Earnings Release
Jaraguá do Sul (SC), July 31st 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 second quarter of 2013 (2Q13). The following
financial and operating data are presented in a consolidated basis, except when otherwise indicated, in thousands of Brazilian Reais (R$) according to accounting practices
adopted in Brazil, including Brazilian Corporate Law and the convergence to IFRS international norms. All growth rates comparisons relate, except when otherwise indicated, to
the same period of the previous year.
Second quarter of 2013 shows growth in profitability
Net Revenue grew by 11% over 2Q12.
EBITDA grew by 23% over 2Q12, reaching R$ 313 million, 18% margin.
Net Income of R$ 205 million, growth of 47% and 12% net margin.
Highlights
Key
Figures
Net operating revenue in the second quarter of 2013
reached R$ 1,699.6 million, with 11.2% growth over
2Q12 and 15.0% over 1Q13;
Net Income totaled R$ 205.0 million, with net margin of
12.1% and 46.6% growth over 2Q12 and 19.0% over
1Q13;
EBITDA reached R$ 312.5 million and EBITDA
margin of 18.4%. Growth was 23.1% over the
previous year and 25.6% over the previous quarter;
Investments in fixed assets totaled R$ 118.0 million in
the first six months of 2013.
Q2 2013
Net Operating Revenue
Domestic Market
External Markets
Q1 2013
%
Q2 2012
%
1,699,639
873,354
826,285
1,477,577
772,935
704,642
15.0%
13.0%
17.3%
399,171
353,077
13.1%
406,915 -1.9%
558,031
463,635
20.4%
32.8%
31.4%
Net Income
204,968
172,299
Net Margin
12.1%
11.7%
External Markets in US$
Gross Operating Profit
Gross Margin
EBITDA
312,547
248,898
EBITDA Margin
18.4%
16.8%
EPS
0.3304
0.2777
19.0%
%
2,898,553
1,443,503
1,455,050
9.6%
14.0%
5.2%
752,247
777,720
-3.3%
461,661 20.9% 1,021,666
853,628
19.7%
139,819 46.6%
9.1%
25.6%
06M12
1,528,791 11.2% 3,177,216
729,235 19.8% 1,646,289
799,556 3.3% 1,530,927
30.2%
19.0%
06M13
253,972 23.1%
32.2%
29.5%
377,267
288,066
11.9%
9.9%
561,445
452,223
16.6%
17.7%
15.6%
0.2254 46.6%
0.6081
0.4643
31.0%
24.2%
31.0%
Figures in R$ Thousand
Conference Call (will simultaneous translation to English)
August 01, 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/2q13.htm
WEG S.A. | 2013 Second Quarter Results
Earnings Release
Economic Activity
and Industrial
Production
The global industrial activity continued at a slow pace in the second quarter of 2013, both in Brazil and
abroad. 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 deterioration in China and maintenance of an unfavorable situation in Germany. In U.S. the situation
continued positive, albeit at a rather slow pace.
Manufacturing ISM Report on Business ® USA
Markit/BME Germany Manufacturing PMI® Germany
HSBC China Manufacturing PMI™
China
June 2013
50.9
48.6
48.2
May 2013
49.0
49.4
49.2
April 2013
50.7
48.1
50.4
December 2012
50.2
46.0
51.5
In Brazil we observe rapid deterioration in industrial production growth expectations in the financial market,
according to the Central Bank of Brazil Focus survey. In early July 2013, the average growth for 2013 is
2.53%, almost a full percentage point below expectations at the end of 1Q13. The IBGE data for industrial
production has fluctuated monthly from expansions and declines. May was down 2.0%, after growing 2.6%
in March and April. In the year we observed expansion of 1.7%, while the last 12 months to May saw
accumulate decline of 0.5%, confirming the slow recovery.
