Earnings Release
4Q 2015
Jaraguá do Sul (SC), February 24, 2016: WEG S.A. (BM&F Bovespa: WEGE3, OTC: WEGZY), one of the world’s largest manufacturer of electric-electronic equipment,
working mainly in capital goods in five main product lines: Motors, Power, Transmission and Distribution, Automation and Coatings, announced today its results for the
fourth quarter of 2015 (4Q15). The following financial and operating data are presented in a consolidated basis, except when otherwise indicated, in thousands of Brazilian
Reais (R$) according to accounting practices adopted in Brazil, including Brazilian Corporate Law and the convergence to IFRS international norms. The Growing rates and
other comparisons are, except when otherwise indicated, made in relation to the same period of the previous year.
REVENUE AND PROFIT GROWTH IN UNFAVORABLE ENVIRONMENTAL
ƒ Net Operating Revenues in the fourth quarter of 2015 reached R$ 2,734.3 million, for 25.4%
growth over the 4Q14 and 7.4% growth over the 3Q15;
ƒ EBITDA reached R$ 382.0 million and EBITDA margin reached 14.0%, practically at the same level
as of 4Q14 and 3.3% lower than the previous quarter;
ƒ Net Income totaled R$ 383.9 million, with net margin of 14.0% and growth of 45.8% over the 4Q14
and of 44.7% over the 3Q15;
ƒ Capacity expansion and modernization investments totaled R$ 468.1 million, being 41% in
industrial plants in Brazil and 59% in expansion projects abroad.
ƒ The WEGE3’s shares were included, from January 2016 onwards, in the Ibovespa, the Brazilian
market’s most important stock index.
KEY FIGURES
Net Operating Revenue
Domestic Market
External Markets
External Markets in US$
Gross Operating Profit
Gross Margin
Net Income
Net Margin
EBITDA
EBITDA Margin
EPS (adjusted for splits)
(R$ Thousand)
Q4 2015
Q3 2015
%
2.734.251
1.060.519
1.673.731
435.575
730.436
26,7%
383.916
14,0%
382.001
14,0%
2.546.349
1.087.388
1.458.962
411.211
724.802
28,5%
265.409
10,4%
395.093
15,5%
7,4%
-2,5%
14,7%
5,9%
0,8%
0,23801
0,16459
44,6%
44,7%
-3,3%
Q4 2014
%
2.179.695
1.086.902
1.092.793
429.332
698.218
32,0%
263.285
12,1%
382.987
17,6%
25,4%
-2,4%
53,2%
1,5%
4,6%
0,16319
45,9%
45,8%
-0,3%
12M15
12M14
9.760.323
4.227.286
5.533.036
1.654.261
2.765.588
28,3%
1.156.065
11,8%
1.477.603
15,1%
7.840.757
3.876.757
3.964.000
1.684.785
2.484.497
31,7%
954.726
12,2%
1.344.829
17,2%
24,5%
9,0%
39,6%
-1,8%
11,3%
%
0,71670
0,59180
21,1%
21,1%
9,9%
CONFERENCE CALL (WITH SIMULTANEOUS TRANSLATION TO ENGLISH)
February 25, Thursday 11 a.m. (Brasília official time)
Dial–in in the US: +1 786 924-6977
Webcasting com slides e áudio original em português: www.ccall.com.br/weg/4q15.htm
PAGE 1
Earnings Release
4Q 2015
ECONOMIC ACTIVITY AND INDUSTRIAL PRODUCTION
The latest projections from the International Monetary Fund released in the World Economic Outlook 2015 report indicate that global
product should grow by 3.1% in 2015, slightly below the 3.3% observed in 2014. As mentioned, the developed economies
contribution for this growth will be more significant, going from 1.8% to 2%. On the other hand, the expectation is that emerging
economies should expand by 4% on average in 2015, with the realignment of growth in China, which seeks to replace exports and
investment by domestic consumption as its growth drivers. This process has an impact on other emerging economies, which are in
large part commodities exporters, whose prices continued to show a downward trend, complicating the needed fiscal adjustment
process and exacerbating political difficulties in many cases.
December 2015
48,2
53,2
48,2
Manufacturing ISM Report on Business ® (USA)
Markit/BME Germany Manufacturing P M I ®
HSBC China Manufacturing P M I ™
November 2015
48,6
52,9
48,6
October 2015
50,1
52,1
48,3
In Brazil, the economic performance was weak once again. There was a rapid deterioration of the fiscal situation and inflation, along
the weakening of the exchange rate, resulting in severe recession, with a drop in GDP near 4% in 2015. The industrial sector
performance was even worse, with the Brazilian industrial production, measured by the IBGE, ending the year with a fall of 8.3%.
