Good morning, everyone, and thank you for waiting. Welcome to Braskem's Fourth Quarter and Year 2023 Results Conference Call. With us today are Mr. Roberto Bischoff, Braskem's CEO; Mr. Pedro Freitas, Braskem's CFO; and Ms. Rosana Avolio, Director of Investor Relations, Strategic Planning, and Corporate Market Intelligence. This event is being recorded. After Braskem's remarks, there will be a question-and-answer session, and further instructions will be provided at that time. Participants will have the opportunity to register on the website to ask questions for Braskem, which will be addressed by the IR department after the conference. We would like to clarify that any statements made during this call regarding Braskem's business prospects, operational and financial goals are based on the beliefs and assumptions of the company's management as well as information currently available. Future statements do not guarantee performance and involve risks and uncertainties related to future events, depending on circumstances that may or may not occur. Investors and analysts should be aware that general conditions, industry trends, and other operational factors may impact Braskem's future results, leading to outcomes that could differ materially from those anticipated. Now, I will turn the conference over to Rosana Avolio. Ms. Avolio, you may begin your presentation.

Hello, ladies and gentlemen. Thank you for participating in Braskem's earnings call. Today, we'll present the results for the fourth quarter and the full year of 2023. Following the agenda on Slide 3, I will start by presenting the company's main financial highlights in the period on Slide number 4. In 2023, the imbalance between global supply and demand caused by the addition of new polyethylene and polypropylene capacity in the United States and China associated with the lower global consumption resulted in international spreads reaching their historic lows throughout the year, pressuring the profitability of the global chemical and petrochemical industry. In this context, Braskem's recurring EBITDA was $211 million in the fourth quarter, reaching $743 million in 2023. The company recorded a loss of approximately $935 million in 2023 with recurring cash consumption, excluding payments related to Alagoas of $375 million in the year. The company continues to have a robust liquidity position, ending the year with $3.6 billion in cash, an amount sufficient to cover debt maturities over the next seven years. This calculation does not take into account the availability of an international revolving credit line in the amount of $1 billion up to 2026. In addition, Braskem's debt profile remains very long with an average maturity of 12 years with more than 60% due after 2030. The company ended the year with leverage of 8.12 times, a reduction of approximately 4 times compared to the previous quarter. Finally, it's important to note that Braskem is committed to the company's resilience and financial health. Therefore, in 2023, the implementation of resilience initiatives positively impacted EBITDA by about $319 million and cash generation by about $525 million. In the next slide, I will comment on the company's main operational and strategic highlights. Regarding operational highlights, the global accident frequency rate decreased by 2% when compared to the previous quarter, ending the year with a rate of 1.08 events per million hours worked, a result below the industry average. In Mexico, Q4 2023 was marked by the recovery of production levels after the unscheduled shutdown in the third quarter of 2023, with an increase in the utilization rate by 18 percentage points when compared to the third quarter of 2023. In the year, Mexico's utilization rate increased by 5 percentage points to 75%. It's worth noting that this is the highest annual utilization rate in Mexico in the last five years. In the United States, the polypropylene plant located in Oster Creek New Enlaport performed above the industry average in the period, reporting production records. Finally, I would like to present some of the company's strategic highlights in 2023. Braskem maintains its efforts to balance capital allocation to continue advancing its growth agenda. In the year, the performance of the industrial decarbonization program was positive, totaling 80 initiatives predicted in the roadmap for 2030. On the technology and innovation front, around BRL554 million were invested in 2023, reinforcing our commitment to this important pillar of our strategy. As for the growth avenues, important advances have been made. On the traditional avenue, the financing of the construction of the ethane import terminal EXPO was completed by terminal chemical Puerto Mexico. This investment represented another important step towards greater availability and stability of raw material supply for Braskem Idesa. Also, on this avenue in March, the company announced a new wind energy purchase agreement with Casa dos Ventos, which provides for supply for up to 22 years. In November, the biomass-based renewable energy production plant developed by Veolia in partnership with Braskem was inaugurated. This team generated via renewable sources is already being supplied to the company's plant in Alagoas and will contribute to the potential reduction of about 150,000 tons of greenhouse gases annually. In the bio-based avenue, the expansion of the green ethylene production capacity to 260,000 tonnes per year, an increase of 30% compared to the previous capacity. In addition, in August, Braskem and XCG Chemicals signed an agreement to form a joint venture to create Braskem CM with the objective of producing green ethylene from Braskem's proprietary ethanol dewatering technology in Thailand. Finally, in the advances of the recycling avenue, we can highlight the conclusion of the acquisition of 61.1% of white plastic, a Brazilian company in the mechanical recycling sector, and the formation of the upside joint venture between Braskem and Terra Circular in the Netherlands, which holds patented and proprietary plastic waste recycling technology. Finally, we have also signed contracts with suppliers of circular raw materials such as NEXUS in the United States and Vito in Europe, ensuring strategic partnerships in this value chain. Moving on to Slide number 7, where I will present the operational performance of the Brazil segment. The utilization rate of Brazilian petrochemical plants in the fourth quarter was 66%, 2 percentage points lower than the third quarter, mainly due to the scheduled shutdown at the Brazilian petrochemical plant. In the Brazilian market, the sales volume of resins was 11% lower than that in the previous quarter, mainly explained by the strategy of prioritizing higher value-added sales and the seasonality of the period. On the other hand, greater commercial opportunities for polyethylene and polypropylene in South America increased the volume of the company's exports. As a result, the segment recurring EBITDA in Q4 was $123 million, an increase of 7% from the prior quarter, representing 52% of the company's consolidated EBITDA for the quarter. Moving on to the next slide. The production of green ethylene was impacted by restrictions in the supply of ethanol in December due to the weather conditions in the