Earnings Release
Jaraguá do Sul (SC), October 30th, 2013: WEG S.A. (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 third quarter of 2013 (3Q13). The following financial
and operating data are presented in a consolidated basis, except when otherwise indicated, in thousands of Brazilian Reais (R$) according to accounting practices adopted in
Brazil, including Brazilian Corporate Law and the convergence to IFRS international norms. All growth rates comparisons relate, except when otherwise indicated, to the same
period of the previous year.
Profitability expansion is the highlight of third quarter of 2013
Net Revenue grew by 9% over 3Q12.
EBITDA grew by 19% over 3Q12, reaching R$ 327 million, 18.6% margin.
Net Income of R$ 229 million, growth of 24% and 13% margin.
Highlights
Key
Figures
Net operating revenue in the third quarter of 2013
reached R$ 1,758.4 million, with 9.0% growth over
3Q12 and 3.5% over 2Q13;
Net Income totaled R$ 228.8 million, with net margin of
13.0% and 23.8% growth over 3Q12 and 11.6% over
2Q13;
EBITDA reached R$ 326.9 million and EBITDA margin
of 18.6%. Growth was 19.0% over the previous year
and 4.6% over the previous quarter;
Investments in fixed assets totaled R$ 182.0 million in the
first nine months of 2013.
Q3 2013
1,758,381
872,363
886,018
Q2 2013
1,699,639
873,354
826,285
3.5%
-0.1%
7.2%
387,197
399,171
599,253
558,031
34.1%
32.8%
Net Income
228,761
204,968
Net Margin
13.0%
12.1%
Net Operating Revenue
Domestic Market
External Markets
External Markets in US$
Gross Operating Profit
Gross Margin
EBITDA
326,934
312,547
EBITDA Margin
18.6%
18.4%
EPS
0.3687
0.3304
%
Q3 2012
1,613,067
798,626
814,441
%
09M13
4,935,597
2,518,652
2,416,945
09M12
4,511,620
2,242,129
2,269,491
9.4%
12.3%
6.5%
-3.0%
401,460 -3.6% 1,139,444
1,179,180
-3.4%
7.4%
498,587 20.2% 1,620,919
1,352,215
19.9%
9.0%
9.2%
8.8%
30.9%
11.6%
184,756 23.8%
11.5%
4.6%
11.6%
274,739 19.0%
32.8%
30.0%
606,028
472,822
12.3%
10.5%
888,379
726,962
17.0%
18.0%
16.1%
0.2978 23.8%
0.9768
0.7621
%
28.2%
22.2%
28.2%
Figures in R$ Thousand
Conference Call (with simultaneous translation to English)
October 31, Thursday 11 a.m. (Brazil Daylight Savings Time)
Dial–in in the US: +1 786 924-6977
Webcasting (simultaneous translation into English): www.ccall.com.br/weg/3q13.htm
WEG S.A. | 2013 Third Quarter Results
Earnings Release
Economic Activity
and Industrial
Production
The global industrial activity showed acceleration in the third quarter of 2013. Purchasing manager indexes
(PMI), commonly used as indicators of industrial activity (PMI indexes above 50 indicate industrial expansion,
while indexes below 50 indicate contraction in industrial activity), showed consistent recovery in major
markets, reversing the recent unfavorable situation in China, confirming the slight recovery in Germany and
the maintenance of favorable situation in USA.
September 2013 June 2013
Manufacturing ISM Report on Business ® USA
56,2
50,9
Markit/BME Germany Manufacturing PMI® Germany
51,1
48,6
HSBC China Manufacturing PMI™
China
50,2
48,2
In Brazil, financial market expectations for industrial production growth continued to fall. According to the
Brazilian Central Bank’s Focus survey, the average growth estimate for 2013 was 2.10% in early October
2013, compared to the expected 2.5% in the previous quarter. The IBGE data for industrial production
continued to oscillate from month to month, showing a slight expansion trend. In the year until August, we
observed IP expansion of 1.6%, while in the last 12 months expansion was of 0.7%.