Industrial Indicators According to Categories of Use in Brazil
Change (%)
Categories of Use
Mai 13 / Abr 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
-3,5
-1,1
-1,8
-1,2
-1,0
-2,0
May 13 / May 12
12,5
-0,6
1,6
4,1
0,8
1,4
Acummulated
On Year
12 months
13,3
0,2
0,3
4,6
-1,0
1,7
-2,3
-0,7
0,3
2,7
-0,4
-0,5
Once again, the production of capital goods showed the best results among the categories of use,
maintaining the expansion of 13.3% accumulated in the year, although still down 2.3% over the past 12
months. One must remember that both the performance of the general industrial production, as the
production of capital goods are strongly influenced by variations in the production of light and heavy
vehicles. Discounting this impact, the performance in capital goods remained positive, showing that
production incentives begin to produce positive impacts.
2 | WEG S.A. | 2013 Second Quarter Results
Earnings Release
Net Operating
Revenue
In the second quarter of 2013 (2Q13) Net Operating Revenues totaled R$ 1,699.6 million, corresponding to
an increase of 11.2% in relation to the second quarter of 2012 (2Q12) and of 15.0% in relation to the first
quarter of 2013 (1Q13). The growth rate considering the comparison on the same basis, adjusted for
consolidation of revenues from acquisitions, was 10.7% over 2Q12. In the quarter was the sale of an
industrial property in Hortolândia (SP), which meant additional revenue of R$ 22.3 million. Adjusted for this
non-recurring revenue, growth in Operating Revenue was 9.2% over 2Q12.
Net Operating Revenue per Market (R$ million)
External Market
Domestic Market
1,613
1,529
1,700
1,662
1,478
1,370
52%
50%
48%
50%
Q2
Q3
53%
49%
48%
48%
52%
Q1
47%
51%
52%
Q4
Q1
2012
Q2
2013
In the 2Q13, net operating revenue breaks down as follows:
ƒ Domestic Market: R$ 873.4 million, representing 51% of Net Operating Revenue, with 19.8% growth
over 2Q12 and 13.0% over 1Q13. Adjusting for the consolidation of revenues from acquisitions Stardur,
Paumar and Injetel and the revenue from sale of the Hortolândia property, growth over 2Q12 would have
been 15.9%;
ƒ External Market: R$ 826.3 million, equivalent to 49% of Net Operating Revenue. The comparison in
Brazilian Reais shows growth of 3.3% over the same period last year and 17.3% over the previous
quarter. Considering the average US dollar, comparison shows decreases of 1.9% compared to 2Q12
and increase of 13.1% over 1Q13.
Evolution of Net Revenues according to Geographic Market
(R$ Million)
Q2 2013
Q1 2013
Change
Q2 2012
Net Operating Revenues
- Domestic Market
- External Markets
- External Markets in US$
1,699.6
873.4
826.3
399.2
1,477.6
772.9
704.6
353.1
15.0%
13.0%
17.3%
13.1%
1,528.8
729.2
799.6
406.9
Change
11.2%
19.8%
3.3%
-1.9%
External Market – Distribution of Net Revenues according to Geographic Market
Q2 2013
Q1 2013
Change
Q2 2012
Change
North America
South and Central America
Europe
Africa
Australasia
31.2%
18.5%
24.4%
12.7%
13.2%
37.5%
14.8%
25.9%
11.7%
10.2%
-6.3 pp
3.7 pp
-1.4 pp
1 pp
3.1 pp
29.8%
13.9%
27.8%
16.9%
11.6%
1.4 pp
4.6 pp
-3.4 pp
-4.2 pp
1.6 pp
3 | WEG S.A. | 2013 Second 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
Q2 2013
Q1 2013
%
Q2 2012
%
61.5%
25.7%
35.8%
21.2%
12.3%
8.9%
10.9%
7.7%
3.2%
6.5%
5.7%
0.8%
63.8%
27.7%
36.1%
19.8%
11.7%
8.1%
10.1%
7.3%
2.8%
6.3%
5.7%
0.7%
-2.3 pp
-2 pp
-0.3 pp
1.4 pp
0.6 pp
0.8 pp
0.8 pp
0.4 pp
0.3 pp
0.2 pp
0.1 pp
0.1 pp
66.2%
25.0%
41.2%
20.6%
12.6%
8.1%
7.9%
5.5%
2.4%
5.2%
4.7%
0.6%
-4.7 pp
0.8 pp
-5.5 pp
0.5 pp
-0.3 pp
0.8 pp
3 pp
2.2 pp
0.8 pp
1.2 pp
1.1 pp
0.2 pp
The revenues performance in the 2Q13 showed gradual acceleration in relation to the previous quarter, in
line with seasonality of the markets. We continue to see favorable trends in the most important variables for
profitability and are confident that the prospects for improvement are consistent.
