Carlos Fadigas - CEO Mario Augusto da Silva - CFO Pedro Teixeira - IR Controller & Project Finance Director.

Luiz Carvalho - HSBC Pedro Medeiros - Citigroup.

Good afternoon, ladies and gentlemen. At this time, we would like to welcome everyone to Braskem’s Fourth Quarter and Full Year of 2015 Earnings Conference Call. Today with us we have Carlos Fadigas, CEO; Mario Augusto da Silva, CFO; and Pedro Teixeira, IR Controller and Project Finance Director.

We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company’s presentation. After Braskem remarks are completed, there will be a question-and-answer session. At that time, further instructions will be given.

[Operator Instructions] We have simultaneous webcast that maybe accessed through Braskem’s IR website, www.braskem.com.br/ir. The slide presentation may be downloaded from this website. Please feel free to flip through the slides during the conference call. There will be a replay facility for this call on the website.

We remind you that questions which will be answered during the Q&A session maybe posted in advance on the website. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of Securities Litigation Reform Act of 1996.

Forward-looking statements are based on the beliefs and assumptions of Braskem management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstance that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Braskem and could cause results to differ materially from those expressed in such forward-looking statements.

Now, I will turn the conference over to Pedro Teixeira, IR Controller and Project Finance Director. Mr. Teixeira, you may begin your conference..

Good morning, ladies and gentlemen. Thank you for participating in another Braskem earnings conference call. Today, we will be commenting on our results for the fourth quarter and the full year of 2015.

We would like to remind you that pursuant to the Federal Brazilian law, the results presented in today’s presentation reflect the adoption of International Financial Reporting Standards, in IFRS. The financial information in today’s presentation has been reviewed by independent auditors.

Now, let’s go to the next slide where we will begin our comments. On slide 3 we present the main highlights of the fourth quarter of 2015. In Brazil the average utilization rate of our cracker was 83% infected by the incidence in Mauá Petrochemical Complex resulted in the plant being shut down for 39 days.

The Brazilian revenue market came to 1.1 million ton 17% less than the fourth quarter of 2014, Braskem [indiscernible] sales forward this trend totaling 751,000 tons. However as we’re studying the shrinkage of the massive market, resin export increased by 5% at the same period reaching to a 189,000 tons.

In addition export of the main basic petrochemicals amounted to 342,000 tons, 16% down in the fourth quarter of 2014 mainly as a consequence of the impact of the unscheduled shutdown of Sao Paulo cracker. It is worth mentioning the signing on December 23, 2015 of new five year petrochemical naphtha contract supply with Petrobras.

Despite the price being set a 102.1% of the RF, international reference price [indiscernible] that the agreement will play an important role in reducing the substantial uncertainty surrounding the sector burning cracker stoppage at a difficult time for the industry and the Brazilian economic as it rolls. In Brazil, U.S.

and European operations the average operational ratio was a 101% in the first quarter of 2015, reflecting the excellent operating performance and increased demand for polyethylene demand especially in the U.S.

These led to a new production record of 510,000 tons 9% up on the fourth quarter of 2014 and record sales for the third consecutive quarter of 517,000 tons. We will go now to our consolidated highlights. The company recorded an EBITDA of BRL2.234 billion and $581 million.

In comparison with the fourth quarter of 2014 EBITDA increased by 65% in reais and 8% in dollars mainly due to the 51% depreciation of the Brazilian currency, the higher volume of resin export from Brazil and the performance of our U.S. and European operations.

Consolidated net income in the quarter came to BRL158 million on a consolidated basis and BRL220 million in the benefit of existing shareholders of Braskem. The company's leverage as measured by the net debt EBITDA ratio in U.S. dollars was 1.91 times, 7% and 26% down on the third quarter 2015 and the first quarter 2014 respectively.

This is the lowest level in nine years. It is also worth noting that in December the rating agency Standard & Poor and Fitch rating reaffirm the Braskem's global investment grade rating of BBB- exceeding the sovereign regrade for the first time. Braskem is not rated investment grade by other three rating agencies, Fitch, S&P and Moody's.

On slide number 4, we present the highlights for the full year of 2015. The Brazilian resin demand, polyethylene, polypropylene and PVC totaled around 4.9 million tons, 7.6% less than in the 2014. However in the same period Braskem's market share increased by one percentage point as a result of sales of 3.4 million tons 6% down on the year before.