region of the petrochemical complex of Rio Grande do Sul. Thus, the utilization rate was 62%, a reduction of 46 percentage points compared to the previous quarter. It's important to note that the utilization rate in the third and fourth quarters of 2023 already reflected the addition of green ethylene capacity. With regard to sales in the last quarter, volume increased by 17%, mainly due to higher seasonal demand supported by the availability of inventory built after the capacity expansion. As a highlight on this front, Braskem concluded the update of green PE life cycle assessment, confirming the product's negative carbon footprint. The update of the study shows that each kilogram of green PE avoids the emission of approximately 2.12 kilograms of CO2 equivalent. Moving on to the next slide. In the United States and European segment, the utilization rate in the last quarter was 82%, in line with the previous quarter and the average for the year, which ended at 81%. On the other hand, sales volume decreased by 6% compared to the third quarter. In the United States, the sales volume was impacted by the seasonality of the period and the destocking process in the transformation chain. In the fourth quarter, recurring EBITDA was $87 million, 45% higher than the third quarter of 2023 and representing 37% of the company's consolidated recurring EBITDA in dollars in the quarter. This increase is mainly explained by the optimization of the sales mix and the flexibility in the purchase of propane in the United States. Moving on to the next slide, we'll talk about the Mexico segment. In Mexico, the utilization rate for the quarter was 84%, an increase of 18 percentage points compared to the previous quarter after the resumption of operations. It's important to note that the average supply of ethane by PEMEX was 35,000 barrels per day in the quarter, above the minimum contractual volume, and the average import of ethane through the fast track solution was 18,000 barrels per day. On the commercial front, sales volume was lower when compared to the previous quarter, mainly due to the recomposition of inventories. Recurring EBITDA in the period was $26 million, almost 3 times higher than the result of the third quarter and represented 11% of the company's consolidated recurring EBITDA in dollars in the quarter. On Slide 12, I will talk about the consolidated financial highlights. In the fourth quarter of 2023, recurring EBITDA was $211 million, an increase of 13% compared to the previous quarter. This increase is a reflection of the prioritization of sales with higher added value, the optimization of sales mix, the higher spread in the international market of resins and chemicals for Brazil and polyethylene in Mexico. For the year, recurring EBITDA was $743 million. The decrease compared to 2022 is mainly explained by the lower petrochemical spreads in the international market in practically all segments. On the other hand, these effects were partially offset by the impact of the resilience and financial health action implemented in 2023, including the sales prioritization and optimization strategy, the reduction of approximately $60 million in general and administrative expenses and $30 million in other fixed costs and the gains from the monetization of credit rights and tax assets. Let's move on to the next slide. Regarding consolidated cash flow, Braskem presented the recurring cash consumption of approximately BRL1.9 billion, mainly explained by the 64% reduction in recurring EBITDA compared to 2022 due to the global industry's downturn. This effect was partially offset by the positive change in the working capital of BRL2.5 billion as a result of the implementation of initiatives for the optimization of operating working capital and for the corporate investment of CapEx lower by BRL245 million compared to the estimate at the beginning of the year as a result of the prioritization of investments and for the lowest income tax payment in the year. If we add the payments related to our costs, cash consumption totaled about BRL4.6 billion in 2023. Moving on to the next slide. Braskem ended 2023, maintaining a very long debt profile with an average payment terms of about 12 years, with 61% of the debt concentrated as of 2030. The company's robust liquidity level is sufficient to cover its obligations for the next seven years. Not considering the international revolving credit facility in the amount of $1 billion that is available up to 2026. At the end of the quarter, the corporate leverage was 8.12 times, a decrease of approximately 4 times compared to the third quarter. Net debt remained in line with the last quarter and the average of the last seven years, ending the year at approximately $5.1 billion. Regarding the agencies, Fitch rating and S&P rating downgraded Braskem's rating to BB+. It's important to note that the company has maintained its commitment to maintaining its liquidity position, cost discipline, and continuing to implement measures to reduce its corporate leverage and to cover its investment grade. Let's move on to Slide 16. Next, I will comment on the main updates of the work front in Marcelo, starting with the location and compensation front on the next slide. The residents' relocation program continues to advance. By February 2024, 99.6% of the program has already been executed with 100% being in the level of evacuation in the risk area and 98% in the area of monitoring, according to Map level 4 of the civil defense. As for the proposals of the financial compensation and relocation support program, the PCF, more than 99% of the estimated proposals have already been submitted, of which about 97.9% have already been accepted and about 95.1% have already been linked paid with an overall acceptance rate of 99.4%. The total provision within this front so far was BRL5.7 billion, of which BRL4.5 billion have already been disbursed and BRL1.4 billion in balance at the end of the fourth quarter of 2023. Moving on to the next slide. With respect to the closure and monitoring of the mines, I will present below the current status of the closure plan. The sand filling group has a total of 13 mines of which five are completed and two are in progress. To achieve a definite solution, 6 cavities, which were prior to the monitoring group were recently added and in the ceiling sand filling and are now in preparation phase. The natural filling group has a total of 6 targeted cavities, of which five are completely filled. Cavity 18, which was recently moved to this group, is in evaluation phase with an indication that no sand filling measures will be necessary. Finally, from the 16 mines directed to the pressurization group, five of them are already pressurized and are being monitored and nine are in the confirmation stage of completion. From this front, BRL3.8 billion have already been provisioned so far, of which BRL2.4 billion have already been disbursed and BRL1.6 billion are in balance at the end of the fourth quarter of 2023. The planned actions mentioned are estimated to be completed by 2026. Moving on to the next slide. Regarding the progress of social urban measures, six urban mobility projects are in the physical execution phase out of a total of 11 planned. The estimated completion is by 2026. On the do Mutange