Earnings Release
Jaraguá do Sul (SC), October 24th 2012: 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 2012 (3Q12). The following financial
and operating data are presented in a consolidated basis, except when otherwise indicated, in thousands of Brazilian Reais (R$) according to the current Brazilian generally
accepted accounting principles, as put forward by the Brazilian applicable laws. All growth rates comparisons relate, except when otherwise indicated, to the same period of the
previous year.
External market continues to grow strongly
Net Revenues grew by 22% over 3Q11. External market grew by 40%
EBITDA reached R$ 284 million, 16.6% higher than 3Q11, margin of 17.6%
Net Income of R$ 185 million, net margin of 11.5%
Highlights
Key
Figures
Net operating revenue in the third quarter of 2012
totaled R$ 1,613.1 million, with 22.4% growth over
3Q11 and 5.5% over the previous quarter;
Net Income totaled R$ 184.8 million, with net margin of
11.5%, with 19.5% growth over 3Q11 and 32.1% over
the previous quarter;
EBITDA reached R$ 284.3 million for a 17.6%
margin, 16.6% higher than the previous year and
9.3% higher than the previous quarter;
Investments in fixed assets totaled R$ 164.6 million in the
first nine months of 2012.
Q3 2012
1,613,067
798,626
814,441
Q2 2012
1,528,791
729,235
799,556
%
5.5%
9.5%
1.9%
401,460
406,915
-1.3%
498,587
461,661
8.0%
30.9%
30.2%
Net Income
184,756
139,819
Net Margin
11.5%
9.1%
Net Operating Revenue
Domestic Market
External Markets
External Markets in US$
Gross Operating Profit
Gross Margin
EBITDA
284,276
260,028
EBITDA Margin
17.6%
17.0%
EPS
0.2978
0.2254
Q3 2011
1,317,483
737,350
580,133
%
22.4%
8.3%
40.4%
09M12
4,511,620
2,242,129
2,269,491
353,520 13.6%
418,266
19.2%
31.7%
32.1%
154,567
19.5%
11.7%
9.3%
243,743
16.6%
18.5%
32.1%
0.2491
19.5%
09M11
3,720,858
2,121,020
1,599,838
%
21.3%
5.7%
41.9%
1,178,760
980,972
20.2%
1,352,215
1,110,365
21.8%
30.0%
29.8%
472,822
430,688
10.5%
11.6%
752,942
624,130
16.7%
16.8%
0.7621
9.8%
20.6%
0.6942
9.8%
Figures in R$ Thousand
Conference Call (with simultaneous translation into English)
October 25, 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/3q12.htm
WEG S.A. | 2012 Third Quarter Results
Earnings Release
Comments from Laurence Beltrão Gomes,
WEG’s Finance and Investor Relations Officer.
In the third quarter of 2012, WEG was able to record significant 22% net revenue growth in relation to 2011. This strong growth, which
was reached despite highly uncertain economic conditions, confirms the resilience and robustness of WEG’s business model.
Once again, external markets’ sales performance, with above 40% growth, was the quarterly highlight. Investments made in our
commercial footprint have been successful in expanding the products portfolio in the international market, even considering the scenario
of low economic activity. This sales expansion is also due to the recognition of WEG’s brand attributes, reliability and state of the art
technology.
In the domestic market, we note that government measures to increase the competitiveness of the industrial sector are important both for
the direct impact on WEG as for the impact on our customers. We hope in coming months the stimulus measures of ‘‘Brasil Maior’’ Plan
will gain more traction and signs of recovery in the Brazilian industry will become clear.
Economic Activity
and Industrial
Production
During the third quarter of 2012, conditions for industrial activity and economic activity in general remained
relatively weak, both in emerging countries as well as in mature markets. In Brazil, the recent initiatives to
stimulate industrial production began to show the first positive results.
