WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English CORPORATE PARTICIPANTS
Mr. Sérgio Schwartz – Executive
President and Investor Relations Officer
Disclamer
Vice
Mr. Wilson Watzko – Controller Officer
Mr. Paulo Polezi – Finance Officer
Mr. Luís Fernando Oliveira – Investor Relations
Manager
The statements that may eventually be made during this conference call relating to
WEG’s business perspectives, projections and operating and financial goals and to
WEG’s potential future growth are management beliefs and expectations, as well as
information that are currently available.
These statements involve risks, uncertainties and the use of assumptions, as they
relate to future events and, as such, depend on circumstances that may or may not
be present.
Investors should understand that the general economic conditions, conditions of the
industry and other operating factors may affect WEG’s future performance and lead
to results that may differ materially from those expressed in such future
considerations.
2Q14 Conference Call
PRESENTATION
Operator: Good morning ladies and gentlemen and
welcome to WEG's conference call to discuss the
results of 2Q14.
Conference Call
2Q14
July 24, 2014
We would like to inform you that this conference call
is being recorded and that for the time being all
participants are connected in listen-only mode. Later
we will begin the Q&A session and further
instructions will be given for you to participate.
If you should require any assistance during the
conference call please reach the operator by
pressing star zero and to obtain the press release or
the presentation that will be used during this
conference call please go to WEG's investor
relations page at www.weg.net/ri.
Page 2
July 24, 2014
Before proceeding let me mention that any forwardlooking statements that may be made during this
conference call relating to the company's business
outlook, operational and financial targets and to
WEG's future potential for growth are based on the
beliefs and assumptions on the part of the
company's management and on information
currently available. These forward-looking statements
involve risks, uncertainties and assumptions as they
refer to future events which may or may not
materialize.
Investors should understand that general economic
conditions, industry conditions and other operating
factors may affect the future performance of WEG
and conduct results which differ materially from
those
expressed
in
such
forward-looking
statements. We would like to remind you that this
conference call is being conducted in Portuguese
with simultaneous translation into English.
Today with us in Jaraguá do Sul are Mr. Sérgio
Schwartz, Executive Vice-President and Investor
Relations Officer; Mr. Wilson Watzko, Controller
Officer; Mr. Paulo Polezi, Financial Officer and Mr.
Luís Fernando Oliveira, Investor Relations Manager.
Please go ahead Mr. Schwartz. _________________________________________
Mr. Sérgio Schwartz – Executive
President and Investor Relations Officer
Vice
Good morning to all. It is a pleasure to have you
again here today to discuss the results of WEG in
2Q14. I will turn the floor over to Paulo who is going
to talk about growth and the performance of
revenues; Wilson then is going to talk about costs,
EBITDA, working capital and investments and we will
then take your questions. The floor is yours Paulo.
Page 1 WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English equipment for generation,
distribution of energy (GTD).
Highlights
Quarterly Figures
Net Operating Revenue
Q2 2014
Q1 2014
%
Q2 2013
1.821.547
1.783.543
2,1%
1.699.639
Domestic Market
External Markets
External Markets in US$
Gross Operating Profit
Gross Margin
Net Income
Net Margin
EBITDA
EBITDA Margin
EPS (adjusted for splits)
900.348
921.198
413.147
577.325
31,7%
227.985
12,5%
311.500
17,1%
0,28265
895.446
888.097
375.677
570.421
32,0%
204.887
11,5%
299.643
16,8%
0,25403
0,5%
3,7%
10,0%
1,2%
%
873.354
826.285
399.171
557.996
32,8%
204.968
12,1%
312.547
18,4%
0,25413
11,3%
4,0%
11,3%
7,2%
3,1%
11,5%
3,5%
3,5%
11,2%
-0,3%
transmission
and
In the foreign market growth was stronger: the
growth was 11.5% in reais still with a positive impact
of the devaluation of the real in this quarter. Revenue
measured in dollars grew 3.5% and this arises from
our better competitive positioning and the expansion
of our portfolio of products and applications.
11,2%
Figures in R$ Thousand
Business Area
Revenue breakdown
2Q14 Conference Call
July 24, 2014
Page 3
13%
Mr. Paulo Polezi – Finance Officer
25%
Then the expansion of the net margin, which
achieved 12.5% with an improvement in the financial
result.
