Earnings Release
1Q 2014
Jaraguá do Sul (SC), April 24, 2014: WEG S.A. (BM&F Bovespa: WEGE3, OTC: WEGZY), one of the world’s largest manufacturer of electric-electronic equipment, with
five main product lines: Motors, Power, Transmission and Distribution, Automation and Coatings, announced today its results for the first quarter of 2014 (1Q14). The
following financial and operating data are presented in a consolidated basis, except when otherwise indicated, in thousands of Brazilian Reais (R$) according to accounting
practices adopted in Brazil, including Brazilian Corporate Law and the convergence to IFRS international norms. All growth rates comparisons relate, except when otherwise
indicated, to the same period of the previous year.
HIGH GROWTH AT THE START OF 2014
ƒ NET OPERATING REVENUES GREW BY 20.7%
ƒ EBITDA GREW BY 20.4%
ƒ NET INCOME GREW BY 18.9%
HIGHLIGHTS
ƒ Net operating revenues in the first quarter of 2014 reached R$ 1,783.5 million, 20.7% higher than 1Q13 and 5.8% below 4Q13;
ƒ EBITDA reached R$ 299.6 million and EBITDA margin reached 16.8%. EBITDA grew by 20.4% over the previous year and fell by 12.3%
over the previous quarter;
ƒ Net Income totaled R$ 204.9 million, with net margin of 11.5% and growth of 18.9% over 1Q13 and decrease of 13.7% over 4Q13;
ƒ Investments in fixed assets totaled R$ 64.3 million in the first three months of 2014.
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
Q1 2014
Q4 2013
%
Q1 2013
1.783.543
1.893.299
-5,8%
1.477.577
895.446
913.388
-2,0%
772.935
888.097
375.677
570.421
979.911
428.229
615.847
-9,4%
-12,3%
-7,4%
704.642
353.077
463.604
32,0%
32,5%
204.887
11,5%
299.643
16,8%
237.439
12,5%
341.653
18,0%
-13,7%
0,33023
0,38270
-13,7%
%
20,7%
15,9%
26,0%
6,4%
23,0%
31,4%
-12,3%
172.299
11,7%
248.898
16,8%
18,9%
0,27772
18,9%
20,4%
Figures in R$ Thousand
CONFERENCE CALL (WITH SIMULTANEOUS TRANSLATION TO ENGLISH)
April 25, Friday 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/1q14.htm
PAGE 1
Earnings Release
1Q 2014
ECONOMIC ACTIVITY AND INDUSTRIAL PRODUCTION
Industrial activity in mature economies continued to show recovery signs in this first quarter of 2014, as can be seen in the purchasing
manager indexes analysis (PMI). PMI Indexes above 50 indicate industrial expansion, while indexes below 50 indicate contraction in
industrial activity. Both in USA as in Germany the expansion has been uninterrupted since the second quarter of 2013. In China,
however, 2014 began in contraction, reversing the slight recovery observed at the end of 2013.
March 2014
February 2014
January 2013
Manufacturing ISM Report on Business ® (USA)
53,7
53,2
51,3
Markit/BME Germany Manufacturing PMI®
53,7
54,8
56,5
HSBC China Manufacturing PMI™
48,0
48,5
49,5
In Brazil, industrial production began 2014 at a slow pace. The cumulative growth in 2014 until February was only 1.3% and growth
in the last 12 months up to February was of 1.1%, maintaining the trend observed throughout 2013, when annual growth reached
1.2%. This performance is below even the modest expectations compiled by the Focus survey of the Brazilian Central Bank, that
points to average growth of around 1.5% for 2014.
Industrial Indicators According to Categories of Use in Brazil
Change (%)
Categories of Use
Feb 14 / Jan 14* Feb 14 / Feb 13
Capital Goods
Intermediary Goods
Consumer Goods
Durable Goods
Semi-durable and non-durable
General Industry
0,1
0,8
0,5
3,3
-0,1
0,4
12,4
1,1
7,4
20,9
3,6
5,0
Acummulated
On Year
12 months
8,0
-0,8
1,7
6,9
0,1
1,3
12,5
-0,1
0,0
1,3
-0,4
1,1
Source: IBGE, Research Office, Industry Coordination
(*) Series with seasonal adjustments
As has been common over the past few months, industrial production of capital goods showed the best results among the categories
of use, with 8% expansion accumulated in the year and 12.5% accumulated over the last 12 months, and also similarly to what we
observed in 2013, influenced by the production of transport equipment. Discounting this effect, the performance in capital goods
production would be more modest.