Industrial Indicators According to Categories of Use in Brazil
Change (%)
Categories of Use
Aug 13 / Jul 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
2.6
0.6
-0.6
0.2
-0.3
0.0
Aug 13 / Aug 12
11.8
-2.0
-2.8
-6.3
-1.6
-1.2
Acummulated
On Year
12 months
13.5
0.1
0.4
2.3
-0.2
1.6
4.6
-0.2
0.9
3.2
0.2
0.7
The highlight in the categories of use of industrial production remains the production of capital goods, with
expansion of 13.5% accumulated in the year and 4.6% over the past 12 months. It is always necessary to
consider that both the performance of the industrial production in general and of capital goods in particular
are strongly influenced by variations in the production of vehicles. Even so, the performance in capital goods
has responded favorably to the production incentives deployed within “Plano Brasil Maior” and enhanced by
the new level of the exchange rate.
WEG S.A. | 2013 Third Quarter Results
Earnings Release
Net Operating
Revenue
In the third quarter of 2013 (3Q13) Net Operating Revenues totaled R$ 1,758.4 million, corresponding to an
increase of 9.0% in relation to the third quarter of 2012 (3Q12) and of 3.5% in relation to the second quarter
of 2013 (2Q13). Adjusted for the acquisitions, net revenues growth rate was 11.8% over 3Q12.
Net Operating Revenue per Market (R$ million)
External Market
Domestic Market
1,613
1,529
1,662
1,700
1,758
49%
50%
1,478
1,370
52%
50%
53%
48%
52%
48%
50%
47%
52%
51%
50%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
48%
2012
2013
In the 3Q13, net operating revenue breaks down as follows:
ƒ Domestic Market: R$ 872.4 million, representing approximately 50% of Net Operating Revenue, with 9.2%
growth over 3Q12 and stability over 2Q13. Adjusting for the consolidation of revenues from acquisitions
Stardur, Paumar and Injetel, growth over 3Q12 would have been 15.0%;
ƒ External Market: R$ 886.0 million, equivalent to approximately 50% of Net Operating Revenue. The
comparison in Brazilian Reais shows growth of 8.8% over the same period last year and 7.2% over the
previous quarter. Considering the average US dollar, comparison shows decreases of 3.6% compared to
3Q12 and 3% over 2Q13.
Evolution of Net Revenues according to Geographic Market
(R$ Million)
Q3 2013
Q2 2013
Change
Q3 2012
Net Operating Revenues
- Domestic Market
- External Markets
- External Markets in US$
1,758.4
872.4
886.0
387.2
1,699.6
873.4
826.3
399.2
3.5%
-0.1%
7.2%
-3.0%
1,613.1
798.6
814.4
401.5
Change
9.0%
9.2%
8.8%
-3.6%
External Market – Distribution of Net Revenues according to Geographic Market
Q3 2013
Q2 2013
Change
Q3 2012
Change
North America
South and Central America
Europe
Africa
Australasia
35.4%
17.5%
25.1%
12.5%
9.5%
32.1%
18.0%
25.8%
12.5%
11.6%
3.3 pp
-0.5 pp
-0.7 pp
0 pp
-2.1 pp
37.6%
15.5%
20.0%
13.6%
13.3%
-2.2 pp
2 pp
5.1 pp
-1.1 pp
-3.8 pp
WEG S.A. | 2013 Third Quarter Results
Earnings Release
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
Q3 2013
Q2 2013
%
Q3 2012
%
59.8%
23.1%
36.7%
23.0%
13.0%
10.0%
10.5%
7.6%
2.9%
6.6%
5.9%
0.8%
61.5%
25.7%
35.8%
21.2%
12.3%
8.9%
10.9%
7.7%
3.2%
6.5%
5.7%
0.8%
-1.7 pp
-2.6 pp
0.9 pp
1.9 pp
0.8 pp
1.1 pp
-0.4 pp
-0.1 pp
-0.3 pp
0.1 pp
0.1 pp
0 pp
60.1%
23.1%
37.0%
24.5%
14.2%
10.3%
8.6%
6.2%
2.5%
6.8%
6.0%
0.8%
-0.3 pp
0 pp
-0.3 pp
-1.4 pp
-1.2 pp
-0.2 pp
1.9 pp
1.4 pp
0.4 pp
-0.1 pp
-0.1 pp
0 pp
Third quarter of 2013 showed, alongside the favorable seasonality that characterizes the second half of the
year in our markets, the continuity of the main trends observed in the previous quarter, mainly revenue growth
in the domestic market in those segments that gained more competitiveness with the new levels of the
Brazilian currency.