Capital goods production accumulated consecutive decline for more than 20 months between 2014 and 2015 and finished the year
down 25.5%. Although part of this decline is attributable to slow heavy vehicles production, the environment for the industry is, in
general, unfavorable.
INDUSTRIAL INDICATORS IN BRAZIL ACCORDING TO LARGE ECONOMIC CATEGORIES
Change (%)
Categories of Use
Dec 15 / Nov 15* Dec 15 / Dec 14
Capital Goods
Intermediary Goods
Consumer Goods
Durable Goods
Semi-durable and non-durable
General Industry
-8,2
0,7
1,0
9,4
0,3
-0,7
-31,9
-11,4
-8,4
-24,7
-4,2
-11,9
Acummulated
On Year
12 months
-25,5
-5,2
-9,4
-18,7
-6,7
-8,3
-25,5
-5,2
-9,4
-18,7
-6,7
-8,3
Source: IBGE, Research Office, Industry Coordination
(*) Series with seasonal adjustments
NET OPERATING REVENUES
Net Operating Revenues totaled R$ 2,734.3 million in the fourth quarter of 2015 (4Q15), for 25.4% growth over the fourth quarter of
2014 (4Q14) and 7.4% growth over the third quarter of 2015 (3Q15). Adjusting net revenues for transactions occurred in the period,
organic growth was of 23.0% over 4Q14.
NET OPERATING REVENUES PER MARKET
(R$ MILLION)
Brazilian Market
External Market
1.784
1.822
2.349
2.546
2.734
2.056
2.180
2.130
50%
55%
61%
52%
57%
52%
50%
51%
50%
49%
48%
50%
48%
45%
43%
39%
Q1 14
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Q3 15
Q4 15
Net Operating Revenue in 4Q15 breakdowns as follows:
ƒ Brazilian Market: R$ 1,060.5 million, representing 39% of Net Operating Revenue, a decrease of 2.4% over 4Q14 and decrease
of 3.3% over 3Q15. Excluding the consolidation of the Efacec Energy Service Ltda. acquisition, decrease was of 2.7% over 4Q14;
PAGE 2
Earnings Release
4Q 2015
ƒ External Markets: R$ 1,673.7 million, equivalent 61% of Net Operating Revenue. Throughout 2015, changes in exchange rates in
the markets in which we operate have impaired the markets behavior analysis. For a better analysis, we believe it is necessary to
observe the growth from various points of view. Thus, the growth compared to 4Q14 was:
ƒ
Measured in Brazilian Reais: 53.2%
ƒ
Measured in Brazilian Reais, excluding the acquisitions (organic growth): 48.5%
ƒ
In local currencies, weighted by the revenues in each market: 9.6%
ƒ
Measured in average US dollar for the quarter: 1,5%
EVOLUTION OF NET REVENUE ACCORDING TO GEOGRAPHIC MARKET
Q4 2015
Net Operating Revenues
- Brazilian Market
- External Markets
- External Markets in US$
2.734,3
1.060,5
1.673,7
435,6
(R$ MILLION)
Q3 2015
2.546,3
1.087,4
1.459,0
411,2
%
Q4 2014
7,4%
-2,5%
14,7%
5,9%
2.179,7
1.086,9
1.092,8
429,3
%
25,4%
-2,4%
53,2%
1,5%
We have highlighted the fact that our prices in the various markets are denominated in several local currencies, according to the
competitive conditions in each market. Thus, the revenue growth achieved in these markets, 9.6% of the weighted average, is not
reflected fully in the growth measured in US dollars, which was 1.5% this quarter. Still, with the average devaluation of 51% of the
Brazilian Real against the US dollar compared to the 4Q14, revenue growth abroad in Reais still significant.
EXTERNAL MARKET – DISTRIBUTION OF NET REVENUE ACCORDING TO GEOGRAPHIC MARKET
North America
South and Central America
Europe
Africa
Australasia
Q4 2015
Q3 2015
%
Q4 2014
42,5%
15,2%
23,3%
9,6%
9,4%
38,2%
16,2%
24,6%
12,5%
8,5%
4,3 pp
-1,0 pp
-1,3 pp
-2,9 pp
0,9 pp
38,7%
13,7%
24,6%
11,4%
11,6%
%
3,8 pp
1,5 pp
-1,3 pp
-1,8 pp
-2,2 pp
BUSINESS AREAS
Industrial Electro-Electronic Equipment – Again, the performance in the external markets was the highlight in this business area.