look, the overall progress of the project is 69% with the demolition activities already completed and the project expected to be fully completed in 2024. The social urban action plan is underway with 23 actions validated by the authorities, of which two are in execution. The implementation of the 23 social economic measures provided for in the term of agreement was completed, and another is in progress. In the financial support program, about 98.8% of the proposals were paid. On this front, BRL1.7 billion have already been provisioned so far with about BRL500 million already disbursed and BRL1.4 billion in balance at the end of the fourth quarter of 2023. Moving on to the next slide on the financial provisions and other updates. The total provisions related to the Alagoas event registered so far is BRL15.5 billion, of which BRL9.5 billion have already been paid. Approximately BRL1.1 billion are recorded in other issues to be paid and about BRL500 million, referring to the adjustment to present value. Finally, at the end of 2023, the provision balance was BRL5.2 billion. In addition, the actions of the environmental plan according to the provisions made are still in progress and are expected to be completed in 2028. Moving on to the next slide. To conclude this session about the Alagoas event, I would like to emphasize that over the last four years, Braskem has permanently reaffirmed its commitment to Maceo with actions and programs on the social, urban, and environmental fronts. Recently, the reaffirmation of these commitments were disclosed in order to bring more transparency in the monitoring of the actions and programs. It's important to highlight that above all, Braskem's priority is and has always been people's safety. Moving on to the last topic of our agenda on Slide 23, we will bring the company perspectives for the future. In the next quarter and in 2024, the outlook for the Brazil segment is positive, with an increase in utilization rate due to the resumption of operating levels after scheduled shutdowns in 2023 and the expectation of an increase in sales volume, especially in the Brazilian market. As for spreads, the trend according to external consulting firms is for an increase in the next quarters due to higher resin prices in the international market with a stabilization trend throughout the year. For green polyethylene, the expectation is also positive, both in the operation rate and in sales volume due to the resumption of supply of the raw materials and the consolidation of the increase in production after the expansion project, reflecting a higher sales volume. In the United States and Europe, there is a stabilization trend in plant utilization rates both in the next quarter and in the year. On the commercial front, sales volumes are expected to increase in the short term compared to the seasonality at the end of the year, but it should remain stable year-on-year. Regarding the spread, according to external consultants, the outlook is for an increase in the short term due to the increase in resin prices. While for the year, the expectation is to maintain the levels of spreads. Finally, in Mexico, the trend for the first quarter is to maintain production given the recent increase in utilization rate with great product availability for sales and higher spreads due to the downturn trend in ethane prices and increase in polyethylene prices. For the year 2024, the outlook is positive in all indicators. Moving on to the next slide, in 2024, Braskem will continue to focus on the value creation products, which seek to balance the optimization of the current asset portfolio and the execution of growth and transformation investments to ensure profitability and financial health. Following, I will comment on those two accesses of value creation for the company. In 2023, on the resilience and financial health front, the implementation of the MAP to corporate initiatives positively impacted EBITDA by $290 million and cash generation by $525 million. For 2024, the company will continue to focus on implementing these initiatives and identifying new opportunities. The combined initiatives have a potential to impact approximately $280 million of EBITDA and $200 million on cash generation. Throughout 2024, we will reinforce this performance with initiatives such as strengthening the commercial strategy with the prioritization of higher value-added sales. Measures to reduce costs and increase productivity will continue to be part of the company's day-to-day operations with a potential positive contribution of approximately $80 million through new initiatives. For 2024, the expected reduction in investments is approximately $300 million, 37% lower than the historical levels of previous years and with no impact on the reliability and safety of industrial assets. This reduction will be made possible by optimizing the investment portfolio and prioritizing initiatives based on return and the selection of partnerships. On the working capital front, the company will continue to work on various efficiency initiatives for the integrated planning cycle, seeking to generate results through the optimization of its operating cycle. Finally, the company continues to map and evaluate opportunities to monetize adjacent assets such as credit rights, taxes to recover, and other assets as well as evaluate structures to enable these monetizations. Moving on to the next slide. The company's growth strategy will continue to advance in the three avenues, namely traditional decarbonization, bio-based products, and recycling. By 2030, the initiatives to be implemented are mapped and understood to adapt to a potential value creation of approximately $1 billion. The implementation of Braskem's coverage strategy for 2030. Finally, based on our pillars, avenues, and foundations, we continue to balance capital allocation with the creation of shareholder value and the generation of positive impact for all stakeholders. Now going to the last slide. Finally, I would like to highlight Braskem's priorities for 2024. Firstly, the company remains focused on fulfilling its commitment established in the agreement signed in Maceió. As for assets, Braskem reinforces its strategy of optimizing asset management, maintaining cost discipline, and increasing productivity and competitiveness. We will also continue to promote discussions about the competitiveness of the Brazilian industry, seeking measures that guarantee the competitive quality of the Brazilian industry. Initiatives to preserve finances, leverage, and reduce cash requirements continue to be priorities for the company's financial stability. In addition, the prioritization of the company's long-term investments will continue to be a central part of our strategy as well as the implementation of innovation and digital transformation initiatives that support such growth. In Mexico, we will continue our efforts to pursue value creation initiatives and to complete the construction of the ethane terminal. Finally, I'd like to reinforce that safety is and will always be the focus at Braskem's operation and a non-negotiable value. Thus, we conclude the presentation of Braskem's fourth quarter and the full year of 2023 results. Thank you very much for your attention. We will now begin the Q&A session.