The purchasing manager indexes (PMI) in some of our key markets demonstrate a slight improvement in
September compared to the previous month, but with indexes still near or slightly below 50 in major
industrial markets. Indexes above 50 indicate industrial expansion, while below 50 indicate contraction in
industrial activity.
Manufacturing ISM Report on Business ®
Markit/BME Germany Manufacturing PMI®
HSBC China Manufacturing PMI™
USA
Germany
China
September 2012 August 2012
51,5
49,6
47,4
44,7
47,9
47,6
July 2012
49,8
43,0
49,3
In Brazil, industrial production decreased 3.4% in up to August 2012 in comparison the same period of the
previous year. Over the previous 12 months the decrease reaches 2.9%. The expectations for industrial
production in 2012, as captured by the Central Bank of Brazil Focus report that consolidates financial
market estimates, are of 2% previous year. However, the monthly comparison shows that recent measures
to expand production and increase industrial competitiveness are starting to have an impact. August was
the third consecutive month of positive monthly comparisons.
Industrial Indicators According to Categories of Use in Brazil
Change (%)
Categories of Use
Aug/Jul*
Capital Goods
0,30
Intermediary Goods
2,00
Consumer Goods
1,20
Durable Goods
2,60
Semi-durable and non-durable
1,20
General Industry
1,50
Source: IBGE, Research office, Industry Coordination
(*) Series with seasonal adjustments
Aug 12 / Aug 11
(13,00)
(0,50)
(0,20)
0,10
(0,30)
(2,00)
Acummulated
On Year
12 months
(12,20)
(2,10)
(2,10)
(7,30)
(0,40)
(3,40)
(8,50)
(1,60)
(2,50)
(8,00)
(0,70)
(2,90)
Capital goods production was, once again, the negative highlight in almost all comparisons, hampered by
the strong influence of the heavy vehicles production, which showed a sharp drop over the year. Thus,
these results do not necessarily reflect the environment that we find in our various client segments.
WEG S.A. | 2012 Third Quarter Results
Earnings Release
Net Operating
Revenue
Net Operating Revenue reached R$ 1,613.1 million in the third quarter of 2012 (3Q12), corresponding to an
increase of 22.4% in relation to third quarter of 2011 (3Q11) and an increase of 5.5% in relation to second
quarter of 2012 (2Q12).
Adjusted for the R$ 85.2 million from the consolidation of Watt Drive (Austria), Electric Machinery (USA),
Stardur and of the WEG-Cestari joint venture (Brazil), net revenue growth would have been 16.2% in 3Q12
over 3Q11.
Net Operating Revenue per Market (R$ million)
External Market
Domestic Market
1,469
1,277
1,317
1,126
1,529
1,613
1,370
52%
50%
43%
44%
47%
59%
57%
56%
53%
52%
48%
50%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
41%
48%
2011
2012
Net operating revenue breakdown according to destination market is as follows:
ƒ Domestic Market: R$ 798.6 million, representing 49.5% of Net Operating Revenues, with growth of
8.3% over 3Q11 and of 9.5% over 2Q12; these figures incorporate the consolidation of revenues from
Stadur and also the WEG-Cestari joint-venture. Adjusted for these transactions, revenue growth would
have been of 2.6% over 3Q11.
ƒ External Market: R$ 814.4 million, equivalent to 50.5% of Net Operating Revenues, with growth of
40.4% over the same period of last year and of 1.9% over the previous quarter. Considering the average
US dollar/Brazilian Real exchange rate of the quarter, net operating revenues from external market in US
dollar reached US$ 401.5 million, which represents growth of 13.6% over 3Q11 and decrease of 1.3%
over 2Q12. Adjusting for the consolidation of revenues from Watt Drive, Electric Machinery and
Pulverlux, growth over 3Q11 would have been of 33.5% when measured in Brazilian Reais.