NET OPERATING REVENUE
Net Operating Revenues totaled R$ 1,783.5 million in the first quarter of 2014 (1Q14), corresponding to an increase of 20.7% in
relation to the first quarter of 2013 (1Q13) and a decrease of 5.8% in relation to the last quarter of 2013 (4Q13). Organic growth
(adjusting net revenues for the transactions WEG Transformers Africa and WEG Balingen) was of 19.9% over 1Q13.
Net Operating Revenue per Market (R$ million)
External Market
Domestic Market
1.893
1.784
1.700
1.758
49%
50%
52%
50%
51%
50%
48%
50%
Q2
Q3
Q4
Q1
1.478
48%
52%
Q1
2013
2014
PAGE 2
Earnings Release
1Q 2014
The first quarter of the year is a period of natural deceleration of business because of both the normal seasonality of the markets and
of the lower number of working days in comparison to the second part of the year. Thus, the decline of Net Operating Revenue in
1Q14 over 4Q13 is normal and expected. On the other hand, the devaluation of Brazilian Real in the period contributed for further
expansion in relation to 1Q13. We continue to see favorable trends in market fundamentals, such as product mix and average selling
prices of the long cycle products, with positive impacts on profitability. We also continue to perform the actions set out in the WEG
Plan 2020 and we are confident in achieving our strategic aspirations.
Net Operating Revenue breaks down as follows in the 1Q14:
ƒ Domestic Market: R$ 895.4 million, representing 50% of Net Operating Revenue, with 15.9% growth over 1Q13 and decrease of
2.0% over 4Q13;
ƒ External Market: R$ 888.1 million, equivalent 50% of Net Operating Revenue. The comparison in Brazilian Reais shows growth of
26.0% over the same period last year and decrease of 9.4% over the previous quarter. Considering the average US dollar,
comparison shows growth of 6.4% compared to 1Q13 and decrease of 12.3% over 4Q13. Organic growth (excluding the
transactions) in the external markets was 24.3% over 1Q13.
Evolution of Net Revenues according to Geographic Market (R$ Million)
Q1 2014
Net Operating Revenues
- Domestic Market
1.783,5
895,4
888,1
375,7
- External Markets
- External Markets in US$
Q4 2013
1.893,3
913,4
979,9
428,2
Change
-5,8%
-2,0%
-9,4%
-12,3%
Q1 2013
1.477,6
772,9
704,6
353,1
Change
20,7%
15,9%
26,0%
6,4%
External Market --- Distribution of Net Revenues according Geographic Market
North America
South and Central America
Europe
Africa
Australasia
Q1 2014
Q4 2013
Change
Q1 2013
36,0%
15,5%
31,7%
18,0%
37,5%
14,8%
26,5%
13,1%
8,9%
27,0%
13,7%
9,6%
4,3 pp
-2,5 pp
-0,5 pp
-0,6 pp
-0,7 pp
25,9%
11,7%
10,2%
Change
-1,5 pp
0,7 pp
0,6 pp
1,4 pp
-1,3 pp
Distribution of Net Revenues per Business Area
Q1 2014
Q4 2013
%
Q1 2013
%
57,7%
60,1%
-2,3 pp
63,8%
-6 pp
Domestic Market
23,0%
22,7%
0,3 pp
27,7%
-4,7 pp
External Market
34,7%
37,4%
-2,7 pp
36,1%
-1,3 pp
23,5%
22,9%
0,7 pp
19,8%
3,7 pp
Electro-electronic Industrial Equipments
Energy Generation , Transmission and Distribution
Domestic Market
12,8%
12,7%
0 pp
11,7%
1,1 pp
External Market
10,8%
10,2%
0,6 pp
8,1%
2,7 pp
Electric Motors for Domestic Use
12,4%
11,0%
1,4 pp
10,1%
2,3 pp
Domestic Market
8,8%
7,5%
1,3 pp
7,3%
1,6 pp
External Market
3,6%
3,4%
0,1 pp
2,8%
0,7 pp
Paints and Varnishes
6,4%
6,1%
0,3 pp
6,3%
0 pp
Domestic Market
5,6%
5,3%
0,3 pp
5,7%
0 pp
External Market
0,7%
0,7%
0 pp
0,7%
0,1 pp
BUSINESS AREAS
In the Industrial Electro-Electronic Equipment area performance in external markets was the result of our better competitive position,
made possible by the new exchange rate level and by the continued expansion of products and applications. This performance was
apparent mainly in North America, where the exchange rate competitive gain was relatively higher, but was present in almost all other
markets. Our products portfolio, which includes some of the most technologically advanced products available, tailored to the
specificities of each market, remains an important competitive advantage, one that we can now explore even more intensely.