Despite it's now scenario, Braskem's average cracker utilization rate was 8% to 9%, three [ph] percentage points less on the previous year's reflecting the company's healthy operational performance with record in basic petrochemical production.

Even in this scenario throughout the year, Braskem opportunities abroad leading to a new record in export of resins which increased by 28% over 2014. On the [indiscernible] the year was market by the execution of two important concern, in outlook for electricity supply [indiscernible] and on December 31 for the supply of naphtha with Petrobras.

In the U.S. and European regions the average polypropylene operating rate was 98% in 2015, 6 percentage points more than the year before led by the unit in United States which posted record production. The construction of the petrochemical complex in Mexico by the [indiscernible] caused the year 99% completed.

The utilities area is very operational and the main feed stock are ready on the site to ensure to start off the cracker at the beginning of polyethylene production. The consolidated highlights were in 2015, Braskem posted a record EBITDA in reais and U.S. dollars totaling BRL9.3 billion and $2.8 billion, 67% and 70% respectively on 2014.

These results was mainly due to the following sectors. A good operational performance, healthy levels of revenue spreads in the International market increased exports volumes from review, the excellent performance of the international unit and the average depreciation of the Brazilian currency.

In-line with the cost reduction strategy Braskem implemented a program with a lot of work front including process improvement and structural optimization generation potential recurring savings of BRL100 million for the year which should be fully achieved in 2017. In 2015, the initiated generated recurring gains on a $156 million.

Thanks to sounding results as a consequence of a strong operating performance in Brazil, United States and Europe operations Braskem's preferential share recorded third highest appreciation of our shares listed in IBOVESPA [ph] by 66% in the year.

On slide number 5 we will discuss the performance of the Brazilian thermoplastic resin market and Braskem sales in the fourth quarter and the full year of 2015.

Thermoplastic revenue markets totaled 1.1 million tons, 70% down on the fourth quarter 2014 as a consequence of this low down of important factors of the Brazilian economy such as services, construction and infrastructure. Braskem sales totaled 751,000 tons in the fourth quarter 2015, 12% less than in the third quarter of 2014.

In the year as a whole the Brazilian thermoplastic resin market totaled 4.9 million ton a reduction of 7.6% over 2014. Braskem's sales came to 3.4 million tons, 6% down the previous year which led to an increase in the market share by 12 percentage point in the period. On slide 6, we will comment the dynamics of international markets.

Even the shrinkage of the domestic resin market in 2015 throughout the year Braskem pursued it's opportunity as alternative to maintain a high utilization of it's Brazilian crackers.

As a result the company's annual resin export increased by 28% to 1.4 million tons while export of the main basic petrochemical totaled 1.5 million tons, 1% more than in 2014.

Braskem's activities in Nile state [ph] and Europe are doing exceptionally well in 2015 thanks to the operating performance with record production, high petrochemical margins and increased amount of polypropylene fueled by economic growth in the U.S. Also polypropylene spread in the U.S.

increases by a 163% during 2015, these happened as a result of a novel supply of polypropylene which is a production of polypropylene. These other supplies lead to lower prices of propylene in the U.S. On the other hand demand for polypropylene remain as high in the U.S. during 2015 and no new -- I expect to come on stream before 2019.

On slide number 7 we presented factors that influence EBITDA in the first quarter of 2015 in comparison with the first quarter of the previous year. Consolidated EBITDA stood at BRL2.2 billion, 65% higher on the first quarter 2014 due to the higher resin exports from Brazil record sales by the U.S. and the 61% depreciation of the Brazilian currency.

It is on U.S. dollar came to $581 million, 8% more than the fourth quarter of 2014. On slide number 8 we present a comparison of EBITDA in the full year of 2015 with the full year of 2014.

Consolidated EBITDA amounted BRL9.4 billion the improvement over 2014 was due to the good operating performance, higher export volume from Brazil and the performance of operations in U.S. and Europe.

Further positive impact came from the healthy levels of resins in international market and the 42 average depreciation of the Brazilian currency in dollars to $2.8 billion, 70% up on the year before.