In the Industrial Electro-Electronic Equipment we continue to see good performance in domestic market in
those segments that were more exposed to competition from imported products, now strengthened by the
more favorable exchange. This positive performance is best observed, as it was in the previous quarter, in
serial products, with high volumes and lower customization degree, in applications such as, for example, the
serial capital goods manufacturing.
In the external markets, despite the recovery of mature economies become increasingly clear, the speed of
this recovery remained slow. The appreciation of U.S. dollar relative to virtually all currencies remained the
tonic and causing an impact of decreased revenues growth rate when measured in U.S. currency. As we
have alerted before, after a recent period of strong growth, we observe an expected reaction and tightening
of competitive conditions in many markets. We are consolidating market positions that we have recently won
and we are confident in growth should resume.
In the Energy Generation, Transmission and Distribution (GTD) area, the highlight were the electric power
generation auctions conducted by the Brazilian regulator in August. The results indicated more sustainable
price conditions being practiced by market participants and more diversification of the energy sources winning
the auction. After a long hiatus, there was participation of sources such as thermal biomass and small hydro.
The auctions results and our new wind energy technological agreement make us more confident in the market
performance of power generation for the next year. At the same time, the market conditions of T&D continued
to improve. The pricing trajectory is positive and note investments projects that were postponed being
gradually resumed.
The improved conditions observed in the Motors for Domestic Use area in the previous quarter were
maintained, with local production gaining competitiveness in response to the new level of the currency and
taking more advantage of the demand stimulus for consumer durables “white goods”.
The Paints and Varnishes area maintained good performance as the acquisitions made in 2012 continued
to be consolidated. Our strategy is based in expanding the products portfolio and in entering new segments,
exploiting the commercial synergies with other WEG products.
Cost of Goods
Sold
Cost of Goods Sold (COGS) totaled R$ 1,159.1 million in 3Q13, increasing 4.0% over 3Q12 and 1.5% over
2Q13. Gross margin reached 34.1%, with expansion of 3.2 percentage points over 3Q12 and 1.2 percentage
point over 2Q13.
As in the previous quarter, the increase in gross margin compared to 3Q12, is due to: (i) relative stability, in
Reais, of raw materials costs (ii) the positive effect of devaluation on revenues; and (iii) greater dilution of
manufacturing costs with revenue growth.
Cost of Raw
Materials
Average copper spot prices at the London Metal Exchange fell by 8.3% in the 3Q13 compared to the average
of 3Q12 and 1.1% in relation to the average of 2Q13. Steel prices in the international markets fell by 4% over
3Q12 and 0.1% over 2Q13. We remind that these variations are calculated in US dollar and that currency
devaluation means relative cost stability in Brazilian currency.
We manage our selling prices according to the characteristics of each product and limiting exposure to cost
variations, considering current market conditions. The two main raw materials used in our products
manufacture, steel and cooper, have relatively uniform prices or follow similar trends in the different markets.
WEG S.A. | 2013 Third Quarter Results
Earnings Release
Selling, General
and
Administrative
Expenses
Consolidated selling, general and administrative expenses (SG&A) represented 15.5% of net operating
revenue in the 3Q13, 0.7 percentage point higher than the 14.8% of the 3Q12 and 0.5 percentage point
higher than the 14.9% of the 2Q13. In absolute terms, operating expenses grew by 14.2% over 3Q12 and
7.1% over the previous quarter.
Q3 2013
Net Operating Revenues
Q2 2013
%
Q3 2012
%
1,758.4
1,699.6
3.5%
1,613.1
9.0%
Consolidated Net Income for the Period
230.2
204.8
12.4%
186.9
23.1%
Net Margin
13.1%
12.0%
(+) Income taxes & Contributions
(+/-) Financial income (expenses)
(+) Depreciation & Amortization
EBITDA
67.5
(26.5)
55.8
326.9
51.7
2.5
53.6
312.5
EBITDA Margin
18.6%
18.4%
11.6%
30.6%
n.a.