In the Industrial Electro-Electronic Equipment in domestic market we observed good performance with
the more favorable exchange rate, especially in those sectors most exposed to competition from imported
products. These tend to be segments that demand products that have more standard features, with higher
volumes and lower degree of customization, for applications in areas such as machinery and equipment.
The good performance of these clients is the main positive impact brought by the new level of the Brazilian
currency against the U.S. dollar. Additionally, these same clients have responded favorably to incentives for
production implemented by the “Plano Brazil Maior”, such as attractive terms and accessible financing and
tax reductions. On the other hand, we observed a loss of dynamism in investments in the process
industries, such as, for example, oil and gas and mining.
In the external markets we observe lower dynamism in key industrial markets, as seen in the purchasing
manager index (PMI) data. To this we also add to appreciation of the U.S. dollar relative to virtually all
currencies, which, due to currency conversion, ultimately impacts consolidated revenues measured in US$,
particularly from emerging markets, where the devaluation is more intense. Additionally, we are
consolidating market positions that we have recently won, which translate into lower growth rates compared
to that observed in recent quarters. Our strong recent growth brought, as expected, a tightening of
competitive conditions in many markets. However, we remain confident in the advantages of our product
portfolio, which is technologically up to date and has features that are adapted for the specificities of each
market.
In the Energy Generation, Transmission and Distribution (GTD) area, market conditions for T&D
continued its gradual pricing improvement trend relative to recent quarters, with consequent positive impact
on profitability. The highlight in this sector has been the supplies of substations for industrial use and wind
farms. The market for generation equipment continues at a slow pace, but with better prospects for the
second half of the year, when we expect new generation capacity auctions to take place, with rules that
allow participation of diverse sources of energy at competitive conditions.
The Motors for Domestic Use area showed significant improvement, with local production also responding
to the new level of the currency, which has made it more competitive. Moreover, the recent adjustments in
import taxes contributed to prevent that consumer stimulus continued to benefit imported products. This is
true both for the “white goods” as for domestic application motors.
The Paints and Varnishes area showed fast growth, both in the traditional business as with consolidation
of acquisitions closed in 2012. Our strategy is based in expanding the products portfolio and in entering
new segments, exploiting the commercial synergies with other WEG products.
Cost of Goods
Sold
Cost of Goods Sold (COGS) totaled R$ 1,141.6 million in 2Q13, increasing 7.0% over 2Q12 and 12.6%
over 1Q13. Gross margin reached 32.8%, with expansion of 2.6 percentage points over 2Q12 and 1.5
percentage point over 1Q13.
Gross Margin
This increase in gross margin compared to 2Q12, is due to: (i) relative stability, in Reais, of raw material
costs (i) the positive effect of devaluation on revenues (ii) greater dilution of manufacturing costs with
revenue growth; (iii) reduction on payroll social security taxes; and (iv) sale of industrial property of
Hortolândia.