Net Operating Revenue
Quarterly Evolution
In R$ million
External Market
Domestic Market
1.893
1.758
10%
1.784
1.822
50%
51%
49%
55%
2Q10
66%
62%
2Q11
Industrial Equipment
2Q14 Conference Call
6%
11%
21%
22%
Good morning. Let us move to page 3 where we
have the table with the main figures for the quarter. I
draw your attention to two points: first the growth in
net revenue. It was a quite challenging quarter but
net revenue grew 7.2% quarter-on-quarter especially
in the foreign market and growth was in dollars and
in reais.
1.700
5%
8%
5%
6%
_________________________________________
2Q12
GTD
21%
25%
61%
62%
2Q13
Domestic Use
6%
7%
2Q14
Paints & Varnishes
July 24, 2014
Page 5
Moving on to slide 5 we see the breakdown of
revenue in major business areas. On the graph we
can see very clearly how the area of motors for
domestic use has been slowing down and it now
accounts for a smaller share and even a smaller
share for 2Q.
On the other hand we see an improvement in
business in GTD with global prices in slow but
consistent recovery and a gradual improvement in
the demand for generation. We expect that this
sector will continue to perform well and that we will
be able to capture that opportunity thanks to our
strong competitive position in renewable generation.
1.478
48%
52%
Q1
52%
50%
49%
51%
Q2
50%
48%
50%
Q3
Q4
Q1
2Q14 Conference Call
Q2
2014
2013
Page 4
July 24, 2014
The area of equipment for industrial use showed a
performance within the usual performance with a
gradual improvement in the foreign market and the
favorable exchange rate offsetting the slowdown in
the domestic market.
I would now like to turn the floor over to Wilson.
On page 4 we see the evolution of net operating
revenue quarter-on-quarter in the last 18 months. In
the domestic market revenue grew 3.1% quarter-onquarter but we saw a slowdown relative to the
previous quarter. There was less growth in shortcycle products, serial products, which after the
devaluation of the real have become more
competitive; the long-cycle products are growing in
some specific segments such as the area of
Page 2 WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English Costs of Goods Sold
Materials
63%
Materials
64%
2Q13
2Q14
Other Costs
9%
Labor
23%
Depreciation
4%
Labor
23%
2Q14 Conference Call
Others Costs
10%
Depreciation
4%
July 24, 2014
Page 6
_________________________________________
Mr. Wilson Watzko – Controller Officer
Good morning to all. On page 6 you see the
breakdown of costs in this quarter and in 2Q13. In
this quarter we saw an interruption in the consistent
trend toward expansion of the gross margin: in
2Q14 gross margin was 31.7%, 1.1 p.p. lower than
in 2Q13 and 0.3 p.p. lower than the previous
quarter.
margin was 17.1% - that is 1.7 p.p. lower than in 2Q
13 and 0.3 p.p. higher than in 1Q 14. In addition to
the effects already mentioned when we talked about
the gross margin the EBITDA margin was also
affected by an increase in operational expenses,
especially administrative expenses.
In this case the slowdown in the domestic market
and the reduction of growth played a greater role as
it is more difficult to dilute expenses. The scenario
domestically showed a decrease in industrial activity
and we have been adopting additional measures to
control costs and expenses to protect our margins
from further deterioration. The additional expansion
of the margin depends from a gradual improvement
in the fundamentals of the markets where we
operate from the point of view of the mix of products
in demand and also on pricing conditions.
Working Capital
In % of Net Revenue
50,0%
40,0%
This positive trend was interrupted because of the
difficulty in realigning sales prices to reflect the costs
of raw materials especially given the slowdown in the
economy and also the dilution of manufacturing
costs is not as good because of the lower growth of
revenue. This loss in gross margin was partially
offset by productivity gains due to constant
innovation in products and production processes
and the smaller tax burden on the payroll.
Main impacts on EBITDA
66,0
(97,3)
55,9
(18,5)
FX Impact on
Revenues
312,5
Volumes,
Prices &
Product Mix
Changes
COGS (ex
depreciation)
Selling
Expenses
(0,8)
13,5
Profit Sharing
Program
Other
Expenses
Working Capital
20,0%
Clients
Inventories
10,0%
Advances
Suppliers
0,0%
2Q06
2Q07
2Q14 Conference Call
2Q08
2Q09
2Q10
Page 8
2Q11
2Q12
2Q13
2Q14
July 24, 2014
On page 8 we see the changes in working capital as
a percentage of the net revenue in the last few
years. The need for working capital is measured this
way and presented a slight increase with an increase
in client accounts and inventories. These increases
are relative, that is they also reflect a lower growth of
revenues. The trend towards a gradual reduction of
working capital as a percentage of revenue as we
have said before is still there.
