Earnings Release
Jaraguá do Sul (SC), February 27th 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 fourth quarter of 2012 (4Q12). The following financial
and operating data are presented in a consolidated basis, except when otherwise indicated, in thousands of Brazilian Reais (R$) according to accounting practices adopted in
Brazil, including Brazilian Corporate Law and the convergence to IFRS international norms. All growth rates comparisons relate, except when otherwise indicated, to the same
period of the previous year.
Fourth quarter confirms growth and profitability
Net Revenue grew by 13.2% over 4Q11, with strong performance abroad.
EBITDA reached R$ 300.6 million in the quarter, 16.4% higher and with margin of 18.1%
Net Income of R$ 183.2 million, with 17.2% growth and net margin of 11%
Highlights
Key
Figures
Net operating revenue in the fourth quarter of 2012
reached R$ 1,662.3 million, with 13% growth over
4Q11 and 3% over 3Q12;
Net Income totaled R$ 183.2 million, with net margin of
11% and 17% growth over 4Q11 and decrease of 1%
over 3Q12;
EBITDA reached R$ 300.6 million and EBITDA
margin of 18.1%. Growth was 16% over the previous
year and of 6% over the previous quarter;
Investments in fixed assets totaled R$ 238.4 million over
2012. In this quarter we announced the acquisitions of
Injetel and Paumar.
Q4 2012
1,662,258
774,533
887,725
Q3 2012
1,613,067
798,626
814,441
%
3.0%
-3.0%
9.0%
431,141
401,460
7.4%
528,641
498,587
6.0%
31.8%
30.9%
Net Income
183,157
184,756
Net Margin
11.0%
11.5%
Net Operating Revenue
Domestic Market
External Markets
External Markets in US$
Gross Operating Profit
Gross Margin
EBITDA
300,603
284,276
EBITDA Margin
18.1%
17.6%
EPS
0.2952
0.2978
Q4 2011
%
1,468,551 13.2%
781,938 -0.9%
686,613 29.3%
380,772 13.2%
445,686 18.6%
30.3%
-0.9%
156,248 17.2%
10.6%
5.7%
-0.9%
258,210 16.4%
12M11
5,189,409
2,902,958
2,286,451
%
19.0%
3.9%
38.1%
1,609,721
1,361,689
18.2%
1,880,856
1,556,051
20.9%
30.5%
30.0%
655,979
586,936
10.6%
11.3%
1,053,545
882,340
17.6%
17.1%
17.0%
0.2518 17.2%
1.0573
Conference Call (with simultaneous translation to English)
February 28, Thursday 11 a.m. (Brasília official time)
Dial–in in the US: +1 786 924-6977
Webcasting (simultaneous translation into English): www.ccall.com.br/weg/4q12.htm
WEG S.A. | 2012 Fourth Quarter Results
12M12
6,173,878
3,016,662
3,157,216
11.8%
19.4%
0.9461
11.8%
Figures in R$ Thousand
Earnings Release
Economic Activity
and Industrial
Production
Global industrial activity showed marginal improvements in the last quarter of 2012, with consistent
recovery in the conditions in some of the major economies such as U.S. and China. On the other hand, the
situation in the Brazilian market, despite the adoption of consumption and production stimulus, has no
shown significant improvements.
Purchasing manager indexes (PMI) provide relevant indications on the situation of industrial activity. PMI
indexes above 50 indicate industrial expansion; while indexes below 50 indicate contraction in industrial
activity. The data in this quarter showed a continuation of the gradual recovery process in some of our keys
markets, especially China and USA. In Germany the situation is less favorable.
Manufacturing ISM Report on Business ® USA
Markit/BME Germany Manufacturing PMI® Germany
HSBC China Manufacturing PMI™
China
January 2013
53.1
49.8
52.3
December 2012 November 2012 October 2012
50.2
49.9
51.7
46.0
46.8
46.0
51.5
50.5
49.5
Industrial activity in Brazil ended 2012 with a decrease of 2.7% over the previous year, according to IBGE,
frustrating the growth expectations that were prevalent early on the year, especially considering that in
2011 the industrial production growth was only 0.3%.
Industrial Indicators According to Categories of Use in Brazil
Change (%)
Categories of Use
Acummulated
Dec/Nov* Dec 12 / Dec 11
On Year
12 months
Capital Goods
-0.80
Intermediary Goods
-0.10
Consumer Goods
0.50
Durable Goods
-0.50
Semi-durable and non-durable
0.90
General Industry
0.00
Source: IBGE, Research office, Industry Coordination
(*) Series with seasonal adjustments
-14.70
-2.50
-1.40
-3.50
-0.80
-3.60
-11.80
-1.70
-1.00
-3.40
-0.30
-2.70
-11.80
-1.70
-1.00
-3.40
-0.30
-2.70
Capital goods production, with a decrease of 11.8% over the previous year, was the worst performing
category in 2012, reflecting the low level of investments in capacity expansion.