The devaluation of the Brazilian currency, in addition to the growth caused by converting revenues in foreign currencies into weaker
Reais, also creates the conditions for further efforts in staff, services and sales infrastructure, which turns into stronger competitive
position and sales growth. The production capacity expansion in Mexico and China, broadening the product range and the flexibility
in customer service, also contribute to this strengthening of WEG’s brand.
In Brazil, however, the industrial investment performance has disappointed, even considering that the expectations were already low.
We noted a slowdown in activity at the end of the year and the factors that would usually foster a recovery, as the devaluation impact
on industrial customers’ ability to export have shown little effect.
Energy Generation, Transmission and Distribution (GTD) – Revenue performance in this business area tends to change slowly, as
it is a result of the execution of an order backlog that was built over the previous months. The highlight remained in wind power
generation. As we go through the manufacturing learning curve of those systems, we have been enjoying productivity gains. We also
have an order book that extends for several months, allowing us to withstand periods of contraction in activity, such as the current
one.
In transmission and distribution (T&D) we been exploring alternatives to Brazil in the external markets to maintain order backlog at
appropriate levels for the coming quarters since the slow economic activity and the slowdown in electricity consumption has
decreased the demand for investments in expansion and the postponement of investments in maintenance. The manufacturing
operations abroad have shown good performance, especially in Mexico.
Motors for Domestic Use – In this business area, as has occurred in recent quarters, revenue growth was concentrated in the
Chinese operations at WEG Yatong, which manufactures electric motors for appliances for clients in North America and Europe, with
revenues in hard currency. The performance in the Brazilian market remained weak. Given current income conditions and credit for
consumption, there are no expectations of a change in this scenario.
Paints and Varnishes – With greater exposure to industrial and consumer goods in this business area, we continue to look for new
markets and applications for our products as a way to compensate for the poor performance. On the other hand, the prospects in
the Argentinean market, where we have a significant presence, are good.
PAGE 3
Earnings Release
4Q 2015
DISTRIBUTION OF NET REVENUE PER BUSINESS AREA
Q4 2015
Q3 2015
%
Q4 2014
%
51,4%
52,8%
-1,4 pp
59,4%
-8 pp
Electro-electronic Industrial Equipments
Domestic Market
12,5%
16,4%
-3,9 pp
24,0%
-11,5 pp
External Market
38,9%
36,4%
2,5 pp
35,4%
3,5 pp
Energy Generation , Transmission and Distribution
32,0%
30,3%
1,7 pp
21,4%
10,6 pp
Domestic Market
17,9%
17,9%
0 pp
13,7%
4,2 pp
External Market
14,1%
12,4%
1,7 pp
7,7%
6,4 pp
Electric Motors for Domestic Use
11,9%
12,3%
-0,4 pp
14,0%
-2,1 pp
Domestic Market
4,7%
4,8%
-0,1 pp
7,6%
-2,9 pp
External Market
7,2%
7,5%
-0,3 pp
6,4%
0,8 pp
Paints and Varnishes
4,4%
4,4%
0 pp
4,7%
-0,3 pp
Domestic Market
3,5%
3,5%
0 pp
4,3%
-0,8 pp
External Market
0,9%
0,9%
0 pp
0,4%
0,5 pp
COST OF GOODS SOLD
Cost of Goods Sold (COGS) totaled R$ 2,003.8 million in 4Q15, 35.3% above 4Q14 and 10.0% above 3Q15. Gross margin reached
26.7%, with reduction of 5.3 percentage points over 4Q14, and reduction of 1.8 percentage points over 3Q15.
The factors that negatively influence the gross margin in 2015 and continuing presence on the 4Q15 were:
(i)
Adverse conditions in the domestic market, which prevent increases in raw material costs denominated in or referenced to the
US dollars, as a results of the Brazilian Real devaluation, to be transferred at the speed necessary to sales prices in the domestic
market;
(ii)
Additional provisions for labor claims for class actions discussing general working conditions, and low turnover of inventories in
abroad;
(iii)
The impact of wind power generation systems, a new product in which we still expect future efficiency gains, and that, Moreover,
has lower than average operating margins because wind generation integrates subsystems that are not manufactured by WEG;
(iv)
The influence revenues from recently acquired businesses, such as SINYA/CMM Group, with an impact on the product mix.
