Earnings Release
Jaraguá do Sul (SC), February 26th, 2014: A 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 fourth quarter of 2013 (4Q13). The following
financial and operating data are presented in a consolidated basis, except when otherwise indicated, in thousands of Brazilian Reais (R$) according to accounting practices
adopted in Brazil, including Brazilian Corporate Law and the convergence to IFRS international norms. All growth rates comparisons relate, except when otherwise indicated, to
the same period of the previous year.
Closing 2013 with higher growth
and profitability
Net Revenue grew by 14% over 4Q12.
EBITDA grew by 18% over 4Q12, reaching R$ 342 million, 18.0% margin
Net Income of R$ 237 million, growth of 30% and 12.5% margin
Highlights
Key
Figures
Net operating revenue in the fourth quarter of 2013
reached R$ 1,893.3 million, with 13.9% growth over
4Q12 and 7.7% over 3Q13;
Net Income totaled R$ 237.4 million, with net margin of
12.5% and 29.6% growth over 4Q12 and 3.8% over
3Q13;
EBITDA reached R$ 341.7 million and EBITDA margin
of 18.0%. Growth was 17.9% over the previous year
and 4.5% over the previous quarter;
Investments in fixed assets totaled R$ 243.7 million over
2013.
Q4 2013
1.893.299
913.388
979.911
Q3 2013
1.758.381
872.363
886.018
7,7%
4,7%
10,6%
Q4 2012
%
12M13
1.662.258 13,9% 6.828.896
774.533 17,9% 3.432.040
887.725 10,4% 3.396.856
12M12
6.173.878
3.016.662
3.157.216
10,6%
13,8%
7,6%
428.229
387.197
10,6%
431.141 -0,7% 1.569.891
1.610.330
-2,5%
615.847
599.253
2,8%
528.641 16,5% 2.236.766
1.880.856
18,9%
32,5%
34,1%
Net Income
237.439
228.761
Net Margin
12,5%
13,0%
Net Operating Revenue
Domestic Market
External Markets
External Markets in US$
Gross Operating Profit
Gross Margin
EBITDA
341.653
326.934
EBITDA Margin
18,0%
18,6%
EPS
0,3827
0,3687
%
31,8%
3,8%
32,8%
30,5%
843.467
655.979
12,4%
10,6%
289.786 17,9% 1.230.032
1.016.748
183.157 29,6%
11,0%
4,5%
3,8%
17,4%
18,0%
16,5%
0,2952 29,6%
1,3595
1,0573
%
28,6%
21,0%
28,6%
Figures in R$ Thousand
Conference Call (with simultaneous translation to English)
February 27, 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/4q13.htm
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Economic Activity
and Industrial
Production
The purchasing manager indexes (PMI) showed acceleration of industrial activity in the fourth quarter of 2013.
PMI indexes above 50 indicate industrial expansion, while indexes below 50 indicate contraction in industrial
activity, showing that the recovery in USA and Germany have been consistent. In China, the recovery is still
discrete, with some volatility in monthly readings.
Manufacturing ISM Report on Business ® USA
Markit/BME Germany Manufacturing PMI® Germany
HSBC China Manufacturing PMI™
China
December 2013 September 2013 June 2013
57.0
56.2
50.9
54.3
51.1
48.6
50.5
50.2
48.2
March 2013
51.3
49.0
51.6
December 2012
50.2
46.0
51.5
In Brazil, the industrial production growth in 2013 was only 1.2%, disappointing analysts who had expected,
according to the Brazilian Central Bank’s Focus survey, average growth of around 2%. The decrease
observed in December, higher than expected, turned out to be decisive for the annual performance,
confirming the loss of momentum in the second half of the year, after a first half with growth of just over 2%.
Industrial Indicators According to Categories of Use in Brazil
Change (%)
Categories of Use
Dec 13 / Nov 13*
Capital Goods
Intermediary Goods
Consumer Goods
Durable Goods
Semi-durable and non-durable
General Industry
Source: IBGE, Research office, Industry Coordination
(*) Series with seasonal adjustments
Dec 13 / Dec 12
-11.6
-3.9
-2.5
-3.0
-2.3
-3.5
1.8
-2.0
-3.2
-3.5
-3.1
-2.3
Acummulated
On Year
12 months
13.3
0.0
-0.2
0.7
-0.5
1.2
13.3
0.0
-0.2
0.7
-0.5
1.2
The positive highlight in the categories of use was industrial production of capital goods, with expansion of
13.3% accumulated in the year, strongly influenced by the production of transport equipment (heavy vehicles).