Preliminary data from the Brazilian Electrical and Electronics Industry Association (ABINEE) indicates that
the Brazilian electronics sector should reach 5% growth in sales in 2012 over the previous year. In areas
related to capital goods, closer to WEG’s businesses, such as industrial automation and industrial
equipment, growth rates were of 8% and 3% respectively. Only the area GTD showed better performance,
with an estimated growth of 18%. These growth rates reflect both the performance of the Brazilian market
as of exports.
We emphasize that throughout the Brazilian government has been adopting several tax reduction
measures, under the “Brazil Maior” Program, as well as structured incentive policies by BNDES to extend
loans for investments. Furthermore, the exchange rate has found a new level, more favorable for local
producers. In mid-February, the estimates collected by the Brazilian Central Bank in the Focus report were
pointing to 3% expansion in industrial production in 2013.
2 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Net Operating
Revenue
Net Operating Revenues totaled R$ 1,662.3 million in the fourth quarter of 2012 (4Q12), corresponding to
an increase of 13.2% in relation to the fourth quarter of 2011 (4Q11) and an increase of 3.0% in relation to
the third quarter of 2012 (3Q12). The growth rate considering the comparison on the same basis, adjusted
for the acquisition revenues consolidation adjusted, was 10.8% over 4Q11.
Net Operating Revenue per Market (R$ million)
External Market
Domestic Market
1.469
1.317
1.277
1.126
47%
1.613
1.662
52%
50%
53%
1.529
1.370
48%
43%
44%
59%
57%
56%
53%
52%
48%
50%
47%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
41%
2011
2012
In the 4Q12, net operating revenue breakdown according as follows:
ƒ Domestic Market: R$ 774.5 million, representing 47% of Net Operating Revenue, with decrease of 0.9%
over 4Q11 and 3.0% over 3Q12. Adjusting for the consolidation of revenues from acquired companies
Stardur, Paumar and Injetel, as well as the WEG-Cestari joint-venture, the fall in relation to 4Q11 would
have been 3.4%;
ƒ External Market: R$ 887.7 million, equivalent to 53% of Net Operating Revenue. The comparison in
Brazilian Reais shows growth of 29.3% over the same period last year and 9.0% over the previous
quarter. These figures incorporate the partial consolidation of acquisitions Watt Drive and Electric
Machinery. Adjusting the effect of acquisitions consolidation, growth would have been 27.0% when
measured in Brazilian Reais. Considering the average US dollar, comparison shows an increase of
13,2% compared to 4Q11 and 7,4% compared to 3Q12.
Similarly to recent quarters, in 4Q12 net revenues from external markets surpassed revenues from the
domestic market. The fast growth abroad is due to our commercial aggressiveness, which resulted in WEG
winning additional market positions and in the expansion of our product portfolio. The devaluation of 12.4%
of the Brazilian currency against the U.S. dollar, comparing the average exchange rates for the 4Q12 and
4Q11, was relevant in sales growth in external markets. More important, however, is that this growth was
achieved in an environment of low economic activity, which underscores our competitiveness, based on the
WEG brand recognition and our portfolio of technologically advanced products.
Evolution of Net Revenues according to Geographic Market
(R$ Million)
Q4 2012
Q3 2012
Change
Q4 2011
Net Operating Revenues
- Domestic Market
- External Markets
- External Markets in US$
1,662.3
774.5
887.7
431.1
1,613.1
798.6
814.4
401.5
3.0%
-3.0%
9.0%
7.4%
1,468.6
781.9
686.6
380.8
Change
13.2%
-0.9%
29.3%
13.2%
3 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
External Market - Distribution of Net Revenues according to Geographic Market
Q4 2012
Q3 2012
Change
Q4 2011
Change
North America
South and Central America
Europe
Africa
Australasia
30.7%
19.4%
23.4%
16.1%
10.5%
39.1%
15.8%
17.6%
13.1%
14.3%
-8.4 pp
3.5 pp
5.8 pp
3 pp
-3.9 pp
34.3%
15.1%
25.5%
14.8%
10.3%
-3.6 pp
4.3 pp
-2.2 pp
1.3 pp
0.2 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 2012
Q3 2012
%
Q4 2011
%
56.6%
23.0%
33.6%
28.0%
11.5%
16.5%
9.3%
6.8%
2.5%
6.1%
5.4%
0.8%
60.1%
23.1%
37.0%
24.5%
14.2%
10.3%
8.6%
6.2%
2.5%
6.8%
6.0%
0.8%
-3.5 pp
-0.2 pp
-3.4 pp
3.5 pp
-2.7 pp
6.2 pp
0.6 pp
0.6 pp
0.1 pp
-0.6 pp
-0.6 pp
0 pp
64.0%
26.0%
37.9%
22.0%
15.4%
6.6%
8.9%
6.9%
2.0%
5.1%
5.0%
0.2%
-7.3 pp
-3.1 pp
-4.3 pp
6 pp
-3.9 pp
9.9 pp
0.4 pp
-0.1 pp
0.5 pp
1 pp
0.4 pp
0.6 pp
Performance in 4Q12 was in line with the Strategic Plan WEG 2020, with substantial growth in revenue as a
result of both the expansion into new markets and the expansion of the product portfolio. Moreover, we
have noted a gradual recovery in important variables for the overall profitability of our business, such as
product mix and average prices in long-cycle products. There are indications that the inflection points in
these variables have been overcome and that the improvements seen throughout 2012 are the basis for the
coming years.