4 | WEG S.A. | 2013 Second Quarter Results
Earnings Release
Cost of Raw
Materials
Average copper spot prices at the London Metal Exchange fell by 9% in the 2Q13 compared to the average
of 2Q12 and 10% in relation to the average of 1Q13. Steel prices in the international markets fell by 12%
over 2Q12 and 6% in relation to the 1Q13. It is important to note that despite falling prices in US dollar,
currency devaluation means relative cost stability in Brazilian currency.
The prices of these commodities, the two main raw materials in our production process, are relatively
uniform across the various markets, as in the case of copper. Although there are some variations in steel
prices from market to market, pricing trends are similar. These characteristics are important in times when
there is a variation in commodity prices or increases in the volatility of macroeconomic variables such as
exchange rate. We manage our selling prices according to the characteristics of each order and with the
current market conditions, incorporating variations in input costs gradually, which limits our exposure to
changes in these costs.
Selling, General
and
Administrative
Expenses
Consolidated selling, general and administrative expenses (SG&A) represented 14.9% of net operating
revenue in the 2Q13, 0.2 percentage point lower than the 15.1% of the 2Q12 and 0.6 percentage point
lower than the 15.6% of the 1Q13. In absolute terms, operating expenses grew by 9.9% over 2Q12 and
10.3% over the previous quarter.
Q2 2013
Net Operating Revenues
Q1 2013
1.699,6
%
Q2 2012
%
1.477,6
15,0%
1.528,8
11,2%
18,3%
141,8
44,4%
Consolidated Net Income for the Period
204,8
173,1
Net Margin
12,0%
11,7%
(+) Income taxes & Contributions
(+/-) Financial income (expenses)
(+) Depreciation & Amortization
EBITDA
51,7
2,5
53,6
312,5
48,3
(24,7)
52,1
248,9
EBITDA Margin
18,4%
16,8%
9,3%
6,9%
n.a.
2,8%
25,6%
46,5
13,5
52,2
254,0
11,2%
-81,6%
2,8%
23,1%
16,6%
Figures in R$ Million
EBITDA and
EBITDA Margin
As a result of aforementioned impacts, EBITDA in 2Q13, calculated according to the new methodology
defined by CVM in the Instruction nº 527/2012, totaled R$ 312.5 million, an increase of 23.1% over 2Q12
and 25.6% over 1Q13. EBITDA margin reached 18.4%, 1.8 percentage point higher than the 2Q12 and 1.5
percentage point higher than the 1Q13.
As for comparative purposes, EBITDA calculated according to the methodology previously used reached R$
322.6 million, an increase of 24.1% over 2Q12 and 25.6% over the previous quarter, EBITDA margin of
19%.
Adjusting the effect of sale of property in Hortolândia both in revenue and EBITDA, EBITDA margin would
have reached 17.9%.
41.9
71.1
128.9
FX Impact on
Revenues
254.0
18.4
COGS (ex
depreciation)
Selling
Expenses
6.3
General and
Administrative
Expenses
12.4
Profit Sharing
Program
4.0
312.5
Other expenses
Volumes,
Prices &
Product Mix
Changes
EBITDA Q2 12
Net Financial
Results
EBITDA Q2 13
In this quarter, net financial result was negative in R$ 2.5 million (negative in R$ 13.5 million in 2Q12 and
positive in R$ 24.7 million in 1Q13). Financial revenues totaled R$ 145.6 million in 2Q13 (R$ 134.5 million in
2Q12 and R$ 123.0 million in 1Q13). Financial expenses totaled R$ 148.1 million (R$ 148.0 million in 2Q12
5 | WEG S.A. | 2013 Second Quarter Results
Earnings Release
and R$ 98.4 million in 1Q13). The decrease in net financial result is mainly due to the exchange rate
depreciation and relatively lower interest rates in the Brazilian financial market.
Income Tax and
Social
Contribution
Income Tax and Social Contribution on Net Profit provision in 2Q13 reached R$ 59.6 million (R$ 56.2 million
in 2Q12 and R$ 51.3 million in 1Q13). Additionally, R$ 7.9 million were recorded as ‘‘Deffered income tax /
social contribution’’ credit (credit of R$ 9.7 million in 2Q12 and credit of R$ 3.0 million in 1Q13).