311,5
EBITDA Q2 14
EBITDA Q2 13
2Q14 Conference Call
(19,9)
General and
Administrative
Expenses
30,0%
Page 7
July 24, 2014
On page 7 we see the major variations of the
accounts of our EBITDA and in this quarter EBITDA
was stable relative to the previous year and EBITDA
Page 3 WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English Capex Program
Contacts
ƒ
In R$ million
ƒ
Outside Brazil
Brazil
94,0
56,8
6,0
61,3
11,8
63,9
15,6
61,1
13,1
64,3
8,4
50,7
49,5
48,3
48,0
55,9
Q1
Q2
Q3
Q4
Q1
2013
2Q14 Conference Call
Sérgio Luiz Silva Schwartz
Investor Relations Officer
Luís Fernando M. Oliveira
Investor Relations Manager
+55 (47) 3276-6973
luisfernando@weg.net
twitter.com/weg_ir
23,5
70,6
Q2
2014
Page 9
July 24, 2014
And finally on slide 9 we have organic investment to
expand capacity. It reached R$ 94 million in the
quarter and 158.3 million in 1Q14. For 2014 our
investment program should be more robust to
expand and upgrade production capacity and this
also includes the first disbursements of the
investment of US$ 345 million in the next five years
in production units for electrical motors in Mexico
and China.
Our initial estimate was that this program would
reach R$ 592 million in 2014; however, given the
magnitude of the investments part of this
disbursement should take place only in 2015 and
the total disbursement in 2014 may be lower than
our original estimations.
We now close the presentation and I turn the floor
over to Sérgio.
_________________________________________
Mr. Sérgio Schwartz – Executive
President and Investor Relations Officer
Vice
Before beginning the Q&A session I would like to
reinforce some points: despite the difficulties in the
market in 2014 we are confident that we will be able
to continue to grow. In Brazil we can see some
improvement in the conditions for the second
semester, which is usually a strong semester, and in
GTD we are going to see greater growth.
In the foreign market conditions are improving
gradually. Our target of R$ 20 billion in revenue in
2020 established in our strategic planning is
possible and we are gearing actions to take
advantage of any opportunities we see as we work
to protect our margins and our profitability in this
challenging scenario.
With this I close this presentation and we are now
opening the Q&A session.
2Q14 Conference Call
Page 10
July 24, 2014
_________________________________________
Q&A Session
Operator
Ladies and gentlemen we will now begin the Q&A
session. We would like to remind you that this
conference call is being conducted in Portuguese
with simultaneous translation into English. To ask a
question please press star one and to remove your
question from the queue please press star two.
Our first question comes from Mr. Cássio Lucin from
J.P. Morgan.
_________________________________________
Mr. Cássio Lucin – JP Morgan
Good morning to all, thank you very much for the
conference call. I have two questions; first I would
like to address the order book for compressors
which has been quite reasonable in Europe and in
the US. Is this reflected already in the backlog of
industrial motors?
And this company has also said that there would be
an increase in price in the mid term; have you been
able to pass the increase in price through to clients
or do you find it difficult at this point?
_________________________________________
Mr. Luis Fernando Oliveira – Investor Relations
Manager
Thank you very much Cássio for the questions. We
said very clearly that the foreign market… We see
the foreign market performing better, especially the
Page 4 WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English US and Europe. In these mature economies the
performance has been more consistent and this
comes not only from compressors, which is a typical
application of motors, but comes from the market as
a whole. The performance has been more
consistent not only in compressors but in other
typical applications.
And as regards the order book things work in a
slightly different way: our order book is not only for
motors; our OEM clients pass these orders to us as
they see the need for deliveries and this is one of our
competitive advantages: we have a very fast
turnaround for delivery, so we are not seeing that in
our book order yet; but we see that the environment
is more favorable in this market, that is for sure.
_________________________________________
Mr. Cássio Lucin – JP Morgan
I have a second question now focusing on the
domestic market: given the slowdown, the foreign
exchange rate, do you see a war in price going on
between competitors in this quarter that may have
an impact or are your competitors more rational
relative to prices?