As in the previous quarter, net revenues from external markets surpassed revenues from the domestic
market. This faster growth abroad is due to the expansion of operations outside Brazil, with market share
gains and expansion of the product portfolio. Additionally, this move is boosted by the devaluation of the
Brazilian currency, of 19% in this quarter compared to 3Q11.
Evolution of Net Revenues according to Geographic Market
(R$ Million)
Q3 2012
Net Operating Revenues
. Domestic Market
. External Markets
. External Markets in US$
1,613.1
798.6
814.4
401.5
Q2 2012
1,528.8
729.2
799.6
406.9
Change
5.5%
9.5%
1.9%
-1.3%
Q3 2011
1,317.5
737.4
580.1
353.5
Change
22.4%
8.3%
40.4%
13.6%
WEG S.A. | 2012 Third Quarter Results | 3
Earnings Release
External Market - Distribution of Net Revenues according to Geographic Market
Q3 2012
North America
South and Central America
Europe
Africa
Australia
39.1%
15.8%
17.6%
13.1%
14.3%
Q2 2012
29.8%
13.9%
27.8%
16.9%
11.6%
Change
Q3 2011
9.3 pp
2 pp
-10.2 pp
-3.8 pp
2.7 pp
34.0%
18.0%
23.0%
15.0%
10.0%
Change
5.1 pp
-2.2 pp
-5.4 pp
-1.9 pp
4.3 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 Area
Q3 2012
Q2 2012
%
Q3 2011
%
60.1%
23.1%
37.0%
24.5%
14.2%
10.3%
8.6%
6.2%
2.5%
6.8%
6.0%
0.8%
66.2%
25.0%
41.2%
20.6%
12.6%
8.1%
7.9%
5.5%
2.4%
5.2%
4.7%
0.6%
-6.1 pp
-1.9 pp
-4.2 pp
3.8 pp
1.6 pp
2.2 pp
0.8 pp
0.7 pp
0.1 pp
1.5 pp
1.3 pp
0.2 pp
61.4%
27.0%
34.5%
23.5%
16.3%
7.1%
9.6%
7.4%
2.2%
5.5%
5.2%
0.3%
-1.3 pp
-3.8 pp
2.5 pp
1 pp
-2.1 pp
3.1 pp
-0.9 pp
-1.2 pp
0.3 pp
1.3 pp
0.8 pp
0.5 pp
As previously mentioned, the continuation of the sales performance in the external markets is the result of
the consistent execution of our strategic plan, with geographic expansion combined with expansion of the
product portfolio. The results are observable in the performance of the various business areas.
In the Industrial Electro-Electronic Equipment area this strategy has been particularly important, especially
in the external market expansion. Combining the strong WEG brand with the research and development
efforts, we develop a portfolio of products adapted to the consumer preference for higher energy efficiency
equipment, with innovative design and features that are customizable for each market.
Thus, performance in this area of business continued to be the operational highlight and maximizing the
returns on investments to expand commercial footprint and resulting in strong sales growth, both in mature
markets such as Europe and North America, as in emerging markets such as Asia and Africa.
In the Brazilian market, while conditions for investment in expansion of industrial capacity have improved as
a result of the active governmental policies to recover competitiveness, such as the ‘‘Brasil Maior’’ Plan, the
impacts are still limited. Our performance in this quarter was primarily attributable to our diversified market
presence, since there were no major highlights from any particular segment.
In the Energy Generation, Transmission and Distribution (GTD) area there were no change in market
dynamics that have been observed in recent quarters. In the Generation segment, the implementation of
regulatory changes has caused significant additional noise and new investments continued at a slow pace.
We remain confident in our competitive advantages, such as the excellence of our industrial footprint and
technological know-how in manufacturing power generation equipment using different renewable sources
(hydroelectric, biomass and wind) adapted to Brazilian conditions.
In the Transmission and Distribution (T&D) market, we continue to see relatively stronger demand in Brazil
and international prices still under pressure from excess production capacity. We have maintained invests
and level of services provided to our clients, as we expect that this strategy will result, over time, in t
strengthening of our relative market position and business expansion. The adjustments in our own
production structure have already been made and allow us to remain competitive, both in Brazil and in
North America, even under current market conditions.