Our first question comes from Luiz Carvalho with UBS. You may proceed, sir.

Thanks for taking my question and also for sharing these cash generation and value generation data with us in the long term. Now if you'll allow me, I have three quick questions. The first, I think Pedro was giving an interview, if I'm not mistaken, but he mentioned that there are two ongoing due diligence processes. Could you please give some more details about these processes, who they are? I have some thoughts as to what they are. One of them, I think, is Petrobras. Could you please give us more details about the timing to the end of the due diligence? My second question is about Alagoas. You made an additional provision of BRL1 billion in Q4. I would appreciate any kind of an update as to what is yet to come, what is being discussed in the Senate, the Brazilian CPI process? And if you have any other estimates, because we're near the end of March now. So is there any information you can give us in advance? Lastly, we've been tracking the spreads using the CNA and in fact, there was an improvement now in Q1, but the outlook is still for a drop, so the recovery is looking to be improved by 2025. But could you please give us some more information about the spread and what you see in your perspectives? Thank you.

Hi, Luiz, this is Pedro. I hope you're doing well. Thanks for your questions. I will answer the first two questions and then I will ask Rosana to talk about the spread. With regard to the due diligence processes. We've got Petrobras that did their due diligence last year. It is materially finished. There's always one or two questions left over. But as far as we're concerned, it's pretty much done. And then we have two other players. One is ADNOC as you mentioned. And there's another one that is also doing their due diligence. Now we don't control their timing. So, I can't give you a specific date regarding when it's going to end. It really depends on their dynamics and to what degree they're going to want more information or not and how much detail they're going to want, but we don't control that timing. But if you imagine that due diligence typically takes something in the order of two to three months for a company the size of Braskem, then you can have an idea as to what these timings might be for this process. But in fact, we don't control their timing nor do we sit down with them to discuss the process or negotiate terms, what's to be done and what isn't. So, our role here really is to provide the answers to their questions. We don't really have visibility after the process overall. With regard to Alagoas, we did have an increase in provision in the order of $1 billion, as you mentioned. The majority of that is linked to the change in category as Rosana explained, some wells have been moved to filling and also because operations were paused for a number of months, which increases costs. On the other hand, we have an important consumption of the provision payments that have been made. And so that's the source. As to the CPI inquiry, we are available for them as we have always been to answer any and all questions about everything that's going on in Maceio, everything that has happened, and is happening. Now with regard to the spreads, I will pass the floor on to Rosana.