_________________________________________
Mr. Luis Fernando Oliveira – Investor Relations
Manager
Price war with other providers of electrical motors
and things? No, no. This is a very rational market,
Cássio. What we see is that we have been able to
pass prices through. Some of our costs are
denominated in foreign currency and we have plans
to pass these costs on to clients, so it is much more
on the side of demand than on the side of supply.
So there is no price war going on.
Good morning to all. My first question has to do with
the investment plan in the mid and short terms and I
would like to understand the reasons why you
decided to postpone investments to 2015 and also
has there been any change in your estimates relating
to FX?
In the beginning of the year you expected the
situation to be more favorable because of the
exchange rate but since the real has appreciated
what is your expectation relating to the exchange
rate for 2014 and 2015?
_________________________________________
Mr. Paulo Polezi – Finance Officer
Hi Peçanha this is Paulo speaking. I will take the first
part of your question relating to investments and I will
answer your question in two parts: as Wilson said
during his presentation Mexico and China are places
where WEG has an investment program under way
to improve its competitive positioning. We are
seeking verticalization in these markets and we are
investing as planned.
On the other hand investments in other units
especially in Brazil, these are investments that have
to do with the situation of the economy and so they
depend on the performance of the economy. We
are reassessing these investments, reevaluating
them and we might execute them in a slower way.
A lot of these investments should be made in 2015
depending on the demand on the market; if the
demand is stronger we might invest at a stronger
pace, otherwise most of these investments should
be made in 2015. It depends on the market
basically.
_________________________________________
Mr. Luiz Peçanha – Bradesco
_________________________________________
And what about the role of the exchange rate? It
plays an important role in terms of investment? Have
you made any changes in the strategic plan
because of the exchange rate?
Operator
_________________________________________
Our next question comes from Mr. Luiz Peçanha
from Bradesco. You may speak sir.
Mr. Luis Fernando Oliveira – Investor Relations
Manager
_________________________________________
Mr. Luiz Peçanha – Bradesco
There has been no change in the budget or in the
strategic plan. This is a parameter, we do not
change that otherwise it loses its function. What we
Page 5 WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English try to do is to try to be neutral relative to the foreign
exchange rates by investing in operations.
We have to be competitive at any exchange rate.
One of the things we know about the exchange rate
is that it is going to vary and we have to live but that,
there is not much we can do about that and so we
have to live with that but there has been no changes
whatsoever to the budget or to the strategic plan by
virtue of the exchange rate.
_________________________________________
Operator
Our next question comes from Mr. Ricardo
Schweitzer from Votorantim Corretora.
_________________________________________
Mr. Ricardo Schweitzer – Votorantim Corretora
Good morning to all, thank you very much for the
call. I would like to have your impression relative to
volumes and mix of backlog especially in the
domestic market as regards short-cycle products.
How much of what happened in 2Q can be
attributed to specific factors of Brazil and how much
can be attributed to a loss of competitiveness on the
part of your clients because of the exchange rate?
And what about going forward in the short and mid
term? Do you believe the second semester will be
better?
And then do you have anything to say regarding to
WEG Balingen and SINYA Group?
_________________________________________
Mr. Luis Fernando Oliveira – Investor Relations
Manager
Your question is a difficult question, we are unable to
answer your question at this point. We believe that
some nonrecurring effects in 2Q are in fact
nonrecurring - that is the World Cup is over; the
reduction of working days is over, so these effects
are over and there should be… The situation should
be more favorable in 3Q.
But we do know that the fundamentals of the
economy are basically the same. The expectation is
that there will be a decompression but it is difficult to
tell you now what it is going to be like.
But for long-cycle products we have a better visibility
and we have better expectations in that regard
especially in GTD. We have a firm portfolio of orders
and we see an improvement in like wind energy and
in this order book we have more visibility and our
expectations are higher.
The first half of the year was good and we expect
the second-half of the year to be as good.
_________________________________________
Mr. Ricardo Schweitzer – Votorantim Corretora
Relative to
comments?
SINYA
and
WEG
Balingen
any
_________________________________________
Mr. Luis Fernando Oliveira – Investor Relations
Manager
Can you repeat the second part of your question?
