Earnings Release
4Q 2014
Jaraguá do Sul (SC), February 25, 2015: 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 2014 (4Q14). The following financial and operating data are presented in a consolidated basis, except when otherwise indicated, in thousands of Brazilian
Reais (R$) according to accounting practices adopted in Brazil, including Brazilian Corporate Law and the convergence to IFRS international norms. The Growing rates and
other comparisons are, except when otherwise indicated, made in relation to the same period of the previous year.
CONSISTENCY OF GROWTH AND RESULTS
NET OPERATING REVENUES GREW BY 15.1%
ƒ Net operating revenues in the fourth quarter of 2014 reached R$ 2,179.7 million, for 15.1% growth over the 4Q13 and 6.0% growth
over the 3Q14;
EBITDA GREW BY 12.1%
ƒ EBITDA reached R$ 383.0 million and EBITDA margin reached 17.6%. In relation to the same quarter last year EBITDA grew by 12.1%,
while compared to the previous quarter there was growth of 9.2%;
NET INCOME GREW BY 10.9%
ƒ Net income totaled R$ 263.3 million, with net margin of 12.1% and growth of 10.9% over the 4Q13 and 1.8% over the 3Q14;
INVESTMENTS OF R$ 424.8 MILLION IN 2014
ƒ Investments in fixed assets totaled R$ 424.8 million over 2014, being 67% in industrial plants and other installations in Brazil and 33%
in expansion projects abroad.
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)
Q4 2014
Q3 2014
2.179.695
1.086.902
1.092.793
429.332
698.218
32,0%
263.285
12,1%
382.987
17,6%
0,32642
2.055.972
994.061
1.061.912
466.737
638.533
31,1%
258.569
12,6%
350.699
17,1%
0,32056
%
6,0%
9,3%
2,9%
-8,0%
9,3%
1,8%
9,2%
1,8%
Q4 2013
1.893.299
913.388
979.911
428.229
615.953
32,5%
237.439
12,5%
341.653
18,0%
0,29439
%
15,1%
19,0%
11,5%
0,3%
13,4%
10,9%
12,1%
10,9%
12M14
12M13
7.840.757
3.876.757
3.964.000
1.684.894
2.484.497
31,7%
954.726
12,2%
1.344.829
17,2%
1,18365
6.828.896
3.432.040
3.396.856
1.569.891
2.236.766
32,8%
843.467
12,4%
1.230.032
18,0%
1,04577
%
14,8%
13,0%
16,7%
7,3%
11,1%
13,2%
9,3%
13,2%
Figures in R$ Thousand
CONFERENCE CALL (WITH SIMULTANEOUS TRANSLATION TO ENGLISH)
February 26, Thursday 11 a.m. (Brasilia official time)
Dial---in in the US: +1 786 924-6977
Webcasting (simultaneous translation into English): www.ccall.com.br/weg/4q14.htm
PAGE 1
Earnings Release
4Q 2014
ECONOMIC ACTIVITY AND INDUSTRIAL PRODUCTION
This was yet another year of slow recovery of the global economic activity. Industrial activity continued to show different pace between
the more important economies, as can be gauged by analysis of purchasing manager indexes (PMI). In the US there was a slight loss
of dynamism in the last month of the year, but 2014 saw the fastest economic expansion since 2008. In Europe, despite concerns
about recession and deflation risks, the German PMI continued fluctuating around 50, that is, near neutrality, a situation similar to the
one observed in China.
December 2014
55,5
51,2
49,6
Manufacturing ISM Report on Business ® (USA)
Markit/BME Germany Manufacturing PMI®
HSBC China Manufacturing PMI™
November 2014
58,7
49,5
50,0
October 2014
59,0
51,4
50,4
In Brazil, GDP growth should be around zero in 2014. Brazilian industrial activity continued to show signs of slowdown in the last
quarter of the year, without interruption of the trend observed over the year, ending 2014 with decrease of 3.2%, according the survey
by the Instituto Brasileiro de Geografia e Estatística (IBGE).