The good performance is explained by the incentives deployed within “Plano Brasil Maior” and enhanced by
the new level of the exchange rate.
Net Operating
Revenue
Net Operating Revenues totaled R$ 1,893.3 million in the fourth quarter of 2013 (4Q13), corresponding to an
increase of 13.9% in relation to the fourth quarter of 2012 (4Q12) and of 7.7% in relation to the third quarter
of 2013 (3Q13). Adjusted for the acquisitions, net revenues growth rate was 13.4% over 4Q12.
Net Operating Revenue per Market (R$ million)
External Market
1,893
Domestic Market
1,529
1,613
1,662
1,700
1,758
49%
50%
52%
1,478
1,370
52%
50%
53%
48%
52%
48%
50%
47%
52%
51%
50%
48%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
48%
2012
2013
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
In the 4Q13, net operating revenue breaks down as follows:
ƒ Domestic Market: R$ 913.4 million, representing approximately 48% of Net Operating Revenue, with
17.9% growth over 4Q12 and of 4.7% over 3Q13. Adjusting for the consolidation of revenues from
acquisitions Stardur, Paumar and Injetel, growth over 4Q12 would have been 17.8%;
ƒ External Market: R$ 979.9 million, equivalent to approximately 52% of Net Operating Revenue. The
comparison In Brazilian Reais shows growth of 10.4% over the same period last year and 10.6% over the
previous quarter. Considering the average US dollar, comparison shows decrease of 0.7% compared to
4Q12 and growth of 10.6% over 3Q13. Adjusting for the revenues of WEG Transformers Africa, organic
growth was 9.5% over 4Q12.
Evolution of Net Revenues according to Geographic Market
(R$ Million)
Q4 2013
Q3 2013
Change
Q4 2012
Net Operating Revenues
- Domestic Market
- External Markets
- External Markets in US$
1,893.3
913.4
979.9
428.2
1,758.4
872.4
886.0
387.2
7.7%
4.7%
10.6%
10.6%
1,662.3
774.5
887.7
431.1
Change
13.9%
17.9%
10.4%
-0.7%
External Market – Distribution of Net Revenues according Geographic Market
Q4 2013
Q3 2013
Change
Q4 2012
Change
North America
South and Central America
Europe
Africa
Australasia
31.7%
18.0%
27.0%
13.7%
9.6%
35.4%
17.5%
25.1%
12.5%
9.5%
-3.7 pp
0.5 pp
1.9 pp
1.2 pp
0.1 pp
30.0%
19.6%
23.1%
16.3%
11.0%
1.7 pp
-1.6 pp
3.9 pp
-2.6 pp
-1.4 pp
Distribution of Net Revenues per Business Area
Electro-electronic Industrial Equipments
Domestic Market
External Market
Energy Generation , Transmission and Distribution
Domestic Market
External Market
Electric Motors for Domestic Use
Domestic Market
External Market
Paints and Varnishes
Domestic Market
External Market
Business Areas
Q4 2013
Q3 2013
%
Q4 2012
%
60.1%
22.7%
37.4%
22.9%
12.7%
10.2%
11.0%
7.5%
3.4%
6.1%
5.3%
0.7%
59.8%
23.1%
36.7%
23.0%
13.0%
10.0%
10.5%
7.6%
2.9%
6.6%
5.9%
0.8%
0.3 pp
-0.5 pp
0.7 pp
-0.2 pp
-0.3 pp
0.1 pp
0.5 pp
-0.1 pp
0.5 pp
-0.6 pp
-0.5 pp
0 pp
56.6%
23.0%
33.6%
28.0%
11.5%
16.5%
9.3%
6.8%
2.5%
6.1%
5.4%
0.8%
3.4 pp
-0.3 pp
3.8 pp
-5.1 pp
1.2 pp
-6.3 pp
1.7 pp
0.8 pp
0.9 pp
-0.1 pp
0 pp
0 pp
Industrial Electro-Electronic Equipment – The business area showed growth of 10% in Net Revenue
compared to 2012, with slightly higher performance in in Brazil than in the external markets. In the domestic
market we observed good performance from short cycle industrial products that are applied in consumer
products manufacturing equipment, mainly as a reflection the new exchange rate level, which increased the
Brazilian industrial competitiveness and enabled our Brazilian customers to recover positions lost to imported
products over the past few years. This good performance, however, was not replicated in the more elaborated
products, related to the process industries and infrastructure projects. In this case, we note an environment
still marked by a few major investments in capacity expansion and concentrated in some segments. In the
external markets, where we observe high growth rates in recent years, this was a year of consolidating our
position and setting new bases for future growth. The new investments in production capacity in Mexico and
China will enable us to continue to pursue increasingly relevant market position in the coming years. We
continue to execute our strategy based on geographic expansion, leveraging the strength of WEG’s brand in
electrical machines with leading global manufacturers of capital goods, and the introduction of new products
and services, increasing the scope of our offer and increasingly integrating our systems. Furthermore, we
seek to expand our presence in new market segments, seeking additional applications for products that are
already part of our manufacturing line, such as machinery safety and building automation.