Net Income
As the result of the previously discussed impacts, net income for 2Q13 was R$ 205.0 million, an increase of
46.6% over 2Q12 and 19% over the previous quarter. The net margin of the quarter was 12.1%, 2.9
percentage point higher than the 2Q12 and 0.4 percentage point higher than the 1Q13.
Cash flow
408.4
2,302.3
168.9
Investing
154.5
3,034.1
Financing
Operating
Cash Dec 2012
Cash June 2013
Operating cash
flow
Cash flow from operating activities totaled R$ 408.4 million in the first half of 2013, an increase of 10% over
the same period last year. The expansion in operating cash generation was due to the increase in cash
generated from operations, with increase in net income before depreciation. On the other hand, we
observed increase in receivables, mainly explained by the impact of exchange rate on receivables
denominated in foreign currencies.
Cash flow from
investing
activities
Investing activities generated R$ 168.9 million in the first half of 2013, mainly due to the maturing of longterm financial instruments, which are, according to accounting standards, classified as “investments”. There
were no new acquisitions announced and paid for in this quarter.
Cash flow from
financing
activities
Financing activities generated R$ 154.5 million in the first half of 2013, mainly with new funding with
attractive maturity and interest rates terms, as previously discussed. During the period we increased
financing by R$ 447.0 million (new debt of R$ 1,183.6 million and amortizations of R$ 736.5 million) and
paid R$ 204.5 million in dividends declared against second half of 2012 results.
Investments
Investments in fixed assets for capacity expansion and modernization totaled R$ 118.0 million in the first six
months of 2013, 85% of which destined to the industrial plants and other installations in Brazil and the
remaining amount to production units and other subsidiaries abroad. Our budget for investments in capacity
expansion and modernization plans to invest R$ 265 million in 2013. Additionally, we estimate
approximately R$ 87 million in the expansion of working capital.
Investments in Fixed Assets (R$ million)
6 | WEG S.A. | 2013 Second Quarter Results
Earnings Release
Outside Brazil
Brazil
58.7
73.7
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
6.0
11.8
50.8
49.5
Q1
Q2
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)
June 2013
3,036,107
3,034,080
2,027
3,048,764
1,327,078
855,787
471,291
1,721,686
1,454,531
267,155
(12,657)
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)
June 2012
2,879,132
2,878,475
657
3,260,988
1,935,177
998,122
937,055
1,325,811
1,090,936
234,875
(381,856)
As of June 30, 2013 cash, cash equivalents and financial investments totaled R$ 3,036.1 million, mainly in
short-term. Gross financial debt totaled R$ 3,048.8 million, 44% in short-term operations and 56% in longterm operations.
There were no significant changes in debt position and cash compared to 1Q13, when we took advantage
of attractive maturity and interest rate conditions to increase the duration and extended the profile of our
total debt. In this quarter we observed a reduction in net debt to R$ 12.7 million at the end of the period, a
natural result of the new issuance and amortizations during the period. Cash is invested in Brazilian currency
in first-tier banks, in fixed income instruments 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 30.9 months.
ƒ Duration of the Brazilian Reais denominated portion is 20.9 months and of the foreign currencies
denominated portion is 13.8 months.
ƒ The weighted average cost of fixed-rate debt denominated in Brazilian Reais is approximately 6.2% per
year. Floating rate contracts are indexed mainly by the Brazilian long-term interest rate (TLJP).
Dividends
In the first half of 2013, the Board of Directors approved the following compensation to shareholders:
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;
In addition, on July 30, the Board of Directors approved intermediate dividends related the net income for
the first half of 2013, in the total amount of R$ 114.8 million to the shareholders on said date. These
proceeds will be paid from August 21, 2013 onwards.