In the domestic market, we noticed that, after the initial impact of the devaluation on our customer’s competitiveness and their
recovering lost market to imported products, growth of serial production industrial products, such as those used in equipment for
PAGE 3
Earnings Release
1Q 2014
consumer goods production, has decreased. The market for long cycle products, used more commonly in process industries and
infrastructure projects, remains concentrated in specific segments. We have strengthened our actions on energy efficiency solutions
in the Brazilian market, an increasingly important aspect in a scenario of rising electricity costs.
We have been mentioning for some time that the gradual elimination of excess global production capacity in the Energy Generation,
Transmission and Distribution (GTD) business area has a positive impact on product prices and profitability. In this favorable
environment, the growth in demand for generation and the urgency of investments in T&D is maximized. The results for the first quarter
have been favorable and the positive trend should continue over the coming quarters. We observe gradual acceleration in business
in small hydroelectric plants (PCH). The announcement for the wind turbines supply to Alupar (see below) consolidated our presence
in this market. In solar energy, we have an integrated generation solution and we continue to close significant supply contracts.
The Motors for Domestic Use business area maintained the strong growth seen at the end of 2013, with the exchange devaluation
increasing the local production competitiveness and maximizing the impact of consumption incentives. The sector has also benefited
from the summer higher average temperatures, with increased sales of air conditioning equipment.
In Paints and Varnishes business area, we observe growth in line with consolidated performance. We continue executing our strategy
of exploring business synergies with other WEG products, expanding the products portfolio and entering new related segments.
COST OF GOODS SOLD
Cost of Goods Sold (COGS) totaled R$ 1,213.1 million in 1Q14, increasing 19.6% over 1Q13 and reduction of 5.0% over 4Q13.
Gross margin reached 32.0%, with expansion of 0.6 percentage points over 1Q13 and reduction of 0.5 percentage points over 4Q13.
The expansion of gross margin trend over recent quarters has been consistent and is due to: (i) the positive effect of FX devaluation
on revenues (ii) relative stability of raw materials costs; (iii) greater dilution of manufacturing costs with revenue growth; (iv) productivity
gains in the use of materials and labor with innovations in engineering products and process; (v) reduction on payroll social security
taxes.
Average on the London Metal Exchange (LME) spot copper prices fell by 11% in the 1Q14 compared to the average of 1Q13 and by
2% compared to the average of 4Q13. Steel prices in the international markets fell by 6% over 1Q13 and by 5% over 4Q13. It is
important to note that the price declines observed in US dollar were partially compensated by the devaluation of Brazilian Reais,
resulting in stable costs when measured in the Brazilian currency.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated selling, general and administrative expenses (SG&A) represented 16.0% of net operating revenue in the 1Q14, 0.4
percentage points higher than the 15.6% of the 1Q13 and 0.7 percentage points higher than 15.3% of the 4Q13. In absolute terms,
operating expenses grew by 23.9% over 1Q13 and decreased by 1.2% over the previous quarter.
EBITDA AND EBITDA MARGIN
As a result of aforementioned impacts, EBITDA in 1Q14, calculated according to the methodology defined by CVM in the Instruction
nº 527/2012, totaled R$ 299.6 million, an increase of 20.4% over 1Q13 and a reduction of 12.3% over 4Q13. EBITDA margin reached
16.8%, 1.2 percentage points lower than 4Q13 and at the same level of 1Q13.