In the Industrial Electro-Electronic Equipment area we have worked to strengthen WEG’s brand.
Research and development focus has resulted in an updated product portfolio, with specific solutions for
each market. These, combined with investments in commercial structure, allowed us to increase our market
share by penetration segments and customers that we did not reach until very recently. It is important to
note that this growth in external markets occurs in both mature and emerging markets, and in a diverse
customer base of OEMs, distributors and end users.
In Brazil we strengthen our position by expanding in more complex systems and solutions, finding
opportunities in new segments and introducing new products and services. Moreover, we explored
opportunities in sectors like oil and gas and shipbuilding, for example. While the competitiveness stimulus
measures under the “Brasil Maior” Plan have not produced short-term results in igniting new industrial
investment intentions, we were able to grow.
In the Energy Generation, Transmission and Distribution (GTD) area market dynamics are, by the very
nature of so-called long-cycle products, more stable. Still, the conditions seem to indicate gradual
improvement over what we have seen in recent quarters, particularly with respect to prices.
In the Generation segment, the energy auction held in December resulted in yet another fall in energy tariffs,
with wind energy once again dominating other sources. The recent changes introduced by BNDES in the
accreditation of wind generation equipment with local content should have a major impact on the
competitive environment. Our competitive advantages, such as industrial capabilities and technological
know-how in manufacturing or power generation equipment using different renewable energy sources
(hydroelectric, biomass and wind), adapted to Brazilian conditions, make us confident about the prospects
of this business. In the Transmission and Distribution (T&D) segment, we observed a gradual decrease in
pricing pressure, with the gradual elimination of excess production capacity, which should also positively
affect this markets’ profitability.
In the Motors for Domestic Use business area, the peculiar situation of growing white goods consumption
and the low local production continued. Measures to stimulate consumption, reducing taxes and improving
credit conditions, have benefited imported products. We have great confidence in our ability to compete
and hopefully recent adjustments in market conditions can restore competitive balance in the market.
The Paints and Varnishes business area continued to show ample opportunities for growth, with product
portfolio expansion and new segments, taking advantage of commercial synergies with other WEG
4 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
products. With the acquisition of Paumar, concluded in December, we were able to quickly restore
production capacity that was impacted by the fire of the Stardur unit.
Q4 2012
Net Operating Revenues
Cost of Goods Sold
Gross Operating Profit
Q3 2012
1,662.3
(1,133.6)
528.6
1,613.1
(1,114.5)
498.6
Gross Margin
31.8%
30.9%
(-) Selling Expenses
(-) General & Administrative
(-) Profit Sharing
Result from Activities
(+) Depreciation & Amortization
EBITDA
(165.9)
(82.0)
(34.1)
246.6
54.0
300.6
(156.7)
(81.4)
(28.8)
231.6
52.6
284.3
EBITDA Margin
18.1%
17.6%
%
3.0%
1.7%
6.0%
Q4 2011
1,468.6
(1,022.9)
445.7
%
13.2%
10.8%
18.6%
30.3%
5.8%
0.8%
18.3%
6.5%
2.5%
5.7%
(140.7)
(70.2)
(25.2)
209.6
48.6
258.2
17.9%
16.8%
35.3%
17.7%
11.0%
16.4%
17.6%
Figures in R$ thousands
Cost of Goods
Sold
Cost of Goods Sold (COGS) totaled R$ 1,133.6 million in 4Q12, increasing 10.8% over 4Q11 and 1.7%
over 3Q12. Gross margin reached 31.8%, with expansion of 1.5 percentage points over 4Q11 and 0.9
percentage point over 3Q12.