7 | WEG S.A. | 2013 Second Quarter Results
Earnings Release
Event
Dividends
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
Board Meeting
Date
7/30/2013
6/25/2013
3/26/2013
Payment Date
8/21/2013
8/21/2013
8/21/2013
Total
Gross amount per
share
R$ 0.18500000
R$ 0.07058823
R$ 0.06470589
R$ 0.32029412
Amounts declared as remuneration to shareholders in the first half represent 52.7% of net income for the
period.
Dividends
Interest on Stockholders' Equity
Gross Total
Per Share
Net Earnings
Total Dividends / Net Earnings
1st Half
2013
114.8
83.9
198.7
0.32029412
377.3
52.7%
1st Half
%
2012
62.0
94.9
156.9 26.6%
0.25294118 26.6%
288.1
54.5%
We maintain our policy to declare interest on stockholders equity quarterly and declare dividends based on
profit earned each semester (six earnings each year).
The common shares issued by WEG, traded under the code WEGE3 at BM&F Bovespa, ended the last
trading session of June 2013 quoted at R$ 28.15, with nominal high of 4.3% in the year. Considering the
dividends and interest on stockholders equity declared in the first half, the high was 5.7% in 2013.
The average daily traded volume in 2Q13 was R$ 16.3 million, (R$ 4.9 million in 2Q12). Throughout the
quarter 134,061 stock trades were carried out (39,940 stock trades in 2Q12), involving 37.9 million shares
(15.5 million shares in 2Q12) and totaling R$ 1,027.8 million (R$ 306.3 million in 2Q12).
Share Price Performance and Traded Volume
30,00
10.000
Shares Traded (thousands)
WEGE3
28,00
26,00
8.000
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
WEGE3 share prices
WEGE3 Share
Performance
0
Dividend adjusted performance (dividend and interest on stockholders equity)
8 | WEG S.A. | 2013 Second Quarter Results
Earnings Release
Results
Conference Call
WEG will hold, on August 01, 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.
10 a.m.
3 p.m.
– Brasília 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:
+55 11 4688-6361
+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/2t13.htm
www.ccall.com.br/weg/2q13.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.
9 | WEG S.A. | 2013 Second 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.
10 | WEG S.A. | 2013 Second Quarter Results
Earnings Release
Annex I
Consolidated Income Statement - Quarterly
Figures in R$ Thousands
2T13
42
2nd 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
1T13
40
1st Quarter
2013
R$
VA%
2T12
33
2nd Quarter
2012
R$
VA%
Changes %
Q2 2013
Q2 2013
Q1 2013
Q2 2012
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%
1,477,577
(1,013,942)
463,635
(156,625)
(73,708)
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%
1,528,791
(1,067,130)
461,661
(155,143)
(76,017)
134,525
(148,006)
8,236
(36,923)
188,333
(56,193)
9,695
(2,016)
139,819
100%
-70%
30%
-10%
-5%
9%
-10%
1%
-2%
12%
-4%
1%
0%
9%
15.0%
12.6%
20.4%
11.0%
8.8%
18.4%
50.6%
-10.4%
18.8%
15.8%
16.1%
165.3%
n.m
19.0%
11.2%
7.0%
20.9%
12.1%
5.5%
8.3%
0.1%
-39.4%
35.5%
36.2%
6.0%
-18.9%
n.m
46.6%
EBITDA
312,547