Industrial Indicators in Brazil According to Large Economic Categories
Change (%)
Categories of Use
Dec 14 / Nov 14* Dec 14 / Dec 13
Capital Goods
Intermediary Goods
Consumer Goods
Durable Goods
Semi-durable and non-durable
General Industry
-23,0
-0,8
-2,0
-2,2
-1,7
-2,8
-11,9
-1,5
-3,2
-9,7
-1,3
-2,7
Acummulated
On Year
12 months
-9,6
-2,7
-2,5
-9,2
-0,3
-3,2
-9,6
-2,7
-2,5
-9,2
-0,3
-3,2
Source: IBGE, Research Office, Industry Coordination
(*) Series with seasonal adjustments
The analyses show general decrease in industry production, reaching practically all large economic categories. In capital goods, which
that includes most of our product line and that of our customers, posted the worst performance among all the categories, with
decrease of 9.6%, mainly influenced by the slowdown on heavy vehicles production.
NET OPERATING REVENUE
Net Operating Revenues totaled R$ 2,179.7 million in the fourth quarter of 2014 (4Q14). Growth was of 15.1% over the fourth quarter
of 2013 (4Q13) and of 6.0% over the third quarter of 2014 (3Q14). Adjusting net revenues for transactions occurred in the period,
organic growth was of 10.8% over 4Q13.
Net Operating Revenue per Market (R$ Million)
1.700
1.758
2.056
1.893
1.784
50%
51%
1.822
1.478
48%
52%
Q1 13
2.180
52%
50%
49%
50%
52%
51%
50%
48%
50%
49%
48%
50%
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Q4 14
Brazilian Market
External Market
Although market conditions in the major global economies observe a slowdown in industrial activity, revenue performance remained
at a healthy rate, showing that diversification and investment in capacity expansion keeps WEG competitive in global markets. In
Brazil, the growing dynamism of the electricity generation, transmission and distribution equipment market offset the weaker
performance of the industrial investment and consumption, helping to maintain revenue growth rates in line with the historical pattern.
Net Operating Revenue in 4Q14 breakdowns as follows:
PAGE 2
Earnings Release
4Q 2014
ƒ Brazilian Market: R$ 1,086.9 million, representing 50% of Net Operating Revenue, with 19% growth over 4Q13 and 9.3% growth
over 3Q14;
ƒ External Markets: R$ 1,092.8 million, equivalent 50% of Net Operating Revenue. The comparison in Brazilian Reais shows growth
of 11.5% over the same period last year and of 2.9% over the previous quarter. Considering the average US dollar for the quarter,
comparison shows growth of 0.3% compared to 4Q13 and decrease of 8.0% over the 3Q14. Organic growth (excluding the
transaction in the last 12 months) in the external market was 3.2% over 4Q13.
Evolution of Net Revenue according to Geographic Market (R$ Million)
Q4 2014
Net Operating Revenues
- Brazilian Market
2.179,7
1.086,9
1.092,8
429,3
- External Markets
- External Markets in US$
Q3 2014
2.056,0
994,1
1.061,9
466,7
Change
6,0%
9,3%
2,9%
-8,0%
Q4 2013
1.893,3
913,4
979,9
428,2
Change
15,1%
19,0%
11,5%
0,3%
External Market --- Distribution of Net Revenue according to Geographic Market
North America
South and Central America
Europe
Africa
Australasia
Q4 2014
Q3 2014
Change
Q4 2013
38,7%
13,7%
38,1%
14,2%
31,7%
18,0%
24,6%
11,4%
11,6%
22,1%
14,0%
11,6%
0,6 pp
-0,5 pp
2,5 pp
-2,6 pp
0 pp
27,0%
13,7%
9,6%
Change
7 pp
-4,3 pp
-2,4 pp
-2,3 pp
2 pp
Distribution of Net Revenue per Business Area
Q4 2014
Q3 2014
%
Q4 2013
%
Electro-electronic Industrial Equipments
59,5%
58,5%
1 pp
60,1%
-0,6 pp
Domestic Market
24,0%
22,5%
1,5 pp
22,7%
1,3 pp
External Market
35,4%
36,0%
-0,6 pp
37,4%
-2 pp
Energy Generation , Transmission and Distribution
21,5%
24,2%
-2,7 pp
22,9%
-1,3 pp
Domestic Market
13,8%
14,0%
-0,2 pp
12,7%
1,1 pp
7,8%
10,2%
-2,5 pp
10,2%
-2,4 pp
14,1%
11,5%
2,6 pp
11,0%
3,2 pp
External Market
Electric Motors for Domestic Use
Domestic Market
7,7%
6,6%
1,1 pp
7,5%
0,1 pp
External Market
6,4%
4,9%
1,6 pp
3,4%
3 pp
Paints and Varnishes
4,9%
5,8%
-0,9 pp
6,1%
-1,2 pp
Domestic Market
4,4%
5,2%
-0,8 pp
5,3%
-0,9 pp
External Market
0,5%
0,5%
-0,1 pp
0,7%
-0,3 pp
BUSINESS AREAS
The Industrial Electro-Electronic Equipment area showed slight growth in net operating revenue, in line with the traditional pickup
of business pace in the second half of the year. In Brazil we continue to see a weaker performance, with low levels of investment in
capacity expansion and poor performance of industrial production. This scenario was noticeable both in serial industrial products as
in engineered products. Even the acceleration of the Brazilian currency devaluation was not enough to improve the dynamics of the
Brazilian industrial, which continues to invest mainly to maintain the installed base, with capacity expansion investments concentrated
in specific cases.