Q1 2014
Net Operating Revenues
Consolidated Net Income for the Period
Net Margin
(+) Income taxes & Contributions
(+/-) Financial income (expenses)
(+) Depreciation & Amortization
EBITDA
EBITDA Margin
1.783,5
207,3
11,6%
62,0
-28,5
58,8
299,6
16,8%
Q4 2013
%
1.893,3 -5,8%
237,3 -12,6%
12,5%
72,0 -14,0%
-24,4 16,7%
3,6%
56,8
341,7 -12,3%
18,0%
Q1 2013
%
1.477,6 20,7%
173,1 19,8%
11,7%
48,3 28,2%
-24,7 15,5%
52,1 12,8%
248,9 20,4%
16,8%
Figures in R$ Million
PAGE 4
Earnings Release
1Q 2014
138,4
(193,7)
167,6
FX Impact on
Revenues
(39,3)
(14,5)
COGS (ex
depreciation)
248,9
Selling
Expenses
Volumes,
Prices &
Product Mix
Changes
General and
Administrative
Expenses
(6,8)
Profit Sharing
Program
(0,9)
299,6
Other
Expenses
EBITDA Q1 14
EBITDA Q1 13
NET FINANCIAL RESULTS
In this quarter, net financial result was positive in R$ 28.5 million (positive in R$ 24.4 million in 4Q13 and R$ 24.7 million in 1Q13).
Financial revenues totaled R$ 152.8 million in 1Q14 (R$ 175.1 million in 4Q13 and R$ 123.0 million in 1Q13). Financial expenses
totaled R$ 124.4 million (R$ 150.7 million in 4Q13 and R$ 98.4 million in 1Q13). Net financial result growth of 15.5% is a result of
increased net cash position and increase in interest rates obtained on financial instruments in the Brazilian market.
INCOME TAX
Income Tax and Social Contribution on Net Profit provision in 1Q14 reached R$ 70.7 million (R$ 71.7 million in 4Q13 and R$ 51.3
million in 1Q13). Additionally, R$ 8.7 million were recorded as ‘‘Deferred income tax / social contribution’’ credit (debt of R$ 0.3 million
in 4Q13 and credit of R$ 3.0 million in 1Q13).
NET INCOME
As a result of aforementioned impacts, net income for 1Q14 was R$ 204.9 million, an increase of 18.9% over 1Q13 and decrease of
13.7% over the previous quarter. The net margin of the quarter was 11.5%, 0.2 percentage point lower than the 1Q13 and 1.1
percentage point lower than the 4Q13.
CASH FLOW
404,0
3.373,8
(388,0)
3.247,4
Investing
Operating
Cash Dec 2013
(142,4)
Financing
Cash Mar 2014
Cash flow from operating activities totaled R$ 404.0 million in 1Q14, with 21% growth over 1Q13. The growth is explained mainly by
the increase in cash generation from operations, with increase in net income before depreciation, and by reduction of the working
capital needs (reduction in receivables and increased suppliers). These factors were partially compensated by increased income tax
and profit sharing paid.
Investing activities consumed R$ 142.4 million in 1Q14, 46% higher than the 1Q13, with WEG Balingen (Württembergische
Elektromotoren GmbH) acquisition being the highlight and with the acceleration of the investment in capacity expansion program.
PAGE 5
Earnings Release
1Q 2014
Financing activities consumed R$ 388.0 million in 1Q14. We performed net amortizations of R$ 96.2 million (new debt issued of R$
16.4 million and amortizations of R$ 112.6 million), which compares with net increase of R$ 690.4 million in new funding in 2013.
INVESTMENTS
Investments in fixed assets for capacity expansion and modernization totaled R$ 64.3 million in the first three months of 2014, 85%
of which destined to the industrial plants and other installations in Brazil and the remaining amount to production units and other
subsidiaries abroad. WEG Balingen acquisiton added approximately R$ 1.1 million in additional fixed assets.
Outside Brazil
Brazil
61,3
63,9
61,1
6,0
11,8
15,6
13,1
50,7
49,5
48,3
48,0
Q1
Q2
Q3
Q4
56,8
64,3
8,4
55,9
Q1
2013
2014
Our expansion program of production capacity and industrial modernization for 2014 expects to invest approximately R$ 592 million,
with highlight to early stages of new industrial plant in China and the expansion and verticalization capacity in the electric motors
industrial plant in Mexico.
DEBT AND CASH POSITION
As of March 31, 2014 cash, cash equivalents and financial investments totaled R$ 3,249.5 million, mainly in short-term, invested in
Brazilian currency in first-tier banks, in fixed income instruments linked to the CDI. Gross financial debt totaled R$ 3,106.6 million,
29% in short-term and 71% in long-term.