Gross Margin
This increase in Gross Margin, both when compared to 4Q11 as when compared to 3Q12, is due to: (i)
devaluation of the Brazilian Real and consequent revenue growth in external market sales; (ii) better dilution
of manufacturing costs due to higher revenue growth; (iii) relative stability of raw material costs; (iv) reduction
on payroll social security taxes; and (v) diminishing pricing pressure in long-cycle products, such as T&D
and relative improvement in the mix of products sold. We note that these positive impacts must be
understood in relation to the immediately previous quarters. If considered in the context of the market, both
the product mix as the relative prices of long cycle still have ample room to further recovery.
Cost of Raw
Materials
Average copper spot prices at the London Metal Exchange rose by 5% in the 4Q12 compared to the
average of 4Q11 and by 3% compared to the average of 3Q12. According to the CRUspiGlobal index, Steel
prices in the international markets fell by 10.6% over 4Q11 and by 3.0% over 3Q12.
Copper prices are, after discounted transportation costs, quite uniform across the various markets. Steel
prices may show regional variations, but follow similar trends in many global markets. Thus, we adjust our
selling prices according to the characteristics of each order and to current market conditions, incorporating
variations of natural raw materials costs and gradually.
Selling, General
and
Administrative
Expenses
Consolidated selling, general and administrative expenses (SG&A) represented 14.9% of net operating
revenue in the 4Q12, 0.6 percentage point higher than the 14.4% of the 4Q11 and 0.2 percentage point
higher than the 14.8% of the 3Q12. In absolute operating expenses grew by 17.5% over 4Q11 and 4.1%
over the previous quarter, once again demonstrating the consistent effort and efficient expense
management.
EBITDA and
EBITDA Margin
As a result of aforementioned impacts, EBITDA in 4Q12 (calculated according to the methodology defined
by CVM Ofício Circular 01/07) totaled R$ 300.6 million, an increase of 16.4% over 4Q11 and of 5.7% over
the previous quarter. EBITDA margin reached 18.1%, 0.5 percentage point higher in both over 4Q11 and
3Q12.
EBITDA calculated using the new methodology set forth by the Brazilian Comissão de Valores Mobiliários
(CVM) Instruction nº 527/2012 would have reached R$ 289.8 million in 4Q12 and R$ 1,016.7 million in
2012, with margin of 17.4% and of 16.5%, respectively. The EBITDA absolute growth would have been
25.1% over 4Q11 and of 19.5% over 2011.
5 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Main impacts on EBITDA
110,3
105,0
25,2
83,4
12,2
FX Impact
on
Revenues
258,2
COGS (ex
depreciation)
Selling
Expenses
Volumes,
Prices &
Product Mix
Changes
General and
Administrative
Expenses
EBITDA Q4 11
8,9
300,6
Profit Sharing
Program
EBITDA Q4 12
Net Financial
Results
Financial revenues totaled R$ 96.8 million in 4Q12 (R$ 140.2 million in 4Q11 and R$ 101.3 million in 3Q12).
Financial expenses totaled R$ 94.1 million (R$ 111.2 million in 4Q11 and R$ 80.7 million in 3Q12). In this
quarter, net financial income was positive in R$ 2.7 million (R$ 29.0 million in 4Q11 and R$ 20.6 million in
3Q12). The decrease in net financial income is mainly due to the reduction of real interest rates on financial
instruments in the Brazilian market.
Income Tax and
Social
Contribution
The Income Tax and Social Contribution Tax on Net Profit provision in 4Q12 reached R$ 62.3 million (R$
46.6 million in 4Q11 and R$ 61.9 million in 3Q12). Additionally, R$ 8.6 million were recorded as ‘‘Deffered
income tax / social contribution’’ credit (debit of R$ 1.7 million in 4Q11 and credit of R$ 6.1 million in 3Q12).
Net Income
As a result of the previously discussed impacts, net income for 4Q12 was R$ 183.2 million, an increase of
17.2% over 4Q11 and decrease of 0.9% over the previous quarter. The net margin of the quarter was
11.0%, 0.4 percentage point higher compared to the 4Q11 and 0.4 percentage point lower compared to
the 3Q12.
Cash flow
From this 4Q12 onwards we are presenting the Cash Flow Statements in accordance with CPC 03. The
main difference with respect to the methodology used in the previous quarters is treatment of the assets
and liabilities from the acquired subsidiaries, which are now presented separately and not incorporated into
the corresponding consolidated accounts. The following discussion considers the new methodology. For
clarity and to enable comparison with the data presented over the previous quarters, we have included the
Cash Flow Statements according to the previous methodology in annex V of this document.
Additionally, the “Cash at the end of period” position showing in the Cash Flow Statement, of R$ 2,302.3
million, does not includes R$ 261.2 million in investments with maturities of less than twelve months, but
without immediate liquidity. Considering the accounts ‘‘Cash’’, ‘‘Cash and Equivalent’’ and ‘‘Short-term
investments’’, the total cash position reaches R$ 2,563.5 million.
