Motors | Automation | Energy | T&D | Paints
April 29th, 2010
The statements that may be made during this conference call relating to expectations, as well as information that are currently available.
These statements involve risks, uncertainties and the use of assumptions, as they relate to future events and, as such, depend on circumstances that may or may not be present.
Investors should understand that the general economic conditions, future performance and lead to results that may differ materially from those expressed in such future considerations.
Page 2 April 29th, 2010
Quarter confirms that recovery is going to be gradual
Economic dynamisms spreads from the Brazilian consumer towards other segments:
Consumer goods continue strong, tied to fundamentals
Industrial products doing better the closer they are to the consumer
Longer cycle products is still in early stages of recovery
Other emerging countries faring better than mature economies
We are resuming some investment plans as demands picks up
Production of HT motors in India by 2H of 2010;
Production of commercial motors in Linhares by year end
Q1 010 Conference Call Page 3 April 29th, 2010
Gross Operating Revenue
Domestic Market
External Markets
External Markets in US$
Net Operating Revenue
Gross Operating Profit
Gross Margin
Quarterly Net Income
Net Margin
EBITDA
EBITDA Margin
Q1 2010 Q4 2009 Growth % Q1 2009 Growth %
1.131.546
1.306.913
-13,4% 1.270.984
-11,0%
801.299
330.247
871.619
435.299
-8,1%
-24,1%
802.351
468.632
-0,1%
-29,5%
181.170
250.328
-27,6% 202.726
-10,6%
931.907
1.076.969
-13,5% 1.048.241
-11,1%
307.454
33,0%
119.074
12,8%
181.750
19,5%
344.226
-10,7%
32,0%
136.426
-12,7%
12,7%
228.548
-20,5%
21,2%
311.954
29,8%
-1,4%
122.193
-2,6%
11,7%
181.112
17,3%
0,4%
Figures in R$ Thousands
Q1 010 Conference Call Page 4 April 29th, 2010
Evolution of Gross Revenues Domestic Market
(in R$ million)
5%
22%
23%
0%
507
623
761
802 801
Q1 2006 Q1 2007 Q1 2008 Q1 2009
Evolution of Gross Revenues External Market
(in US$ million)
External Market in US$
Quarterly Average FX
2,1875 2,1066
1,7354
2,3117
Q1 2010
1,8229
18%
30%
-11%
29%
202,7
165,2
195,3
181,2
126,6
Gross Operating Revenues decreasing by 11%. Net Revenues down by 11.1%
FX appreciation of 27% negatively impacts comparisons
Product mix continues to shift towards short cycle products
Lower order intake during 2009 is now apparent in revenues
Recovery continues driven by the
Brazilian consumer
Long cycle and external (mature) markets continue soft.
Q1 2006 Q1 2007
Q1 010 Conference Call
Q1 2008 Q1 2009 Q1 2010
Page 5 April 29th, 2010
Gross Revenues Breakdown 1Q10
7%
5%
South & Central America
10%
North America
9%
Europe
71%
Brazil
Q1 010 Conference Call Page 6
2%
Africa
3%
Asia & Oceania
April 29th, 2010
Gross Revenues Breakdown 1Q10
784
7%
17%
7%
18%
59%
971
6%
14%
21%
59%
1.100
6%
15%
25%
54%
1.271
5%
9%
33%
52%
1.132
8%
17%
30%
46%
1Q06 1Q07
Industrial Equipment GTD
1Q08
Domestic Use
1Q09 1Q10
Paints & Varnishes
Q1 010 Conference Call Page 7 April 29th, 2010
Successful cost containment, even below optimum capacity utilization
Raw materials have been stable up to end of the quarter
Lower dilution of fixed costs, that continued to grow as percentage of total
COGS
Other Costs
33%
Other Costs
29% Steel & Coper
45%
Depreciation
6%
Other Materials
19%
Q1 10
Depreciation
5%
Steel & Coper
42%
Other Materials
21%
Q1 09
Q1 010 Conference Call Page 8 April 29th, 2010
36% 37% 36%
30%
33%
22%
24% 23%
17%
20%
238
293
320 312 307
193
203
181 182
149
Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010
Gross Profit Gross Margin
Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010
EBITDA EBITDA Margin
18%
118
16%
129
14%
126
12%
122
13%
119
Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010
Net Income
Q1 010 Conference Call
Net Margin
Page 9
Gross margin improving, despite little help from top line growth
EBITDA margin trending towards the floor of the historical interval
Net margin showing more modest improvement, benefiting from FX stability
April 29th, 2010
March 2010
CASH & EQUIVALENT 1.962.538
DEBT 1.782.466
- Current
- Long Term
NET CASH (DEBT)
814.274
968.192
180.072
December 2009
2.127.117
1.872.533
895.885
976.648
254.584
March 2009
1.815.164
2.099.941
1.171.587
928.354
(284.777)
Seasonal impact of dividend disbursement
Operating cash flow trends continue favorable
Capex program picking up where demand is stronger
Reduction on short term debt continues
Virtually no foreign currency exposure
Q1 010 Conference Call Page 10 April 29th, 2010
91,9
20,1
71,8
Q1 09
Q1 010 Conference Call
63,5
15,7
47,8
Q2 09
32,7
13,7
19,1
Q3 09
Page 11
38,2
13,8
24,3
Q4 09
Outside Brazil
Brazil
61,4
34,2
27,2
Q1 10
April 29th, 2010
Alidor Lueders
IRO alidor@weg.net
Luís Fernando M. Oliveira
Investor Relations Manager
+55 (47) 3276-6973 luisfernando@weg.net
ri@weg.net
MSN Messenger luisfernando@weg.com.br
www.weg.net/ir twitter.com/weg_ir
Q1 010 Conference Call Page 12 April 29th, 2010