to the recurring expenses with technology typically incurred in the first quarter of the year. Compared to 2Q12, G&A expenses decreased even further, by 14%, reflecting the Company’s efforts to control fixed costs, despite the continued inflationary pressures.

In 1H13, SG&A expenses amounted to R$1.0 billion, in line with the amount in 1H12. The increase in selling expenses, which was fueled by sales volume growth, was offset by the reduction in G&A expenses. 

4  EBITDA 

Braskem’s consolidated EBITDA³ in 2Q13 amounted to R$1,051 million or US$506 million, increasing 12% and 8%, respectively, from 1Q13. EBITDA margin excluding naphtha resale stood at 11.4%, expanding 1 p.p. The main factors contributing to this performance were: (i) the sales volume growth, positively affected by the domestic market; (ii) the improvement of the international spreads of resins, which expanded 16%; and (iii) the positive impact from the PIS and COFINS tax rates reduction for raw material purchases as of May. 

Compared to 2Q12, EBITDA increased by 24% in Brazilian real and 18% in U.S. dollar. Excluding the nonrecurring impact of R$108 million in the period (prepayment of Refis tax amnesty installments and adjustment of the compensation received for the interruption of propylene supply in the U.S. recognized in 1Q12), EBITDA grew by 43% in Brazilian real and 35% in U.S. dollar. This performance is basically explained by the improvement of thermoplastic resin spreads in the international market of 18% and by the sales volume growth. Additionally, the 5% average U.S. dollar appreciation contributed R$111 million to this growth.

In 1H13, Braskem’s consolidated EBITDA amounted to R$1,988 million, increasing 22% from the prior-year period. In U.S. dollar, EBITDA grew by 13%. Excluding the impact from the nonrecurring items in 1H12 (as mentioned above) of R$344 million, EBITDA increased by 55% in Brazilian real and 41% in U.S. dollar. Sales volume growth and the expansion in international spreads for resins and basic petrochemicals, which were 21% and 9% higher, respectively, were the main responsible for the improvement in the Company’s performance.

4  Net Financial Result

The net financial result in 2Q13 was an expense of R$666 million, compared to an expense of R$107 million in the prior 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 June 30, 2013, this net exposure was composed of: (i) in operations, 62% of supplier accounts, which was partially offset by 75% of accounts receivable; and (ii) in the capital structure, 77% of net debt. Since the Company’s operating cash flow is heavily linked to the U.S. dollar, the Company’s believes that maintaining this level of net exposure to the dollar in liabilities acts as a natural hedge, which is in compliance with its 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.

Export Hedge Accounting

As Braskem regularly exports part of its production and aiming to better reflect the exchange variation on its result, the Company decided to designate, as of May 1, part of its dollar-denominated liabilities as a hedge for its future exports, in compliance with accounting standards IAS 39 and CPC 38.

As a result, the exchange variation from these designated liabilities, which amounted to US$6,757 million, will be temporarily recorded under shareholders’ equity and transferred to the income statement only when such exports occur, thus enabling the simultaneous recognition of the currency’s impact on liabilities and exports. (Note 23.2.1 (b.ii) to the quarterly Financial Statements – Non-derivative liabilities designated for export hedge accounting).

In 2Q13, the effect from the 10% U.S. dollar appreciation ⁴   on the net exposure of liabilities not designated as hedge had a negative impact on the financial result of R$126 million. If hedge accounting had not been adopted, this impact on the financial result would be negative in R$1.5 billion. It is important to mention that in either case the effect has no immediate impact on the Company’s cash position, since the amount represents currency translation accounting impacts, especially on Braskem’s debt, with any expenditure occurring upon the maturity of the debt, which has an average term of 14.5 years (up from 14.2 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 2Q13 was an expense of R$471 million, increasing R$106 million from the expense in the prior quarter, which is mainly explained by the restatement of (i) the lawsuits related to participation in the São Paulo State Special Installment Program (PEP), and (ii) the adjustment to present value of raw material purchases in the domestic market. Compared to 2Q12, the net financial result was virtually stable.