In the external markets were able to use our competitive advantage more aggressively. We continue to execute our plan to expand
the production platform outside Brazil, with new electric motors production units in Mexico and China, incorporating know-how and
building a stronger industrial equipment global brand. The consolidation of the WEG brand among the world’s major capital goods
manufacturers allows us to increase the scope of our product and services offering and provide increasingly integrated systems.
The Energy Generation, Transmission and Distribution (GTD) business area ended the year with significant expansion compared
to 2013. In transmission and distribution (T&D) the demand conditions remained favorable, although prices continue to recover at very
slow pace in major world markets, reflecting production capacity and demand balance that is still evolving. In power generation
equipment, however, we started to see the first concrete results of improved market conditions in Brazil. From mid-2013, small
hydroelectric plants (PCH) started to become more viable and competitive in energy auctions. In addition, we started to see the first
PAGE 3
Earnings Release
4Q 2014
revenues from wind generation equipment sales. The outlook for this area remains positive, both for the execution of the current order
book as with winning new orders in small hydro, wind and solar, in which WEG already has a local generation systems integration
solution and was included in the official energy auctions for the first time in 2014.
In the Motors for Domestic Use area repeated in 2014 the good growth in net operating revenue of 2013, with the revenue integration
from the acquisition of SINYA/CMM in China. The growth in the Brazilian market was more modest. Despite the changes in the
consumption patterns brought by the World Cup in 2014 and the reduction of consumer credit availability, the seasonality of this
business is favorable in the fourth quarter, which usually shows the boost in sales in anticipation of the year-end holidays and of the
summer. These seasonal variations tend to be less intense in the future, as the internationalization of this business area is advancing
with a full products portfolio, able to globally meet our clients’ demands.
Finally, the Paints and Varnishes business area has suffered from the weak performance of Brazilian industrial sector, which is its
most important market, with only satisfactory growth. The strategy to diversify and leverage cross-selling to customers already
developed, however, remains valid for market expansion.
COST OF GOODS SOLD
Cost of Goods Sold (COGS) totaled R$ 1,481.5 million in 4Q14, 16.0% above 4Q13 and 4.5% above 3Q14. Gross margin reached
32.0%, with reduction of 0.5 percentage points over 4Q13 and increase of 1.0 percentage points over 3Q14.
The impacts on gross margin resulting from: (I) difficulty on realigning sales prices at the necessary speed to reflect higher costs from
the currency devaluation, which again was present in the quarter; (II) market fluctuations throughout the year, with sharp slowdown in
the second quarter in anticipation of hosting the World Cup, followed by some pickup in inventories; and (III) lower value added
product mix.
Average London Metal Exchange (LME) spot copper prices fell by 7.4% in 4Q14 compared to the average of 4Q13 and fell by 5.2%
compared to the average of 3Q14. Steel prices in the international markets fell by 20.7% over 4Q13 and fell by 16.5% over 3Q14.
These prices variations are denominated in US dollar.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated selling, general and administrative expenses (SG&A) totaled R$ 330.4 million in 4Q14, 14.3% growth over the 4Q13 and
9.0% growth over the previous quarter. As a percentage of Net Operating Revenue, operating expenses represented 15.2% in 4Q14,
0.1 percentage points lower than 15.3% of the 4Q13 and 0.4 percentage points higher than 14.7% of the 3Q14.