4.0%
4.6%
55.8
(20.6)
52.6
274.7
21.0%
28.7%
5.9%
19.0%
17.0%
Figures in R$ Million
EBITDA and
EBITDA Margin
As a result of aforementioned impacts, EBITDA in 3Q13, calculated according to the methodology defined by
CVM in the instruction nº 527/12, totaled R$ 326.9 million, an increase of 19.0% over 3Q12 and 4.6% over
2Q13. EBITDA margin reached 18.6%, 1.6 percentage point higher than the 3Q12 and 0.2 percentage point
higher than the 2Q13.
As additional information for comparative purposes, calculated according to the previous methodology,
EBITDA reached R$ 344.5 million in the 3Q13, EBITDA margin of 19.6%.
100,5
(39,8)
(29,1)
COGS (ex
depreciation)
44,8
FX Impact on
Revenues
274,7
Volumes,
Prices &
Product Mix
Changes
EBITDA Q3 12
(7,2)
Selling
Expenses
General and
Administrative
Expenses
(9,7)
Profit
Sharing
Program
(7,2)
326,9
Other
Expenses
EBITDA Q3 13
Net Financial
Results
In this quarter, net financial result was positive in R$ 26.5 million (positive in R$ 20.6 million in 3Q12 and
negative in R$ 2.5 million in 2Q13). Financial revenues totaled R$ 156.2 million in 3Q13 (R$ 101.3 million in
3Q12 and R$ 145.6 million in 2Q13). Financial expenses totaled R$ 129.6 million (R$ 80.7 million in 3Q12 and
R$ 148.1 million in 2Q13). The positive net financial result is mainly due the difference between interest rate
in remuneration of investments and debt.
Income Tax and
Social
Contribution
Income Tax and Social Contribution on Net Profit provision in 3Q13 reached R$ 92.3 million (R$ 61.9 million
in 3Q12 and R$ 59.6 million in 2Q13). We recognized deferred tax credits, mainly because of constitution of
new provisions, to the amount of R$ 24.8 million (credit of R$ 6.1 million in 3Q12 and credit of R$ 7.9 million
in 2Q13).
Net Income
As the result of the previously discussed impacts, net income for 3Q13 was R$ 228.8 million, an increase of
23.8% over 3Q12 and 11.6% over the previous quarter. The net margin of the quarter was 13.0%, 1.6
percentage point higher than the 3Q12 and 1.0 percentage point higher than the 2Q13.
WEG S.A. | 2013 Third Quarter Results
Earnings Release
Cash flow
735.3
2,302.3
93.3
(193.0)
Investing
Financing
2,937.8
Operating
Cash Dec 2012
Cash September 2013
Operating cash
flow
Over the first nine months of 2013, cash flow from operating activities totaled R$ 735.3 million, 25% above
the amount generated in the same period last year. The expansion was due both to the increase in cash
generated from operations, with an increase of 20% in net income before depreciation, and to working capital
management.
Cash flow from
investing
activities
Investing activities generated R$ 93.3 million in the first nine months of 2013, mainly due to the maturing of
long-term financial instruments, which are, according to accounting standards, classified as “investments”.
Cash flow from
financing
activities
Financing activities consumed R$ 193.0 million in the first nine months of 2013. We highlight, among other
impacts, the new funding with attractive maturity and interest rates, which increased financing by R$ 318.5
million (new debt of R$ 1,337.6 million and amortizations of R$ 1,019.1 million). Additionally, we paid R$ 392.1
million in dividends declared against results from the second half of 2012 and first half of 2013.
Investments
Investments in fixed assets for capacity expansion and modernization totaled R$ 182.0 million in the first nine
months of 2013, 81% of which destined to the industrial plants and other installations in Brazil and the
remaining amount to production units and other subsidiaries abroad. Investments in capacity expansion and
modernization should reach, until the end of 2013, an amount close to R$ 265 million.
Investments 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
2012
Q4
56.8
61.3
63.9
6.0
11.8
15.6
50.8
49.5
48.3
Q1
Q2
Q3
2013
WEG S.A. | 2013 Third Quarter Results
Earnings Release
Debt and Cash
Position
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)
September 2013
2,939,913
2,937,836
2,077
2,888,158
1,114,526
689,217
425,309
1,773,632
1,527,412
246,220
51,755
December 2012
2,565,532
2,563,500
2,032
2,689,840
1,645,772
1,067,683
578,089
1,044,068
824,910
219,158
(124,308)
September 2012
2,525,535
2,524,865
670
2,873,962
1,617,387
868,994
748,393
1,256,575
1,044,603
211,972
(348,427)
As of September 30, 2013 cash, cash equivalents and financial investments totaled R$ 2,939.9 million, mainly
in short-term. Gross financial debt totaled R$ 2,888.2 million, 39% in short-term operations and 61% in longterm operations.