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Energy Generation, Transmission and Distribution (GTD) – Net Revenues growth of 0.2% over 2012. In
the transmission and distribution business (T&D) demand conditions remained favorable until at least midyear, with slight recovery in prices observed in the major global markets, reflecting a gradual improvement in
the balance between production capacity and demand. The highlight were the substations supplied to
interconnect wind generation units to the integrated national grid in Brazil, a business line in which WEG
became a major player in a short period of time. In equipment for energy generation (G), we also observed a
gradual improvement in market conditions, with changes in competitive conditions and in the regulations of
energy auctions. New orders, however, will only be recognized as revenues upon their effective delivery. Our
wind power generation equipment offer has shown to be competitive and we are seeing better conditions for
small hydropower plants (PCH) and biomass generation. One of the highlights in generation was solar power,
where WEG already has locally manufactured integrated generation solution and scored significant supplies,
including Brazil’s largest solar power, by Tractebel, with 3MW capacity.
Motors for Domestic Use – Revenues growth of 38% over 2012. The good performance in this business
area is due to the additional competitiveness of our clients with local production due to the new exchange
rate level, same situation observed in short cycle industrial products mentioned previously. In addition, the
new exchange rate level allowed the incentives to increase consumption, such as tax reduction, to have more
impact on the entire supply chain and not concentrated at the end.
Paints and Varnishes – The area maintained the good performance of recent years, with growth of 18% over
the previous year. These consistent results show that the strategy of leveraging relationship, cross-selling to
the developed customers, maximizes return on sales effort.
Cost of Goods
Sold
Cost of Goods Sold (COGS) totaled R$ 1,277.5 million in 4Q13, increasing 12.7% over 4Q12 and 10.2%
over 3Q13. Gross margin reached 32.5%, with expansion of 0.7 percentage point over 4Q12 and reduction
of 1.6 percentage point over 3Q13.
As observed in the previous quarter and throughout 2013, the expansion of gross margin compared to the
last year is due to: (i) relative stability, in Reais, of raw materials costs (ii) the positive effect of FX devaluation
on revenues; (iii) greater dilution of manufacturing costs with revenue growth; and (iv) innovations in products
and manufacturing processes that led to productivity gains.
Cost of Raw
Materials
The two raw materials with greater relative weight in our cost structure, steel and copper, have relatively
uniform prices in different markets or, considering regional particularities, follow similar trends in different
countries. Global copper prices follow those defined at the London Metal Exchange (LME) and in the 4Q13
the spot prices showed decrease of 9.5% over the average of 4Q12 and increase of 1.1% over the average
of 3Q13. Steel prices have important regional differences. On average, the international steel prices fell 1.1%
over 4Q12 and 0.7% over 3Q13. Considering the devaluation of 11% of Brazilian Reais in relation to the US
dollar in the period, the variations calculated in US dollar means relative cost stability in Brazilian currency.
We manage our selling prices according to the characteristics of each products and market, seeking to limit
exposure to the cost of raw materials variations.
Selling, General
and
Administrative
Expenses
Consolidated selling, general and administrative expenses (SG&A) represented 15.3% of net operating
revenue in the 4Q13, 0.3 percentage point higher than 14.9% of the 4Q12 and 0.2 percentage point lower
than 15.5% of the 3Q13. In absolute terms, operating expenses grew by 16.5% over 4Q12 and 6.2% over
the previous quarter.