COGS BREAKDOWN
Labor
19,6%
Q4 15
Depreciation
4,1%
Other Costs
10,0%
Materials
66,3%
Other Costs
Depreciation 8,9%
4,2%
Q4 14
Labor
21,5%
Materials
65,3%
In the 4Q15, average copper spot prices at the London Metal Exchange (LME) showed accumulated decrease of 26.3% compared
to 4Q14 and further drop of 7.3% over the previous quarter. Steel prices also showed additional decrease of 34.5% compared to
4Q14, and decrease of 11.2% compared to 3Q15. As always, these are the variations of US dollars prices, which means that prices
in Brazilian Reais continued to rise, as they incorporate devaluation of 51.1% over 4Q14.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated selling, general and administrative expenses (SG&A) totaled R$ 387.5 million in 4Q15, 17.3% growth over the 4Q14 and
6.3% growth over the previous quarter. As a percentage of Net Operating Revenue, operating expenses represented 14.2% in 4Q15,
1.0 percentage points lower than in 4Q14, and 0.1 percentage points lower than in 3Q15.
PAGE 4
Earnings Release
4Q 2015
EBITDA AND EBITDA MARGIN
In the 4Q15, EBITDA (according to the Instruction CVM 527/2012) totaled R$ 382.0 million, a decrease of 0.3% over the 4Q14 and
decrease of 3.3% over the 3Q15. EBITDA margin reached 14.0%, 3.6 percentage points lower than 4Q14, and 1.5 percentage point
lower than 3Q15. The decline in gross margin cannot be fully compensated by the operating expenses control.
FIGURES IN R$ MILLION
Q4 2015
Net Operating Revenues
Net Income before Minorities
Net Margin
(+) Income taxes & Contributions
(+/-) Financial income (expenses)
(+) Depreciation & Amortization
EBITDA
EBITDA Margin
2.734,3
383,7
14,0%
-7,8
-79,0
85,1
382,0
14,0%
310,3
Q3 2015
%
2.546,3
268,1
10,5%
15,9
28,7
82,4
395,1
15,5%
Q4 2014
7,4%
43,1%
n.a.
n.a.
3,3%
-3,3%
2.179,7
264,3
12,1%
82,0
-31,2
67,8
383,0
17,6%
%
25,4%
45,2%
n.a.
n.a.
25,6%
-0,3%
(507,4)
244,2
FX Impact on
Revenues
(35,6)
383,0
Volumes,
Prices &
Product Mix
Changes
EBITDA Q4 14
COGS (ex
depreciation)
Selling
Expenses
(19,0)
(7,6)
14,1
General and
Administrative
Expenses
Profit Sharing
Program
Other Income
382,0
EBITDA Q4 15
NET FINANCIAL RESULTS
Net financial result was positive in R$ 79.0 million in 4Q15 (positive in R$ 31.2 million in the 4Q14 and negative in R$ 28.7 million in
the 3Q15). This highly positive result was again mainly due to the mark-to-market of derivative transactions used to hedge the foreign
currency debt, reversing the negative impact that was observed in the previous quarter. The US$ denominated interest rates in Brasil,
which in 3Q15 had risen and negatively affected the market value of the swaps used to hedge the debt in US$, dropped in the 4Q15.
Again, we stress that this is an accounting impact and that there is no actual cash outflow until the transactions are settled. At maturity,
this financing is quite competitive.
INCOME TAX
In the 4Q15, the provision for “Income Tax and Social Contribution on Net Profit” reached R$ 9.7 million (R$ 70.1 million and R$ 99.7
million in 4Q14 and 3Q15, respectively). Additionally, a credit of R$ 17.4 million was recorded as ‘‘Deferred Income Tax / social
contribution’’ (debit of R$ 11.9 million and credit of R$ 83.8 million, respectively). The decrease in the effective tax rate on income is
due to differences in tax rates on results abroad.
NET INCOME
As a result of aforementioned impacts, net income for 4Q15 was R$ 383.9 million, an increase of 45.8% over 4Q14 and increase of
44.6% over the previous quarter. Net margin for the quarter was 14.0%, 2.0 percentage points higher than in 4Q14 and 3.6
percentage points higher than the previous quarter.
CASH FLOW
As of this quarter, the cash flows statement started to eliminate the devaluation effect produced in the balance sheets consolidation
of our subsidiaries. The impact of exchange rate changes on their each account, naturally, still exists. This change makes the analysis
simpler and more direct.
We can see that there was cash generation of R$ 982.4 million from operating activities in 2015, despite an increase in investments
in working capital. We have worked to improve efficiency in investments in working capital, with results already apparent mainly in
inventories. On the other hand, accounts payable and advances from customers have contributed less.
PAGE 5
Earnings Release
4Q 2015
The operating cash flow and access to credit lines allowed us to maintain investment activities without undue pressure on cash
position. With the continuation of the investment program, with emphasis on the expansion in new plants in China and Mexico,
investment activities consumed R$ 904.0 million in the year.
Finally, financing activities consumed R$ 157.6 million in the period, with R$ 2,598.1 million in new financing raised and R$ 1,961.3
million in amortization (net increase R$ 636.8 million), and the net payment R$ 794.4 million in interest on loans and dividends and
interest on stockholders’ equity.