There were no significant changes in debt position and cash compared to the previous quarter. In early 2013,
we took attractive maturity and interest rate conditions to increase the duration and extended the profile of
our total debt. At the end of this quarter, as a natural result of the new issuance and amortization during the
period, we observed net cash position of R$ 51.8 million. Cash continues invested mainly in Brazilian currency
in first-tier banks, in fixed income referenced in Reais and linked to the CDI.
The characteristics of the debt are:
ƒ Total duration of the debt is 19.2 months and duration of long-term portion is 29.1 months.
ƒ Duration is 21.0 months for the Brazilian Reais denominated portion and 13.4 months for the foreign
currencies denominated portion.
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, payments declared during the first half of 2013 were made to shareholders, 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 profit recorded in the first half of 2013, in the total amount of R$ 114.8
million.
ƒ In addition, on September 24, the Board of Directors approved interest on stockholders’ equity (JCP), to
the shareholders of record on said date, in the gross amount of R$ 47.4 million. This JCP will be paid from
March 12, 2014 onwards.
Event
Interest on Stockholders’ Equity
Dividends
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
Total
Board Meeting
Date
09/24/2013
07/30/2013
06/25/2013
03/26/2013
Payment Date
03/12/2014
08/21/2013
08/21/2013
08/21/2013
Gross amount per
share
R$ 0.076470588
R$ 0.185001236
R$ 0.07058823
R$ 0.06470589
R$ 0.396765944
Our practice continues to be to declare interest on stockholders equity quarterly and declare dividends
based on profit earned each semester (i.e., six events declared each year).
WEGE3 Share
Performance
The common shares issued by WEG, traded under the code WEGE3 at BM&F Bovespa, ended the last
trading session of September 2013 quoted at R$ 27.00, same value in the beginning of the year. Considering
the dividends and interest on stockholders equity declared in the first half, the high was 2.3% in 2013.
WEG S.A. | 2013 Third Quarter Results
Earnings Release
The average daily traded volume in 3Q13 was R$ 13.5 million, (R$ 4.8 million in 3Q12). Throughout the quarter
139,999 stock trades were carried out (45,117 stock trades in 3Q12), involving 31.6 million shares (15.0
million shares in 3Q12) and totaling R$ 878.9 million (R$ 303.8 million in 3Q12).
Share Price Performance and Traded Volume
30,00
10.000
Shares Traded (thousands)
WEGE3
28,00
26,00
8.000
WEGE3 share prices
22,00
6.000
20,00
18,00
4.000
16,00
14,00
2.000
12,00
10,00
Traded shares (thousands)
24,00
0
Dividend adjusted performance (dividends and interest on stockholders equity)
New wind energy
technological
agreement
On August 14, WEG S.A. announced it has entered into a technological agreement with Northern Power
Systems (“NPS”). Founded in 1975 and based in Barre, Vermont, USA, Northern Power designs, develops
and manufactures wind turbines, been a pioneer and one of the technological leaders in permanent magnet
direct drive or PM/DD.
The technological agreement foresees that the companies will cooperate so WEG can offer to the South
American wind market a utility-scale technology platform that will include wind turbines rated between 2.1
and 2.3MW and rotors sized from 93m to 110m, which shall meet customer requirements in a range of a
wind classes. Turbines leveraging PM/DD technology typically demonstrate higher availability and lower
maintenance and repair costs than traditional gear-based turbines, offering higher energy production over the
turbine’s lifetime, and providing enhanced economic returns to owners. The wind turbines initially will be
manufactured at WEG’s manufacturing facilities in Jaraguá do Sul, state of Santa Catarina, Brazil.
WEG has already secured an initial order from Geradora Eólica Bons Ventos da Serra I S.A., a partnership
between Brazilian Servtec Group, a tradition strategic player in the Brazilian engineering and energy spaces,
and several investments funds managed by Rio Bravo, a very active financial player in this industry. WEG will
supply 11 of the 2.1MW wind turbines to a wind farm located in Ibiapina, in the State of Ceará, from mid 2014
onwards.