Thank you, Pedro. Thank you, Luiz, for the question. I'm going to divide my answer into what we saw in the past year and what we see now and our prospects for the future. What did we see in the last 18 months? In fact, we saw relevant capacity coming in of polyethylene and polypropylene in China with a target of self-sufficiency in the United States in the last wave, using a very competitive raw material. If this takes about five years to build a major complex, what did you see in terms of change? There was a growth in demand. It has grown less than expected when all the capacities were put into play. So, first is to provide a context of what we saw. And considering the scenario, we saw that the spreads had been suppressed in a very important way, reaching historic lows and also the minimal in the 30 years. What do we see since the beginning of the year? We see that the world continues growing. This is everybody's expectation. It grows less, but still growing. And the demand for products, commodities and petrochemicals grows a little higher than the global demand. But the difference is that we see less capacity coming in year after year. That means that we are confident with the industry. We are confident that we are going to normalize the cycle. What we saw last year was something lower than the average cycle. Now we are in a transition for this normalization to go to average level cycles up to 2026. I would say that 2024 had a cycle of low, but we are undergoing a transition going to normalization. In 2025, we are going towards an average. Then in the future, we will have higher spreads. As you said, Luiz, what do we see in the short term? We saw that the spreads have been improving better than the industry was expecting. Even consulting firms have noted this trend. The movement is that restocking is going to be executed, but we see a conflict in the Red Sea, and we also see a conflict in Panama. We see that there's a lot of support in Brazil and Mexico. We have base gas capacity, also in Brazil. So, in the first quarter regarding petrochemical spreads, we saw better spreads than expected. For the future, what is a consensus for the industry according to consulting firms? What we're going to see is better spreads in 2024, better than in 2023, leading to normalization after a low cycle and for the future, improved spreads based on fewer offers because we understand that the world is going to continue growing.

All right. Thank you very much. That was very clear.

Our next question comes from Pedro Soares with BTG Pactual. You may proceed, sir.

Good afternoon, everyone. I have two questions. The first is about your capital expenditures and portfolio optimization. You're emphasizing the need to adapt to the current cycle and optimize our portfolio. Could you provide some insight into the investments planned for 2024? Will you be focusing on delayed investments or recurring investments that have been moved to 2025? Should we anticipate that these delays will be reflected in 2025, or will they likely extend further into the future? We've previously discussed some divestments for certain assets; could you update us on any developments in that area over the past few months? My second question pertains to cash generation for 2024. With the reduced investment for that year, can we expect a free cash flow that is closer to breakeven, even in a low cycle? Or is that more likely to happen in 2025?

Hi Pedro, I'm doing well, thank you. Regarding capital expenditures, I'd like to mention that I will omit Braskem Idesa as they have a terminal that skews the numbers. Our CapEx for 2023 was $750 million, and for 2024, it's projected to be $400 million. What's behind this change? In 2023, we faced a central stop costing approximately $80 million; a smaller stop was around $60 million. Since we won't have a central stop in 2024, this alone accounts for a significant reduction in CapEx, nearly $60 million. Additionally, we completed our expansion of Green PE and the green ethylene plant in Triunfo in 2023. These two major events will reduce our CapEx further. Moreover, we have strategic investments in innovation and technology, along with ongoing construction in a unit in the South. Given our previous projects, the CapEx number becomes even lower. We are in a low cycle, and with reduced rates, we don't need investments driven by asset availability. There are investments that could be made at a higher rate to maintain standard operations, but during a low cycle, this can be optimized, allowing for more efficient CapEx distribution. This includes renegotiations with suppliers and maintenance work. Ultimately, while the $400 million CapEx is lower compared to a typical year in our cycle, this reduction is contextual and does not indicate a delay in investments for 2025. The reduction is simply a result of the current cycle and completed projects without significant new replacements or investments in strategic projects for this year. Looking ahead, we anticipate returning to a normal level of $500 million to $600 million for 2025. As for divestments, we have some smaller interests and peripheral projects that have been evaluated but do not significantly impact our core objectives or value generation. While we sometimes invest in non-core projects with a notable fiscal impact, they remain relatively minor. Finally, on cash generation, your inquiry about breakeven is insightful. We're expecting better EBITDA, lower CapEx, and historically low interest rates, working capital, and taxes to lead us towards breakeven cash flow without considering Alagoas. Our cash generation estimate aligns with reasonable expectations for the year.