893,6
381,6
1.141,4
2.931,6
Operating
Investing
2.302,3
Financing
Cash Dec 2011
Cash Dec 2012
6 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Operating cash
flow
Cash flow from operating activities in 2012 totaled R$ 893.6 million, an increase of 168% over 2011. This
expansion in operating cash generation was provided both by the increase in cash generated from
operations, with increase in net income before depreciation, as by the relative decrease in working capital
requirements, mainly with inventory reduction, despite strong revenue growth in external markets.
Investments
Investments in fixed assets for capacity expansion and modernization totaled R$ 238.4 million in 2012, 90%
of which destined to industrial plants and other installations in Brazil and the remaining amount to
production units and other subsidiaries abroad. In addition to these investments, R$ 27 million in fixed
assets were incorporated from the consolidation of Stardur, Paumar, Injetel and WEG Cestari transactions
in 2012.
Disbursements in capacity expansion over the 2012 were lower than originally forecasted because our
investment program is managed for optimum capacity utilization and maximization of return on invested
capital. Thus, the relatively lower performance in domestic and optimization efforts to meet demand in the
external market determined a slower speed of implementation of the investment program.
Investments in Fixed Assets (R$ million)
Outside Brazil
Brazil
63,1
33,8
49,9
41,1
2,4
7,3
25,6
38,8
42,6
Q1
Q2
Q3
8,2
73,7
58,7
55,5
50,4
5,0
3,7
5,1
62,1
53,7
51,9
45,4
Q4
Q1
Q2
Q3
1,0
2011
9,3
64,5
Q4
2012
Cash flow from
investing
activities
Investing activities consumed R$ 381.6 million in 2012, a decrease of 41% over 2011. The main factor
behind this reduction is the decision not to invest in financial instruments with longer maturities. In addition,
there was a decrease of 22% the amount spent on acquisitions in 2012. On the other hand, as previously
discussed, there was an increase of 26% in investment in fixed assets.
Debt and Cash
Position
Debt and Cash Position (R$ Thousand)
December 2012
December 2011
December 2010
Cash & Financial instruments
- Current
- Long Term
2,565,532
2,563,500
2,032
3,212,250
2,931,615
280,635
2,552,996
2,552,996
-
Debt
- Current
2,689,840
1,645,772
3,457,728
1,701,435
2,418,943
1,018,995
- In Brazilian Reais
- In other currencies
- Long Term
1,067,683
578,089
1,044,068
585,687
1,115,748
1,756,293
476,599
542,395
1,399,948
- In Brazilian Reais
- In other currencies
Net Cash (Debt)
824,910
219,158
(124,308)
1,560,712
195,581
(245,478)
1,209,687
190,260
134,053
As of December 31, 2012 cash, cash equivalents and financial investments totaled R$ 2,565.5 million.
Gross financial debt totaled R$ 2,689.8 million, 61% in short-term operations and 39% in long-term
operations.
In 2012, we observed the decrease of both our cash positions as total financing while maintaining a net
debt position of close to balance. At the end of 2012 WEG had net debt of R$ 124.3 million (net debt of R$
7 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
245.5 million in December 31, 2011). The new level of interest rates in Brazil decreases the attractiveness of
high cash positions, as discussed earlier. The cash resources are invested in Brazilian currency in first-tier
banks.
The main sources of funding are:
ƒ In local currency – loans from BNDES, FINEP and other development agencies;
ƒ In other currencies – trade finance transactions and working capital financing of subsidiaries abroad,
denominated in the respective currencies of each country.
The characteristics of the debt are:
ƒ The duration of the long-term portion is 29.4 months.
ƒ The duration of the Brazilian Reais denominated portion is 15.7 months and of the foreign currencies
denominated portion is 11.8 months.
ƒ The weighted average cost of fixed-rate debt denominated in Reais is approximately 6.9% per year.
Floating rate contracts are indexed mainly by to the Brazilian long-term interest rate (TLJP).
Dividends
Management will propose during the annual General Shareholders’ Meeting to distribute R$ 375.2 million as
payment of dividends and interest on stockholders equity on 2012 results, which corresponds to R$
0.60482353 per share before eventual tax deductions. This amount represents 57% of net income before
statutory adjustments.
As of August 15, 2012, payments declared during the first half of 2012 were made to shareholders
(intermediate dividends), to the total amount R$ 156.9 million, as below:
ƒ On March 20, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross
amount of R$ 47.4 million;
ƒ On June 26, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross amount
of R$ 47.4 million;
ƒ On July 24, as dividends referring to first half of 2012 results, to the total amount of R$ 62.0 million.