EBITDA and
EBITDA Margin
As a result of aforementioned impacts, EBITDA in 4Q13, calculated according to the methodology defined by
CVM in the Instruction nº 527/12, totaled R$ 341.7 million, an increase of 17.9% over 4Q12 and 4.5% over
3Q13. EBITDA margin reached 18.0%, 0.6 percentage points higher than the 4Q12 and 0.6 percentage
points lower than the 3Q13. As additional information for comparative purposes, calculated according to the
previous methodology, EBITDA reached R$ 343.2 million in the 4Q13, with EBITDA margin reaching 18.1%.
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Q4 2013
Q3 2013
1,893.3
1,758.4
7.7%
3.1%
Net Operating Revenues
Consolidated Net Income for the Period
237.3
230.2
Net Margin
12.5%
13.1%
(+) Income taxes & Contributions
(+/-) Financial income (expenses)
(+) Depreciation & Amortization
EBITDA
72.0
(24.4)
56.8
341.7
67.5
(26.5)
55.8
326.9
EBITDA Margin
18.0%
18.6%
%
Q4 2012
%
1,662.3
13.9%
184.8
28.4%
11.1%
6.7%
-8.1%
1.8%
4.5%
53.7
(2.7)
54.0
289.8
34.2%
n.a.
5.2%
17.9%
17.4%
Figures in R$ Million
98,2
(139,7)
132,9
FX Impact on
Revenues
289,8
(32,5)
(9,8)
COGS (ex
depreciation)
Selling
Expenses
Volumes,
Prices &
Product Mix
Changes
General and
Administrative
Expenses
(6,5)
Profit
Sharing
Program
9,3
341,7
Other Income
EBITDA Q4 13
EBITDA Q4 12
Net Financial
Results
In this quarter, net financial result was positive in R$ 24.4 million (positive in R$ 2.7 million in 4Q12 and R$
26.5 million in 3Q13), mainly due the difference between interest rate in remuneration of investments and
debt. Financial revenues totaled R$ 175.1 million in 4Q13 (R$ 96.8 million in 4Q12 and R$ 156.2 million in
3Q13). Financial expenses totaled R$ 150.7 million (R$ 94.1 million in 4Q12 and R$ 129.7 million in 3Q13).
Income Tax and
Social
Contribution
Income Tax and Social Contribution on Net Profit provision in 4Q13 reached R$ 71.7 million (R$ 62.3 million
in 4Q12 and R$ 92.3 million in 3Q13). We recognized deferred tax credits, mainly reversal of provisions after
REFIS, to the amount of R$ 0.4 million (credit of R$ 8.6 million in 4Q12 and credit of R$ 24.8 million in 3Q13).
Net Income
Net income for 4Q13 was R$ 237.4 million, an increase of 29.6% over 4Q12 and 3.8% over the previous
quarter. The net margin of the quarter was 12.5%, 1.5 percentage point higher than the 4Q12 and 0.5
percentage point lower than the 3Q13.
Cash flow
1,027.4
2,302.3
54.8
(10.6)
Investing
Financing
3,373.8
Operating
Cash Dec 2012
Cash Dec 2013
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Operating cash
flow
In 2013, cash flow from operating activities totaled R$ 1,027.4 million, the same level observed in the previous
year. There was an increase in cash generated from operations, with an increase of 22% in net income before
depreciation, but this increase was consumed largely by the increase in working capital, mainly with expansion
of inventories.
It is important to observe we adopted a new classification of accounts that impacted the volume of provisions
“Fixed assets write-offs” and “Accrued interest on loans and financing” are now being included in the “Net
cash used by operating activities” and no longer in “Investing activities” and in “Financing activities”,
respectively.
Cash flow from
investing
activities
Investing activities generated R$ 54.8 million in 2013. The main change was in the account “Long-term
financial investments”, in which, in accordance with the applicable accounting standards, are classified
financial instruments that do not have immediate liquidity.
Cash flow from
financing
activities
Financing activities consumed R$ 10.6 million in 2013. We highlight, among other impacts, the net increase
of R$ 536.5 million in new funding (new debt of R$ 1,890.3 million and amortizations of R$ 1,353.7 million),
with attractive maturity and interest rates, and the payment of dividends and interest on stockholders’ capital
declared in the second half of 2012 and the first half of 2013.