In the Motors for Domestic Use business area, we have observed a mismatch of market growth for ‘‘white
goods,’’ especially after the implementation of measures to stimulate consumption, and the demand for our
products. We expect that recent additional government measures, including increases of import tax, may
restore the competitive equilibrium in the sector.
Finally, in the Paints and Varnishes business area, we had for the first time in the third quarter the
consolidation of revenues from Stardur. Regardless of this fact, the organic growth in this business area
remained healthy, showing the advantages of diversified model and the ability to capture synergies.
WEG S.A. | 2012 Third Quarter Results
Earnings Release
Q3 2012
Net Operating Revenues
Cost of Goods Sold
Gross Operating Profit
Q2 2012
1,613.1
(1,114.5)
498.6
1,528.8
(1,067.1)
461.7
Gross Margin
30.9%
30.2%
(-) Selling Expenses
(-) General & Administrative
(-) Profit Sharing
Result from Activities
(+) Depreciation & Amortization
EBITDA
(156.7)
(81.4)
(28.8)
231.6
52.6
284.3
(155.1)
(76.0)
(22.6)
207.9
52.2
260.0
EBITDA Margin
17.6%
17.0%
%
5.5%
4.4%
8.0%
Q3 2011
1,317.5
(899.2)
418.3
%
22.4%
23.9%
19.2%
31.7%
1.0%
7.1%
27.3%
11.4%
0.9%
9.3%
(129.5)
(66.5)
(24.7)
197.6
46.2
243.7
21.0%
22.5%
16.7%
17.2%
14.0%
16.6%
18.5%
Figures in R$ thousands
Cost of Goods
Sold
Cost of Goods Sold (COGS) totaled R$ 1,114.5 million in 3Q12, increasing 23.9% over 3Q11 and 4.4%
over 2Q12. Gross margin reached 30.9%, 0.8 percentage point lower than in 3Q11, but 0.7 percentage
point higher than in the 2Q12.
Gross Margin
Gross margin variations were the result of positive and negative factors. Among the positive, we highlight (i)
devaluation of the Brazilian Real and consequent revenue growth in external market; (ii) the relative stability
of raw material costs; and (iii) revenue growth and consequent better dilution of manufacturing costs. We
also highlight the positive impact from the changes on the social security contribution calculation
methodology. However, we continue to observed: (i) the new units India and Linhares (ES) have not
reached the ideal utilization levels, (ii) the product sold mix is still recovering, especially in long-cycle
products, (iii) continuation of pricing pressures in segments such as T&D.
Cost of Raw
Materials
Average copper spot prices at the London Metal Exchange fell by 14% in the 3Q12 compared to the
average of 3Q11 and 2% compared to the average of 2Q12. Steel prices in the international markets have
continued to drop as compared to the previous quarter (-8%) as compared to the previous year (-12%),
according to the CRUspiGlobal index.
These lower US dollar prices for raw materials steel and copper are actually translated into relatively stable
prices when measured in Brazilian Reais. We have insisted that these raw materials prices are set
internationally or at least follow trends that are similar across many global markets, resulting in similar cost
conditions for the various competitors, regardless of the location of their operations. Thus, the selling prices
for most of our products reflect current market conditions and the relative share of raw materials in our total
costs has been relatively stable.
Selling, General
and
Administrative
Expenses
Consolidated selling, general and administrative expenses (SG&A) represented 14.8% of net operating
revenue in the 3Q12, once again demonstrating the good performance of the actions taken to control
expenses and increased productivity. In the 3Q11 these expenses represented 14.8% of net operating
revenue and in the 2Q12 represented 15.1% of net operating revenue.