EBITDA AND EBITDA MARGIN
In this 4Q14, EBITDA (according to the Instruction CVM 527/2012) totaled R$ 383.0 million, 12.1% growth over the 4Q13 and 9.2%
growth over 3Q14. EBITDA margin reached 17.6%, 0.4 percentage points lower than 4Q13 and 0.5 percentage points higher than
3Q14.
Q4 2014
Net Operating Revenues
Consolidated Net Income for the Period
Net Margin
(+) Income taxes & Contributions
(+/-) Financial income (expenses)
(+) Depreciation & Amortization
EBITDA
EBITDA Margin
2.179,7
264,3
12,1%
82,0
-31,2
67,8
383,0
17,6%
Q3 2014
%
6,0%
2.056,0
0,6%
262,6
12,8%
66,1 24,2%
-41,6 -25,1%
6,6%
63,6
9,2%
350,7
17,1%
Q4 2013
%
1.893,3 15,1%
237,3 11,4%
12,5%
72,0 13,9%
-24,4 27,7%
56,8 19,4%
341,7 12,1%
18,0%
Figures in R$ Million
PAGE 4
Earnings Release
4Q 2014
110,4
(193,5)
176,0
FX Impact on
Revenues
(27,1)
COGS (ex
depreciation)
341,7
Volumes,
Prices &
Product Mix
Changes
Selling
Expenses
(13,9)
(12,7)
2,1
General and
Administrative
Expenses
Profit Sharing
Program
Other
Expenses
383,0
EBITDA Q4 14
EBITDA Q4 13
Figures in R$ Million
NET FINANCIAL RESULTS
In this quarter, net financial result was positive in R$ 31.2 million (positive result of R$ 24.4 million in 4Q13 and positive of R$ 41.6
million in 3Q14). Financial revenues totaled R$ 282.2 million in 4Q14 (R$ 175.1 million in 4Q13 and R$ 208.2 million in 3Q14). Financial
expenses totaled R$ 251.1 million (R$ 150.7 million in 4Q13 and R$ 166.6 million in 3Q14). Net financial result growth of 27.7% over
the previous year is a result of increase in interest rates obtained on financial instruments in Brazilian market, proving the good credit
rating of WEG.
INCOME TAX
Income Tax and Social Contribution on Net Profit provision in 4Q14 reached R$ 70.2 million (R$ 71.7 million in 4Q13 and R$ 77.7
million in 3Q14). Additionally, R$ 11.9 million were recorded as ‘‘Deferred Income Tax / social contribution’’ debt (debt of R$ 0.4 million
in 4Q13 and credit of R$ 11.6 million in 3Q14).
NET INCOME
As a result of aforementioned impacts, net income for 4Q14 was R$ 263.3 million, an increase of 10.9% over 4Q13 and 1.8% over
the previous quarter. The net margin of the quarter was 12.1%, 0.4 percentage points lower than 4Q13 and 0.5 percentage points
lower than 3Q14.
CASH FLOW
1.147,5
(1.389,8)
3.373,8
196,5
Operating
Cash December 2013
Investing
3.328,0
Financing
Cash December 2014
Figures in R$ Million
In 2014, cash flow from operating activities totaled R$ 1,147.5 million, an increase of 12% over the same period of 2013. The
expansion was due to the increase in cash generated from operations, partially offset by increased working capital needs, and
especially the higher consumption of cash with payments of income tax and profit sharing.
The acceleration of investments in expansion and modernization of productive capacity program, especially with the new unit projects
in China and Mexico, as well as acquisitions made during 2014, WEG Balingen, in Germany, CMM and Sinya Group, in China, Efacec
PAGE 5
Earnings Release
4Q 2014
Service, in Brazil, FTC, in Colombia, and KATT, in Germany, led to the consumption of R$ 1,389.8 million in investments activities,
reversing the cash flow situation observed in 2013.
Financing activities generated R$ 196.5 million in 2014. In this period we issued R$ 1,517.8 million new debt and amortized R$ 677.0
million of existing debt, resulting in net increase of R$ 840.7 million, with attractive maturities and interest rates. Additionally, we paid
R$ 459.5 million in dividends and interest on stockholders’ capital from the second half of 2013 and the first half of 2014.
