Motors | Automation | Energy | T&D | Paints
J.P. Morgan Transportation and
Industrials Brazil Conference
July 08, 2011
Disclaimer
The information contained herein has been prepared by WEG S.A. (“WEG” or the “Company”) solely for meetings held with investors and/or
potential investors. This material does not constitute offering material in whole or part, and you must obtain further information before making an
investment decision in respect of the common shares of the Company.
This material has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any
securities and should not be treated as giving investment advice. It is not targeted to the specific investment objectives, financial situation or
particular needs of any recipient. No representation or warranty, either express or implied, is made as to the accuracy, completeness or reliability
of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. Any opinions
expressed in this material are subject to change without notice and WEG is not under obligation to update or keep current the information
contained herein. In addition, WEG has been informed that their affiliates, agents, directors, partners and employees may make purchases and/or
sales as principals or may act as market makers or provide investment banking or other services to the Company. The Company and their
respective affiliates, agents, directors, partners and employees accept no liability whatsoever for any loss or damage of any kind arising out of the
use of all or any part of this material.
You should consult your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem
necessary, and you must make your own investment, hedging or trading decision based upon your own judgment and advice from such advisers
as you deem necessary and not upon any view expressed in this material.
This material includes forward-looking statements subject to risks and uncertainties, which are based on current expectations and projections
about future events and trends that may affect the Company’s business. These statements include projections of economic growth and energy
demand and supply, as well as information about competitive position, the regulatory environment, potential opportunities for growth and other
matters. Several factors may adversely affect the estimates and assumptions on which these statements are based, many of which are beyond
our control.
JP Morgan Transportation & Industrials Conference - July 2011
1
Business Units
Motors
Page 2
Automation
Energy
Transmission
& Distribution
Coatings
Our Business
Revenues breakdown per production site
Brazil;
93%
2010
CHINA
MEXICO
MEXICO
Abroad;
7%
PORTUGAL
ARGENTINA
Revenues breakdown per
distribution channel
2010
OEM; 58%
Reseller;
14%
End user;
28%
Business areas
Business
Units
Performance
Drivers
Page 6
ElectroElectronic
Industrial
Equipments
Generation,
Transmission
and
Distribution
Motors for
Domestic Use
Industrial
Paints and
Varnishes
Motors +
Automation
Energy + T&D +
Automation
Motors
Coatings
Industrial Production
growth and
Investments in
Fixed Capital
(capex)
Growth in
investments in
electric enrgy
infrastructure
Disposable income,
supply of credit and
level of interest
rates
Brazilian GDP
growth
Mega trends are reshaping
the competitive landscape
Emergence
of new
economies
Pricing of
the planet
Positioned to benefit
from mega trends
Renewable Energy
Energy Management
ƒ
ƒ
Industrial electricity consumption is the
largest portion of global consumption
Management systems (ISO 50.001)
already being implemented
ƒ
ƒ
Smart
ƒ Infrastructure
Electricity distribution network has to
ƒ
ƒ
ƒ
Page 8
Scale and technological development
increase viability
Mobility
become “smarter”
More sensors, more automation, more
efficient generation and use of electricity
Global need to diversify energy
sources and lower GHG emissions
Increasing urbanization adds to
congestions and need of new solutions
Hybrids, pure electric and alternative
fuels vehicles will become more
important
Energy prices will
continue to increase
ƒ Traditional energies sources are
becoming ever more scarce and
difficult to obtain
ƒ Concerns about the impact of
energy generation on climate
change
ƒ Improving living standards in
emerging economies increase
energy intensity (consumption per
capita)
Brazilian industrial electricity tariff
(in US$ / MWh)
300
250
200
150
100
50
-
2000
2001
2002
Source: EPE BEN 2010
Page 9
2003
2004
2005
2006
2007
2008
2009
Harmonization of
energy efficiency
regulations
IE3
IE2
IE1
95,0%
90,0%
85,0%
80,0%
75,0%
Page 10
Motor size (in watts)
160
132
110
90
75
55
45
37
30
22
18.5
15
11
7.5
5.5
4
3
2.2
1.5
1.1
0.75
70,0%
200 up…
Conversion of energy (efficiency)
100,0%
Brazil electricity is already clean,
but it can get cleaner
180.000 160.000 8% CAGR
140.000 120.000 Biomass - 5% CAGR
Small Hydro – 6% CAGR
Wind - 17% CAGR
100.000 80.000 60.000 4% CAGR
40.000 20.000 5% CAGR
‐
2010
2011
2012
Fossil Fuels
2013
2014
Large Hydro
2015
2016
Renewables
2017
2018
2019
Nuclear
Source: EPE - PDE 2019
Page 11
Power grid
must evolve
Demand management
SMART GRID: Applying sensing,
measurement and control devices with twoway communications to dynamically
respond to changes in grid conditions
Smart apliances
Use can be shifted to off
peak times to save money
Can shut off in response
to frequency fluctuations
Sensors
Detected fluctuations and
disturbances, and can signal
for areas to be isolated
Solar
panels
Houses
Storages
Offices
Disturbance
In the grid
Energy generated at off
peak times could be
stored in batteries for later
uses
Storage
Isolated
microgrid
Wind farm
Processors
Execute special protection
schemes in microseconds
Central power
plant
Generators
Industrial
plant
JP Morgan Transportation & Industrials
Conference - July 2011
Energy from small generators
and solar panels can reduce
overall demand on the grid
12
WEG solutions for
marine automation
Thrusters motors
Automation
Generators
Page 14
Transformers
Motors
Strategic
Positioning
Appliance
Industrial
High Voltage
Energia
Generators
Biomass Systems
Small Hydro
Wind
T&D
Power
Dry
Distribution
Automação
Drives
Novos Negócios
Substations
Gearbox
Controls
Panels
Gensets
Turbines
Acquisitions and
Portfolio Strategy
May 2010
Market
Access
May 2010
June 2010
Technology
Page 16
December 2010
Growth Drivers &
Opportunities
ƒNew and improved products, focusing
efficiency, reliability and features
ƒMore integrated systems / complete
solutions
ƒNew markets / products, R&D and
acquisitions and new geographies.
Page 17
Key takeaways
ƒ Global growth driven by emerging economies, with
massive infrastructure spending
ƒ Energy management will become more important, with
minimum performance standards (MEPS) regulations and
standardization
ƒ Growing importance of renewable sources of energy
ƒ Smart infrastructure systems will demand smarter
equipment
ƒ Brazilian pre-salt oil development will demand significant
investment
Page 18
Contacts
Laurence Beltrão Gomes
IRO
+55 (47) 3276-7917
laurence@weg.net
Luís Fernando M. Oliveira
Investor Relations Manager
+55 (47) 3276-6973
luisfernando@weg.net
Page 19
1Q11 Highlights
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 2011
1,343,137
862,863
480,274
288,211
1,126,117
310,662
Q1 2010 Growth % Q4 2010 Growth %
1,131,546 18.7% 1,504,610 -10.7%
801,299
964,471 -10.5%
7.7%
330,247 45.4%
540,200 -11.1%
181,170 59.1%
315,278 -8.6%
931,907 20.8% 1,258,429 -10.5%
308,613
391,300 -20.6%
0.7%
27.6%
33.1%
121,564
119,645
10.8%
12.8%
164,808
181,750
14.6%
19.5%
31.1%
1.6%
141,508 -14.1%
11.2%
-9.3%
224,149 -26.5%
17.8%
Figures in R$ Thousands
Page 20