EBITDA and
EBITDA Margin
As a result of the aforementioned impacts, EBITDA in 3Q12 (calculated according to the methodology
defined by CVM Ofício Circular 01/07) totaled R$ 284.3 million, an increase of 16.6% over 3Q11 and of
9.3% over the previous quarter. EBITDA margin reached 17.6%, 0.9 percentage point lower compared to
the 3Q11 and 0.6 percentage point higher compared to the 2Q12.
WEG S.A. | 2012 Third Quarter Results | 5
Earnings Release
Main impacts on EBITDA
155,6
208,5
139,9
FX Impact
on
Revenues
26,3
16,1
COGS (ex
depreciation)
Selling
Expenses
243,7
Volumes,
Prices &
Product Mix
Changes
EBITDA Q3 11
General and
Administrative
Expenses
4,1
284,3
Profit Sharing
Program
EBITDA Q3 12
Net Financial
Results
Financial revenues totaled R$ 101.3 million in 3Q12 (R$ 154.4 million in 3Q11 and R$ 134.5 million in
2Q12). Financial expenses totaled R$ 80.7 million (R$ 162.4 million in 3Q11 and R$ 148.0 million in 2Q12).
In this quarter, net financial income was positive in R$ 20.6 million (negative in R$ 8.0 million in 3Q11 and
negative in R$ 13.5 million in 2Q12).
Income Tax and
Social
Contribution
The Income Tax and Social Contribution Tax on Net Profit provision in 3Q12 reached R$ 61.9 million (R$
37.4 million in 3Q11 and R$ 56.2 million in 2Q12). Additionally, R$ 6.1 million were recorded as ‘‘Deferred
income tax / social contribution’’ (R$ 12.2 million in 3Q11 and R$ 9.6 million in 2Q12).
Net Income
As a result of the previously discussed impacts, net income for 3Q12 was R$ 184.8 million, an increase of
19.5% over 3Q11 and of 32.1% over the previous quarter. The net margin of the quarter was 11.5%, 0.3
percentage point lower compared to the 3Q11 and 2.3 percentage point higher compared to the 2Q12.
Operating cash
flow
Cash flow from operating activities in the first nine months of 2012 totaled R$ 508.7 million, an increase of
75% over the same period of 2011. This increase in operating generation was caused by contribution of
virtually all components, with emphasis on: (i) increase in net income before depreciation and (ii) lower
increase in working capital needs, especially with smaller expansion in inventories relative to sales growth.
Capex
Investments in expansion and modernization of production capacity amounted to R$ 164.6 million in the
first nine months of 2012, being 92% directed to industrial units and other facilities in Brazil and the
remaining to production units and other subsidiaries abroad.
Our expectation was that we would see a gradual acceleration in our investment program for 2012 in
relation to what we had in 2011, to reach approximately R$ 300 million during the year. Given the current
execution of the capex program up to the end of 3Q12, we should not reach this target in 2012, even
considering an eventual pick in the speed of execution in this last quarter, given the favorable financing
conditions extended by BNDES on the Investments Acceleration Program (PSI).
WEG S.A. | 2012 Third Quarter Results
Earnings Release
Investments in Fixed Assets (R$ million)
Outside Brazil
Brazil
63,1
33,8
8,2
49,9
41,1
58,7
55,5
50,4
5,0
3,7
5,1
62,1
53,7
51,9
45,4
Q4 11
Q1 12
Q2 12
Q3 12
1,0
7,3
2,4
25,6
38,8
42,6
Q1 11
Q2 11
Q3 11
2011
2012
Cash flow from
investing
activities
Investing activities consumed R$ 270.6 million in the first nine months of 2012, 15% lower than the volume
consumed in the same period of 2011. This reduction occurred despite an increase of investments in fixed
assets, a result not only of the investments in expansion and modernization of production capacity but also
the consolidation of the assets from the acquisitions and partnerships. In addition, there was an increase of
R$ 133.7 million of intangible and R$ 51.8 million in goodwill related to these acquisitions and joint
ventures. The main reason for the decrease in cash consumption was reversal of investments previously
classified as long-term and which are now classified as cash equivalents.