On slide number 9, we show Braskem's debt, given that the Mexican project financed on a project [indiscernible] that will be amortized exclusively by solid cash generation. The analysis presented here exclude these amount.

On December 31, 2015 the company's gross debt totaled $7.3 billion in-line with the previous quarter, in reais however that fell by 2%, 9% of the gross debt was dollar denominated.

Cash and cash equivalent came to $1.9 billion equivalent to BRL7.4 billion as a result net debt to the $5.4 billion 5% down on the third quarter 2016, net debt in reais was 7% less in the same period. 85% of the net debt was dollar denominated.

In-line with this strategy the company also maintained stand-by credit facilities in the amount of $ 750 million and BRL500 million with no restrictive covenants to withdraw during adverse market scenarios.

It is worth emphasizing that the company's high level of liquidity ensures that it has sufficient cash and cash equivalent to cover the payment of obligation occurring over the next 39 months including the standby credit facilities. This coverage comes to 45 months.

The reduction in net debt together with dollar EBITDA growth of 70% in the last 12 months had a positive impact on leverage measured by the net debt to EBITDA ratio which improved from 2.05 to 1.91 times, 7% down on the quarter before and the lowest level since 2007. In reais such ratio came to a 2.23 times down by 16% from the previous quarter.

On December 31, 2015 the average debt term was around 16 years considering dollar denominated that only, the average term was around 19 years. In 2015 Braskem maintained it's investment grade with a three leading risk rating agencies and was rated above sovereign risk of a first time by Standard & Poor and Fitch.

In December Standard & Poor reaffirmed Braskem Global rating of BBB- at both sovereign risk and with the possibility of being two degrees above the country's rating. According to the agency this reaffirmation reflects the company's strong liquid position, solid cash generation and geographical diversification.

Slide 10 shows our CapEx in 2015, Braskem invested BRL2.4 billion in the year, the difference in relation to the initial forecast of BRL2.1 billion was mainly due to the impact of the exchange rate on the transactional amount invested in dollars to reais.

Excluding Braskem's contribution to the Mexican project from the analysis, investment came to BRL1.3 billion 3% down the initial estimate. Of this total around 90% or BRL1.2 billion was allocated to industrial operation including investment related to improving operational efficiency, health and safety and environment for activity and maintenance.

The reminder went to other projects such as the construction of the [indiscernible] in the United States.

In 2015 Braskem's contribution to the project in Mexico totaled $323 million or BRL1.1 billion, construction of the complex handed by the [indiscernible] closed the year 99% completed and the area is already operational, it's around BRL3.7 billion in 2016, 60% of reach in dollar denominated are located to operational assessment in the U.S.

and the European operation in the Mexican project these are now total $447 million. The next [indiscernible] sales is expected to absorb $329 million in 2016 which will go mainly to initial working capital and to compliance with a project started and contract obligation to constitute the reserve account for the project finance debt.

Excluding the Mexican project from the analysis 2016 revenues are expected to reach $2.3 billion around 75% of which is allocated to investments related to maintenance, productivity, HES and operating efficiency including investment with the schedule maintenance the stoppage of one of the crackers lying in [indiscernible] by year in the first quarter 2015.

A reminder we will go to other strategic projects including UTEC production in the Nile state who will start having the schedule for the second half of 2016 improving a neutral productivity in polypropylene plans in the U.S. and Germany and studies related to potential strategic expansion projects.

Moving on to slide 12, we will comment on the global petrochemical scenario. In regards to the global scenarios the Chinese slowdown, low energy and commodity price and a gradual monetary squeeze in the United States led international monetary firm to reduce it's 2016 global growth estimate from 3.6% to 3.4%.

In Brazil the scenario were almost certainly continue to deteriorate with GDP expected to shrink by 3.5% in 2016 and sharing a challenging a year for the chemical industry.

In regards to the dynamic of the oil market, , the United States and the European Union have removed their sanctions on Iran and the tone will be set by concern with the country’s return to a market that is already oversupplied. This aspect is positive for the competitiveness of naphtha-based petrochemical players.

In the petrochemical sector, Braskem shall remain healthy in 2016, there maybe some volatility especially in the Asian markets with new polypropylene capacity coming on stream in China was started by a more positive scenario in U.S., polypropylene market whereby polypropylene spreads are few high with over supply of propylene in no new capacity of polypropylene in 2019.