On the same basis, the financial result in 1H13 was an expense of R$835 million, increasing R$81 million from the expense in the prior-year period, which mainly reflects the application of the accounting rule regarding adjustment to present value due to the change in the payment term for raw material acquisitions in the local market to 90 days as of 2Q12.

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

4  Net Income / Loss

Braskem posted a net loss of R$128 million in 2Q13, which is basically explained by the negative impact from the net financial expense of R$666 million. However, in the first six months of the year, the Company recorded net income of R$99 million, reflecting the improvement in operating performance.

As already mentioned, to better reflect the effects of exchange variation on the profit or loss, Braskem adopted, as of May 1, the practice of hedge accounting. If it had not adopted such practice, Braskem would have registered net losses of R$1,082 million in 2Q13 and R$855 million in 1H13.

4  Cash Flow

Braskem’s operating cash flow, adjusted by Financial Investments, was R$2,013 million in 2Q13. The positive impact from working capital was R$1,115 million, which is mainly explained by the positive variations (i) of R$734 million in Suppliers, due to the U.S. dollar appreciation and the increase of raw material purchase explained by the production growth; and (ii) of R$257 million in Inventory, due to the higher sales volume.

The adjusted Free Cash Flow in the quarter was positive R$692 million, reflecting the higher operating cash flow and R$70 million in proceeds from the sale of the Water Treatment Unit, which were partially offset by: (i) the increase in interest paid, due to the concentration of payments of semiannual coupons on bonds issued by Braskem in the second and fourth quarters of the year; and (ii) the continuous disbursements for the Mexico project and the Company’s operating investments.

In 1H13, Adjusted Free Cash Flow was negative R$212 million, decreasing R$175 million from the prior-year period. The highlight was the increase in investments, which includes the R$1.6 billion disbursement made by the subsidiary Braskem-Idesa (Mexico project), which is fully consolidated by the Company.

4  Capital Structure and Liquidity 

On June 30, 2013, Braskem's consolidated gross debt stood at US$8,555 million, down 5% from the balance on March 31, 2013. In Brazilian real, consolidated gross debt grew by 5% in the period. In both cases, consolidated gross debt was affected by the 10% appreciation in the U.S. dollar in the period. At the end of the period, 71% of gross debt was denominated in U.S. dollar.

The balance of cash and investments decreased by US$38 million to US$1,577 million. In line with its strategy to maintain its high liquidity and financial health, the Company maintains three revolving 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.

As a result, Braskem's consolidated net debt in U.S. dollar decreased by 5% to US$6,977 million. In Brazilian real, consolidated net debt grew by 4%. The percentage of net debt denominated in U.S. dollar was 77%.

Excluding from this amount the cash and resources invested via the bridge loan of the Mexico project, which totaled US$649 million and were reimbursed to Braskem upon withdrawal of the first installment of the project finance on July 24, 2013, the balance of net debt stood at US$6,407 million.

The EBITDA growth in the last 12 months of 4% (US$2.1 billion), combined with the lower net debt in U.S. dollar, led to a decrease from 3.62x to 3.30x in the Company’s financial leverage measured by the ratio of net debt to EBITDA when measured in U.S. dollar. In Brazilian real, the leverage ratio decreased by 1% to 3.58x.

Excluding the Mexico project from the analysis, financial leverage measured by the net debt/EBITDA ratio in U.S. dollar stood at 3.01x, down 10% from the prior quarter. In Brazilian real, the leverage ratio fell to 3.25x.

On June 30, 2013, the average debt term stood at approximately 15 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 June 30, 2013 was 5.90% in U.S. dollar and 8.26% in Brazilian real, compared to 5.98% and 8.00% 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 June 30, 2013.

Only 7% 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 22 months. Considering the stand-by credit facilities, this coverage extends to 31 months.

CAPITAL EXPENDITURE:

Maintaining its commitment to making investments with returns above the cost of capital, in the first six months of 2013, Braskem made investments (excluding capitalized interest) of R$1,060 million.