18.4%
248,898
16.8%
253,972
16.6%
25.6%
23.1%
EPS
0.33038
19.0%
46.6%
0.27772
0.22537
WEG S.A. | 2013 Second Quarter Results
Earnings Release
Annex II
Consolidated Income Statement
06M13
42
6 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
06M12
Figures in R$ Thousands
33
6 Months
2012
R$
VA%
%
2013
2012
3,177,216
(2,155,550)
1,021,666
(330,483)
(153,898)
268,673
(246,505)
10,559
(92,146)
477,866
(110,856)
10,823
566
377,267
100%
-68%
32%
-10%
-5%
8%
-8%
0%
-3%
15%
-3%
0%
0%
12%
2,898,553
(2,044,925)
853,628
(297,334)
(143,784)
262,326
(229,922)
13,194
(75,212)
382,896
(104,646)
14,860
5,044
288,066
100%
-71%
29%
-10%
-5%
9%
-8%
0%
-3%
13%
-4%
1%
0%
10%
10%
5%
20%
11%
7%
2%
7%
-20%
23%
25%
6%
-27%
-89%
31%
EBITDA
561,445
17.7%
452,223
15.6%
24%
EPS
0.60810
0.46432
31%
WEG S.A. | 2013 Second 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
June 2013
(A)
R$
AV%
36
6,339,494
66%
3,034,080
32%
1,554,042
16%
1,368,012
14%
383,360
4%
98,741
1%
2,027
0%
40,762
0%
55,952
1%
3,104,687
33%
7,585
0%
2,570,042
27%
527,060
6%
9,542,922 100%
2,840,488
244,200
362,605
113,854
1,327,078
89,310
395,904
24,450
283,087
2,380,354
1,721,686
113,323
310,429
234,916
81,513
4,240,567
9,542,922
30%
3%
4%
1%
14%
1%
4%
0%
3%
25%
18%
1%
3%
2%
1%
44%
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%
3,012,724
168,831
331,037
126,655
1,645,772
79,281
358,124
33,559
269,465
1,709,100
1,044,068
137,916
320,503
206,613
91,377
4,060,349
8,873,550
34%
2%
4%
1%
19%
1%
4%
0%
3%
19%
12%
2%
4%
2%
1%
46%
100%
June 2012
(C)
R$
AV%
27
6,020,120
66%
2,878,475
32%
1,350,250
15%
1,459,793
16%
331,602
4%
81,920
1%
657
0%
35,584
0%
45,679
1%
3,007,665
33%
349
0%
2,513,061
28%
494,255
5%
9,109,705 100%
3,230,080
226,231
349,350
85,137
1,935,177
84,507
325,175
20,485
204,018
1,965,957
1,325,811
142,261
331,370
166,515
84,185
3,829,483
9,109,705
35%
2%
4%
1%
21%
1%
4%
0%
2%
22%
15%
2%
4%
2%
1%
42%
100%
(A)
(A)
(B)
(C)
<===== Não Apagar est
11%
5%
18%
5%
6%
15%
5%
-6%
4%
16%
11%
21%
209%
10%
15%
12%
22%
1%
3%
0%
2073%
1%
2%
-1%
7%
8%
5%
-6%
45%
10%
-10%
-19%
13%
11%
-27%
5%
39%
65%
-18%
-3%
14%
-11%
4%
8%
-12%
8%
4%
34%
-31%
6%
22%
19%
39%
21%
30%
-20%
-6%
41%
-3%
11%
5%
WEG S.A. | 2013 Second Quarter Results
Earnings Release
Annex IV
Consolidated Cash Flow Statement
06M13
Figures in R$ Thousands
06M12
6 Months
2013
19
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
6 Months
2012
15
477,866
105,747
107,461
(282,634)
(163,450)
142,807
(64,721)
(128,334)
(68,936)
382,896
101,731
84,043
(197,874)
(140,355)
163,936
(65,298)
(95,186)
(60,971)
408,440
370,796
(118,040)
(1,483)
4,827
33,812
261,249
(5,169)
(6,268)
-
(113,749)
(15,742)
4,533
61,243
28,439
(51,788)
(52,090)
(164,668)
168,928
(303,822)
1,183,571
(736,534)
(88,114)
(204,467)
574,371
(683,207)
(90,504)
(172,314)
Cash Flow From Financing Activities
154,456
(371,654)
Change in Cash Position
731,824
(304,680)
2,302,256
3,034,080
2,931,615
2,626,935
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 Second Quarter Results