INVESTMENTS
134,1
132,3
Outside Brazil
Brazil
56,8
6,0
61,3
11,8
94,0
63,9
15,6
61,1
13,1
64,3
8,4
50,7
49,5
48,3
48,0
55,9
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
47,9
60,5
23,5
70,6
71,8
Q2 14
Q3 14
86,2
Q4 14
Figures in R$ Million
In 2014, WEG started a new cycle of investments for capacity expansion and modernization, with the start of the implementation of
new electric motors production units in Mexico and China that will receive investments of US$ 345 million over five years. In 2014
investments totaled R$ 424.8 million, being 67% of it destined to the industrial plants and other installations in Brazil and the remaining
to production units and other subsidiaries abroad. In addition, the consolidation of acquisitions made during 2014 added R$ 61.2
million in fixed assets: WEG Balingen, in Germany, and Sinya and CMM Group, in China.
However, we have flexibility in implementing our investment program as capacity additions are designed to be modular, responding
to the demand and optimizing the capacity occupation to maximize the return on invested capital. Thus, we postponed some
disbursements originally scheduled for 2014 over the coming months.
DEBT AND CASH POSITION
On December 31, 2014 cash, cash equivalents and financial investments totaled R$ 4,194.2 million, almost entirely in fixed income
instruments linked to the CDI, invested in Brazilian currency in first-tier banks. Gross financial debt totaled R$ 4,092.1 million, being
36% in short-term and 64% in long-term.
December 2014
December 2013
December 2012
Cash & Financial instruments
4.194.224
3.376.029
2.565.532
- Current
- Long Term
4.193.177
1.047
3.373.799
2.230
2.563.500
2.032
Debt
4.092.150
100%
3.209.004
100%
2.689.840
100%
- Current
1.466.752
36%
912.796
28%
1.645.772
61%
- In Brazilian Reais
779.146
462.336
- In other currencies
687.606
450.460
- Long Term
- In Brazilian Reais
- In other currencies
Net Cash (Debt)
2.625.398
64%
2.296.208
1.067.683
578.089
72%
1.044.068
39%
1.701.408
2.048.766
824.910
923.990
247.442
219.158
102.074
167.025
(124.308)
Figures in R$ Thousand
At the end of the 4Q14 WEG had net cash of R$ 102.1 million (net cash of R$ 167.0 million on December 31, 2014). Over the quarter
we raised new funding on attractive terms of maturities and fees. The characteristics of the debt are:
ƒ The total duration debt is 22.9 months and the long-term portion is 32,1 months. Duration portion denominated in Brazilian Reais
is 19.6 months and for the portion in foreign currencies is 28.2 months.
PAGE 6
Earnings Release
4Q 2014
ƒ The weighted average cost of fixed-rate denominated in Brazilian Reais is approximately 6,3% per year. Floating rate contracts are
indexed mainly by the Brazilian long-term interest rate (TJLP).
DIVIDENDS
As of August 13, 2014, payments declared during the first half of 2014 were made to shareholders, as below:
ƒ On March 25, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 51.8 million;
ƒ On June 24, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 56.9 million;
ƒ On July 22, as dividends referring to profit recorded in the first half of 2014, in the total amount of R$ 125.3 million.
The payments referring to the second half of 2014 (supplementary dividends), to the total amount of R$ 287.1 million, will begin
on March 11, 2015.
ƒ On September 23, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 57.9 million;
ƒ On December 16, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount of R$ 61.7 million;
ƒ On February 24, as supplementary dividends referring to profit recorded in the second half of 2014, in the total amount of R$ 167.5
million.
Event
Board Meeting
Date
Payment Date
Gross amount per
share
Dividends
24/02/2015
11/03/2015
0,207646611
Interest on Stockholders’ Equity
16/12/2014
11/03/2015
0,076470588
Interest on Stockholders’ Equity
23/09/2014
11/03/2015
0,071764706
Dividends
22/07/2014
13/08/2014
0,155386949
Interest on Stockholders’ Equity
24/06/2014
13/08/2014
0,070588235
Interest on Stockholders’ Equity
25/03/2014
13/08/2014
0,083529412
Total
0,665386501
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 on December
2014 quoted at R$ 30.60, with nominal gain of 27.7% in the year and gain of 30.9% considering the dividends and interest on
stockholders equity declared in the period.
PAGE 7
Earnings Release
4Q 2014
35,00
3.500
WEGE3
30,00
3.000
25,00
2.500
20,00
2.000
15,00
1.500
10,00
1.000
5,00
500
0,00
0
Traded shares (thousands)
WEGE3 share prices
Shares Traded (thousands)
The average daily traded volume in 4Q14 was R$ 22.9 million, (R$ 16.7 million in 4Q13). Throughout the quarter 198,284 stock trades
were carried out (148,016 stock trades in 4Q13), involving 48.7 million shares and moving R$ 1,419.7 million (R$ 1,016.6 million in
4Q13).