Investiments
Investments in fixed assets for capacity expansion and modernization totaled R$ 243.7 million in 2013, 80%
of which destined to the industrial plants and other installations in Brazil and the remaining amount to
production units and other subsidiaries abroad. In addition, R$ 15 million were included in fixed assets from
the Paumar and Hawker Siddeley Electric Africa acquisitions held in 2013.
The original estimate from disbursements in capacity expansion over 2013, of R$ 265 million, was nearly
reached, with some additional disbursements in 2014. We always remember that the investment program is
managed for optimum capacity utilization and maximization of return on invested capital.
Investiments in Fixed Assets (R$ million)
Outside Brazil
Brazil
73.7
58.7
55.5
50.4
5.0
3.7
53.7
51.9
45.4
Q1
Q2
Q3
9.3
5.1
64.5
Q4
56.8
61.3
63.9
61.1
6.0
11.8
15.6
13.1
50.8
49.5
48.3
48.0
Q1
Q2
Q3
Q4
2012
Debt and Cash
Position
2013
Debt and Cash Position (R$ Thousands)
Cash & Financial instruments
- Current
- Long Term
Debt
- Current
- In Brazilian Reais
- In other currencies
- Long Term
- In Brazilian Reais
- In other currencies
Net Cash (Debt)
December 2013
3,376,029
3,373,799
2,230
3,209,004
912,796
28%
462,336
450,460
2,296,208
72%
2,048,766
247,442
167,025
December 2012
2,565,532
2,563,500
2,032
2,689,840
1,645,772
61%
1,067,683
578,089
1,044,068
39%
824,910
219,158
(124,308)
December 2011
3,212,250
2,931,615
280,635
3,457,728
1,701,435
49%
585,687
1,115,748
1,756,293
51%
1,560,712
195,581
(245,478)
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
As of December 31, 2013 cash, cash equivalents and financial investments totaled R$ 3,376.0 million,
invested mainly in Brazilian currency in first-tier banks, while the gross financial debt totaled R$ 3,209.0 million,
28% in short-term operations and 72% in long-term operations. At the end of 2013 WEG had net cash of R$
167.0 million.
Over the 2013, we changed the debt profile, lengthening the maturities with attractive interest rates. At the
same time, we worked to significantly reduce the financial exposure to exchange rate fluctuations. Cash
continues to be mainly invested in first-tier banks, in fixed income instruments denominated in Brazilian
currency and linked to the CDI.
We believe that our financial flexibility, which is our ability to finance investment opportunities with attractive
returns and without excessive increase in exposure to risks, is one of the main reasons for our success in the
long-term. We work to maintain a strong capital structure and preserve access to liquidity resources and
sources at competitive costs, including agents such as BNDES, International Finance Corporation (IFC) and
the Financier of Studies and Projects (FINEP), in addition to other financial institutions.
The characteristics of the debt are:
ƒ Total duration of the debt is of 20.7 months and duration of long-term portion is 27.5 months.
ƒ Duration for the Brazilian Reais denominated portion is of 23.0 months and for the foreign currencies
denominated portion of 12.7 months
ƒ The weighted average cost of fixed-rate debt denominated in Brazilian Reais is approximately 6.0% per
year. Floating rate contracts are indexed mainly by the Brazilian long-term interest rate (TJLP).
Dividends
As of August 21, 2013, payments declared during the first half of 2013 were made to shareholders, to the
total amount R$ 198.7 million, as below::
ƒ On March 26, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount
of R$ 40.1 million;
ƒ On June 25, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount
of R$ 43.8 million;
ƒ On July 30, as dividends referring to first half of 2013 results, to the total amount of R$ 114.8 million.
The payments referring to the second half of 2013 (supplementary dividends), to the total amount of R$ 263.2
million, will begin on March 12, 2014:
ƒ On September 24, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross
amount of R$ 47.4 million;
ƒ On December 17, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross
amount of R$ 52.6 million;
ƒ On February 25, 2014, as supplementary dividends referring to second half of 2013 results, to the total
amount of R$ 163.2 million.