Cash from
Operations
2.184,6
Operating
Investments
982,4
(904,0)
Financing
(157,6)
Net Debt
Issuance
636,8
3.205,2
3.284,3
Interest and
Dividends
Paid
(794,4)
Working
Capital
(1.202,1)
Cash December 2014
Cash December 2015
INVESTMENTS
The highlight of the investment program for capacity expansion and modernization of fixed assets were the new electric motors
industrial plants in Mexico and China. At the end of 2015 both units had already started production, which will be further expanded in
a modules over the coming years.
In 2015, we invested R$ 468.1 million in capacity expansion and modernization, with 43% allocated to industrial plants in Brazil and
57% allocated to production units and other subsidiaries abroad. In addition, we have incorporated R$ 21.6 million in fixed assets
resulting from the acquisitions made during the year. This total amount was in line with the initial estimate of capital expenditures at
the beginning of the year to R$ 477.0 million, despite some adjustments in implementing the program, particularly in the Brazilian
units. This is possible by the modular characteristic of capacity increases, always carried out in accordance with effective demand
and seeking to maximize the return on invested capital.
Outside Brazil
132,3
Brazil
94,0
64,3
8,4
55,9
60,5
134,1
120,1
47,9
34,3
82,4
23,5
131,5
134,1
86,6
97,7
44,9
36,4
49,6
70,6
71,8
86,2
85,8
32,8
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15
The program for 2016 foresees investments of R$ 470 million in capacity expansion and modernization and information technology,
always following the market conditions evolution, especially in Brazil. Given the flexibility in the modular implementation of these
investments, we can make timely adjustments to expenditures on production plants to prevent that production capacity expands
ahead of effective demand, maximizing the return on invested capital.
PAGE 6
Earnings Release
4Q 2015
DEBT AND CASH POSITION
On December 31, 2015 cash, cash equivalents and financial investments totaled R$ 4,813.7 million, entirely invested in first-tier banks
and in Brazilian currency, while the gross financial debt totaled R$ 5,170.7 million, being 25% in short-term and 75% in long-term,
resulting in net debt of R$ 357.0 million.
EM R$ MIL
Cash & Financial instruments
- Current
- Long Term
Debt
- Current
- In Brazilian Reais
- In other currencies
- Long Term
- In Brazilian Reais
- In other currencies
Net Cash (Debt)
December 2015
4.813.700
4.442.278
371.422
5.170.654 100%
1.286.071
25%
638.990
647.081
3.884.583
75%
1.751.352
2.133.231
(356.954)
December 2014
4.194.224
4.158.203
36.021
4.092.150 100%
1.466.752
36%
779.146
687.606
2.625.398
64%
1.701.408
923.990
102.074
December 2013
3.376.029
3.373.799
2.230
3.209.004 100%
912.796
28%
462.336
450.460
2.296.208
72%
2.048.766
247.442
167.025
The current characteristics of the debt are:
ƒ The total debt duration is of 27.7 months and for the long-term portion is of 36.0 months. In December 2014, theses durations
were of 22.9 months and 32.1 months, respectively.
ƒ The duration for portion denominated in Brazilian Reais is of 23.2 months and for the portion in foreign currencies is of 31.6 months.
In December 2014 these durations were of 19.6 months and 28.2 months, respectively.
ƒ The weighted average cost of fixed-rate Brazilian Reais denominated debt is approximately 7.6% per year (6.3% per year in
December 2014). Floating rate contracts are indexed mainly by Brazilian long-term interest rate TJLP.
The two main lines of funding are:
ƒ NCE Compulsory – obtained from commercial banks in Brazil, in Brazilian Reais, at fixed rates, with maturities up to three years.
ƒ Export Prepayments (PPE) – obtained from commercial banks in Brazil in US$, with a LIBOR spread plus interest. According to
internal policies, we usually swap to CDI to hedge against changes on exchange rate.
DIVIDENDS
As of August 12, 2015, payments declared during the first half of 2015 were made to shareholders, as below:
ƒ On March 24, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 67.4 million
ƒ On June 23, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 78.8 million
ƒ On July 28, as dividends referring to profit recorded in the first half of 2015, in the total amount of R$ 133.9 million
The Board of Directors will propose to the Annual General Meeting the allocation of R$ 592.8 million for payment of dividends and
interest on stockholders’ equity, as compensation to shareholders on the 2015 annual results, representing 51.3% of net income
before statutory adjustments. The payments referring to the second half of 2015 (supplementary dividends), to the total amount of R$
312.7 million, will begin on March 16, 2016.