Our next question comes from Eduardo with Santander. You may proceed, sir.

Good afternoon, everyone. Thanks for taking my questions. My first question pertains to Mexico. Looking at the Pemex supply, I wonder how sustainable is this supply above contracted volumes? And what is PEMEX rated as internationally? My next question regarding Brazil, with the logistics disruptions, has this helped us to gain market share compared to imported products? I can imagine that imported products are being traded with a mind to the higher import costs. So, in that sense, has Braskem managed to regain some of its volume and price?

Thanks for your question. I'll answer Mexico first, and then I'll ask Rosana to answer your second question about the global logistics matters and how that affects the Brazilian market. With regard to PEMEX, since 2022, we have seen stability in the production of ethane on behalf of PEMEX countrywide. So, the production volume there has been stable. And within the contract that was renegotiated in '21, we have the right of first refusal for anything that PEMEX does not consume internally. So essentially, what has been happening is that when PEMEX has a downtime in one of their plants, if they have any kind of issue, they will redirect that ethane to us. Otherwise, we have a minimum contractual volume of 30,000 barrels per day, and we have honored that amount, and in some cases, we have obtained a bit more contractually. This has allowed us to increase the Mexico operation rate as a result of the fast track process. Now by the end of this year or early '24, or perhaps as late as early '25, we still have that right of first refusal. It remains in place up to 2045, but the minimum contractual volume will cease to exist. Thus, what we've been seeing is that PEMEX will continue doing business with operating levels at a rate that is different from the past few years. Starting next year, the terminal will start running at polyethylene. Now regarding prices and price references, what we have today is very similar to the U.S.-based producers. It's essentially the U.S. price plus the logistics costs, specifically the costs that we have in Mexico in that pipeline, the Pemex pipeline that brings that to our site. So, that's the cost we have there. Now with regard to the market, Rosana, please.

Yes, Pedro, of course. Eduardo, thank you for the question. I'm also going to divide my answer into spread effects and sales volume. The first spread effect has two main impacts. At the end of the day, you have an increase from a natural freight increase because this is a very important route, mentioning Red Sea again, that transports 25% of oil in the world. So, it's a very important route. What we have seen that there has been some deviation. What that means is that the freight prices are higher, especially when the price is moving towards Asia. So, if you look at Asia, Asia has the nature of being a marginal producer, meaning that the cost of production is higher. The price references are higher for those who are not marginal producers, different from Braskem. We are well located. And other than that, we see a lot of price increases. The second effect when we see logistics structure, which is different from 2021. I would also like to make a consideration in relation to 2021. We see that factor is different because freight costs increase. Most of the regions are experiencing deficiencies globally. In that case, we use import parity. This is very common in Europe and in the United States and also in Brazil. That means that with the more expensive international freight within the import parity, we add all the cost, insurance, aliquot of imports, and import tariffs to form the final price. At the end of the day, that's how the prices are formed. This is how we can comment on spreads. Regarding sales volume, whenever there is any kind of disruption, we see some specific situations. If you have a client in Brazil or Latin America, if this client purchases imported products, that term for the product to arrive at this client in this producer in the transformation cycle is longer. So, we see opportunities for the company to have higher sales volume. This is something we saw happening in a specific manner.

Our next question comes from Gabriel Barra with Citi. You may proceed, sir.

So, I have three follow-ups from previous questions. Firstly, in the Alagoas case, I think Pedro mentioned that a large portion of that additional investment was because of the wells and filling them. My question is, did this decision come from the company? Or was it enforced by some kind of authority? Or was it a decision that the company made because of safety? And what can we expect for the future. I think this number was not yet mapped out here on our side. So, could you speak a little bit about the future for that? Are there any other wells that are likely to be closed and potential impacts that are likely to be felt for provisioning? The second point for Alagoas and back to cash generation from what it seems, based on what Pedro said, it looks like the scenario for '24 is looking toward a breakeven point, but there's a bigger disbursement for Alagoas, which may bring that cash value to negative numbers. So, I'd like to understand a little bit about the consumption of that provisional value and what kind of leveraging position the company is going to stop at in '24. Lastly, we've had some discussions about the company's rate for EBITDA. As Rosana mentioned, we have some spread curve in the order of '24 and '25. It's looking like the spreads are going to improve. And we're reaching '25 in a more normalized scenario for the company. So, I'd like to understand, in your opinion, what does a more normalized scenario look like? We talk about $2.5 billion EBITDA. Did something structurally change in your minds? Or what do you foresee for the company's more normalized spread scenario? Thanks.