Debt and Cash
Position
Debt and Cash Position (R$ Thousand)
September 2012
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)
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)
December 2011
3,212,250
2,931,615
280,635
3,457,728
1,701,435
585,687
1,115,748
1,756,293
1,560,712
195,581
(245,478)
September 2011
3,319,834
3,086,568
233,266
3,288,987
1,797,222
723,389
1,073,833
1,491,765
1,337,411
154,354
30,847
As of September 30, 2012, cash (cash, cash equivalents and short and long term financial investments)
totaled R$ 2,525.5 million and gross financial debt totaled R$ 2,874.0 million, resulting in a net debt
position of R$ 348.4 million (net cash of R$ 30.8 million in September 30, 2011 and net debt of R$ 245.5
million in December 31, 2011). Cash is invested mainly in Brazilian currency denominated financial
instruments referenced to the Interbank Deposit Certificate (CDI), in the 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 28.1 months.
ƒ The duration of the Brazilian Reais denominated portion is 18.1 months and of the foreign currencies
denominated portion is 10.1 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).
WEG S.A. | 2012 Third Quarter Results | 7
Earnings Release
Dividends
As of August 15, payments declared during the first half of 2012 were made to shareholders, 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 profit recorded in the first half of 2012, in the total amount of R$
62.0 million.
13/3/2013
Gross amount per
share
R$ 0,07647059
Net amount per
share
R$ 0,06500000
15/8/2012
R$ 0,10000000
R$ 0,10000000
15/8/2012
15/8/2012
R$ 0,07647059
R$ 0,07647059
R$ 0,06500000
R$ 0,06500000
R$ 0,32941177
R$ 0,29500000
Event
Board Meeting Date
Payment Date
Interest on Stockholders’ Equity
25/9/2012
Dividends
24/7/2012
Interest on Stockholders’ Equity
Interest on Stockholders’ Equity
26/6/2012
20/3/2012
Total
Interim dividends and interest on equity capital declared in the first half of 2012 totaled R$ 156.9 million,
corresponding to 54.5% of net income for the period. Earnings per share after withholding income tax was
of R$ 0.23.
ƒ In addition, on September 25, 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 13, 2013 onwards.
Cash flow from
financing
activities
Financing activities consumed R$ 901.4 million in the first nine months of 2012, mainly as a result of the
decrease in gross debt, with payment of loans and financing. In this period we conducted a net reduction of
R$ 449.6 million of debt (new debt of R$ 836.8 million and amortization of R$ 1,286.4 million).
Cash flow
The total cash, as presented in the Statement of Cash Flows, of R$ 2,268.2 million, does not include R$
256.6 million in financial investments with maturities less than twelve months, but without immediate
liquidity. If considered ‘‘Cash’’, ‘‘Cash equivalents’’ and ‘‘Short-term financial investments’’, total short term
cash and financial instruments reach R$ 2,524.9 million.
Cash flow
508.7
2,931.6
Operating
270.6
901.4
Investing
2,268.2
Financing
Cash 4Q11
Extraordinary
Event
Cash 3Q12
On October 16, 2012, a fire broke out in our Stardur coatings manufacturing plant, located in Indaiatuba,
São Paulo. There were no casualties, only material damage, for which the WEG has insurance coverage.
Production at the Indaiatuba plant has been interrupted and is being transferred to the Guaramirin (SC) and
Mauá (SP) plants. WEG expects that contingency measures implemented should minimize impacts to its
market presence.
WEGE3 Share
Performance
At the end of the last trading day of September 2012, the common shares issued by WEG, traded under
the code WEGE3 at BM&F Bovespa, were quoted at R$ 23.62 with a nominal increase of 25.8% in the
year. Considering the dividends and interest on stockholders equity declared in the first half of 2012, the
total return for the shareholders was of 28.9% in 2012.