FTC ENERGY GROUP ACQUISITION IN COLOMBIA
On October 20, WEG S.A. announced the acquisition of FTC Energy Group (‘‘FTC’’), a Bogotá, Colombia, based company that
manufactures and assembles electrical panels for process automation.
FTC was founded in 1984 and has reached a prominent position in the Colombian oil and gas equipment market, with extensive
experience in special panels and electrical rooms. In 2013, FTC reached approximately US$ 10 million in net revenues.
The transaction is subject to approval from anti-trust authorities and other technical and commercial terms.
KATT ACQUISITION IN GERMANY
On December 01, WEG S.A. announced the acquisition of Antriebstechnik KATT Hessen GmbH (‘‘KATT’’), an electric motors
manufacturer with headquarters in Homberg, Germany.
KATT originated in 2002, from the merger of KATT Motoren, founded in 1924, and its AKS development affiliate. Over the years, KATT
has accumulated large experience in manufacture high-speed motors and a strong technological development expertise. The
company has two manufacturing units, in Homberg and Dresden, employing around 190 people. Net revenues in 2013 were of
approximately € 14.4 million.
WEG SELECTED FOR CORPORATE SUSTAINABILITY INDEX (ISE)
On November 26, WEG S.A was once again selected to the Corporate Sustainability Index portfolio (ISE) of BM&FBOVESPA. The
new ISE’s portfolio, will be valid from January 5, 2015 to January 2, 2016. Company is the sole representative of Machinery and
Equipment segment.
The inclusion of WEGE3’s shares in ISE, which has been occurring consistently for some years, shows the Company’s commitment
with corporate governance good practices, social responsibility and sustainable development. WEG once again authorized disclosure
of its answers to the selection questionnaire.
PAGE 8
Earnings Release
4Q 2014
RESULTS CONFERENCE CALL
WEG will hold, on February 26, 2015 (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:
(11) 3193-1001 / (11) 2820-4001
+1 786 924-6977
+1 888 700-0802
WEG
Access to the webcast:
Slides and Portuguese audio:
Slides and English translation:
www.ccall.com.br/weg/4t14.htm
www.ccall.com.br/weg/4q14.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 2014
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. 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 2014
Annex I
Consolidated Income Statement - Quarterly
Figures in R$ Thousands
4T14
55
4th Quarter
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
EBITDA
3T14
53
3rd Quarter
2014
R$
VA%
4T13
46
4th Quarter
2013
R$
VA%
Changes %
Q4 2014
Q4 2014
Q3 2014
Q4 2013
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%
2.055.972
(1.417.439)
638.533
(205.555)
(97.548)
208.182
(166.599)
2.072
(50.404)
328.681
(77.674)
11.589
4.027
258.569
100%
-69%
31%
-10%
-5%
10%
-8%
0%
-2%
16%
-4%
1%
0%
13%
1.893.299
(1.277.346)
615.953
(198.657)
(90.313)
175.104
(150.694)
3.490
(45.595)
309.288
(71.660)
(375)
(186)
237.439
100%
-67%
33%
-10%
-5%
9%
-8%
0%
-2%
16%
-4%
0%
0%
13%
6,0%
4,5%
9,3%
10,4%
6,0%
35,6%
50,7%
394,4%
24,8%
5,4%
-9,7%
n.m
-74,9%
1,8%
15,1%
16,0%
13,4%
14,2%
14,5%
61,2%
66,6%
193,6%
37,9%
12,0%
-2,1%
n.m
n.m
10,9%
382.987
17,6%
350.699
17,1%
341.653
18,0%
9,2%
12,1%
PAGE 11
Earnings Release
4Q 2014
Annex II
Consolidated Income Statement
12M14
55
12 Months
2014
R$
VA%
12M13
Figures in R$ Thousands