Moving to the last slide, our strategy for 2016 remains based on geographical and feedstock diversification, strengthening our customer relationships, [indiscernible] Brazilian petrochemical and plastics chain and capturing operating efficiency and maintenance of financial health and cost discipline.

The main priorities of 2016 in Brazil is to ensure operating efficiency to supply domestic demand and export the surplus volume.

To implement a maintenance stoppage in the one of the crackers lined in the year in the fourth quarter of 2016 to evaluate opportunities for diversification to determine and do so policy that together with the fiscal monetary policy leads to rather recovery of the Brazilian [indiscernible] competitive sectors. In U.S.

and in Europe capitalized positive press [ph] in the U.S. polypropylene market with increase of the demand in supply of polypropylene in the market and also polypropylene growth opportunities from competitive polypropylene in U.S. In Mexico the focus will be in the stoppage of the cracker and the polyethylene.

To sell the polyethylene in domestic market consolidated relationship with clients in the export market and also to export from Mexico benefited from synergies with existing operations of Braskem in U.S., Europe and South America.

On the financial standpoint our focus will be on cash generation and continuing to implement the expense reduction program generation potential recurring savings of BRL100 million per year which should be achieved in 2017. That brings us to the end of our presentation and we will now go to the question and answer session..

[Operator Instructions]. Our first question comes from Luiz Carvalho from HSBC..

Just a quick follow-up from the previous call, the first question is if you’ve an idea what will be the EBITDA impact on the program stoppage that you forecast to do on the cracker in the second half of this year? And the second one if you can provide us a bit of the update about the class section U.S.

I mean I think if you know what's the stage in terms of timeline and when do you expect to have more detail about this process? Thank you..

I can give you the base numbers on the stoppage in by year and then you can try to extrapolate from that the EBITDA impact if you need for the information of help on this extrapolation in this calculation, [indiscernible] Braskem will be more than happy to help but the big numbers are, the quarter has capacity of 2 million tons.

There are two ethylene mines there we’re stopping one of them, so approximately 600,000 tons per year, 50,000 per month. It's going to stop for -- let's put it 45 days to -- use your math 75 KT of ethylene. Naturally as it's apparent stoppage you’re going to work to inventory prior to that and then so that we have impact.

So I think there is 75 KT compared to the total ethylene and a direct subtraction and the EBITDA on a day to day capacity should be even and naturally you also have to take into consideration that whatever volume one needs, you’re going to probably be taking out of the export of revenues regarded in the next month.

So much is more effect when taking into consideration you’re going to be moving up on the worst sales and also given the inventory to accommodate for that. It's taking into consideration our total ethylene capacity, it's something around 2%. So when we have the consolidation it's not how much effect for this stoppage.

Regarding the class action, I don’t have all the details. It's going through scores of few to grow, we filed the so-called motion to this and we finding the best interest of Braskem. We show what we believe [indiscernible].

Next we will focus on the balance sheet and it state that if there were improper payments made therefore the balance sheet was not accurate and therefore they have some kind of compensation [ph].

We asked that the part of the motion to be released, these presented to be arguments and now the judge will decide rather this will go on or not depending on the [indiscernible]. So that’s where we are.

From this point on it's [indiscernible] in the end we will always make sure that the past if anyone is concerned with this [indiscernible] they have to take into consideration first of all the amount of shares we have outstanding, how much of that is traded in the U.S.

and how much is put someone -- in this supposed depreciation of the share price even though it has come up after that.

The only reason I'm mentioning this point is that if it tends to go straight to the other very known class action in Brazil, but it's the class action of Petrobras and there you’re comparing a company that had billions of dollars of market capital loss, they also had a huge portion of it's shares in the capital markets, 20% of this share in the market not a big portion of that New York Stock Exchange and the valuation in share price wasn’t so material.

But having said that it's upto -- having to focus on that and try to figure out what will be a potential loss. Naturally I’ve to work to avoid any loss that could come from that and actually I will -- to avoid the class action itself in any relevant credit [ph] that is [Technical Difficulty]..

Our next question comes from Pedro Medeiros from Citigroup..