Transformer
business
acquisition in the
South Africa
On September 09, WEG S.A. announced the acquisition of the transformer and substation manufacturing
business from Hawker Siddeley Electric Africa (Pty) Ltd. (“HST”) in South Africa. The acquired business will
form a new subsidiary, WEG Transformers Africa (Pty) Ltd.
Investments in
Mexico and China
On September 30, WEG S.A. announced investments of US$ 345 million over the next 5 years for expansion
of motors production capacity in Mexico and China. In Mexico, investments will expand local production
capacity and increase verticalization, integrating the production process of the Mexican operation and making
it similar to what exists today at WEG’s largest industrial plant, in Jaraguá do Sul (SC). The Project includes
the construction of an iron foundry that will supply all the needs for machined cast components for all industrial
HST was one of the pioneers companies in mini substations and has become one of the largest manufacturers
of mini substations and distribution transformers in South Africa, with the capability to design and manufacture
the complete range presently in use in the country’s industrial sector. HST has estimated potential revenues
of approximately US$ 10 million over the next 12 months.
WEG S.A. | 2013 Third Quarter Results
Earnings Release
electric motors frame sizes manufactured in Mexico and destined to all North America consumer markets.
The planned investments are US$ 210 million over the next 5 years.
In China, the plans are for investments of US$ 135 million until 2020 in the construction of a new manufacturing
plant of industrial motors targeted to the Asian market, besides the additional investment at the Nantong
operation. The location selected for this new plant was Rugao, a technological and industrial development
zone 65km away from Nantong and 180km from Shanghai.
WEG S.A. | 2013 Third Quarter Results
Earnings Release
Results
Conference Call
WEG will hold, on October 31, 2013 (Thursday), conference call and webcast to discuss the results. The call
will be conducted in Portuguese with simultaneous translation in English, following scheduled time:
11 a.m.
9 a.m.
1 p.m.
– Brasilia time
– New York (EDT)
– London (GMT)
Connecting phone numbers:
Dial–in for connecting from Brazil:
Dial–in for connecting from the USA:
Toll-free for connecting from the USA:
Code:
+55 11 4688-6361 / +55 11 4706-0951
+1 786 924-6977
+1 855 281-6021
WEG
Acess to the webcast:
Slides and Portuguese audio:
Slides and English translation:
www.ccall.com.br/weg/3t13.htm
www.ccall.com.br/weg/3q13.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 scheduled to star.
WEG S.A. | 2013 Third 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 Third Quarter Results
Earnings Release
Annex I
Consolidated Income Statement - Quarterly
Figures in R$ Thousands
3T13
44
3rd 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
2T13
42
2nd Quarter
2013
R$
VA%
3T12
35
3rd Quarter
2012
R$
VA%
Changes %
Q3 2013
Q3 2013
Q2 2013
Q3 2012
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%
1.699.639
(1.141.608)
558.031
(173.858)
(80.190)
145.637
(148.120)
4.991
(50.038)
256.453
(59.551)
7.860
(206)
204.968
100%
-67%
33%
-10%
-5%
9%
-9%
0%
-3%
15%
-4%
0%
0%
12%
1.613.067
(1.114.480)
498.587
(156.743)
(81.392)
101.326
(80.700)
1.246
(39.593)
242.731
(61.926)
6.141
2.190
184.756
100%
-69%
31%
-10%
-5%
6%
-5%
0%
-2%
15%
-4%
0%
0%
11%
3,5%
1,5%
7,4%
6,9%
7,4%
7,3%
-12,5%
-52,3%