Hi, Gabriel. Regarding the additional BRL1 billion provision, half of that is attributed to the cavity balance, and I will elaborate further. Approximately 25% of it comes from having to pause operations in that region after the Cavity number 18 incident, which was halted for two months. This indicates around BRL500 million for cavities and about BRL250 million due to downtime. There are also several other minor impacts, including adjustments, legal costs, and other expenses that accumulate. Now concerning the cavities, our presentation includes a slide outlining the closure and monitoring of the wells. Previously, we had four categories on that slide: backfilling with sand, natural filling, plugging and pressurization, and monitoring. Within the monitoring category, we identified six cavities. These cavities are stable and situated in geologically secure areas, so it wouldn’t be practical to fill them since the risk of a sinkhole occurring, similar to what happened in cavity 18, was considered very low. The recommendation for those cavities was monitoring. If they are stable, no additional action is necessary as the regions shown are safe. However, following the incident at cavity 18, evaluations by specialists concluded that, despite the low risk, it was prudent to transition those six cavities to natural filling due to that unlikely event occurring. Thus, while those cavities may still bear some risk, it's considered remote. This was an internal decision, not mandated by outside parties. We chose to fill them and informed all federal entities about our decision, which is currently under review by the A&M entity. All necessary documentation has been submitted, but we are still awaiting movement on that protocol. We have indicated in our slide that 17 out of 35 cavities have already been completed, while 10 are still confirming. Cavity number 18 is in the filling stage, and initial studies have been published, pending validation from the A&M. Regarding the source of the provision, we have earmarked BRL5.2 billion for Alagoas, with roughly half of that allocated to spending this year. We have certain obligations to fulfill, so we will actually disburse slightly over half of the BRL5.2 billion, which amounts to BRL2.6 billion. Consequently, the effective expenditure will be a bit higher due to available working cash in this context, which falls under accounts payable. In terms of leveraging, it varies depending on the EBITDA figure considered. We finished the year with a leverage ratio of 8.12 times, and we anticipate reducing this by year-end due to cash utilization and EBITDA adjustments. Our forecast suggests around 4.5 times leverage if we estimate EBITDA at $1.2 billion, which is still below the low cycle benchmark. In 2019, during a low cycle, our EBITDA reached $1.6 billion excluding Green PE and Delta; including those two factors, the low cycle would be closer to $2 billion. Looking ahead, we project the mean EBITDA for the cycle to range between $2.8 billion and $3 billion according to various assessments.

Our next question comes from Matias Vammalle with Bluebay. You may proceed, sir.

Thank you very much. My question has been answered. Thank you.

Our next question comes from Alejandra with JPM. You may proceed.

Hi, good afternoon. Thanks for taking my question. I just had a follow-up on the provisions. I'm just wondering why a portion of it was reclassified. I just wanted to understand a little bit better the reason for that.

Hi, Alejandra, I will answer in Portuguese. The question is why was there a reclassification in the Alagoas system for accounts payable? Well, Alejandra, that is an accounting rule. It's an obligation that essentially is represented by the flow of payments. So, someone does some work, some contracts are signed. At that point, you have an obligation to make a payment. That number every quarter has been in the order of BRL100 million or BRL200 million. We've also signed an agreement with the municipal government, and they still have some amount due. But since as an obligation that has a specific payment schedule predefined that is included. It's an accounting issue that you'll see in our presentation that we are providing that information for those numbers. It is a net predetermined agreement with the municipal government, BRL1.7 billion. We've already paid BRL700 million, so BRL1 billion is remaining.

So, we have some questions related to institutional aspects. So, I'm going to put the questions together. The major part has already been answered. There is an interest. There's a person interested in the topics of China. They ask if we are going to be a net exporter of polyethylene in the long term. Then I'm going to ask the other questions.