The payments referring to the second half of 2012 (supplementary dividends), to the amount of R$ 218.3
million, will begin on March 13, 2013:
ƒ On September 25, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross
amount of R$ 47.4 million;
ƒ On December 18, as interest on stockholders’ equity (JCP), to shareholders on said date, in the gross
amount of R$ 43.1 million;
ƒ On February 26, 2013, as supplementary dividends referring to 2012 results, to the total amount of R$
127.8 million.
Event
Dividends
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
Dividends
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
Total
Cash flow from
financing
activities
Board Meeting
Date
26/02/2013
18/12/2012
25/09/2012
24/07/2012
26/06/2012
20/03/2012
Payment Date
13/03/2013
13/03/2013
13/03/2013
15/08/2012
15/08/2012
15/08/2012
Gross amount per
share
R$ 0.20600000
R$ 0.06941176
R$ 0.07647059
R$ 0.10000000
R$ 0.07647059
R$ 0.07647059
Net amount per
share
R$ 0.20600000
R$ 0.05900000
R$ 0.06500000
R$ 0.10000000
R$ 0.06500000
R$ 0.06500000
R$ 0.60482353
R$ 0.56000000
Financing activities consumed R$ 1,141.4 million in 2012, mainly with the continuation of the reduction in
gross debt and the payment of loans and financing. In this period we conducted a net reduction of R$
596.0 million of debt (new debt of R$ 982.7 million and amortization of R$ 1,578.7 million).
8 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
WEGE3 Share
Performance
The common shares issued by WEG, traded under the code WEGE3 at BM&F Bovespa, ended the last
trading session of 2012 quoted at R$ 27.00, with a nominal gain of 43.8% in the year. Considering the
dividends and interest on stockholders equity declared in the period, the increase was of 47.7% in 2012.
The average daily traded volume in 4Q12 was R$ 26.2 million, almost four times higher than in 4Q11.
Throughout the quarter 136,687 stock trades were carried out (47,524 stock trades in 4Q11), involving 59.3
million shares (17.5 million shares in 4Q11) and totaling R$ 1,546.6 million (R$ 328.2 million in 4Q11).
Share Price Performance and Traded Volume
30,00
10.000
Ações Negociadas (mil)
WEGE3
28,00
26,00
8.000
Cotações WEGE3
22,00
6.000
20,00
18,00
4.000
16,00
14,00
2.000
Ações Negociadas (mil)
24,00
12,00
10,00
0
Dividend adjusted performance (dividend and interest on stockholders equity)
Injetel Acquisition
On October 31, 2012 WEG S.A. announced acquisition of Injetel Indústria e Comércio de Componentes
Plásticos Ltda. (“Injetel”), a company specialized in manufacturing and marketing of power switches, power
outlets and plugs for commercial and residential applications.
Injetel was founded in 1991 and currently employs 50 people, occupying around 2,000 square meters
industrial area in Curitiba, in the State of Paraná. Revenues in 2011 were of approximately R$ 7 million.
Paumar
Acquisition
On December 03, WEG S.A. announced acquisition of Indústria de Tintas e Vernizes Paumar S.A.
(“Paumar”), a company specialized in manufacturing and marketing of coatings, varnishes, enamels and
lacquers.
Paumar was founded in 1964 and currently employs 67 people, occupying around 5,800 square meters of
an industrial are of around 37,500 square meters in Mauá, in the State of São Paulo. Revenues in 2011
were of approximately R$ 21 million.
The acquisition of Paumar aims mainly the maintenance of production capacity, affected by a fire at the
Stardur unit on October 2012.
Selection for the
ISE (Corporate
Sustainability
Index)
On November 29, 2012 BM&F Bovespa announced that WEG S.A. was selected for the ISE portfolio
BM&FBOVESPA, which will be valid from January 07, 2013 until January 03, 2014. WEG is the only
Company from the capital goods, machinery and equipment and electro-electronic equipment industry
segments that was included. WEG is also of 14 companies that authorized the opening of the questionnaire
responses of selection.
The new portfolio is comprised of 51 stocks from 37 companies. They represent 16 sectors and totaled R$
1.07 trillion in market value, equivalent 44.81% of the total value of companies traded on the
BM&FBOVESPA on November 26, 2012.
9 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Inclusion on
MSCI Global
Indices’
On November 14, 2012, company MSCI Inc., owner of the family of MSCI equity indices, announced the
inclusion in the MSCI Global Standard Indices, from November 30, 2012 onwards, of the common shares
issued by WEG (WEGE3).
The indices calculated by MSCI are used as reference performance by investors totaling more than U$ 7
trillion worldwide. The inclusion of the shares of WEG in the MSCI indices is the result of the gradual
increase in the liquidity of these shares. At the same time, it is expected that inclusion can increase the
interest of foreign institutional investors in “WEGE3” shares and on the “WEGZY” depositary receipt traded
in the U.S. OTC market
FINEP 2012
Award
On December 19, 2012, WEG’s innovation management process was awarded one of the FINEP Innovation
Award 2012, category “Large Company”by the Brazilian President Dilma Rousseff.