ƒ On September 22, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 87.3 million.
ƒ On December 15, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 94.9 million;
ƒ On February 23, as supplementary dividends referring to profit recorded in the second half of 2015, in the total amount of R$ 130.6
million.
PAGE 7
Earnings Release
4Q 2015
Event
Board Meeting
Date
Gross amount per
share
Interest on Stockholders’ Equity
24/03/2015
0,083529412
Interest on Stockholders’ Equity
23/06/2015
0,048825190
Dividends
28/07/2015
0,082999282
Interest on Stockholders’ Equity
22/09/2015
0,054117647
Interest on Stockholders’ Equity
15/12/2015
0,058823529
Dividends
23/02/2016
0,080946530
Total
0,409241590
Our policy is to declare interest on stockholders equity quarterly and declare dividends based on profit earned each semester, thus,
we reported six different earnings each year, which is paid semiannually.
WEGE3 SHARE PERFORMANCE
The common shares issued by WEG, traded under the code WEGE3 at BM&F Bovespa, ended the last trading session of 2015
quoted at R$ 14.95, with a nominal losses 2.3% in the year and flat considering the dividends and interest on stockholders equity
declared in the period. These percentages are already adjusted for the stock split approved at the Ordinary and Extraordinary General
Shareholders Meeting held on March 31. The stock split at the ratio of two common shares for each existing share, and were ex-split
on April 1st.
7.000
25,00
Shares Traded (thousands)
WEGE3
6.000
20,00
WEGE3 share prices
15,00
10,00
4.000
3.000
Traded shares (thousands)
5.000
2.000
5,00
1.000
0,00
0
The average daily traded volume in 4Q15 was R$ 33.9 million, (R$ 22.9 million in 4Q14). Throughout the quarter 464,440 stock trades
were carried out (198,284 stock trades in 4Q14), involving 132.9 million shares (48.7 million in 4Q14) and moving R$ 2,035.8 million
(R$ 1,419.7 million in 4Q14).
PAGE 8
Earnings Release
4Q 2015
RESULTS CONFERENCE CALL
WEG will hold, on February 25, 2016 (Thursday), conference call and webcast to discuss the results. The call will be conducted in
Portuguese with simultaneous translation in English, following scheduled time
11 a.m.
9 a.m.
2 p.m.
– Brasília time
– New York (EST)
– London (GMT)
Connecting phone numbers:
Dial–in for connecting from Brazil:
Dial–in for connecting from USA:
Toll-free for connecting from USA:
Code:
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Slides and English translation:
www.ccall.com.br/weg/4t15.htm
www.ccall.com.br/weg/4q15.htm
The presentation will be available in Investor Relations page of WEG website (www.weg.net/ri). Please, call approximately 10 minutes
before the call is scheduled to start.
PAGE 9
Earnings Release
4Q 2015
BUSINESS AREA
Industrial Electro-Electronic Equipment
The industrial electrical-electronic equipment area includes low and medium voltage electric motors, drives & controls, industrial
automation equipment and services, and maintenance services and parts. We compete in all major markets with our products and
solutions. Electric motors and other related equipment find applications in practically all industrial segments, in equipment such as
compressors, pumps and fans, for example.
Energy Generation, Transmission and Distribution (GTD)
Products and services included in this area are electric generators for hydraulic and thermal power plants (biomass), hydro turbines
(small hydroelectric plants or PCH), wind turbines, transformers, substations, control panels and system integration services. In the
GTD area in general and specifically in power generation, investment maturing terms are longer, with slower investment decisions and
longer project and manufacturing lead times. As such, new orders are recorded as revenue after a few months, upon effective delivery
to buyers.
Motors for Domestic Use
In this business area, our operations have traditionally focused in Brazil, where we hold a significant share in the market of single
phase motors for durable consumer goods, such as washing machines, air conditioners, water pumps, among others. In 2014 we
started the internationalization of this area, with an acquisition in China. This is a short cycle business and variations in consumer
demand are rapidly transferred to the industry, with almost immediate impacts on production and revenue.
Paints and Varnishes
In this area, including liquid paints, powder paints and electro-insulating varnishes, we have very clear focus on industrial applications
in Brazil, and are expanding to Latin America. Our strategy in this area is cross selling to customers from other operating areas. The
target markets ranging from shipbuilding industry to the manufacturers of white line home appliances. We seek to maximize the scale
of production and efforts to developed new products and new segments of production and efforts to developed new products and
new segments.
The information contained in this report relating to WEG’s business perspectives, the projections and results and to the company’s
growth potential should be considered as only estimates and were based on the management expectations relating to the future of
the company. These expectations are highly influenced by the market conditions and the general economic performance of the
country and of the foreign markets which may be subject to sudden change.