WEG S.A. | 2012 Third Quarter Results
Earnings Release
The average daily traded volume in 3Q12 was R$ 4.8 million, 33% lower than 3Q11. Throughout the
quarter 45,117 stock trades were carried out (48,156 stock trades in 3Q11), involving 15.0 million shares
(26.0 million shares in 3Q11) and totaling R$ 303.8 million (R$ 458.5 million in 3Q11).
Share Price Performance and Traded Volume
3.000
24,00
Shares Traded (thousands)
WEGE3
22,00
WEGE3 share prices
2.000
18,00
16,00
1.000
14,00
12,00
10,00
nJa
10
Traded shares (thousands)
20,00
0
Ap
0
r-1
0
l-1
Ju
0
t- 1
Oc
n
Ja
1
-1
Ap
1
r-1
1
l-1
Ju
O
11
ct-
n
Ja
2
-1
2
r- 1
Ap
2
l-1
Ju
Dividend adjusted performance (dividend and interest on stockholders equity)
Results
Conference Call
WEG will hold, on October 25, 2012 (Thursday), conference call and webcast to discuss the results. The
call will be conducted in Portuguese with simultaneous translation in English, following scheduled time:
11 a.m.
09 a.m.
02 p.m.
--- Brasilia (DST)
--- 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/3t12.htm
www.ccall.com.br/weg/3q12.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. | 2012 Third Quarter Results | 9
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. | 2012 Third Quarter Results
Earnings Release
Annex I
Consolidated Income Statement - Quarterly
Figures in R$ Thousands
3rd 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
1,613,067 100%
(1,114,480) -69%
498,587
31%
(156,743) -10%
(81,392)
-5%
101,326
6%
(80,700)
-5%
1,246
0%
(39,593)
-2%
242,731
15%
(61,926)
-4%
6,141
0%
(2,190)
0%
184,756 11.5%
EBITDA
284,276
EPS
0.29780
18%
2nd Quarter
2012
R$
AV%
3rd Quarter
2011
R$
AV%
Changes %
Q3 12
Q3 12
Q2 12
Q3 11
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%
1,317,483
(899,217)
418,266
(129,536)
(66,462)
154,397
(162,387)
479
(29,348)
185,409
(37,444)
12,225
5,623
154,567
100%
-68%
32%
-10%
-5%
12%
-12%
0%
-2%
14%
-3%
1%
0%
12%
6%
4%
8%
1%
7%
-25%
-45%
-85%
7%
29%
10%
-37%
n.m
32%
22%
24%
19%
21%
22%
-34%
-50%
160%
35%
31%
65%
-50%
n.m
20%
260,028
17%
243,743
19%
9.3%
16.6%
32.1%
19.5%
0.22537
0.24914
11 | WEG S.A. | 2012 Third Quarter Results
Earnings Release
Annex II
Consolidated Income Statement
09M12
35
9 Months
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
09M11
Figures in R$ Thousands
26
9 Months
2011
R$
AV%
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%
3,720,858
(2,610,493)
1,110,365
(368,222)
(189,234)
359,327
(285,357)
11,145
(83,949)
554,075
(136,398)
25,564
12,553
430,688
100%
-70%
30%
-10%
-5%
10%
-8%
0%
-2%
15%
-4%
1%
0%
12%
EBITDA
752,942
17%
624,130
17%
EPS
0.76212
WEG S.A. | 2012 Third Quarter Results
0.69420
%
2012
2011
21%
21%
22%
23%
19%
1%
9%
30%
37%
13%
22%
-18%
n.m
10%
21%
10%
Earnings Release
Annex III
Consolidated Balance Sheet
Figures in R$ Thousands
September 2012
R$
AV%
29
December 2011
R$
AV%
22
September 2011
R$
AV%
20
CURRENT ASSETS