The Award is organized by the Financiadora de Estudos e Projetos (Finep), an agency linked to the Ministery
of Science, Technology and Innovation (MCTI) and was created to recognize and disseminate innovative
efforts made by companies, scientific and technological institutions, and Brazilian inventors, developed in
Brazil and already applied in the country or abroad.
2013 BCG Global
Challengers
WEG once again figures in the BCG Global Challengers list of the 100 companies from emerging countries
that are rapidly growing and internationalizing. This is the fifth time that the list is published and WEG has
been present in all previous editions.
The so called “global challengers” recorded average revenues of US$ 26.5 billion, surpassing the US$ 21
billion of 420 U.S. non-financial public companies that comprise the S&P 500 index. With thirteen
companies on the list, Brazil is the third country with the most global challengers, after China and India.
10 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Results
Conference Call
WEG will hold, on February 28, 2013 (Thursday), conference call and webcast to discuss the 2012 results.
The call will be conducted in Portuguese with simultaneous translation in English, following scheduled time:
11 a.m.
9 a.m.
2 p.m.
– Brasilia time
– New York (EST)
– 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 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/4t12.htm
www.ccall.com.br/weg/4q12.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.
11 | WEG S.A. | 2012 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.
12 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Annex I
Consolidated Income Statement - Quarterly
Figures in R$ Thousands
4T12
37
4th Quarter
2012
R$
AV%
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
1,662,258 100%
(1,133,617) -68%
528,641
32%
(165,903) -10%
(82,026)
-5%
96,768
6%
(94,107)
-6%
4,153
0%
(49,051)
-3%
238,475
14%
(62,287)
-4%
8,620
1%
(1,651)
0%
183,157 11.0%
EBITDA
300,603
EPS
0.29522
18.1%
3T12
35
3rd Quarter
2012
R$
AV%
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%
4T11
28
4th Quarter
2011
R$
AV%
1,468,551
(1,022,865)
445,686
(140,682)
(70,249)
140,243
(111,212)
5,927
(57,662)
212,051
(46,558)
(1,713)
7,532
156,248
Changes %
Q4 12
Q4 12
Q3 12
Q4 11
100%
-70%
30%
-10%
-5%
10%
-8%
0%
-4%
14%
-3%
0%
1%
11%
3.0%
1.7%
6.0%
5.8%
0.8%
-4.5%
16.6%
233.3%
23.9%
-1.8%
0.6%
40.4%
n.m
-0.9%
13.2%
10.8%
18.6%
17.9%
16.8%
-31.0%
-15.4%
-29.9%
-14.9%
12.5%
33.8%
n.m
n.m
17.2%
284,276 17.6%
258,210 17.6%
5.7%
16.4%
0.29780
0.25185
-0.9%
17.2%
WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Annex II
Consolidated Income Statement
12M12
37
12M11
12 Months
2012
R$
AV%
12 Months
2011
R$
AV%
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
6,173,878
(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%
EBITDA
1,053,545
17.1%
EPS
1.05734
Figures in R$ Thousands
28
5,189,409
(3,633,358)
1,556,051
(508,904)
(259,483)
499,570
(396,569)
17,072
(141,611)
766,126
(182,956)
23,851
20,085
586,936
100%
-70%
30%
-10%
-5%
10%
-8%
0%
-3%
15%
-4%
0%
0%
11%
%
2012
2011
19%
18%
21%
22%
18%
-8%
2%
9%
16%
13%
25%
24%
n.m
12%
882,340 17.0%
19%
0.94605
12%
WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Annex III
Consolidated Balance Sheet
Figures in R$ Thousands
December 2012
R$
AV%
31
December 2011
R$
AV%
22
December 2010
R$
AV%
13
CURRENT ASSETS
5,710,017
64%
5,867,061
64%
4,794,009
64%
Cash & cash equivalents
Receivables
Inventories
Other current assets
LONG TERM ASSETS
Long term securities
Deferred taxes
Other non-current assets
FIXED ASSETS
2,563,500
1,472,839
1,306,273
367,405
88,833
2,032
36,891
49,910
3,074,700
29%
17%
15%
4%
1%
0%
0%
1%
35%
2,931,615
1,307,692
1,362,314
265,440
432,469
280,635
111,488
40,346
2,806,331
32%
14%
15%
3%
5%
3%
1%
0%
31%
2,552,996