March 2014
December 2013
March 2013
Cash & Financial instruments
3.249.472
3.376.029
3.281.577
- Current
- Long Term
3.247.375
2.097
3.373.799
2.230
3.279.518
2.059
Debt
3.106.557
100%
3.209.004
- Current
- In Brazilian Reais
- In other currencies
- Long Term
- In Brazilian Reais
- In other currencies
Net Cash (Debt)
100%
3.404.706
100%
914.246
29%
912.796
28%
1.526.274
45%
503.749
16%
462.336
14%
1.077.205
32%
410.497
13%
450.460
14%
449.069
13%
2.192.311
71%
2.296.208
72%
1.878.432
55%
1.976.524
64%
2.048.766
64%
1.646.899
48%
215.787
7%
247.442
8%
231.533
7%
142.915
167.025
(123.129)
At the end of the 1Q14 WEG had net cash of R$ 142.9 million (net debt of R$ 123.1 million in March 31, 2013). Over the 2013 we
raised new funding on attractive terms of maturities and fees, increasing the duration and lengthening the debt total profile, without
increasing the gross debt.
The characteristics of the debt are:
ƒ Duration of long-term portion is 25.4 months.
ƒ Duration for the Brazilian Reais denominated portion is of 20.7 months and for the foreign currencies denominated portion is of
11.5 months.
ƒ The weighted average cost of fixed-rate denominated in Brazilian Reais is approximately 6.1% per year. Floating rate contracts are
indexed mainly by the Brazilian long-term interest rate (TLJP).
PAGE 6
Earnings Release
1Q 2014
DIVIDENDS
On March 25, the Board of Directors approved the payment to shareholders, as interest on stockholders’ equity (JCP), totaling R$
51.8 million or R$ 0.083529412 per share (before deduction of income tax at source), payable on August 13, 2014.
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 March
2014 quoted at R$ 31.70, with nominal high of 1.7% in the year. Considering the dividends and interest on stockholders equity
declared in the first quarter, the high was 2.7% in 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 1Q14 was R$ 15.5 million, (R$ 14.3 million in 1Q13). Throughout the quarter 128,099 stock trades
were carried out (114,952 stock trades in 1Q13), involving 31.8 million shares (32.5 million shares in 1Q13) and totaling R$ 943.4
million (R$ 844.6 million in 1Q13).
WÜRTTEMBERGISCHE ELEKTROMOTOREN GMBH ACQUISITION
On February 18, WEG S.A. announced that has agreed to acquire the electric motors and gearbox manufacturer Württembergische
Elektromotoren GmbH (‘‘Württembergische’’), a family owned business founded in 1939, and with manufacturing plants located in
Balingen, south central Germany, 75 km from Stuttgart, one of the most industrialized regions of the country. The company offers of
gearboxes, three phase, single-phase and direct current electric motors up to 1,000 watts and fractional servomotors.
The manufacturing plant occupies 5,000 square meters area, employing around 80 people. Net revenues in 2013 were of
approximately € 7 million.
A C Q U I S I T I O N O F ‘‘ S I N Y A ’’ A N D ‘‘ C M M ’’ G R O U P S I N C H I N A
On March 25, WEG S.A. announced an agreement to acquire the Chinese manufacturer of electric motors for washers and dryers
Changzhou Sinya Electromotor Co. Ltd (‘‘SINYA Group’’) and the component manufacturer Changzhou Machine Master Co. Ltd.
(‘‘CMM Group’’).
SINYA Group manufactures electric motor for washers, dryers and other white goods appliances, developing advanced technology
products for major manufacturers worldwide. SINYA Group was founded in July 2005 and the main manufacturing plant is located in
PAGE 7
Earnings Release
1Q 2014
Changzhou, Jiangsu province, occupying 28,550 square meters area. A new manufacturing plant, with around 68,760 square meters,
is under construction. The Group still includes ‘‘Wuxi Ecovi’’, an appliance products and solutions development and engineering
company. SINYA Group’s revenues in 2012 were of approximately USD 88 million.
CMM Group manufactures transmissions and mechanical components for ‘‘white line’’ solutions marketed by SINYA Group. CMM
Group was founded in July 2005 and the manufacturing plant is located in Changzhou, with approximately 12,000 square meters
area. CMM Group’s revenues in 2012 were of approximately USD 17 million, being SINYA Group one of its main customers.
These transactions are not part of the quarterly information at March 31, 2014 are subject to approval by several Chinese regulators.
