BAK

Market Context

• Global macroeconomic volatility persisted in Q2 2026 due to the Middle East conflict, which restricted global feedstock supply (especially to Asia) and raised oil and naphtha prices, pushing up international resin and chemical spreads significantly above 2016-2025 averages. U.S. PE spreads were nearly 40% higher than historical averages, driven by widened U.S.-Asia arbitrage that created attractive export margins.
• Management emphasized this spread improvement is a temporary supply shock, not a structural change to the challenged global petrochemical cycle.

Consolidated Financial and Operational Performance

• Operating cash generation was $385 million, driven by higher international spreads. After working capital volatility from feedstock price swings and higher inventory for high-value sales prioritization, recurring cash generation was ~$210 million; net cash consumption was ~$15 million after Alagoas event and lease payments.
• Alagoas geological event remediation work is nearly complete: 99.9% of resident relocation and compensation proposals are submitted, 99.7% of proposals are accepted and paid. 14 salt cavities have been filled, with 3 in process and 1 in planning. Total provisions for the event stand at BRL 18.2 billion, with BRL 14.6 billion disbursed and a remaining balance of BRL 3.2 billion.

H2 2026 Corporate Priorities

• Capital Structure and Liquidity: Advance restructuring of Braskem (including Braskem Idesa) to achieve a sustainable capital structure and guarantee business continuity; maintain strict capital allocation discipline focused on preserving and optimizing financial liquidity.
• Operational and Commercial Competitiveness: Expand operational excellence programs, capture cross-organizational synergies, and strengthen value capture levers to improve competitiveness; advance the company's transformation plan to map and capture long-term value creation opportunities.
• Institutional and Stakeholder Commitment: Advocate for a more competitive business environment for the Brazilian chemical and petrochemical industry; fulfill all commitments related to the Alagoas geological event; maintain safety as a non-negotiable core value across all global operations.

• External consultants expect the strong Q2 2026 spread levels will not persist: spreads are forecast to moderate significantly in H2 2026 as trade flows normalize, with a 59% projected drop in Brazilian PE naphtha spreads between Q2 and Q3 2026, and similar declines expected for Brazilian PP naphtha and Mexican PE-ethane spreads, returning to pre-conflict levels or lower.
• The global petrochemical industry remains structurally challenged: pre-conflict fundamentals of global overcapacity (especially in Asia), moderate demand growth, and pressured operating rates will persist even after trade flow normalization, so the Q2 2026 strength is a temporary tactical opportunity, not a cyclical recovery.
• 2026 CapEx guidance for global assets (excluding Braskem Idesa) remains $485 million; 35% of the annual budget has been spent through H1 2026, in line with historical disbursement patterns, with full-year spending expected to hit the pre-approved target, with most disbursement occurring in H2 2026.
• Seasonal demand growth typically expected in Q3 2026 has not materialized, making near-term sales performance difficult to predict; management will remain flexible to capture opportunities as they arise.

1. Brazil Segment: Average plant utilization rate increased 1 percentage point sequentially. Resin sales volume fell 2% (polyethylene -6%, PVC -1%, partially offset by polypropylene +3%), chemical sales volume fell 4%. Recurring EBITDA reached $869 million, up 261% from Q1 2026, driven by 50% higher international resin and chemical spreads, $115 million in PIS/COFINS tax credits, and $27 million in recovered demurrage credits and provision reversals. Gains were partially offset by 4% BRL appreciation against USD and lower domestic sales volumes. Green ethylene utilization rose 2 percentage points sequentially, with green polyethylene sales up 49% driven by European demand and post-Chinese New Year normalization, including a renewed partnership with New Balance for bio-based EVA. This segment contributes ~83% of consolidated recurring EBITDA.

2. United States and Europe Segment: Utilization rate was 7%, down 3 percentage points sequentially due to scheduled 35-day (U.S.) and 30-day (Germany) plant maintenance. Overall sales volume was flat sequentially, as higher U.S. sales offset lower European sales from inventory management. Recurring EBITDA was $147 million, up sequentially, driven by higher international polypropylene spreads from the Middle East conflict. This segment contributes ~14% of consolidated recurring EBITDA.