1,044,712
1,008,952
187,349
136,984
78,810
58,174
2,580,171
34%
14%
13%
2%
2%
0%
1%
1%
34%
7,622
0%
349
0%
601
0%
2,537,094
29%
2,445,760
27%
2,395,575
32%
Intangibles
TOTAL ASSETS
529,984
8,873,550
6%
100%
360,222
9,105,861
4%
100%
183,995
7,511,164
2%
100%
CURRENT LIABILITIES
3,012,724
34%
2,752,960
30%
1,938,803
26%
Social and Labor Liabilities
168,831
2%
161,436
2%
141,797
2%
Suppliers
331,037
4%
298,195
3%
242,300
3%
Fiscal and Tax Liabilities
126,655
1%
88,473
1%
72,204
1%
1,645,772
19%
1,701,435
19%
1,018,995
14%
79,281
358,124
33,559
269,465
1,709,100
1%
4%
0%
3%
19%
2,804
285,843
26,314
188,459
2,446,312
0%
3%
0%
2%
27%
63,440
271,949
23,583
104,535
2,028,525
1%
4%
0%
1%
27%
1,044,068
12%
1,756,293
19%
1,399,948
19%
Other Long Term Liabilities
137,916
2%
122,485
1%
86,875
1%
Deferred Taxes
320,503
4%
421,918
5%
415,318
6%
Contingencies Provisions
206,613
2%
145,616
2%
126,384
2%
91,377
1%
106,477
1%
89,229
1%
STOCKHOLDERS' EQUITY
4,060,349
46%
3,800,112
42%
3,454,607
46%
TOTAL LIABILITIES
8,873,550
100%
9,105,861
100%
7,511,164
100%
Investment in Subs
Property, Plant & Equipment
Short Term Debt
Dividends Payable
Advances from Clients
Profit Sharring
Other Short Term Liabilities
LONG TERM LIABILITIES
Long Term Debt
MINORITIES
15 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Annex IV
Consolidated Cash Flow Statement
Figures in R$ Thousands
12M12
12M11
12 Months
2012
17
Operating Activities
Net Earnings before Taxes
Depreciation and Amortization
Provisions:
Changes in Assets & Liabilities
12 Months
2011
13
864,102
208,337
175,686
(354,559)
766,126
188,030
127,886
(748,906)
893,566
333,136
Investment Activities
Investments
Fixed Assets
Intagible Assets
Goodwill in Capital Transactions
Asset Write Downs
Accumulated Conversion Adjustment
Long term securities bought
Aquisition of Subsidiaries
(7,220)
(237,882)
(17,939)
(54,077)
22,827
78,521
17,359
(183,156)
(189,065)
2,426
21,000
34,378
(280,635)
(234,902)
Cash Flow From Investment Activities
(381,567)
(646,798)
Financing Activities
Working Capital Financing
Long Term Financing
Interest paid on loans and financing
Acquisition of Stakes of non-controlling shareholders
Treasury Shares
Dividends & Intesrest on Stockholders Equity Paid
982,720
(1,578,739)
(174,827)
(52,090)
(318,422)
2,284,737
(1,127,569)
(155,246)
(10,055)
(299,586)
Cash Flow From Financing Activities
(1,141,358)
692,281
(629,359)
378,619
2,931,615
2,302,256
2,552,996
2,931,615
Cash Flow from Operating Activities
Change in Cash Position
Cash & Cash Equivalents
Beginning of Period
End of Period
16 | WEG S.A. | 2012 Fourth Quarter Results
Earnings Release
Annex V
Consolidated Cash Flow Statement (previous methodology)
Figures in R$ Thousands
12M12
12M11
12 Months
2012
17
12 Months
2011
13
Operating Activities
Net Earnings before Taxes
Depreciation and Amortization
Provisions:
Changes in Assets & Liabilities
864,102
208,337
175,686
(413,257)
766,126
188,030
127,886
(782,260)
Cash Flow from Operating Activities
834,868
299,782
Investment Activities
Fixed Assets
Intagible Assets
Goodwill in Capital Transactions
Asset Write Downs
Accumulated Conversion Adjustment
Long term securities bought
(265,356)
(169,971)
(54,077)
22,827
78,521
17,359
(231,542)
(193,509)
21,000
34,378
(280,635)
Cash Flow From Investment Activities
(377,917)
(650,308)
Financing Activities
Treasury Shares
Working Capital Financing
Long Term Financing
Interest paid on loans and financing
Dividends & Intesrest on Stockholders Equity Paid
985,678
(1,578,739)
(174,827)
(318,422)
(10,055)
2,321,601
(1,127,569)
(155,246)
(299,586)
Cash Flow From Financing Activities
(1,086,310)
729,145
(629,359)
378,619
2,931,615
2,302,256
2,552,996
2,931,615
Change in Cash Position
Cash & Cash Equivalents
Beginning of Period
End of Period
17 | WEG S.A. | 2012 Fourth Quarter Results