16,9%
16,1%
55,1%
216,0%
n.m
11,6%
9,0%
4,0%
20,2%
18,6%
5,8%
54,2%
60,7%
91,2%
47,7%
22,7%
49,1%
304,4%
-33,5%
23,8%
EBITDA
326.934
18,6%
312.547
18,4%
274.739
17,0%
4,6%
19,0%
EPS
0,36871
11,6%
23,8%
0,33038
0,29780
WEG S.A. | 2013 Third Quarter Results
Earnings Release
Annex II
Consolidated Income Statement
09M13
44
9 Months
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
09M12
Figures in R$ Thousands
35
9 Months
2012
R$
VA%
%
2013
2012
4.935.597
(3.314.678)
1.620.919
(516.371)
(239.986)
424.870
(376.154)
12.941
(150.628)
775.591
(203.198)
35.658
2.023
606.028
100%
-67%
33%
-10%
-5%
9%
-8%
0%
-3%
16%
-4%
1%
0%
12%
4.511.620
(3.159.405)
1.352.215
(454.077)
(225.176)
363.652
(310.622)
14.440
(114.805)
625.627
(166.572)
21.001
7.234
472.822
100%
-70%
30%
-10%
-5%
8%
-7%
0%
-3%
14%
-4%
0%
0%
10%
9%
5%
20%
14%
7%
17%
21%
-10%
31%
24%
22%
70%
-72%
28%
EBITDA
888.379
18,0%
726.962
16,1%
22%
EPS
0,97680
0,76212
28%
WEG S.A. | 2013 Third 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
September 2013
(A)
R$
AV%
38
6.306.860
66%
2.937.836
31%
1.562.243
16%
1.467.641
15%
339.140
4%
118.883
1%
2.077
0%
56.970
1%
59.836
1%
3.126.322
33%
7.584
0%
2.574.218
27%
544.520
6%
9.552.065 100%
2.709.593
231.383
362.428
138.569
1.114.526
42.708
477.696
57.472
284.811
2.432.182
1.773.632
115.300
295.173
248.077
82.578
4.327.712
9.552.065
28%
2%
4%
1%
12%
0%
5%
1%
3%
25%
19%
1%
3%
3%
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%
September 2012
(C)
R$
AV%
29
5.657.018
65%
2.524.865
29%
1.411.747
16%
1.389.619
16%
330.787
4%
80.004
1%
670
0%
32.190
0%
47.144
1%
3.020.011
34%
349
0%
2.526.237
29%
493.425
6%
8.757.033 100%
2.876.077
223.573
321.473
113.478
1.617.387
43.327
316.697
40.752
199.390
1.876.901
1.256.575
124.966
322.296
173.064
86.084
3.917.971
8.757.033
33%
3%
4%
1%
18%
0%
4%
0%
2%
21%
14%
1%
4%
2%
1%
45%
100%
(A)
(A)
(B)
(C)
<===== Não Ap
10%
11%
15%
16%
6%
11%
12%
6%
-8%
3%
34%
49%
210%
54%
77%
20%
27%
2%
4%
0%
2073%
1%
2%
3%
10%
8%
9%
-10%
37%
9%
9%
-32%
-46%
33%
71%
6%
42%
70%
-16%
-8%
20%
-10%
7%
8%
-6%
3%
13%
22%
-31%
-1%
51%
41%
43%
30%
41%
-8%
-8%
43%
-4%
10%
9%
WEG S.A. | 2013 Third Quarter Results
Earnings Release
Annex IV
Consolidated Cash Flow Statement
09M13
Figures in R$ Thousands
09M12
9 Months
2013
20
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
9 Months
2012
16
775.591
161.504
178.252
(380.019)
(123.528)
216.998
(164.417)
(192.547)
(116.525)
625.627
154.365
126.057
(318.245)
(223.067)
150.126
3.940
(150.729)
(98.515)
735.328
587.804
(186.951)
(20.877)
12.448
38.894
261.199
(5.169)
(6.268)
-
(164.185)
(17.949)
6.111
74.054
23.332
(51.788)
(52.090)
(164.668)
93.276
(347.183)
1.337.629
(1.019.081)
(120.230)
717
(392.059)
834.218
(1.286.438)
(134.146)
(317.639)
Cash Flow From Financing Activities
(193.024)
(904.005)
Change in Cash Position
635.580
(663.384)
2.302.256
2.937.836
2.931.615
2.268.231
Cash Flow from Operating Activities
Investment Activities
Fixed Assets
Intagible Assets
Results of sales of fixed assets
Accumulated Conversion Adjustment
Long term securities bought
Goodwill in Capital Transactions
Acquisition of Stakes of non-controlling shareholders
Aquisition of Subsidiaries
Cash Flow From Investment Activities
Financing Activities
Working Capital Financing
Long Term Financing
Interest paid on loans and financing
Treasury Shares
Dividends & Intesrest on Stockholders Equity Paid
Cash & Cash Equivalents
Beginning of Period
End of Period
WEG S.A. | 2013 Third Quarter Results