I’ve a couple of questions and some follow-ups from the Portuguese version of the call. The first one is if you can comment more on about the results from the cost optimization program launched in 2015 both on a qualitative and quantitative point of view.

How has the program delivery in 2015 influenced the regional estimates made for savings by the end of 2016, so is there a chance it would increase those savings or reduce and any color on that side will be positive.

The second question is actually more of a confirmation related to fourth quarter results and if you give more color on the contract sign for gasoline sales with Petrobras that you recently signed, was there any gain in the quarter that we would consider one-off when looking at international gasoline prices because of the response rate and if you don’t mind commenting whether there is any opportunity or restriction for the company to use it's infrastructure for liquids to import fuel into the country and benefit from the current spreads to domestic prices.

Third question is free cash flow has been quite strong in the last few quarters, and given the company's guidance for 2016 CapEx the startup in Mexico and the comments made in the Portuguese version of the call about the outlook for positive spreads in 2016, I would like to understand how management has been considering the application of the company's cash flow.

We saw positive increase in 2015 dividends.

You’ve commented that greenfield investments and your analysis that would consume capital in 2016-17 are not that large and can find dedicated competitive funding in market that is -- can you comment on this how do you consider free cash flow allocation from here? Should we expect management to increasingly dedicate time to M&A or to a new investment cycle or potentially even an increase in shareholder capital return.

And I just have one last very quick follow-up and confirmation about the Mexico project startup. It might not be important but is there potential contribution from the utility facility in the Mexico project in terms of EBITDA and any specific contribution to be the potentially reported in the first quarter? That’s all. Thanks..

Let me start with the cost optimization program we have and you go back to this numbers, right? It has reached a level of roughly BRL150 million for the year at the end of 2015, it's base is increasing, it has crossed the money phase in 2015 exactly 190 to be precise but what's the difference between the two numbers? We have a series of initiatives, of actions and they are been implemented gradually.

Every time you’ve run up those implemented you reach a new level of annualized savings. So the savings for 2015 were BRL109 million. The pace at which we finish 2016 was at a pace of BRL150 million of saving on an annualized basis.

We’re expecting to finish the year of 2016 around BRL300 million and if you got information that all of that will show up as fixed cost.

Out of that roughly 230 million is associated with fixed cost, the savings of roughly $50 million is investment that will reduce the level of investments in phase one with that, so that, if you can see in that cost will show up later as depreciation but it's money is going to be phased in 2016 and roughly BRL20 million of savings associated with reduction of working capital so that’s how we plan on saving BRL 310 million, BRL320 million in 2016.

You reach the BRL400 million on annualized savings only 2017 and the reason why it's going to take so long and that’s a question [Technical Difficulty] and the answer I drew out is that it depends on investments to be made, changes should be made during the stoppage of the crackers to be able to implement some of those initiatives.

So we will start saving once the cracker has stopped the change has been made and that’s when we’re going to get there.

Another thing that we’re seeing internally here is how we show in the income statement because in those income statement we particularly have [indiscernible] fixed cost of operations outside Brazil and once it's translated to a higher exchange rate it shows new [Technical Difficulty].

So let's say you’re spending the same amount of money or even saving money in U.S. dollars or even saving money in U.S. dollars that it shows an increase in our reais income statement.

So the challenge still growing on how we better show that the income statement was several things going at the same time, inflation, exchange rate, change in scope we’re going next thing starting up so we’re going to have more fixed cost being coming into the income statement.

So in separate looking from the audience will be able to show that yes we’re saving this money. Regarding the latest [ph] contract signed with Petrobras, I'm sure I fully understand the expression but let me address these points and then if you need information you let me know.

We signed the contract, this contract that’s not [Technical Difficulty] any constraint or any obligation associated with our commercialization of gas [Technical Difficulty] but we produce fair amount of [indiscernible] exports so it does not -- it's not tied to any mandatory [indiscernible] to Petrobras anything like that.

Our team has been analyzing what's the best place to allocate gasoline we’re producing, the local prices are very good at this point internally and at this point we haven't found a structural and meaningful operation to import gasoline to Brazilian and few other companies are looking at it most likely will be on the retail distribution are also looking at it but many times they deport storage, the tanks, the volumes, we’re getting some volumes but we haven't found meaningful import operation to be done by Braskem or by somebody else.