Event
Dividends
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
Dividends
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
Total
WEGE3 Share
Performance
Board Meeting
Date
02/25/2014
12/17/2013
09/24/2013
07/30/2013
06/25/2013
03/26/2013
Payment Date
03/12/2014
03/12/2014
03/12/2014
08/21/2013
08/21/2013
08/21/2013
Gross amount per
share
R$ 0.263000670
R$ 0.084705882
R$ 0.076470588
R$ 0.185001236
R$ 0.070588230
R$ 0.064705890
R$ 0.744472496
The common shares issued by WEG, traded under the code WEGE3 at BM&F Bovespa, ended the last
trading session of 2013 quoted at R$ 31.16, with increase of 15.4% in the year. Considering the dividends
and interest on stockholders equity declared in the period, the increase was of 18.4% in 2013.
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
The average daily traded volume in 4Q13 was R$ 16.7 million, (R$ 26.2 million in 4Q12). Throughout the
quarter 148,016 stock trades were carried out (136,687 stock trades in 4Q12), involving 33.7 million shares
(59.3 million shares in 4Q12) and totaling R$ 1,016.6 million (R$ 1,546.6 million in 4Q12).
Share Price Performance and Traded Volume
34,00
10.000
Shares Traded (thousands)
WEGE3
32,00
30,00
8.000
28,00
WEGE3 share prices
6.000
24,00
22,00
20,00
4.000
18,00
16,00
2.000
14,00
Traded shares (thousands)
26,00
12,00
10,00
0
Dividend adjusted performance (dividends and interest on stockholders equity)
Corporate
Sustainability
Index (ISE)
BM&F Bovespa announced on November 28, 2013, that WEG was once again selected for the ISE
BM&FBOVESPA Index, which will be valid from January of 2014 until January of 2015. WEG continues to be
the only Company from capital goods, machinery and equipment and electro-electronic equipment industry
segments that was included.
The new portfolio is comprised of 51 stock from 40 companies. They represent 18 sectors and totaled R$
1.14 trillion in market value, equivalent 47% of the total value of companies traded on the BM&FBOVESPA.
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Results
Conference Call
WEG will hold, on February 27, 2014 (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.
09 a.m.
02 p.m.
– Brasilia time
– New York (EDT)
– London (GMT)
Dial–in for connecting from Brazil:
Dial–in for connecting from the USA:
Toll-free for connecting from the USA:
Code:
(11) 4706-0951
+1 786 924-6977
+1 888 700-0802
WEG
Connecting phone numbers:
Acess to the webcast:
Slides and Portuguese audio:
Slides and English translation:
www.ccall.com.br/weg/4t13.htm
www.ccall.com.br/weg/4q13.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.
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Industrial
ElectroElectronic
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 only recognized as revenue after a few months, upon
effective delivery to buyers.
Motors for
Domestic Use
In this business area, our operations are mainly 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.
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.
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Annex I
Consolidated Income Statement - Quarterly
Figures in R$ Thousands
4T13
46
4th Quarter
2013
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
3T13
44
3rd Quarter
2013
R$
VA%
4T12
37
4th Quarter
2012
R$
VA%
Changes %
Q4 2013
Q4 2013
Q3 2013
Q4 2012
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%
1.758.381
(1.159.128)
599.253
(185.888)
(86.088)
156.197
(129.649)
2.382
(58.482)
297.725
(92.342)
24.835
1.457
228.761
100%
-66%
34%
-11%
-5%
9%
-7%
0%
-3%
17%
-5%
1%
0%
13%
1.662.258
(1.133.617)
528.641
(165.903)
(82.026)
96.768
(94.107)
4.153
(49.051)
238.475
(62.287)
8.620
1.651