PAGE 10
Earnings Release
4Q 2015
Annex I
Consolidated Income Statement - Quarterly
Figures in R$ Thousands
janeiro-00
Trimestre
Trimestre
Net Operating Revenues
Cost of Goods Sold
Gross Profit
Sales Expenses
Administrative Expenses
Financial Revenues
Financial Expenses
Other Operating Income
Other Operating Expenses
EARNINGS BEFORE TAXES
Income Taxes & Contributions
Deferred Taxes
Minorities
NET EARNINGS
#N/D
4th Quarter
2015
R$
VA%
janeiro-00
#N/D
3rd Quarter
2015
R$
VA%
janeiro-00
#N/D
4th Quarter
2014
R$
VA%
Changes %
Q4 2015
Q4 2015
Q3 2015
Q4 2014
2.734.251
(2.003.815)
730.436
(262.209)
(125.258)
285.788
(206.743)
7.507
(53.617)
375.904
(9.624)
17.394
(242)
383.916
100%
-73%
27%
-10%
-5%
10%
-8%
0%
-2%
14%
0%
1%
0%
14%
2.546.349
(1.821.547)
724.802
(245.007)
(119.326)
522.019
(550.732)
14.393
(62.175)
283.974
(99.702)
83.849
2.712
265.409
100%
-72%
28%
-10%
-5%
21%
-22%
1%
-2%
11%
-4%
3%
0%
10%
2.179.695
(1.481.477)
698.218
(226.955)
(103.443)
282.237
(251.071)
10.245
(62.888)
346.343
(70.152)
(11.897)
1.009
263.285
100%
-68%
32%
-10%
-5%
13%
-12%
0%
-3%
16%
-3%
-1%
0%
12%
7,4%
10,0%
0,8%
7,0%
5,0%
-45,3%
-62,5%
-47,8%
-13,8%
32,4%
-90,3%
-79,3%
n.m
44,7%
25,4%
35,3%
4,6%
15,5%
21,1%
1,3%
-17,7%
-26,7%
-14,7%
8,5%
-86,3%
n.m
n.m
45,8%
EBITDA
382.001
14,0%
395.093
15,5%
382.987
17,6%
-3,3%
-0,3%
EPS (adjusted for splits)
0,23800
44,6%
45,8%
0,16459
0,16319
PAGE 11
Earnings Release
4Q 2015
Annex II
Consolidated Income Statement
janeiro-00
#N/D
janeiro-00
Figures in R$ Thousand
#N/D
12 Months
2015
R$
VA%
12 Months
2014
R$
VA%
Net Operating Revenues
Cost of Goods Sold
Gross Profit
Sales Expenses
Administrative Expenses
Financial Revenues
Financial Expenses
Other Operating Income
Other Operating Expenses
EARNINGS BEFORE TAXES
Income Taxes & Contributions
Deferred Taxes
Minorities
NET EARNINGS
9.760.323
100%
(6.994.735) -71,7%
2.765.588
28%
(950.252)
-10%
(458.953)
-5%
1.345.633
14%
(1.200.150)
-12%
28.351
0%
(226.489)
-2%
1.303.728
13%
(234.116)
-2%
96.198
1%
9.745
0%
1.156.065 11,8%
7.840.757
100%
(5.356.260) -68,3%
2.484.497
32%
(820.471)
-10%
(386.112)
-5%
785.503
10%
(651.926)
-8%
15.902
0%
(199.464)
-3%
1.227.929
16%
(271.583)
-3%
5.970
0%
7.590
0%
954.726
12%
EBITDA
1.477.603
EPS (adjusted for splits)
0,71669
15,1%
1.344.829
0,59180
17,2%
%
2015
2014
24%
31%
11%
16%
19%
71%
84%
78%
14%
6%
-14%
n.m
28%
21%
9,9%
21%
PAGE 12
Earnings Release
4Q 2015
Annex III
Consolidated Balance Sheet
Figures in R$ Thousands
CURRENT ASSETS
Cash & cash equivalents
Receivables
Inventories
Other current assets
LONG TERM ASSETS
Long term securities
Deferred taxes
Other non-current assets
FIXED ASSETS
Investment in Subs
Property, Plant & Equipment
Intangibles
TOTAL ASSETS
December 2015
December 2014
December 2013
(A)
(B)
(C)
R$
%
R$
%
R$
%
#REF!
#REF!
#REF!