So we’re going to keep looking at this price differential but at this point there isn't anything meaningful should be done in that front. Free cash flow, that was the asset, right now we plan to use the free cash flow mainly to the leverage to the company.

Having said that we have announced -- we ask that the increase the levels of investment from 15 to 16 so that has to do with as mentioned the end of the -- the final investments in the next project it has to do with the maintaining stoppage at our cracker, it also demand significant amount of money, net with change and exchange rate that makes CapEx outside the view.

Higher volume in some products we are going to go after. So M&A target performance and M&A something that really depends somebody else is not our primary target at this point, in all it happens that would then what comes to the market and has the obligation to keep analyzing whatever comes to the market.

But if you think about the cash flow generated, we have included in this events, we have included -- also increased investment but the balance for now [Technical Difficulty] anything like that is going to come back to the capital markets talk about, but at this point that’s our view.

We have at some point in time -- polyethylene and producing leverage at this point. But haven't said that as always we are going to keep track of what is happening and underlying this scenario. Regarding utilities in Mexico, we would not have contribution from the assets we have and the mix with EBITDA.

We’re analyzing opportunity alone, energy generation, we may have some surplus to be sold most likely we will have but that will also depend on price of gas, price of electricity in Mexico, how much electricity complex is using internally and match that with the main use of electricity and the end point we seek more relevant surplus that would lead to contribution EBITDA, we would like to know but at this point I would factor that, it's not relevant even calculated the spend with change in gas and energy prices but that’s something in the future once we have the [indiscernible] in the complex running.

Once we have for sure the understanding of the total consumption of electricity of the complex in Mexico..

Our next question comes from Mr. Amen Rodigrez [ph] from GBM..

In the past questions we have seen remarkable profitability, can you comment on your view to sustainability of this improved margins especially in the next 2 or 3 years? Thank you..

Well I think to comment on the margins we have different products and different segments. We are coming from a year of further margins especially in the second and third quarter of the year. We have some -- we have production in Europe [Technical Difficulty] and therefore better spreads.

Our view for spread in 2016 for the yield products that we have polyethylene and polypropylene but that [indiscernible] should be received is that they are going to lower margins in what we have in 2015, nothing significant because we don’t see a lot of new capacity coming to the market and when those markets that come to the market, that’s at least is polypropylene in China, that’s not going to affect the main markets where we have irrelevant polypropylene in the United States.

So healthy margins in 2016, a little bit lower than what happened in 2015, so that’s positive. So that is in regard, that’s going to be [Technical Difficulty].

I think that especially polyethylene as you get to the end of '17, that needs to be end of '17 that when we have crackers in the United States starting it's operations before we have is of ethylene capacity, the addition of roughly 2.5 million of ethylene in United States next year and roughly 500 million tons in 2018.

So a lot of crackers that are been in the U.S., we’re going to start operations next year so we’re going to a partial effect of additional capacity as they start throughout the second half of the year and then the full effect mainly in 2018 that should bring prices off ethylene and therefore for polyethylene down for the end of 2017 and especially in 2018.

So in that regard ethylene in particularly is not in the long term. In the downturn in '18 and '19 and demand catches up improvement margins from 2020 going forward. For statistic polypropylene it's a different game we don’t have polypropylene in any regions, we have very bigger events in parts of the regions.

So there is not a shield gas [ph] effect that we have in polyethylene we don’t have in polypropylene, but we have at this point a very different margins in different regions, the biggest difference would be between U.S. with higher margins, in Asia with much lower margins. I think that in keeping better margins for polypropylene in the U.S.

as I mentioned, this year nest year and each in 2018 because a relevant new capacity in polypropylene U.S. can't be before 2019. There is no relevant additional capacity due [Technical Difficulty] starting construction, maybe starting planning for that but that won't come to the market until 2019. What may enroll polypropylene margins in the U.S.

prior to '19 will be higher level imports but that we face the largest charm is for products inside the U.S. for several of them maybe some [indiscernible] high volume in the U.S. so that may have some impact but not a big impact in U.S. -- with U.S. joint margins at the longer term.