183.157
100%
-68%
32%
-10%
-5%
6%
-6%
0%
-3%
14%
-4%
1%
0%
11%
7,7%
10,2%
2,8%
7,6%
3,2%
12,1%
16,2%
46,5%
-22,0%
3,9%
-22,4%
n.m
n.m
3,8%
13,9%
12,7%
16,5%
20,5%
8,4%
81,0%
60,1%
-16,0%
-7,0%
29,7%
15,0%
n.m
n.m
29,6%
EBITDA
341.653
18,0%
326.934
18,6%
289.786
17,4%
4,5%
17,9%
EPS
0,38270
3,8%
29,6%
0,36871
0,29522
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Annex II
Consolidated Income Statement
12M13
46
12 Months
2013
R$
VA%
12M12
Figures in R$ Thousands
37
12 Months
2012
R$
VA%
%
2013
2012
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
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%
6.173.878
(4.293.022)
1.880.856
(619.980)
(307.202)
460.420
(404.729)
18.593
(163.856)
864.102
(228.859)
29.621
8.885
655.979
100%
-70%
30%
-10%
-5%
7%
-7%
0%
-3%
14%
-4%
0%
0%
11%
11%
7%
19%
16%
7%
30%
30%
-12%
20%
26%
20%
19%
-79%
29%
EBITDA
1.230.032
18,0%
1.016.748
16,5%
21%
EPS
1,35951
1,05730
29%
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
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
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
December 2013
(A)
R$
AV%
40
6.851.787
68%
3.373.799
33%
1.658.806
16%
1.445.927
14%
373.255
4%
123.866
1%
2.230
0%
60.376
1%
61.260
1%
3.165.640
31%
7.264
0%
2.614.556
26%
543.820
5%
10.141.293 100%
2.578.048
216.553
420.250
139.570
912.796
87.723
459.130
34.191
307.835
2.920.978
2.296.208
95.031
294.405
235.334
84.495
4.557.772
10.141.293
25%
2%
4%
1%
9%
1%
5%
0%
3%
29%
23%
1%
3%
2%
1%
45%
100%
December 2012
(B)
R$
AV%
31
5.710.017
64%
2.563.500
29%
1.472.839
17%
1.306.273
15%
367.405
4%
88.833
1%
2.032
0%
36.891
0%
49.910
1%
3.074.700
35%
7.622
0%
2.537.094
29%
529.984
6%
8.873.550 100%
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
34%
2%
4%
1%
19%
1%
4%
0%
3%
19%
12%
2%
4%
2%
1%
46%
100%
December 2011
(C)
R$
AV%
22
5.867.061
64%
2.931.615
32%
1.307.692
14%
1.362.314
15%
265.440
3%
432.469
5%
280.635
3%
111.488
1%
40.346
0%
2.806.331
31%
349
0%
2.445.760
27%
360.222
4%
9.105.861 100%
2.752.960
161.436
298.195
88.473
1.701.435
2.804
285.843
26.314
188.459
2.446.312
1.756.293
122.485
421.918
145.616
106.477
3.800.112
9.105.861
30%
2%
3%
1%
19%
0%
3%
0%
2%
27%
19%
1%
5%
2%
1%
42%
100%
(A)
(A)
(B)
(C)
<===== Não Ap
20%
17%
32%
15%
13%
27%
11%
6%
2%
41%
39%
-71%
-99%
64%
-46%
23%
52%
3%
13%
-5%
1981%
3%
7%
3%
51%
14%
11%
-14%
28%
27%
10%
-45%
11%
28%
2%
14%
71%
120%
-31%
-8%
14%
-7%
12%
14%
-6%
34%
41%
58%
-46%
3028%
61%
30%
63%
19%
31%
-22%
-30%
62%
-21%
20%
11%
WEG S.A. | 2013 Fourth Quarter Results
Earnings Release
Annex IV
Consolidated Cash Flow Statement
12M13
Figures in R$ Thousands
12M12
12 Months
2013
21
12 Months
2012
17
Operating Activities
Net Earnings before Taxes
Depreciation and Amortization
Provisions:
Profit Sharing
Stock Options
Other 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
1.084.879
218.279
379.359
142.728
567
236.064
(655.083)
(299.506)
187.409
(146.049)
(280.483)
(116.454)
864.102
208.337
320.765
108.466
519
211.780
(354.559)
(324.344)
187.545
92.326
(210.296)
(99.790)
Cash Flow from Operating Activities
1.027.434
1.038.645
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
(258.699)
(21.943)
2.030
83.761
261.046
(5.177)
(6.260)
-
(237.882)
(17.939)
14.730
78.521
17.359
(54.077)
(52.090)
(183.156)
54.758
(441.754)
1.890.267
(1.353.734)
(155.933)
738
(391.987)
845.738
(1.578.739)
(174.827)
(318.422)
(10.649)
(1.226.250)
Change in Cash Position
1.071.543
(629.359)
Cash & Cash Equivalents
Beginning of Period
End of Period
2.302.256
3.373.799
2.931.615
2.302.256
Cash Flow From Investment Activities
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
WEG S.A. | 2013 Fourth Quarter Results