I would like to thank for the question. In relation to China, I'm going to make some general comments, then I'll go into specifics about polyethylene. China has been searching for self-sufficiency in different sectors. This was no different in our petrochemical sector. So, in 2015, when we see the convergence of the products that we have with our company, China had some targets of sales efficiency for polypropylene and since then, first, we had polypropylene and then the other. Naturally, China has several feedstocks and has been adding capacity since then. More recently, China has a line of polyethylene also. So, I'm going to divide this into CPMP. As for PP, we believe that China is going to reach self-sufficiency. Consulting firms inform us that it is sometimes difficult to follow all the data provided by China, and China has already reached 91% self-sufficiency in polypropylene. As for propylene, the nature of the business is a little more regional. Still commodities, but it's more regional when compared to polyethylene. This happens because the difference between more and less producers from the viewpoint of cost is lower. So, what do I mean by this? Braskem is a leader in polypropylene in the Americas, and when we're more focused on the regional level, of course, we have protections. We are large; nature protects us even. When we talk about polyethylene and when we see the data provided by consulting firms, we imagine that China is only going to reach polyethylene’s efficiency close to 2030, 2032. So, there's still a long journey ahead of us, about 10 years ahead. When we look at the same comparison of PPE and PP and when we see the producers that are more or less competitive on the global curve of cost, it's more or less relevant. The polyethylene market is more global. So, it's important that in polyethylene, we should have industry, and Braskem should have access to competitive feedstock. When we look at the journey that we've gone through, first, when we consolidated the Brazilian market, we have been in this search for feedstock diversification and competitive raw materials. Now talking specifically about polyethylene. Braskem has Mexico. Mexico is one of the main producer, more competitive producer. We have some diversification in Brazil, but we still have a base in Brazil that ensures this competitiveness when we compare with the industry at large. Let me make another consideration about China. When we talk about our self-sufficiency of polyethylene and polypropylene in the long term, I'm not considering any type of restriction, any government restriction related to the reduction of carbon. This is something that is being discussed by companies. I'm not even considering this in the curve. This can change the scenario of new capacities. It may even be an entry barrier when we consider new capacities for the future.

I'm going to move on with the questions, Pedro. Okay, go ahead. Could you inform what was the cash burn and how much was added to the provision for Alagoas in relation to what was planned for 2023 with an additional provision for the fourth quarter?

Well, there was an additional provision in Q4. That was in the order of BRL1 billion. In Q4, our disbursements were in the order of BRL400 million, a little bit more than that. So that was the effect of Q4. Now for the year, I don't have those numbers. Rosana, do you have them?

Yes, for the year, we spent in 2023 BRL2.7 billion in the consolidated year.

My last question since we have already answered many of the questions. The question is, is the provision to backfill the original 9 mines was BRL3.8 billion? Why the additional provision to backfill 6 more mines? Is only about BRL500 million.

The 6 additional cavities are already factored into the BRL3.8 billion total. This amount covers more than just sand filling; it also encompasses probing and might include auxiliary wells for plugging and pressurization. The entire monitoring system installed in the region is part of this figure, along with environmental actions and various technical matters handled by our consultants. The cost of the closure is included in this overall figure. To provide some context, around half of the EUR1 billion set aside last quarter, approximately BRL500 million, is due to the 6 new cavities that were added, although 2 cavities were taken off that list. Thus, considering the net addition of 4 cavities around $500 million, the average cost to fill each cavity is about BRL130 million to BRL150 million. The remaining costs relate to all these other activities. This provision is not just meant for backfilling. Additionally, the average size of these cavities is smaller, which tends to lower the cost per cavity.

Pedro, there are no further questions, so I'm going to turn the call to the operator.

Thank you, everyone. The Q&A session has come to an end. I would like to turn the call over to the company for the final remarks. You may proceed.

Good morning, everyone. This is Roberto Bischoff. I want to thank you all for joining our earnings call. I’d like to share a few closing thoughts. First, 2023 was a challenging year, marked by a significant imbalance between supply and demand. Global consumption did not rebound as quickly as we had hoped, leading to a decrease in spread, which reached historic lows over the past year. We started the year with a slightly higher spread level, but by April or May, conditions worsened, affecting the entire petrochemical industry globally. Despite these challenges, we remained committed to resilience and financial strength. We introduced various fixed cost initiatives across different areas and optimized global sales and operating cash, which positively impacted our results and cash flow. Furthermore, despite the difficulties, we stayed on track with our growth strategy. As mentioned by Pedro and Rosana during the presentation, we completed the green ethane expansion process in Brazil, achieving a significant 30% increase in capacity. In Mexico, we made significant progress on the ethane terminal, which is now over 50% complete. We also solidified global partnerships that support our growth strategy. This involved considerable focus, discipline, and resilience in our operations, as we prioritized our growth strategy. Heading into 2024, we are optimistic that the petrochemical cycle is beginning to normalize. We have had numerous opportunities to share our views on the timing and pace of this normalization, especially with a lower anticipated increase globally compared to past years. I want to reiterate our steadfast commitment to resilience and effective capital allocation. We continuously aim for financial initiatives while executing our growth strategy. In closing, I want to express my gratitude once again for your trust in us and for participating in our call. We look forward to reconnecting in May when we share our results for the first quarter of 2024. Thank you all.

The conference of Braskem has come to an end. We'd like to thank you for attending this call, and have a good afternoon, everyone.