Just to finalize, PVC, it's a resin produced 700 KT, we have seen facilities now a lot of capacity that was in China has depressed [ph] price for almost [indiscernible] starting 2006 but we have seen the catch up in demand in the after year.

So we hope to have PVC margins on -- not on a quarter by quarter basis but on a year by year basis should go up, again should better levels of margin. So long term that should increase but coming from a very low starting point.

So I tried to -- I try to give you an idea of how [indiscernible] margin is going forward with polyethylene and polypropylene. In polypropylene different dynamics when you compare different regions and specific case of PVC. So that’s how we see spreads margins going forward..

Our next question comes from [indiscernible]..

My question relates to the ethylene project in Mexico.

Could you give us some guidance on the production volume, sale volumes, EBITDA margins that you expect for the current year and maybe dividend contribution to Braskem for 2016, 2017, what do you expect on that front?.

Let me try to address some of your questions without going straight into the numbers because naturally some of these numbers are been tracked by our competitors, and the international markets are very I would say competitive one with large U.S. producers of thin resin into the U.S.

but let me share with you some combination that will help you forecast the numbers. First of all U.S. posted it's first quarter of the year reported [ph] plants to the cracker and the polyethylene lines are not running at this point.

We do expect to have the cracker and the three polyethylene lines running at some point between now and at the end of this quarter over the next 40 days.

From that point on, we are going to try to ramp up production to get some maximum production in the end the complex is capable of producing at cost capacity roughly 1.50 million tons and we hope to reach cash flows to that level production at some point between quarters three and four.

So it's hard for me to give you an exact number but if you did regard the first quarter and take into consideration is the second quarter we will be ramping up and true capacity will be reaching at some point between third and fourth quarter it gives you an idea of how much we’re planning to produce.

You probably have to take into consideration that we have beat inventory if you were to consider one month inventory of resins that would be roughly 80 KT [Technical Difficulty] to have lower inventories that so from whatever numbers production we get, I’ve to subtract the ones between something between 80 KT and 60 KT that will be needed as inventory to manage sales and so on.

We’re targeting to sell mainly in the mid-market they are going to exporting as well. Having said that, I can't go at this point into the expected EBITDA. We don’t provide guidance on EBITDA for Braskem for petrochemical components.

At this point the spread between the other markets [Technical Difficulty] but on the other hand the spreads on the polymer from ethylene to polyethylene it's much healthier, so that should help us a good margin over EBITDA this year in 2016.

In regarding dividends, the dividend in the initial year they have to work on capital even [indiscernible] and most of the cash generated is going to be used to pay the project funded and actually as you can expect the project ties a lot of the cash flow of this project and we don’t forecast any dividend payments this year.

We do forecast [indiscernible] payment but therefore we would contribute to the reduction of other roles -- consolidated Braskem leverage as they produce EBITDA and as they generated and reduce net debt. So that’s what we can share about the Mexican project this year at this point..

The Q&A section is finished. I will turn over the company for closing remarks..

Well we would like to thank you for participating in the call. I would like to mention one point that didn’t come up in the conference call but I think it's important information that the fact that Braskem towards -- reaffirm at investment grade level by Standard & Poor's that happened the day before yesterday.

We operated this from double digit plus -- we stated BBB- [Technical Difficulty] rating of the year and we believe important part of what has sustained -- the operational results and also the increased cash generation outside Brazil. We have had 42% of our revenues coming from outside of Brazil in 2015.

We are going to have slightly more than 50% - 51% of our revenues coming from outside in the year of 2016 as we create production and EBITDA in the United States as we have stock op [ph] of next.

So that shows strong cash flow in hard currency outside of the view [Technical Difficulty] one of the very few resin companies that are investment grade by reputed agencies. So it is a handful companies that have two investment grade agencies -- one of that.

So having said that [Technical Difficulty] working very hard to increase competitiveness of the current operations we have. As we discussed increased production and find the best market volatility in Brazilian production and we’re going to keep increasing the size of Braskem by investing and so we will be expanding in the U.S.

with polypropylene and that’s our commitment to the shareholders. More cash generation from the current operations and with strategy on top of generating more revenue and cash flows helps Braskem to be more resilient cash generation. So thank you again for participating and have a good day..

Thank you. This concludes today's Braskem's earnings conference call. You may disconnect your lines at this time..