WIND TURBINES SUPPLY CONTRACTS
On April 02, WEG S.A. announced that it has signed contract with specific purpose entity (‘‘SPE’’) Energia dos Ventos I and preagreements with SPE Energia dos Ventos II, III, IV and X, all controlled by Alupar Investimentos S.A., to supply wind energy generation
systems (equipment and services.) The contracts include the supply of 46 wind turbines of 2.1 MW each.
The agreements establish that, in addition to the usual installation and commissioning services, WEG shall provide operation and
maintenance services for 10 years after the commissioning. The wind turbines use the Permanent Magnet Direct Drive technology
(‘‘PM/DD’’) and will be installed in five wind farms located in Aracatí, Ceará state, in the Brazilian Northeastern. The Energia dos Ventos
I, II, III, IV and X projects won energy purchasing contracts at the ‘‘A-5’’ auction held by Agencia Nacional de Energia Elétrica (ANEEL)
in 2011. The wind turbines will be manufactured at WEG’s plant in Jaraguá do Sul, Santa Catarina, with deliveries from 2015 onwards.
PAGE 8
Earnings Release
1Q 2014
RESULTS CONFERENCE CALL
WEG will hold, on April 25, 2014 (Friday), 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.
10 a.m.
03 p.m.
--- Brasilia time
--- New York (EDT)
--- London (BST)
Connecting phone numbers:
Dial---in for connecting from Brazil:
Dial---in for connecting from the USA:
Toll-free for connecting from the USA:
Code:
(11) 3193-1001 / (11) 28204001
+1 786 924-6977
+1 888 700-0802
WEG
Acess to the webcast:
Slides and Portuguese audio:
Slides and English translation:
www.ccall.com.br/weg/1t14.htm
www.ccall.com.br/weg/1q14.htm
The presentation will be available in the Investor Relations page of WEG website (www.weg.net/ri). Please, call approximately 10
minutes before the call is scheluded to star.
PAGE 9
Earnings Release
1Q 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 singlephase 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.
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
1Q 2014
Annex I
Consolidated Income Statement - Quarterly
Figures in R$ Thousands
1T14
49
1st 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
4T13
46
4th Quarter
2013
R$
VA%
1T13
40
1st Quarter
2013
R$
VA%
Changes %
Q1 2014
Q1 2014
Q4 2013
Q1 2013
1.783.543
(1.213.122)
570.421
(196.661)
(88.703)
152.842
(124.363)
1.846
(46.065)
269.317
(70.669)
8.683
2.444
204.887
100%
-68%
32%
-11%
-5%
9%
-7%
0%
-3%
15%
-4%
0%
0%
11%
1.893.299
(1.277.452)
615.847
(199.987)
(88.877)
175.104
(150.694)
3.490
(45.595)
309.288
(71.660)
(375)
(186)
237.439
100%
-67%
33%
-11%
-5%
9%
-8%
0%
-2%
16%
-4%
0%
0%
13%
1.477.577
(1.013.973)
463.604
(157.029)
(73.273)
123.036
(98.385)
5.568
(42.108)
221.413
(51.305)
2.963
772
172.299
100%
-69%
31%
-11%
-5%
8%
-7%
0%
-3%
15%
-3%
0%
0%
12%
-5,8%
-5,0%
-7,4%
-1,7%
-0,2%
-12,7%
-17,5%
-47,1%
1,0%
-12,9%
-1,4%
n.m
n.m
-13,7%
20,7%
19,6%
23,0%
25,2%
21,1%
24,2%
26,4%
-66,8%
9,4%
21,6%
37,7%
193,0%
216,6%
18,9%
EBITDA
299.643
16,8%
341.653
18,0%
248.898
16,8%
-12,3%
20,4%
EPS
0,33023
-13,7%
18,9%
0,38270
0,27772
PAGE 11
Earnings Release
1Q 2014
Annex II
Consolidated Balance Sheet
Figures in R$ Thousands
March 2014
(A)
R$
%
CURRENT ASSETS
December 2013