46
12 Months
2013
R$
VA%
%
2014
2013
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
7.840.757
(5.356.260)
2.484.497
(820.471)
(386.112)
785.503
(651.926)
15.902
(199.464)
1.227.929
(271.583)
5.970
7.590
954.726
100%
-68%
32%
-10%
-5%
10%
-8%
0%
-3%
16%
-3%
0%
0%
12%
6.828.896
(4.592.130)
2.236.766
(716.358)
(328.863)
599.974
(526.848)
16.431
(196.223)
1.084.879
(274.858)
35.283
1.837
843.467
100%
-67%
33%
-10%
-5%
9%
-8%
0%
-3%
16%
-4%
1%
0%
12%
15%
17%
11%
15%
17%
31%
24%
-3%
2%
13%
-1%
-83%
313%
13%
EBITDA
1.344.829
17,2%
1.230.032
18,0%
9%
PAGE 12
Earnings Release
4Q 2014
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 2014
December 2013
(A)
(B)
R$
%
R$
%
8.098.187
69% 6.851.787
68%
4.193.177
36% 3.373.799
33%
1.867.864
16% 1.658.806
16%
1.704.919
14% 1.445.927
14%
332.227
3%
373.255
4%
126.670
1%
123.866
1%
1.047
0%
2.230
0%
55.864
0%
60.376
1%
69.759
1%
61.260
1%
3.557.773
30% 3.165.640
31%
8.224
0%
7.264
0%
2.877.942
24% 2.614.556
26%
671.607
6%
543.820
5%
11.782.630
100% 10.141.293
100%
December 2012
(C)
R$
%
(A)/(B) (A)/(C)
5.710.017
64% 18%
42%
2.563.500
29% 24%
64%
1.472.839
17% 13%
27%
1.306.273
15% 18%
31%
367.405
4% -11% -10%
88.833
1%
2%
43%
2.032
0% -48%
36.891
0% -7%
51%
49.910
1% 14%
40%
3.074.700
35% 12%
16%
7.622
0% 13%
8%
2.537.094
29% 10%
13%
529.984
6% 23%
27%
8.873.550
100% 16%
33%
CURRENT LIABILITIES
Social and Labor Liabilities
Suppliers
Fiscal and Tax Liabilities
Short Term Debt
Dividends Payable
Advances from Clients
Profit Sharring
Other Short Term Liabilities
LONG TERM LIABILITIES
Long Term Debt
Other Long Term Liabilities
Deferred Taxes
Contingencies Provisions
MINORITIES
STOCKHOLDERS' EQUITY
TOTAL LIABILITIES
3.380.459
173.382
445.577
148.335
1.466.752
111.351
590.815
111.173
333.074
3.262.552
2.625.398
95.316
282.989
258.849
83.234
5.056.385
11.782.630
3.012.824
168.831
331.037
126.655
1.645.772
79.381
358.124
33.559
269.465
1.709.100
1.044.068
137.916
320.503
206.613
91.277
4.060.349
8.873.550
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
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%
3%
29%
23%
1%
3%
2%
1%
45%
100%
34%
2%
4%
1%
19%
1%
4%
0%
3%
19%
12%
2%
4%
2%
1%
46%
100%
31%
14%
6%
6%
61%
27%
29%
13%
8%
12%
14%
0%
-4%
10%
-1%
11%
16%
12%
3%
35%
17%
-11%
40%
65%
231%
24%
91%
151%
-31%
-12%
25%
-9%
25%
33%
PAGE 13
Earnings Release
4Q 2014
Annex IV
Consolidated Cash Flow Statement
Figures in R$ Thousands
12M14
12M13
12 Months
2014
12 Months
2013
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
1.227.929
250.477
395.638
(726.524)
(199.394)
156.085
(237.825)
(290.872)
(154.518)
1.147.520
1.084.879
218.279
379.359
(655.083)
(299.506)
187.409
(146.049)
(280.483)
(116.454)
1.027.434
Investment Activities
Fixed Assets
Intagible Assets
Results of sales of fixed assets
Accumulated Conversion Adjustment
Long term securities bought
Goodwill in Capital Transactions
Acquisition of Stakes of non-controlling shareholders
Aquisition of Subsidiaries
Cash Flow From Investment Activities
(427.652)
(40.943)
12.355
60.636
(863.979)
(2.699)
(5.947)
(136.523)
(1.389.830)
(258.699)
(21.943)
2.030
83.761
261.046
(5.177)
1.517.761
(677.016)
(185.807)
1.104
(459.516)
196.526
1.890.267
(1.353.734)
(155.933)
738
(391.987)
(10.649)
(45.784)
1.071.543
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
Change in Cash Position
(6.260)
54.758
PAGE 14