9,589,344
67% 8,063,213
68% 6,851,787
68%
4,434,759
31%
4,149,437
35%
3,373,799
33%
2,545,927
18%
1,867,864
16%
1,658,806
16%
2,009,254
14%
1,704,919
14%
1,445,927
14%
599,404
4%
340,993
3%
373,255
4%
619,206
4%
161,644
1%
123,866
1%
214
0%
1,047
0%
2,230
0%
131,327
1%
55,864
0%
60,376
1%
487,665
3%
104,733
1%
61,260
1%
4,052,991
28% 3,557,773
30% 3,165,640
31%
1,379
0%
8,224
0%
7,264
0%
3,264,898
23%
2,877,942
24%
2,614,556
26%
786,714
6%
671,607
6%
543,820
5%
14,261,541 100% 11,782,630 100% 10,141,293 100%
CURRENT LIABILITIES
Social and Labor Liabilities
Suppliers
Fiscal and Tax Liabilities
Short Term Debt
Dividends Payable
Advances from Clients
Profit Sharring
Derivatives
Other Short Term Liabilities
LONG TERM LIABILITIES
Long Term Debt
Other Long Term Liabilities
Deferred Taxes
Contingencies Provisions
MINORITIES
STOCKHOLDERS' EQUITY
TOTAL LIABILITIES
3,494,850
191,077
566,769
121,461
1,284,633
172,484
486,225
143,897
1,438
526,866
4,610,631
3,868,335
159,632
242,696
339,968
126,680
6,029,380
14,261,541
25% 3,379,017
1%
173,382
4%
445,577
1%
148,335
9%
1,462,493
1%
111,707
3%
590,815
1%
111,173
0%
2,461
4%
333,074
32% 3,264,350
27%
2,615,049
1%
107,463
2%
282,989
2%
258,849
1%
82,878
42% 5,056,385
100% 11,782,630
29% 2,578,048
1%
152,739
4%
420,250
1%
139,570
12%
912,796
1%
87,723
5%
459,130
1%
98,005
0%
3%
307,835
28% 2,920,978
22%
2,296,208
1%
95,031
2%
294,405
2%
235,334
1%
84,495
43% 4,557,772
100% 10,141,293
25%
2%
4%
1%
9%
1%
5%
1%
0%
3%
29%
23%
1%
3%
2%
1%
45%
100%
(A)/(B) (A)/(C)
<===== Não A
19%
40%
7%
31%
36%
53%
18%
39%
76%
61%
283% 400%
-90%
135% 118%
366% 696%
14%
28%
-83% -81%
13%
25%
17%
45%
21%
41%
3%
10%
27%
-18%
-12%
54%
-18%
29%
-42%
58%
41%
48%
49%
-14%
31%
53%
19%
21%
36%
25%
35%
-13%
41%
97%
6%
47%
71%
58%
68%
68%
-18%
44%
50%
32%
41%
PAGE 13
Earnings Release
4Q 2015
Annex IV
Consolidated Cash Flow Statement
Figures in R$ Thousands
12 Months
2015
12 Months
2014
Operating Activities
Net Earnings before Taxes
Depreciation and Amortization
Provisions:
Changes in Assets & Liabilities
(Increase) / Reduction of Accounts Receivable
Increase / (Reduction) of Accounts Payable
(Increase) / Reduction of Investories
Income Tax and Social Contribution on Net Earnings
Profit Sharing Paid
Cash Flow from Operating Activities
1.303.728
319.358
561.473
(1.202.117)
(651.516)
(23.697)
(67.035)
(298.415)
(161.454)
982.442
1.227.929
250.477
436.259
(698.673)
(155.402)
129.357
(227.238)
(290.872)
(154.518)
1.215.992
Investment Activities
Fixed Assets
Intagible Assets
Results of sales of fixed assets
Long term securities bought
Goodwill in Capital Transactions
Acquisition of Stakes of non-controlling shareholders
Aquisition of Subsidiaries
Cash Flow From Investment Activities
(468.146)
(38.922)
18.170
(291.649)
(129.678)
(903.965)
(427.652)
(40.943)
12.355
(863.979)
(2.699)
(5.947)
(136.523)
(1.450.466)
2.598.118
(1.961.274)
(265.876)
(8.651)
(519.895)
(157.578)
1.459.291
(677.016)
(185.807)
1.104
(459.516)
138.056
Change in Cash Position
71.945
8.563
Change in Cash Position
(7.156)
(87.855)
Cash & Cash Equivalents
Beginning of Period
End of Period
3.284.275
3.277.119
3.372.130
3.284.275
Financing Activities
Working Capital Financing
Long Term Financing
Interest paid on loans and financing
Treasury Shares
Dividends & Intesrest on Stockholders Equity Paid
Cash Flow From Financing Activities
PAGE 14