Of this amount, 47% (R$493 million) was allocated to the project in Mexico. This investment is explained primarily by the resumption of disbursements via equity, which seek to balance the project’s financing structure (70% debt / 30% equity), and by the anticipation of certain disbursements due the progress of its construction. The Company also invested R$486 million in maintenance in order to keep its assets operating at high levels of operating efficiency and reliability.

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 mid and long term strategy, Braskem focuses on investments that improve the competitiveness and diversify its raw material matrix, strengthening its leadership in the Americas and in the biopolymers industry.

BRASKEM’S COMPETITIVE ADVANTAGES:

4    VISIO Program

In 2Q13, the Visio Program maintained its commitment to developing Brazil’s plastics chain and creating value for Braskem’s Clients.

 Braskem, in partnership with Multinova, developed a polyethylene sheet for the construction industry that is installed between the slab and the subfloor to reduce noise transmission between floors. The initiative helped boost Multinova’s sales while creating a new market for Braskem, which is the only resin supplier to the company.

In keeping with its strategy to strengthen partnerships with Clients, Braskem developed a new PVC solution for a line of dolls manufactured by Muiltibrink whose particular characteristics ensured the project’s feasibility. The solution’s success led the use of this new formula to be expanded to other toy lines.

4   Innovation Pipeline

New polypropylene resin for the automotive industry: as part of our continuous effort to serve Clients and meet the industry’s needs, Braskem expanded its PP resin portfolio to include applications for automotive compounds.

Polyethylene for blow-molded packaging: Braskem has enhanced its PE portfolio for the blow-molded packaging market. The new resin meets the chemical resistance requirements demanded by the cleaning products market, especially multi-purpose cleaners.

OUTLOOK:

The International Monetary Fund (IMF) revised its forecast for world economic growth in 2013 to 3.1%, or 0.2 p.p. below its forecast published in April, citing weaker growth in emerging markets as the main factor.

In line with the global market, the Brazilian central bank also expects the country to present a more moderate GDP growth, of 2.31% in 2013.

During 1H13, the competitiveness agenda of Brazil’s chemical industry has advanced. The tax cuts on raw material purchases, which had been advocated by the Chemical Industry Competitiveness Council created under the economic stimulus plan known as Brasil Maior and which were announced by the federal government in May, could help support a new cycle of investment in the industry and country over the coming years.

However, the international scenario remains challenging, and it is expected that the Brazilian government will continue to strengthen the competitiveness of the local industry amidst the global economic uncertainties.

As for the global petrochemical industry, the short-term scenario is marked by caution. The main factors are related to: (i) the higher global availability of products due to the recovery in the capacity utilization rate, following the scheduled and unscheduled shutdowns in the second quarter; and (ii) the level of growth in Chinese demand given current monetary policy. However, the economic situation in developed countries (USA and Japan) should be a positive leverage of this scenario. In the medium and long term, the outlook for the petrochemical industry remains positive, supported by a better macroeconomic environment.

Braskem’s strategy in this context remains centered on strengthening its business and increasing its competitiveness by: (i) intensifying its partnerships with Clients, with a resumption of market share gains in the Brazilian market and segmented sales in the U.S. and European markets; (ii) supporting the development of Brazil’s petrochemical and plastics chain; (iii) pursuing operational efficiency by maintaining high capacity utilization rates and optimizing the production mix; (iv) diversifying its feedstock matrix and improving its competitiveness by advancing construction of the gas-based petrochemical complex in Mexico (Ethylene XXI); and (v) maintaining its cost discipline and financial health.

NOTE:

(i) On June 28, 2013, the Brazilian real/U.S. dollar exchange rate was R$2.2156/US$1.00.

16

UPCOMING EVENTS:

4       2Q13 Earnings Conference Call

INVESTOR RELATIONS TEAM:

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 Income Statement

(R$ million)  

EXHIBIT 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)  

* Includes Non-derivative liabilities designated for export hedge(Note 23.2.1 to the quarterly Financial Statements).

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)