_________________________________________
Mr. Ricardo Schweitzer – Votorantim Corretora
I wanted to know whether you had anything to say
about the recent acquisitions of WEG Balingen in
Germany and the SINYA Group in China.
_________________________________________
Mr. Luis Fernando Oliveira – Investor Relations
Manager
We consolidated the acquisition as of June in China
and we are now beginning to operate there. We
should see more effective results and the integration
of the activities as of next year. The revenue of
course we are going to consolidate the revenue in
3Q that will be the first semester… The first quarter.
We have so far consolidated only the assets and the
revenue will be consolidated in 3Q only.
And the business in Germany is very short and the
effect has to be diluted in time. In China we are
going to see the effect shortly since it is motors for
the white line.
_________________________________________
Operator
Page 6 WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English Our next question comes from Mr. Fernando Leitão
from Hoya Corretora.
_________________________________________
Mr. Fernando Leitão – Hoya Corretora Thank you very much for the call, congratulations for
the results. Once again you have been exceeding
our expectations and I wanted to ask a question
relating to costs. Forgive me if this has been said
already but the connection seems to be a bit… The
volume was not so good for me. There seems to
have been a loss in gross margins; what was this
due to?
And then relative to the investment in China just for
me to have the order of magnitude what is the
number of units manufactured in China as compared
with WEG Brasil?
machines and dryers. It is a new market for us, this
market in China as well as new for us and the
volume of production is completely different.
So we are talking about a very complex operation.
This comparison from the point of view of volumes
does not make much sense. What we can say is
that China is obviously one of the key, one of the
cornerstones of our strategies. It is a key market for
WEG.
_________________________________________
Mr. Fernando Leitão – Hoya Corretora So if you allow me just one more comment or
question: China is a key market for WEG in terms of
growth, in terms of WEG 2020, your strategic plan
and we could say that the foreign market… Can we
say that China is going to be key or is going to be
important for WEG 2020?
_________________________________________
_________________________________________
Mr. Luis Fernando Oliveira – Investor Relations
Manager
As regards the factors that affected the gross margin
specifically we talked about two: the first one was a
certain difficulty in passing price increases through
and then the dilution of costs which was affected by
a slower increase in revenue. These were the two
negative aspects and we have some positive
aspects which were not enough to offset these two
factors.
On the positive side we have lower payroll charges
and also more productivity in processes and
products; but these two positive factors were not
enough to offset the two negative impacts and to
continue to achieve an increase in margin in general
we have to continue to grow, this is very clear to us.
As regards China we are talking about an operation
which… I mean it is difficult to tell you the number of
units produced, the operation is very complex. Since
2004 we had an operation manufacturing industrial
motors, it is a very mature operation. We made
additional investments in a new manufacturing plant
for industrial motors, it was a greenfield project in
China for industrial motors and this project has to do
specifically with that. We are going to expand the
product line and we are going to increase the
number of processes.
And more recently we made an acquisition of a
different product line: specifically motors for washing
Mr. Luis Fernando Oliveira – Investor Relations
Manager
Not only China but China plays a very important role.
In the markets where we have a presence, in mature
markets… we want to increase the product line in
more developed economies where we provide
electrical motors and so we want to sell other
products around electrical motors.
In markets such as China, India and markets that are
more recent for us we are still adopting the
strategies to penetrate these markets. The Chinese
market is huge and our presence there is relatively
small; there is a lot of room for growth almost
irrespectively of macroeconomic conditions just by
increasing our presence in that market. China is a
very important part of our strategy.
_________________________________________
Mr. Fernando Leitão – Hoya Corretora Thank you.
_________________________________________
Operator
Our next question comes from Mr. Lucas Marquiori
from Banco Safra.
Page 7 WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English _________________________________________
Mr. Lucas Marquiori – Banco Safra
Good morning, thank you very much for the call. I
have two questions: could you give us a little bit
more information about the productivity gains? Can
you give us examples so that this can become
clearer to us where these gains are coming from
innovation and what we can expect for 3Q and 4Q?
And then I would like to know from you what you
expect for the electrical buses business, what are
the figures in that sector. Some recent investments
have been made in this segment; can these have an
impact on WEG? What are the prospects for this
segment in Brazil?