5,657,018
65%
5,867,061
64%
5,742,007
66%
Cash & cash equivalents
Receivables
Inventories
Other current assets
LONG TERM ASSETS
Long term securities
Deferred taxes
Other assets with related parties
Other non-current assets
FIXED ASSETS
2,524,865
1,411,747
1,389,619
330,787
80,004
670
32,190
47,144
3,020,011
29%
16%
16%
4%
1%
0%
0%
0%
1%
34%
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%
0%
31%
3,086,568
1,162,056
1,269,623
223,760
378,587
233,266
103,846
41,475
2,575,233
35%
13%
15%
3%
4%
3%
1%
0%
0%
30%
349
0%
349
0%
933
0%
2,526,237
29%
2,445,760
27%
2,397,920
28%
Intangibles
TOTAL ASSETS
493,425
8,757,033
6%
100%
360,222
9,105,861
4%
100%
176,380
8,695,827
2%
100%
CURRENT LIABILITIES
Investment in Subs
Property, Plant & Equipment
2,876,077
33%
2,752,960
30%
2,818,379
32%
Social and Labor Liabilities
223,573
3%
161,436
2%
188,599
2%
Suppliers
321,473
4%
298,195
3%
317,125
4%
Fiscal and Tax Liabilities
113,478
1%
88,473
1%
63,632
1%
1,617,387
18%
1,701,435
19%
1,797,222
21%
43,327
316,697
40,752
199,390
1,876,901
0%
4%
0%
2%
21%
2,804
285,843
26,314
188,459
2,446,312
0%
3%
0%
2%
27%
47,903
239,143
39,348
125,407
2,167,388
1%
3%
0%
1%
25%
1,256,575
14%
1,756,293
19%
1,491,765
17%
Other Long Term Liabilities
124,966
1%
122,485
1%
129,275
1%
Deferred Taxes
322,296
4%
421,918
5%
411,545
5%
Contingencies Provisions
173,064
2%
145,616
2%
134,803
2%
86,084
1%
106,477
1%
98,709
1%
STOCKHOLDERS' EQUITY
3,917,971
45%
3,800,112
42%
3,611,351
42%
TOTAL LIABILITIES
8,757,033
100%
9,105,861
100%
8,695,827
100%
Short Term Debt
Dividends Payable
Advances from Clients
Profit Sharring
Other Short Term Liabilities
LONG TERM LIABILITIES
Long Term Debt
MINORITIES
13 | WEG S.A. | 2012 Third Quarter Results
Earnings Release
Annex IV
Consolidated Cash Flow Statement
Figures in R$ Thousands
09M12
09M11
9 Months
2012
16
9 Months
2011
12
Operating Activities
Net Earnings before Taxes
Depreciation and Amortization
Provisions:
Changes in Assets & Liabilities
625,627
154,365
126,057
(397,384)
554,075
139,393
92,160
(494,815)
Cash Flow from Operating Activities
508,665
290,813
Investment Activities
Fixed Assets
Intagible Assets
Goodwill in Capital Transactions
Asset Write Downs
Accumulated Conversion Adjustment
Long term securities bought
(188,662)
(133,691)
(51,788)
6,111
74,054
23,332
(124,813)
(2,462)
2,472
38,401
(233,266)
Cash Flow From Investment Activities
(270,644)
(319,668)
836,818
(1,286,438)
(134,146)
(317,639)
(10,055)
1,648,515
(672,509)
(105,962)
(297,562)
Cash Flow From Financing Activities
(901,405)
562,427
Change in Cash Position
Cash & Cash Equivalents
Beginning of Period
End of Period
(663,384)
533,572
2,931,615
2,268,231
2,552,996
3,086,568
Financing Activities
Treasury Shares
Working Capital Financing
Long Term Financing
Interest paid on loans and financing
Dividends & Intesrest on Stockholders Equity Paid
WEG S.A. | 2012 Third Quarter Results