(B)
R$
%
March 2013
(C)
R$
%
(A)/(B) (A)/(C)
6.602.879
67%
6.851.787
68%
6.310.741
66%
-4%
5%
3.247.375
33%
3.373.799
33%
3.279.518
35%
-4%
-1%
Receivables
1.576.829
16%
1.658.806
16%
1.347.331
14%
-5%
17%
Inventories
1.461.766
15%
1.445.927
14%
1.316.606
14%
1%
11%
Other current assets
316.909
3%
373.255
4%
367.286
4%
-15%
-14%
LONG TERM ASSETS
Long term securities
Deferred taxes
134.326
2.097
68.870
1%
0%
1%
123.866
2.230
60.376
1%
0%
1%
107.528
2.059
43.337
1%
8%
0% 0%
14%
25%
2%
59%
Cash & cash equivalents
Other non-current assets
FIXED ASSETS
Investment in Subs
Property, Plant & Equipment
Intangibles
63.359
1%
61.260
1%
62.132
1%
3%
2%
3.161.488
32%
3.165.640
31%
3.078.166
32%
0%
3%
8.091
0%
7.264
0%
7.577
0%
11%
7%
2.605.834
26%
2.614.556
26%
2.544.242
27%
0%
2%
547.563
6%
543.820
5%
526.347
6%
1%
4%
TOTAL ASSETS
9.898.693
100%
10.141.293
100%
9.496.435
100%
-2%
4%
CURRENT LIABILITIES
2.506.714
25%
2.578.048
25%
2.852.160
30%
-3%
-12%
Social and Labor Liabilities
199.637
2%
216.553
2%
172.007
2%
-8%
16%
Suppliers
379.952
4%
420.250
4%
365.492
4%
-10%
4%
Fiscal and Tax Liabilities
137.847
1%
139.570
1%
103.069
1%
-1%
34%
Short Term Debt
914.246
9%
912.796
9%
1.526.274
16%
0%
-40%
47.016
0%
87.723
1%
36.718
0%
-46%
28%
469.261
5%
459.130
5%
306.889
3%
2%
53%
44.201
0%
34.191
0%
38.260
0%
29%
16%
314.554
3%
307.835
3%
303.451
3%
2%
4%
LONG TERM LIABILITIES
2.822.456
29%
2.920.978
29%
2.528.789
27%
-3%
12%
Long Term Debt
2.192.311
22%
2.296.208
23%
1.878.432
20%
-5%
17%
-20%
Dividends Payable
Advances from Clients
Profit Sharring
Other Short Term Liabilities
98.307
1%
95.031
1%
123.063
1%
3%
Deferred Taxes
Other Long Term Liabilities
292.073
3%
294.405
3%
319.621
3%
-1%
-9%
Contingencies Provisions
239.765
2%
235.334
2%
207.673
2%
2%
15%
MINORITIES
77.959
1%
84.495
1%
80.931
1%
-8%
-4%
STOCKHOLDERS' EQUITY
4.491.564
45%
4.557.772
45%
4.034.555
42%
-1%
11%
TOTAL LIABILITIES
9.898.693
100%
10.141.293
100%
9.496.435
100%
-2%
4%
PAGE 12
Earnings Release
1Q 2014
Annex III
Consolidated Cash Flow Statement
Figures in R$ Thousands
03M14
03M13
3 Months
2014
3 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
269.317
58.805
88.495
(12.641)
118.511
50.259
(10.915)
(81.448)
(89.048)
221.413
52.136
67.655
(6.294)
91.360
46.754
(10.480)
(71.190)
(62.738)
Cash Flow from Operating Activities
403.976
334.910
Investment Activities
Fixed Assets
Intagible Assets
Results of sales of fixed assets
Accumulated Conversion Adjustment
Long term securities bought
Goodwill in Capital Transactions
(64.284)
(3.208)
490
(53.618)
132
(2.699)
(56.759)
(811)
903
(25.135)
(4.497)
(5.169)
(5.947)
(6.268)
(13.229)
-
Acquisition of Stakes of non-controlling shareholders
Aquisition of Subsidiaries
Cash Flow From Investment Activities
(142.363)
(97.736)
Financing Activities
Working Capital Financing
Long Term Financing
Interest paid on loans and financing
Treasury Shares
Dividends & Intesrest on Stockholders Equity Paid
16.382
(112.601)
(43.588)
(248.230)
827.186
(136.811)
(11.277)
(204.724)
Cash Flow From Financing Activities
(388.037)
474.374
Change in Cash Position
(126.424)
711.548
Beginning of Period
3.373.799
2.302.256
End of Period
3.247.375
3.013.804
Cash & Cash Equivalents
PAGE 13