_________________________________________
Mr. Sérgio Schwartz – Executive
President and Investor Relations Officer
Vice
Good morning Lucas and thank you very much for
your question, this is Sérgio speaking. When we talk
about productivity in a company, in a complex group
such as WEG it is difficult to give a very direct
answer; but if you look at our main product, motors and this is our main strength - this has to do with our
verticalized manufacturing model. We want to offer
the market products which are customized but
made in large volumes.
So you asked me to give you an example: we
provide mass customized motors. You see, in the
recent past Chinese manufacturers came to Brazil
and began to supply pumps (motor + pump) for
prices that were lower than the price of the motor or
the pump alone.
of the motors complements the compressor and this
allows the elimination of intermediary components
like coupling and so on and this increases
productivity.
Also from the compressor industry we prepare all the
cables, all the fittings specifically for the model of
compressor of clients and we do that in WEG and
we deliver these products in the clients’ production
line and this also allows productivity gains to our
clients.
And I could give you many other examples to
illustrate what we mean by productivity. Also
internally we focus on the improvement of
processes; we invest in new machinery, new
equipment; in the development of devices to
streamline the operation and to make the operation
more productive.
_________________________________________
Mr. Lucas Marquiori – Banco Safra
And what about the electrical buses? Can you give
us a big picture of where it stands today?
_________________________________________
Mr. Sérgio Schwartz – Executive
President and Investor Relations Officer
Vice
We have developed products for that segment. We
have motors and inverters for full electric buses, for
hybrid buses; but this market depends on
incentives, on funding, and it depends also on the
decision on the part of the authorities to foster this
type of transportation. Some states, some cities
have made this decision but still at very modest
levels relative to the potential of Brazil.
So what did we do to fight in this market? We
worked with the pump manufacturers, domestic and
foreign pump manufacturers, and we developed
specific products that would yield a better
performance. And we worked on integration so that
part of the motor would replace part of the pump or
vice versa to look for a simplification of the assembly
process and therefore the manufacturers of motors
and pumps could achieve more productivity. This
had to do with design, had to do with research and
this is the type of innovation that we focus on
together with our clients to fight in the market against
our competitors.
But WEG has the national content and therefore
WEG is able to receive funding from BNDES and
also WEG has been working very closely with
players in that market and we are therefore in a good
position to capture business opportunities in this
segment in the future.
Also as regards compressors, another typical
application, we tried to develop motors so that part
_________________________________________
_________________________________________
Mr. Lucas Marquiori – Banco Safra
Thank you very much.
Operator
Page 8 WEG S.A.
2nd Quarter 2014 Earnings Results Conference Call
July 24, 2014 – 11:00 a.m. (Brasilia time)
Transcript of the simultaneous translation from Portuguese into English Ladies and gentlemen to ask a question please
press star one. Once again ladies and gentlemen for
questions please press star one.
Thank you very much for participating, thank you
very much for your questions. I hope I have been
able to clarify your questions and have a nice day.
_________________________________________
_________________________________________
Mr. Luis Fernando Oliveira – Investor Relations
Manager
Operator
We have a question that came from our web
platform from Mr. Saraiva and he asks about the
wind and solar markets. WEG has been in the solar
market for a long time, we were pioneers in this
market. We recently opened a solar installation in
Fernando de Noronha, a beautiful project.
WEG's conference call is now ended. I would like to
thank you all very much for participating, have a nice
day and thank you very much for using Chorus Call.
And as regards wind energy we already have a book
order, a very sound book order until the end of next
year and we are preparing ourselves for the next
auctions which should take place in the second
semester and we are very optimistic about these
next auctions.
And our ambition is that these new sources of
energy will give us conditions that are as good as
the more traditional sources of energy such as small
power plants and biomass.
Sergio Saraiva asks us if we have a target in terms of
market share. We do not have a target but we have
a production capacity that is flexible and that may be
allocated to different products depending on the
conditions of the market. What I mean is that if it is
good to operate in wind energy we have the
conditions, we have the production capacity to
increase our presence that segment.
If for any reason that market proves not to be
attractive the production capacity may be allocated
to produce other rotating electrical machines: large
electrical motors; generation of electrical energy from
other sources and so in Brazil and abroad we have
different alternatives and this is one of our main
advantages: our production is very flexible.
_________________________________________
Operator
WEG's Q&A session is now ended. I would like to
turn the floor over to Mr. Schwartz for his final
remarks.
_________________________________________
Mr. Sérgio Schwartz – Executive
President and Investor Relations Officer
Vice
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