3. Mexico Segment (Braskem Idesa): Polyethylene plant utilization rate was 43%, down 12 percentage points sequentially amid liquidity preservation measures. Average ethane imports fell 3,000 barrels per day (bpd) to 14,700 bpd, and PEMEX domestic ethane supply also fell 3,000 bpd to 11,800 bpd. Polyethylene sales fell 11% due to lower production availability. Recurring EBITDA was $57 million, up sequentially, driven by a 73% increase in U.S. polyethylene spreads from Middle East conflict-related supply uncertainty. This segment contributes ~5% of consolidated recurring EBITDA.

Consolidated recurring EBITDA for Q2 2026 was $1.043 billion, with a 24% EBITDA margin, up significantly from the prior quarter.

• Persistent geopolitical volatility from the ongoing Middle East conflict creates continued uncertainty around feedstock supply and pricing, leading to unpredictable spread volatility and challenges for short-term planning.
• The global petrochemical industry faces structural risks of persistent overcapacity (estimated at ~20 million tons of polyethylene oversupply, equal to ~15% of current global industry capacity) and moderate demand growth, which will keep pressure on margins long-term after the temporary Q2 supply shock fades.
• Braskem Idesa faces ongoing liquidity and feedstock supply risks, leading to reduced operating rates to preserve cash; ethane supply from both imports and PEMEX has declined sequentially, limiting production availability.
• Dumped low-cost polyethylene imports from the U.S. create pricing pressure and erode sales volumes in the Brazilian domestic market, weighing on the Brazil segment's performance.
• Braskem requires significant capital structure restructuring to address leverage challenges, creating near-term operational and financial uncertainty if restructuring cannot be completed on a consensual basis.
• Brazilian real appreciation against the U.S. dollar creates a negative headwind to consolidated financial results.

Q: What is the current status of Braskem's capital restructuring process, and will utilization rate reductions like Braskem Idesa's be extended to Brazil operations?

A: Capital restructuring is a top short-term priority, with ongoing constructive dialogue with two major creditor groups (bank representatives and bondholders) aimed at reaching a consensual agreement to rebalance Braskem's long-term capital structure. Restructuring and operational adjustments are linked, with current production level maintenance measures designed to protect the company and capital structure while supporting ongoing business. Management sees no current indication of demand changes that would require adjustments to Brazilian operating rates, so no changes are planned.

Q: How have inventory levels and demand evolved across the supply chain since the end of Q2, and is restocking starting to occur?

A: While the Middle East conflict temporarily pushed up spreads and demand expectations, global demand has weakened as the market adjusted to the supply shock, and Brazilian demand is now tracking below initial 2026 expectations (apart from specific PVC demand growth driven by Brazil's Sanitation Law, which is not a structural market shift). Inventory levels across the Brazilian supply chain are currently balanced, but low-cost U.S. polyethylene imports remain competitive and continue to enter the market. Braskem is fully capable of meeting all domestic Brazilian demand and prioritizes serving its local customer base.

Q: How will the new shared Board (with shareholders IG4 and Petrobras) balance near-term leverage reduction targets with long-term investments in operational synergies under the new shareholding structure?

A: The petrochemical industry requires long-term planning, as its long-lived assets rely on structural decisions that play out over decades, similar to Asia's capacity buildout that began decades ago. The company balances two complementary pillars: near-term capital restructuring and long-term structural transformation to improve efficiency, sustainability, and competitiveness. The new shared Board benefits from complementary strengths: IG4 is focused on long-term value creation, while Petrobras brings deep industry expertise, creating positive synergies in day-to-day governance.

Q: How is Braskem engaging in the current Brazilian antidumping process for U.S. polyethylene imports, and what impacts would an extension of measures have?

A: Braskem is actively participating in the process with Brazilian regulatory bodies (including GECEX) and has requested improved import protection to address the existing imbalance caused by confirmed dumping. Antidumping measures are currently in effect, and Braskem is advocating for adjustments to better counter unfair import flows, awaiting a responsible government decision expected in the coming weeks.